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

                                   Form 10-QSB

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

For the quarterly period ended September 30, 1998

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________to_______________

Commission file number  0-21489

                      International Dispensing Corporation
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


          Delaware                                        13-3856324
-------------------------------                ---------------------------------
(State of other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


          2500 Westchester Avenue, Suite 304, Purchase, New York 10577
          ------------------------------------------------------------
                    (Address of principal executive offices)


                                 (914) 251-0336
                           ---------------------------
                           (Issuer's telephone number)


                                 Not applicable
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether  the  issuer  (1) filed all  reports 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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes or common
equity, as of the latest  practicable date:  9,566,668 shares of Common Stock as
of October 20, 1998

Transitional Small Business Disclosure Format (Check One): Yes [ ]     No [X]


                                        1

<PAGE>


                      International Dispensing Corporation
                          (A Development Stage Company)


                                Table of Contents



Part I -  FINANCIAL INFORMATION                                      Page Number
                                                                     -----------

Item 1.   Financial Statements

          Balance Sheets at September 30, 1998 (unaudited)                3
          and December 31, 1997

          Statements of Operations for the Nine and Three Months          4
          Ended September 30, 1998 and 1997 and for the Period from
          Inception (October 10, 1995) through September 30, 1998

          Statements of Cash Flows for the Nine Months Ended              5
          September 30, 1998 and 1997 and for the Period from
          Inception(October 10, 1995) through September 30, 1998

          Notes to Financial Statements                                   6

Item 2.   Management's Discussion and Analysis of Financial               7
          Condition and Results of Operations

Part II - OTHER INFORMATION                                               10

                                       2

<PAGE>

                      INTERNATIONAL DISPENSING CORPORATION
                          (A Development Stage Company)

                                  BALANCE SHEET

                                                   September 30,    December 31,
                                                       1998             1997
                                                    -----------     -----------
                                                    (unaudited)
Assets
Current Assets:
Cash and cash equivalents ......................    $ 1,386,102     $ 3,138,204
Accounts receivable ............................        723,089            --
Prepaid expenses ...............................           --            46,333
                                                    -----------     -----------
                 Total current assets ..........      2,109,191       3,184,537
Fixed Assets:
Leasehold improvements .........................          7,270           7,270
Office equipment ...............................          4,350           4,350
Automobile .....................................         21,920          21,920
Accumulated depreciation and amortization ......        (11,059)         (6,559)
                                                    -----------     -----------
                     Net fixed assets ..........         22,481          26,981
Other Assets ...................................        729,367          57,786
                                                    -----------     -----------
                         Total Assets ..........    $ 2,861,039     $ 3,269,304
                                                    ===========     ===========

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable ...............................        280,937          12,255
Accrued expenses ...............................         31,128          49,766
                                                    -----------     -----------
Total current liabilities ......................        312,065          62,021
                                                    -----------     -----------
                    Total liabilities ..........        312,065          62,021
Commitments & contingencies
Stockholders' Equity:
Preferred stock, $.001 par value; ..............           --              --
2,000,000 shares authorized, no
shares issued or outstanding
Common stock, $.001 par value; .................          9,567           9,567
40,000,000 shares authorized;
9,566,668 issued and outstanding
as of Dec. 31, 1997 and September 30,
1998 respectively
Additional paid-in capital .....................      9,895,286       9,895,286
Deficit accumulated during .....................     (7,355,879)     (6,697,570)
development stage
                                                    -----------     -----------
           Total stockholders' equity ..........      2,539,407       3,207,283
                                                    -----------     -----------
Total liabilities and stockholders' equity .....    $ 2,861,039     $ 3,269,304
                                                    ===========     ===========



   The accompanying notes are an integral part of these financial statements

                                       3

<PAGE>

<TABLE>
<CAPTION>
                                                INTERNATIONAL DISPENSING CORPORATION
                                                   (A Development Stage Company)

                                                       STATEMENT OF OPERATIONS

                                                                                                                        Cumulative
                                                               Nine Months                     Three Months           from Inception
                                                                  ended                           ended             October 10, 1995
                                                      ------------------------------   ----------------------------      through
                                                      September 30,    September 30,   September 30,  September 30,    September 30,
                                                            1998           1997             1998           1997            1998
                                                        -----------     -----------     -----------     -----------     ----------- 
                                                        (unaudited)     (unaudited)     (unaudited)     (unaudited)     (unaudited)

<S>                                                     <C>             <C>             <C>             <C>             <C>        
Revenues ...........................................    $   707,750     $      --       $   375,000     $      --       $   707,750

