U.S.SECURITIES AND EXCHANGE COMMISSION
                          Washington,  D.C. 20549


                                FORM 10-QSB


(Mark One)

[X]  Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act 
     of 1934
	
        For the quarterly period ended:                    November 30, 1996

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

   	For the transition period from ____________ to ____________

                      Commission File Number  0-18250

                                   TMS, Inc.
        (Exact name of small business issuer as specified in its charter)

	   OKLAHOMA                                       91-1098155
(State or other jurisdiction of        (I.R.S. Employer Identification Number)
incorporation or organization)



                         206 West Sixth Street
                         Post Office Box 1358
                      Stillwater, Oklahoma  74075
                  (Address of principal executive offices)
        Issuer's telephone number, including area code: (405) 377-0880


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 [ ]


State the number of shares outstanding of each of the issuer's classes of 
common equity, as of the latest practicable date:

Title of Each Class                           Outstanding at November 30, 1996
Common stock, par value $.05 per share                    13,312,717


Transitional Small Business Disclosure Format(check one):
Yes [ ]  No [X]


<PAGE>  1
                                PART I - FINANCIAL INFORMATION



Item 1. Financial Statements


TMS, Inc.
Condensed Balance Sheets
November 30, 1996 and August 31, 1996
<TABLE>
<CAPTION>

                                               November 30,       August 31,
                                                  1996               1996
                                               -------------     -------------


<S>                                           <C>                  <C>
Cash                                          $     448,426           546,745
Trade accounts receivable, net                    1,227,249         1,374,079
Contract service work in process                    321,839           209,583
Other current assets                                321,697           350,157
                                               -------------     -------------
   Total current assets                           2,319,211         2,480,564
                                               -------------     -------------


Property and equipment                            2,410,675         2,384,267
Accumulated depreciation and amortization          (964,130)         (901,928)
                                               -------------     -------------
   Net property and equipment                     1,446,545         1,482,339
                                               -------------     -------------

Capitalized software development costs, net         519,243           509,867
Other assets                                        233,632           235,615
                                               -------------     -------------

Total assets                                      4,518,631         4,708,385
                                               =============     =============



Current liabilities                                 578,742           642,383

Long-term debt, net of current installments         350,372           355,801
                                               -------------     -------------
     Total liabilities                              929,114           998,184
                                               -------------     -------------


Common stock                                        665,636           660,692
Additional paid-in capital                       11,447,486        11,416,680
Unamortized deferred compensation                   (32,194)          (32,970)
Accumulated deficit                              (8,491,411)       (8,334,201)
                                               -------------     -------------
   Total shareholders' equity                     3,589,517         3,710,201
                                               -------------     -------------


Total liabilities and shareholders' equity     $  4,518,631         4,708,385
                                               =============     =============
</TABLE>


See accompanying notes to condensed 
financial statements.


<PAGE>  2

TMS, Inc.
Condensed Statements of Operations
Three Months Ended November 30, 1996 and 1995
<TABLE>
<CAPTION>


                                                    1996              1995
                                               -------------     -------------
<S>                                            <C>                  <C>
Revenue:

   Licensing and royalties                     $    650,521         1,086,096
   Software development services                    429,338           230,167
   Document conversion services                     125,038           287,185
                                               -------------     -------------
                                                  1,204,897         1,603,448
                                               -------------     -------------
Operating costs and expenses:

   Cost of licensing and royalties                  242,114           200,489
   Cost of software development services            206,454           149,046
   Cost of document conversion services             107,081           206,518
   Selling, general and administrative expenses     808,349           848,799
   Research and development                           9,125            30,173
                                               -------------     -------------
                                                  1,373,123         1,435,025
                                               -------------     -------------

Operating (loss) income                            (168,226)          168,423

Other income, net                                    11,817            22,847
                                               -------------     -------------

(Loss) income before income taxes                  (156,409)          191,270

Income tax expense                                      800            14,913
                                               -------------     -------------

Net (loss) income                              $   (157,209)          176,357
                                               =============     =============


Net (loss) income per common and common
   equivalent share                                   (0.01)             0.01
                                               =============     =============

Weighted average common and common 
   equivalent shares                             13,312,717        13,091,519
                                               =============     =============

</TABLE>

See accompanying notes to condensed 
   financial statements.



<PAGE>  3

TMS, Inc.
Condensed Statements of Cash Flows
Three Months Ended November 30, 1996 and 1995
<TABLE>
<CAPTION>


                                                    1996              1995
                                               -------------     -------------


<S>                                                <C>               <C>
Net cash flows (used in) provided by 
   operating activities                             (21,696)          342,807
                                               -------------     -------------


Cash flows from investing activities:
   Purchases of property and equipment              (32,056)          (28,019)
   Capitalized software development costs           (78,336)         (113,318)
   Patent costs                                      (4,128)          (17,814)
   Proceeds from sale of equipment                    7,245             3,635
                                               -------------     -------------
   Net cash used in investing activities           (107,275)         (155,516)
                                               -------------     -------------

Cash flows from financing activities:
   Repayment of long-term debt                       (5,098)           (6,289)
   Proceeds from short-term note payable                 -            318,000
   Repayments of short-term note payable                 -           (393,000)
   Issuance of common stock                          35,750            11,696
                                               -------------     -------------
   Net cash provided by (used in) 
     financing activities                            30,652           (69,593)
                                               -------------     -------------

Net increase (decrease) in cash                     (98,319)          117,698


Cash at beginning of period                         546,745           404,238
                                               -------------     -------------

Cash at end of period                               448,426           521,936
                                               =============     =============
</TABLE>

See accompanying notes to condensed 
  financial statements.


