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, 1997

[ ]	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, 1997
Common stock, par value $.05 per share                    13,283,906


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, 1997 and August 31, 1997
<TABLE>
<CAPTION>

                                           November 30,         August 31,
                                              1997                 1997
                                          _____________      _____________


<S>                                    <C>                     <C>
Cash                                   $      509,861            426,174
Trade accounts receivable, net              1,194,933          1,235,195
Contract service work in process            1,015,980            579,137
Other current assets                          266,331            322,291
                                          ____________       ____________
   Total current assets
                                            2,987,105          2,562,797
                                          ____________       ____________


Property and equipment                      2,948,749          2,714,181
Accumulated depreciation and
  amortization                             (1,247,354)        (1,167,738)
                                          ____________       ____________
   Net property and equipment               1,701,395          1,546,443
                                          ____________       ____________
Capitalized software development
   costs, net                                 515,524            499,444
Other assets                                  237,738            238,342
                                          ____________       ____________
Total assets                                5,441,762          4,847,026
                                          ============       ============

Note payable                                  263,000             78,000
Accounts payable                              336,958            247,123
Other current liabilities                     504,733            442,765
                                          ____________       ____________
   Total current liabilities                1,104,691            767,888
                                          



Obligation under capital lease,
   net of current installments                 69,919                  0
Long-term debt, net of current
   installments                               327,835            333,618
                                          ____________       ____________
Total liabilities                           1,502,445          1,101,506
                                          ____________       ____________

Common stock                                  671,552            671,552
Additional paid-in capital                 11,473,561         11,473,561
Unamortized deferred compensation             (27,902)           (30,048)
Accumulated deficit                        (8,099,009)        (8,290,660)
Treasury stock                                (78,885)           (78,885)
                                          _____________      ____________
   Total shareholders' equity               3,939,317          3,745,520
                                          _____________      ____________
Total liabilities and shareholders'
   equity                              $    5,441,762          4,847,026
                                          =============      ============
</TABLE>

See accompanying notes to condensed 
  financial statements.


<PAGE>  2

TMS, Inc.
Condensed Statements of Operations
Three Months Ended November 30, 1997 and 1996
<TABLE>
<CAPTION>


                                                  1997            1996
                                                  ____            ____
<S>                                       <C>                <C>
Revenue:
  Licensing and royalties                 $    1,153,170        650,520
  Software development services                  452,764        429,338
  Document conversion services                   448,210        125,038
                                             ____________    ____________
                                               2,054,144      1,204,896
                                             ____________    ____________
Operating costs and expenses:
  Cost of licensing and royalties                206,173        251,238
  Cost of software development services          227,646        206,454
  Cost of document conversion services           272,359        107,082
  Selling, general and administrative
     expenses                                  1,100,415        808,351
                                             ____________    ____________
                                               1,806,593      1,373,125
                                             ____________    ____________

Operating (loss) income                          247,551       (168,229)

Other (expense) income, net                      (11,031)        11,817
                                             ____________     ___________

Income (loss) before income taxes                236,520       (156,412)

Income tax expense                                44,869            800
                                             ____________     ___________

Net income (loss)                         $      191,651       (157,212)
                                             ============     ===========
Net income (loss) per common and common
  equivalent share                        $       0.01           (0.01)
                                             ============     ===========
Weighted average common and common 
   equivalent shares                          13,827,933      13,312,717
                                             ============     ===========

</TABLE>
See accompanying notes to condensed 
  financial statements.