Cost of goods sold .................................        462,095            --           275,000            --           462,095
                                                        -----------     -----------     -----------     -----------     ----------- 
Gross margin .......................................        245,655            --           100,000            --           245,655
                                                        -----------     -----------     -----------     -----------     ----------- 
Operating expenses:
General and adminstrative ..........................        976,801         689,378         330,107         250,845       3,589,051
Depreciation and amortization ......................          4,500             663           1,500             221          11,060
                                                        -----------     -----------     -----------     -----------     ----------- 

Total operating expenses ...........................        981,301         690,041         331,607         251,066       3,600,111
                                                        -----------     -----------     -----------     -----------     ----------- 

Loss from operations ...............................       (735,646)       (690,041)       (231,607)       (251,066)     (3,354,456)
Other income (expense)
Interest expense ...................................           --              --              --              --            66,665

Interest income ....................................         77,337         147,425          15,578          48,438         315,242
                                                        -----------     -----------     -----------     -----------     ----------- 

Net loss before extraordinary loss .................    ($  658,309)    ($  542,616)    ($  216,029)    ($  202,628)    ($3,105,879)
                                                        ===========     ===========     ===========     ===========     =========== 

Extraordinary loss on retirement of debt ...........           --              --              --              --          (250,000)


Net loss ...........................................    ($  658,309)    ($  542,616)    ($  216,029)    ($  202,628)    ($3,355,879)

Basic and diluted loss per share ...................    $     (0.07)    $     (0.06)    $     (0.02)    $     (0.02)

Basic and diluted weighted average
shares outstanding .................................      9,566,668       9,566,668       9,566,668       9,566,668



                              The accompanying notes are an integral part of these financial statements

</TABLE>

                                                                  4

<PAGE>

<TABLE>
<CAPTION>

                                                INTERNATIONAL DISPENSING CORPORATION
                                                    (A Development Stage Company)

                                                       STATEMENT OF CASH FLOWS
                                                                                                                         Cumulative
                                                                                                                      from Inception
                                                                              Nine months          Nine Months      October 10, 1995
                                                                                ended                ended                through
                                                                             September 30,        September 30,        September 30,
                                                                                 1998                  1997                 1998
                                                                              -----------          -----------          -----------
                                                                              (unaudited)          (unaudited)          (unaudited)

<S>                                                                           <C>                  <C>                  <C>         
Cash flows from operating activities:
Net Loss ............................................................         $  (658,309)         $  (542,616)         $(3,355,879)
Adjustments to reconcile net loss to
net cash used in operating activities:
  Depreciation and amortization .....................................               4,500                  663               11,058
  Non-cash compensation .............................................                --                   --                 76,238
  Loss on retirement of debt ........................................                --                   --                250,000
  Changes in operating assets and liabilities:
    Increase in accounts receivable .................................            (723,089)             (97,154)            (723,089)
    (Increase) decrease in prepaid expenses .........................              46,333               26,136                 --
    Increase in other assets ........................................            (671,581)                --               (723,567)
    Increase (decrease) in accrued expenses .........................             250,044              (97,016)             312,065
                                                                              -----------          -----------          -----------
Net cash used in operating activities: ..............................          (1,752,102)            (709,987)          (4,153,174)
                                                                              -----------          -----------          -----------
Cash flows from operating activities:
Purchase of fixed assets ............................................                --                (21,920)             (33,539)
Purchase of license .................................................                --                   --             (4,000,000)
                                                                              -----------          -----------          -----------
Net cash used in investing activities ...............................                --                (21,920)          (4,033,539)
Cash flows from financing activities:
Proceeds from private placement .....................................                --                   --              2,100,000
Proceeds from issuance of covertible debt ...........................                --                   --                150,000
Repayment of promissory note ........................................                --                   --               (300,000)
Repayment of bridge loans ...........................................                --                   --             (1,050,000)
Repayment of convertible debt .......................................                --                   --               (100,000)
Proceeds from initial public offering ...............................                --                   --              8,772,815
                                                                              -----------          -----------          -----------
Net cash provided from financing activities .........................                --                   --            $ 9,572,815
                                                                              -----------          -----------          -----------
Net increase (decrease) in cash and cash equivalents ................          (1,752,102)            (731,907)           1,386,102
Cash and cash equivalents, beginning of period ......................           3,138,204            4,268,963                 --
                                                                              -----------          -----------          -----------
Cash and cash equivalents, end of period ............................         $ 1,386,102          $ 3,537,056          $ 1,386,102
                                                                              ===========          ===========          ===========
Supplemental disclosure of cash flow information:
Cash paid for interest ..............................................                --                   --            $    66,665
Cash paid for taxes .................................................                --                   --                   --
Non-cash investing and financing activities:
Issuance of common stock ............................................                --                   --            $     5,800
Purchase of license from affiliate ..................................                --                   --            $ 4,000,000