<PAGE>  4

TMS, Inc.
Notes to Condensed Financial Statements



Unaudited Interim Condensed Financial Statements
------------------------------------------------
The unaudited interim condensed financial statements and related notes were
prepared by TMS, Inc.(the Company).  Certain information and footnote 
disclosures normally included in financial statements prepared in accordance 
with generally accepted accounting principles have been condensed or omitted 
pursuant to rules and regulations established by the Securities and Exchange 
Commission (SEC).  The accompanying unaudited interim condensed financial 
statements should be read in conjunction with the audited financial statements 
and related notes included in the Company's Form 10-KSB Annual Report  for the 
fiscal year ended August 31, 1996.

The unaudited interim financial statements reflect all adjustments which are, 
in the opinion of management, necessary for a fair presentation of financial 
position, results of operations and cash flows for the interim periods 
presented. All adjustments are normal and recurring.   

Interim results are subject to year-end adjustments and audit by independent 
auditors.  The financial data for the interim periods may not necessarily be 
indicative of the results expected for the year.


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

This analysis of the Company's results of operations and financial condition 
contains certain forward-looking statements regarding the Company's business 
and prospects that are based upon numerous assumptions about future conditions 
which may ultimately prove to be inaccurate and actual events and results may 
materially differ from anticipated results described in such statements.  The 
Company's ability to achieve such results is subject to certain risks and 
uncertainties, such as those inherent generally in the retail and computer 
software industries and the impact of competition, pricing and changing market 
conditions.  The Company disclaims, however, any intent or obligation to 
update these forward-looking statements.  As a result, the reader is cautioned 
not to place reliance on these forward-looking statements. 


Revenue
-------
Total revenue for the first quarter of fiscal 1997 was $1,204,897 compared to
$1,603,448 for the same quarter of fiscal 1996, a decrease of $398,551 or 25%. 

Licensing and royalties revenue for the first quarter of fiscal 1997 decreased 
$435,575, or 40% over licensing and royalties revenue for the same quarter of 
fiscal 1996. First quarter revenue from text products decreased $121,881, or 
68%, from the same quarter last year. As mentioned in the Company's 10-KSB for 
the year ended August 31, 1996, revenue from text products is expected to 
continue to decline because future development of this technology will occur 
on a customer contract basis and be reported as software development service 
revenue. Revenue from imaging products (e.g. ViewDirector) decreased $300,106, 
or 48%, over last year, while revenue from image enhancement products (e.g. 
FormFix, ScanFix) remained flat at approximately $265,000 for both quarters. 
The decreases in imaging and image enhancement product revenues may be 
attributed to competition and price erosion for the Company's imaging 
technology, and late releases of the Company's ViewDirector Plug-in and 
FormFix products which hindered revenue growth in both product groups. The 
ViewDirector Plug-in and FormFix final products were released early in the 
second quarter.  

Software development service revenue for the first quarter of fiscal 1997 was 
$429,338 compared to $230,167 for the first quarter of fiscal 1996, an 
increase of $199,171 or 87%. During the first quarter of fiscal 1997, the 

<PAGE>  5

software development services group was operating at full capacity and at 
November 30, 1996 had a service revenue backlog of approximately $500,000. 
During the first quarter of fiscal 1996, the Company was in the process of 
rebuilding it's software development service business.  

Document conversion service revenue for the first quarter of fiscal 1997 was 
$125,038 compared to $287,185 for the first quarter of fiscal 1996, a decrease 
of $162,147, or 56%. During the first quarter of fiscal 1996, service under 
the Toro contract, which was substantially completed during March of 1996, 
accounted for approximately $188,000, or 66% of the document conversion 
revenue. The Company has secured new document conversion service contracts, 
but not at the level of revenue provided under the Toro contract. The Company 
has a sales and marketing plan underway to obtain additional document 
conversion service opportunities, but there can be no assurance as to when 
additional document conversion service contracts will be secured, or if 
revenues from any new contracts will replace the level of revenue recognized 
for Toro. Management reduced the number of document conversion employees 
during the first quarter of the current fiscal year to help offset the decline 
in revenues and is prepared to make additional cost cutting measures where 
necessary.   


Operating Costs and Expenses
----------------------------
Total operating costs and expenses for the quarter ended November 30, 1996,
were $1,373,123 compared to $1,435,025 for the same quarter in fiscal 1996, a 
decrease of $61,902 or 4%. 