<PAGE>  3

TMS, Inc.
Condensed Statements of Cash Flows
Three Months Ended November 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                    1997            1996
                                                    ____            ____


<S>                                          <C>                 <C>
Net cash flows provided by (used in)
   operating activities                      $     155,663         (21,696)
                                                ___________     ___________

Cash flows from investing activities:
   Purchases of property and equipment            (137,962)        (32,056)
   Capitalized software development costs         (111,833)        (78,336)
   Patent costs                                          0          (4,128)
   Proceeds from sale of equipment                       0           7,245
                                                ___________      __________
Net cash used in investing activities             (249,795)       (107,275)
                                                ___________      __________



Cash flows from financing activities:
   Repayment of long-term debt                      (7,181)         (5,098)
   Proceeds from short-term note payable           185,000               0
   Repayments of short-term note payable                 0               0
   Issuance of common stock                              0          35,750
                                                ___________      __________
Net cash provided by (used in) 
  financing activities                             177,819          30,652
                                                ___________      __________

Net increase (decrease) in cash                     83,687         (98,319)

Cash at beginning of period                        426,174         546,745
                                                ___________      __________
Cash at end of period                        $     509,861         448,426
                                                ===========      ==========
</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, 1997.

The unaudited interim financial statements reflect all adjustments that 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 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 1998 was $2,054,144 compared to
$1,204,896 for the same quarter of fiscal 1997, an increase of $849,248 or 
70%. 

Licensing and royalties revenue for the first quarter of fiscal 1998 increased 
$502,650, or 77%, over licensing and royalties revenue for the same quarter of 
fiscal 1997. First quarter revenue from imaging products increased $400,678, 
or 125%, over the same period last year. Approximately 70% of the increase in 
imaging revenue resulted from sales of the Prizm Plug-in product that was 
released early in the second quarter of fiscal 1997 and targets corporate 
intranet and Internet users.  The remaining 30% of the increase was primarily 
attributable to additional royalties from customers that use the Company's 
ViewDirector product.  First quarter revenue from image enhancement products 
(e.g. ScanFix, FormFix) increased $71,780, or 27%, over last year.  Increased 
revenue for image enhancement occurred across all major product lines and is 
primarily attributable to two additional salespersons that the Company hired 
late in fiscal 1997 to focus on image enhancement sales and a joint marketing 
program with Caere Corporation, a leader in Optical Character Recognition 
(OCR) technology.  Caere uses the Company's ScanFix technology as part of 
their OCR product offerings. 

<PAGE>  5

Software development service revenue for the first quarter of fiscal 1998 was 
$452,764 compared to $429,338 for the first quarter of fiscal 1997, an 
increase of $23,426 or 5%. At November 30, 1997, the Company had a software 
development service revenue backlog of approximately $580,000.

Document conversion service revenue for the first quarter of fiscal 1998 was 
$448,210 compared to $125,038 for the first quarter of fiscal 1997, an 
increase of $323,172, or 258%. Approximately 55%, or $245,000, of the first 
quarter document conversion service revenue came from one customer. The 
Company expects that services to this customer will be substantially complete 
early in the second quarter, but has secured another contract that will help 
replace the level of revenue reported for the first quarter. At November 30, 
1997, the Company had a document conversion service revenue backlog of 
approximately $665,000. 


Operating Costs and Expenses

Total operating costs and expenses for the quarter ended November 30, 1997,
were $1,806,593 compared to $1,373,125 for the same quarter in fiscal 1997, an 
increase of $433,648 or 32%. 

The cost of licensing and royalties decreased $45,065, or 18%, for the first 
quarter of fiscal 1997, compared to the same period a year ago. The gross 
profit margin for licensing and royalties was 82% and 61% for the three months 
ended November 30, 1997 and 1996, respectively.  The increase in gross profit 
margin is partially attributable to the 36% increase in royalty revenue, which 
results in little or no cost to the Company.  Additionally, the Company has 
expanded product offerings by using its toolkits to build complete software 
applications to address an expanding marketplace of software users.  First 
quarter revenue from complete software applications was mostly derived from 
companies purchasing licenses to install multiple copies of the Company's 
software throughout their organizations. Revenue from multiple licenses does 
not result in a proportional increase in unit costs and thus had a significant 
impact on the Company's first quarter gross margins.     