                             The accompanying notes are an integral part of these financial statements

</TABLE>

                                                                 5

<PAGE>


                      INTERNATIONAL DISPENSING CORPORATION
                          (A Development Stage Company)

                        NOTES TO THE FINANCIAL STATEMENTS
  (Information as of and for the period ended September 30, 1998 is unaudited)


1.   THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

     The balance sheet as of September 30, 1998 and statements of operations and
statements  of cash flows for the six months  then ended have been  prepared  by
International  Dispensing Corporation (the "Company") without audit. The results
should be read in conjunction  with the audited  financial  statements and notes
thereto  included  in the  Company's  Annual  Report on Form 10-KSB for the year
ended December 31, 1997.  Results of operations for the nine month period is not
necessarily  indicative  of the  operating  results  for the full year.  Interim
statements are prepared on a basis consistent with year end statements.

     In the opinion of management,  the unaudited interim  financial  statements
furnished  herein include all adjustments  necessary for a fair  presentation of
the results of operations of the Company.  All such  adjustments are of a normal
recurring nature.

2.   BUSINESS DEVELOPMENTS

     On December 23, 1997,  the Company  entered into an agreement with Well Men
Industrial  Company Limited,  a Hong Kong registered  corporation  ("Well Men"),
pursuant to which Well Men granted to the Company an  exclusive  right to market
and sell in China  certain  Well Men  products.  Well Men also  assigned  to the
Company for the purpose of commercializing  such Well Men products,  all of Well
Men's patents and patent  applications  relating to such Well Men products.  The
agreement  is for an  initial  term of ten  years.  The  Company  has  opened  a
representative  office in China to promote  the sales of these  products  and to
establish the name of the Company. Operations commenced in March, 1998.

                                        6

<PAGE>


ITEM 2

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     The Company  was  incorporated  in Delaware in October  1995 under the name
ReSeal Food  Dispensing  Systems,  Inc.  and  changed its name to  International
Dispensing  Corporation on September 12, 1996. The Company was formed  primarily
for the  purpose  of  commercializing  and  marketing  certain  proprietary  and
patented delivery and dispensing technologies (the "Technologies") licensed from
ReSeal International  Corporation ("RIC"), which Technologies consist of barrier
oriented,  closed delivery and dispensing  systems (the "Systems")  composed of:
(i)   self-adjusting   reservoir   bodies,   (ii)  patented,   barrier  capable,
unidirectional  flow  valves (the "Valve  Assemblies"),  and (iii) as  required,
mechanisms to activate and facilitate the product  delivery and flow  functions.
When  utilized in  dispensing  flowable  food and beverage  products  like milk,
juice,  wine,  etc., the Systems are designed to maintain the sterility,  purity
and freshness of such products  throughout its use life, with the possibility of
eliminating or reducing the need for adding preservatives to the product to keep
it fresh  and/or  refrigeration  throughout  its use  life.  The  self-adjusting
reservoir  body of a System is designed to shrink in proportion to the amount of
the product being dispensed through the Valve Assembly. The Valve Assemblies are
designed to dispense a product without  letting either air or contaminants  flow
back into the internal  reservoir in which the  remaining  product is held.  The
Company  believes that by maintaining  the purity of the product that remains in
the  container,  the  Systems  will  provide  higher  levels  of  freshness  for
significantly  longer periods of time and, if preservatives are eliminated,  the
level of purity, of a wide array of packaged flowable products.

     The  Company  is  primarily  focusing  its  marketing   activities  on  the
application of the licensed  technologies in the Field of Use (as defined below)
as set forth in that certain Amended and Restated License Agreement, between the
Company and RIC, which  encompasses the food and beverage  industries as broadly
defined.  "Field Of Use" means the use of the  Technology to make,  use,  lease,
sell or distribute (a) any food or beverage dispensers or containers that embody
the Technology or the  manufacture,  use,  lease,  sale or distribution of which
uses  the  Technology  (collectively  the  "Product")  intended  for  use  in an
industrial  or  commercial  place  of  business  in the  preparation  of food or
beverage at such place of business,  (b) any food or beverage  Product  intended
for  use  in an  industrial  or  commercial  place  of  business  by a  customer
purchasing  food or beverage at such place of business for consumption on or off
the  premises of such place of  business,  or (c) any food or  beverage  Product
intended  to be sol to or by  food  or  beverage  wholesale  price  discounters,
retailers  and similar  establishments  that sell food or beverage to consumers.
Within such  categories,  the  applications of the licensed  technologies can be
divided into a number of  potential  markets,  including  but not limited to the
following: (i) beverages, which include milk/cream,  coffee, tea (hot and cold),
hot  chocolate,  juices,  sweeteners,  baby formula,  baby food (in puree form),
wines and water;  (ii) foods,  which include soups,  liquid eggs, liquid butter,
sauces,  yogurt,  melted cheese (nachos),  baby foods and hot toppings in liquid
form; and (iii) condiments,  which include ketchup,  barbecue sauce, mayonnaise,
salad dressing, oils and mustard.