The cost of licensing and royalties increased $41,625, or 21%, for the first 
quarter of fiscal 1997, compared to the same period a year ago. The gross 
profit margin for licensing and royalties was 63% and 82% for the three months 
ended November 30, 1996 and 1995, respectively.  The decrease in gross profit 
margin is primarily attributable to the 40% decrease in licensing and royalty 
revenue and more engineering time devoted to product maintenance. 

The cost of software development services increased $57,408, or 39%, for the 
first quarter of fiscal 1997, compared to the same period a year ago. The 
gross profit margin for software development services was 52% and 35% for the 
three months ended November 30, 1996 and 1995, respectively.  The increased 
cost of software development services is primarily attributable to the 
additional personnel   needed to satisfy contract requirements.  Improved 
gross margins are a direct result of the engineering service group operating 
at full capacity during the fiscal 1997 first quarter.  

The cost of document conversion services decreased $99,437, or 48%, for the 
first quarter of fiscal 1997, compared to the same period a year ago. The 
gross profit margin for document conversions services was 14% and 28% for the 
three months ended November 30, 1996 and 1995, respectively.  The decrease in 
costs is the direct result of management reducing the number of document 
conversion employees to help offset the decline in revenues. Despite the 
decrease in costs, gross margins declined over fiscal 1996 first quarter 
levels because of the number of employees and level of overhead that is 
required to be maintained in order to be responsive to new projects. 
Management is prepared to make additional cost reductions if revenue growth 
from the document conversion service division is not achieved. 

Selling, general and administrative expenses for the first quarter of fiscal 
1997 decreased $40,450, or 5%, when compared to the first quarter of fiscal 
1996. The decrease can be attributed to approximately $115,000 in non-
recurring legal, accounting and other professional fees incurred during the 
prior year first quarter for the merger with Sequoia Data Corporation. The 
100% decrease in merger costs over the prior year was partially offset by an 
additional $75,000, or 70%, investment in tradeshow and advertising. 
Management expects second quarter  marketing costs to decrease approximately 
50% over fiscal 1997 first quarter levels.  

Research and development costs for the first quarter of fiscal 1996 decreased 
$21,048, or 70% from the same period a year ago.  The decrease is primarily 

<PAGE>  6

attributable to the Company focusing it's resources on product maintenance 
releases and new products and enhancements to existing products that are 
capitalized for financial accounting and reporting purposes. The Company 
capitalized software development costs of $78,336 and $113,318, during the 
first quarter of fiscal 1997 and 1996, respectively.  

Income Taxes
------------
Deferred tax benefits of approximately $60,000 for the quarter ended November
30, 1996, was offset by deferred tax expense of approximately $60,000 
attributable to the increase in the valuation allowance for deferred tax 
assets.  The Company assesses the realizability of deferred tax assets at 
least quarterly, and adjusts the valuation allowance to reflect the future 
benefits that will more likely than not be realized from those deferred tax 
assets.  The current tax expense of $800 recognized for the fiscal 1997 first 
quarter represents state taxes paid.  

Net Loss/Income 
---------------
Net loss for the first quarter of fiscal 1997 was $157,209, or $.01 per share,
compared to net income of $176,357, or $.01 per share, for the first quarter 
of fiscal 1996. The 25% decrease in revenue and lower gross margins for 
licensing and royalties and document conversion services, were the primary 
factors that caused the fiscal 1997 first quarter loss.   


                             FINANCIAL CONDITION

Working capital, at November 30, 1996 was $1,740,469 with a current ratio of  
4.0:1 compared to $1,838,181, with a current  ratio of 3.9:1, at August 31, 
1996. Net cash used in operations for the three months ended November 30, 1996 
was $21,696 compared to net cash provided by operations of $342,807 for the 
three months ended November 30, 1995. The current quarter net loss and slower 
customer billing cycles associated with custom software services were the 
primary factors that affected operating cash flows. Net cash used in investing 
activities for the first three months of fiscal 1997 was $107,275 compared to 
$155,516 for the same period in fiscal 1996. 

During the quarter ended November 30, 1996, the Company did not borrow against 
it's $800,000 line of credit. At November 30, 1996, the Company's long-term 
debt was $350,372.  Current obligations under the long-term debt total 
$21,156.

The Company believes that operating cash flow and the $800,000 operating line 
of credit will be adequate to meet its current obligations and current 
operating and capital requirements. The funding of long-term needs is 
dependent upon increased revenue and profitability and obtaining funds through 
outside debt and equity sources. The funding for long-term needs includes 
funding for increased product development, expanded sales staff and adequate 
promotion of the Company and its products. 


                         PART II - OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

Reports on Form 8-K
-------------------

None



Exhibits

Exhibit No.     Name of Exhibit

        27	Financial Data Schedule as of and for the three month period 
                ending November 30, 1996.  




                                   SIGNATURES
	

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


TMS, Inc.


                                 /s/ Maxwell Steinhardt
Date: January 6, 1997            _______________________
                                 Maxwell Steinhardt
                                 Chief Executive Officer

                                 /s/ Deborah D. Mosier
Date: January 6, 1997            _______________________
                                 Deborah D. Mosier                            
                                 Chief Financial Officer