The cost of software development services increased $21,192, or 10%, for the 
first quarter of fiscal 1998, compared to the same period a year ago. The 
gross profit margin for software development services was 50% and 52% for the 
three months ended November 30, 1997 and 1996, respectively. 

The cost of document conversion services increased $165,277, or 154%, for the 
first quarter of fiscal 1998, compared to the same period a year ago. The 
gross profit margin for document conversion services was 39% and 14% for the 
three months ended November 30, 1997 and 1996, respectively.  The increase in 
cost represents the hiring of additional personnel to meet service contract 
requirements.  The increase in gross profit margin is the result of the 
document conversion group operating at or near full capacity during the fiscal 
1998 first quarter. In the prior year first quarter, the Company was in the 
process of rebuilding its service backlog and had to maintain a certain number 
of employees and level of overhead to be responsive to new opportunities. 

Selling, general and administrative expenses for the first quarter of fiscal 
1998 increased $292,064, or 36%, when compared to the first quarter of fiscal 
1997. The increase in costs is almost entirely due to personnel related 
expenses.  As mentioned in the Company's 10-KSB for the fiscal year ending 
August 31, 1997, the Company made several market adjustments to salaries in 
addition to regular merit and cost of living increases.  The Company also 
improved employee benefit offerings by implementing a 401(k)-retirement plan 
matching program and absorbing 25% more of the cost of employee medical 
insurance premiums. The majority of these changes occurred at the beginning of 
the fiscal 1997 third quarter.  During the first quarter of fiscal 1998, the 
Company implemented an incentive compensation plan that provides cash rewards 
to all employees if certain revenue and profit goals are achieved.  The 
Company recognized approximately $45,000 related to the incentive plan during 
the fiscal 1998 first quarter. All of the increases in personnel related costs 
were deemed necessary to retain and attract competent technical, 
sales/marketing and management staff.  Management expects the employment 
environment will continue to remain competitive, which may adversely impact 
future earnings through increased costs. 


<PAGE>  6

Income Taxes

Deferred tax expense of $89,878 for the quarter ended November 30, 1997, was
offset by deferred tax benefit of approximately $45,000 attributable to the 
decrease 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. 

Net Income/Loss 

Net income for the first quarter of fiscal 1998 was $191,651 or $.01 per
share, compared to a net loss of $157,212, or $.01 per share, for the first 
quarter of fiscal 1997. The 70% increase in revenue resulting in improved 
gross margins for licensing and royalties and document conversion services, 
were the primary factors that resulted in a significant improvement in 
earnings over the prior year.  

FINANCIAL CONDITION

Working capital, at November 30, 1997 was $1,882,414 with a current ratio of  
2.7:1 compared to $1,794,909 with a current  ratio of 3.3:1, at August 31, 
1997. Net cash provided by operations for the three months ended November 30, 
1997 was $155,663 compared to net cash used in operations of $21,696 for the 
same period last year. The current quarter pre-tax profit was the primary 
reason for improved operating cash flow over the same period last year. Net 
cash used in investing activities for the first three months of fiscal 1998 
was $249,795 compared to $107,275 for the same period in fiscal 1997. The 
increase in investing activities primarily relates to additional equipment 
needed to meet requirements under document conversion service contracts.

During the quarter ended November 30, 1997, the Company borrowed $185,000 
against its $800,000 line of credit for general operating purposes. This 
resulted in a balance of $263,000 outstanding against the line of credit at 
November 30, 1997. The Company also entered into a $100,000 capital lease 
obligation to obtain the scanners needed to meet requirements under document 
conversion contracts. 

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 and technical 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, 1997.  



<PAGE>  7

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.

      January 8, 1998        /s/ Arthur D. Crotzer
Date: ____________________       _______________________
                                 Chief Executive Officer
                                 

      January 8, 1998        /s/ Deborah D. Mosier 
Date: ____________________       _______________________
                                 Chief Financial Officer