     The prototype tooling for production of prototype Valve Assemblies has been
completed.  Upon production of initial  prototype Valve  Assemblies,  such Valve
Assemblies will be subjected to independent laboratory testing. In addition, the
Company has  supplied  specific  prototype  Systems to  customers  for  consumer
testing. Additional customers will also be supplied with prototype systems.

     On November 10, 1997, the Company entered into a Joint Systems  Development
Agreement  with  Packaging  Systems,  L.L.C.,  the parent company of Rapak, Inc.

                                       7

<PAGE>


The resulting products of this strategic alliance will be Bag-in-Box with unique
Valve/Pump  Technology food and beverage  delivery systems that will be marketed
to the food and beverage industries throughout the United States.

     On December 23, 1997,  the Company  entered into an agreement with Well Men
Industrial  Company Limited,  a Hong Kong registered  corporation  ("Well Men"),
pursuant to which Well Men granted to the Company an  exclusive  right to market
and sell in China  certain  Well Men  products.  Well Men also  assigned  to the
Company for the purpose of commercializing  such Well Men products,  all of Well
Men's patents and patent  applications  relating to such Well Men products.  The
agreement  is for an  initial  term of ten  years.  The  Company  has  opened  a
representative  office in China to promote  the sales of these  products  and to
establish the name of the Company. Operations commenced in March, 1998.


                              RESULT OF OPERATIONS

Nine Months Ended September 30, 1998 Compared to 
Nine Months Ended September 30, 1997
------------------------------------


     Revenue - For the nine months ended  September  30,  1998,  the Company had
revenues of $707,750 versus no revenues for the comparable  1997 period.  All of
these  revenues  were derived  from the sale of Well Men products in China.  The
sale of Well Men  products  in China  commenced  in March of 1998.  The  Company
anticipates continuing revenues from the sale of Well Men products over the next
twelve months.

     Gross Margin - For the nine months ended  September  30, 1998,  the Company
had gross margins of $245,655  versus no gross margins for the nine months ended
September 30, 1997. All of these gross margins derived from the sale of Well Men
products in China. The margins for the last three-month period of the nine month
period declined slightly from the margins experienced in the first six months of
the period due to price promotion activity. The Company anticipates that margins
will return to the levels experienced in the first six-month period.

     Operating  Expenses - For the nine months ended  September  30,  1998,  the
Company had operating expenses of $981,301 versus operating expenses of $690,041
for the nine month period ended  September 30, 1997.  This increase of $291,260,
or 42.2% over the comparable  period last year is due primarily to the Company's
accelerated  investment in research and development of its core technology,  and
its start-up costs associated with the Well Men Agreement.

     Net Loss - For the nine months ended  September 30, 1998, the Company had a
net loss of  $658,309  versus a net loss of $542,616  for the nine months  ended
September  30, 1997.  This  increase in net loss of $115,693,  or 21.3% over the
comparable  period  last  year is due  primarily  to the  Company's  accelerated
investment in research and development of its core technology,  and its start-up
cost associated with the Well Men Agreement.

                                       8

<PAGE>


Three Months Ended September 30, 1998 Compared To
Three Months Ended September 30, 1997
-------------------------------------

     Revenue - For the three months ended  September  30, 1998,  the Company had
revenues of $375,000 versus no revenues for the comparable  1997 period.  All of
these  revenues  were derived  from the sale of Well Men products in China.  The
sale of Well Men products  commenced in March of 1988.  The Company  anticipates
continuing  revenues  from  the sale of Well Men  products  over the next twelve
months.

     Gross Margin - For the three months ended  September 30, 1988,  the Company
had gross margins of $100,000 versus no gross margins for the three months ended
September  30,  1997.  All of these gross  margins were derived from the sale of
Well Men products in China.

     Operating  Expenses - For the three months ended  September  30, 1998,  the
Company had operating expenses of $331,607 versus operating expenses of $251,066
for the three month period ended  September 30, 1997.  This increase of $80,541,
or 32.1% over the comparable  period last year is primarily due to the Company's
accelerated investment in research and development of its core technology.

     Net Loss - For the three months ended September 30, 1998, the Company had a
net loss of $216,029  versus a net loss of $202,628  for the three  months ended
September  30,  1997.  This  increase in net loss of  $13,401,  or 6.6% over the
comparable  period last year,  resulted from expenses incurred by the Company in
connection  with its accelerated  investment in research and  technology,  which
were  partially  offset by revenues and gross  margins  generated by the sale of
Well Men products in China.

     The Company has reported  a net loss from  operations  of $3,355,879  since
inception.

                               Financial Condition

     As  reflected  in the  financial  statements,  the Company has  experienced
continuing net losses and negative cash flows from operations  through September
30,  1998.  The  Company's  continuing  existence is dependent on its ability to
attain profitable  operations.  As of September 30, 1998, the Company had liquid
assets of $1,386,102.

     In a private  placement  concluded in February 1996,  the Company  obtained
aggregate  capital  of  $2,250,000  through  the  issuance  by  the  Company  of
convertible    notes,    options    and    the    sale    of    Common    Stock.

     In October 1996, the Company sold, in an initial public  offering,  833,334
Units,  each Unit  consisting  of two shares of Common Stock and two  redeemable
Class A purchase  warrants for $12.00 per Unit. Each warrant entitles the holder
to purchase  one share of the  Company's  Common Stock for $7.00 during the four
year period  commencing  October 3, 1997.  The  warrants are  redeemable  by the
Company at $.05 per warrant any time after October 3, 1997 if certain conditions
are met.  The net  proceeds,  which  the  Company  received  from the  offering,
amounted to approximately $8.8 million.

                                       9

<PAGE>


     The Company  believes that it has adequate  funds  available to conduct and
continue its business and does not foresee needing to raise  additional funds in
the next 12 months.


PART II - OTHER INFORMATION

Item 1.      Legal Proceedings
                      None

Item 2.      Changes in Securities and Use of Proceeds
                      None

Item 3.      Defaults upon Senior Securities
                      None

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

     An Annual Meeting of  Stockholders of the Company was held on July 9, 1998.
The  stockholders   approved  an  amendment  to  the  Company's  Certificate  of
Incorporation to provide for a classified  Board of Directors of 3 classes.  The
number of votes  cast in favor of the  amendment  was  4,869,845,  the number of
votes cast against was 2,693,400 and the number of  abstentions  was 75,000.  In
addition,  Claude  Lee was  elected  as a Class 1  director  to serve for a term
expiring at the 1999 Meeting of Stockholders (8,479,282 shares voted in favor of
his election and 1,000 shares  withholding  votes);  George Kriste and Jay Rosen
were elected as Class 2 directors to serve for a term  expiring at the year 2000
Annual Meeting of Stockholders  (8,247,282 shares voting in favor of election of
George Kriste,  233,000 shares  withholding  votes for George Kriste,  8,405,282
shares voted in favor of the election of Jay Rosen and 75,000 shares withholding
votes for Jay Rosen); and Jon D. Silverman and Gregory B. Abbott were elected as
Class 3 directors  to serve until the year 2001 Annual  Meeting of  Stockholders
(8,405,282  shares voted in favor of the  election of each of Messrs.  Silverman
and Abbott and 75,000 shares withholding votes in favor of their election).

     The stockholders also approved a proposal to approve 1998 Stock Option Plan
of the Company.  The number of votes cast in favor was 5,138,245,  the number of
votes cast  against  was  2,486,800  and the number of  abstentions  was 13,200.
Finally,  the  stockholders  approved a proposal to approve the  Director  Stock
Option Plan of the  Company.  The number of votes cast in favor of the  proposal
was  7,447,555,  the number of votes cast  against was 198,850 and the number of
abstentions was 3,575.

Item 5.      Other Information
                      None

Item 6.      Exhibits and Reports on Form 8-K
                      (a)    Exhibit 27 - Financial Data Schedule
                      (b)    No  reports  on  Forms 8-K  have been filed for the
                             quarter for which this report is being filed.

                                       10

<PAGE>


                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                      INTERNATIONAL DISPENSING
                                      CORPORATION



Date: October 21, 1998                /s/ Jon D. Silverman
                                      --------------------
                                      Jon D. Silverman
                                      Chairman of the Board, Chief Executive
                                        Officer and President
                                      (Principal Executive Officer)



Date: October 21, 1998                /s/ Jeffrey D. Lewenthal
                                      ------------------------
                                      Jeffrey D. Lewenthal
                                      Chief Financial Officer and Treasurer
                                      (Principal Accounting and Financial
                                      Officer)