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:                      May 31, 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 May 31, 1997
Common stock, par value $.05 per share                    13,431,049


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
May 31, 1997 and August 31, 1996
<TABLE>
<CAPTION>


                                           May 31,       August 31, 
                                            1997            1996
                                        ------------   ------------

<S>                                   <C>              <C>
Cash                                  $    421,343        546,745 
Trade accounts receivable, net           1,319,089      1,374,079 
Contract service work in process           425,361        209,583 
Other current assets                       351,973        350,157 
                                        ------------   ------------
  Total current assets                   2,517,766      2,480,564 
                                        ------------   ------------

Property and equipment                   2,608,093      2,384,267
Accumulated depreciation and
   amortization                         (1,096,406)      (901,928)
                                        ------------   ------------
   Net property and equipment            1,511,687      1,482,339 
                                        ------------   ------------
Capitalized software development
   costs, net                              501,147        509,867 
Other assets                               237,537        235,615 
                                        ------------   ------------

Total assets                             4,768,137      4,708,385
                                        ============   ============

Current liabilities                        621,422        642,383 

Long-term debt, net of current
   installments                            339,252        355,801
                                        ------------   ------------

Total liabilities                          960,674        998,184
                                        ------------   ------------

Common stock                               672,058        660,692 
Additional paid-in capital              11,473,055     11,416,680 
Unamortized deferred compensation          (31,121)       (32,970)
Accumulated deficit                     (8,306,529)    (8,334,201)
                                        ------------   ------------
Total shareholders' equity               3,807,463      3,710,201 
                                        ------------   ------------

Total liabilities and shareholders'
   equity                             $  4,768,137      4,708,385 
                                        ============   ============
</TABLE>

See accompanying notes to condensed 
  financial statements.

<PAGE>  2

TMS, Inc.
Condensed Statements of Operations
Three and Nine Months Ended May 31, 1997 and 
May 31, 1996
<TABLE>
<CAPTION>


                                 Three Months Ended         Nine Months Ended
                                  1997        1996         1997         1996
                              ----------    ---------   ---------    ---------
<S>                          <C>           <C>         <C>         <C>
Revenue:
 Licensing and royalties     $  1,041,377     696,905   2,609,059   2,775,181 
 Software development
  services                        164,373     243,101   1,010,639     647,775 
 Document conversion services     244,124     229,349     503,122     792,670 
                                ----------   ---------  ----------  ----------

                                1,449,874   1,169,355   4,122,820   4,215,626 
                                ----------  ----------  ----------  ----------
Operating costs and expenses:
 Cost of licensing and
  royalties                       255,953     237,761     768,390     740,047 
 Cost of software development
  services                        193,864     157,708     618,878     434,536 
 Cost of document conversion
  services                        123,127     180,786     314,767     599,387 
 Selling, general and
  administrative expenses         854,273     756,655   2,407,820   2,334,546 
                                ----------  ----------  ---------   ---------
                                1,427,217   1,332,910   4,109,855   4,108,516 
                                ----------  ----------  ---------   ---------

Operating (loss) income            22,657    (163,555)     12,965     107,110

Other income, net                   9,900       5,182      32,007      38,292 
                                ----------   ----------  ---------   ---------

Income (loss) before
  income taxes                     32,557    (158,373)     44,972     145,402 

Income tax expense (benefit)       17,300     (36,849)     17,300    (209,279)
                               -----------   ----------  ---------   ---------


Net income (loss)            $     15,257    (121,524)     27,672     354,681 
                               ===========   ==========  =========  ==========

Net (loss) income per common
 and common equivalent share $       0.00       (0.01)       0.00        0.03
                               ===========   ==========  ==========  ==========

Weighted average common and
 common equivalent shares      14,053,463   12,445,226  14,100,888 14,010,908 
                              ===========   ==========  ========== ==========
</TABLE>

See accompanying notes to condensed 
  financial statements.



<PAGE>  3

TMS, Inc.
Condensed Statements of Cash Flows
Nine Months Ended May 31, 1997 and 
May 31, 1996
<TABLE>
<CAPTION>


                                               1997           1996
                                               ----           ----
<S>                                       <C>              <C>
Net cash flows (used in) provided
 by operating activities                  $  285,991        415,846 
                                           ----------     ----------

Cash flows from investing activities:
 Purchases of property and equipment        (229,375)      (164,944)
 Capitalized software development costs     (235,240)      (278,422)
 Patent costs                                 (6,223)        (4,627)
 Proceeds from sale of equipment               7,245          3,635 
                                           ----------     ----------
Net cash used in investing activities       (463,593)      (444,358)
                                           ----------     ----------

Cash flows from financing activities:
  Repayment of long-term debt                (15,541)       (16,030)
  Proceeds from short-term note payable           -         468,000 
  Repayments of short-term note payable           -        (543,000)
  Issuance of common stock                    67,741        120,794 
                                           ----------     ----------
Net cash provided by (used in) 
  financing activities                        52,200         29,764 
                                           ----------     ----------

Net increase (decrease) in cash             (125,402)         1,252 

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

Cash at end of period                     $  421,343        405,490
                                           ==========     ==========
</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 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 third quarter of fiscal 1997 was $1,449,874 compared to 
$1,169,355 for the same period in fiscal 1996, an increase of $280,519 or 24%. 
Total revenue for the first nine months of fiscal 1997 decreased 2% to 
$4,122,820 as compared to the $4,215,626 reported for the same period in fiscal
1996. 

<PAGE>  5

Licensing and royalties revenue, when compared to fiscal 1996, increased 
$344,472 or 49%, for the third quarter of fiscal 1997, and decreased $166,122, 
or 6%, for the first nine months of the current year. Third quarter text 
product revenue was fairly consistent for both the current and prior year third
quarter, while text product revenue for the first nine months of fiscal 1997 
decreased $111,754, or 33%, from the same period 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. For the third quarter of the current year, revenue
from imaging products (e.g. ViewDirector) increased $248,724, or 64%, and 
revenue from image enhancement products (e.g. FormFix, ScanFix) increased 
$89,901, or 47%. For the first nine months of the current year, revenue from 
imaging products decreased $143,909 or 9%, and revenue from image enhancement 
products increased $53,802, or 7%, over the same period last year. Competition 
and price erosion has had the biggest impact on the overall decline in revenue 
from imaging products. The potential for near-term growth in imaging revenue is
primarily expected to come from the Company's ViewDirector Plug-in products. 
Markets for the plug-in products include all internet and corporate intranet 
users. During the current year third quarter, revenue from the ViewDirector 
Plug-in product accounted for approximately 91%, or $225,000, of the total 
growth in imaging technology.  For the first nine months of the current year, 
ViewDirector Plug-in product revenue has contributed 26% to the Company's total
imaging product revenue stream.  Growth in image enhancement product revenue 
has been marginal. Near the end of the second quarter, the Company hired two 
additional salespeople on the west coast to focus on image enhancement product 
sales. The internal training cycle for new sales personnel ranges from three to
five months; accordingly, the Company expects the additional sales staff to 
have a more significant impact on fourth quarter results.  

Software development service revenue for the third quarter of fiscal 1997 was 
$164,373 compared to $243,101 for the same period last year, a decrease of 
$78,728, or 32%. For the first nine months of the current year, software 
development service revenue of $1,010,639 increased $362,864, or 56%, over the 
same period last year. The year-to-date increase in software development 
services revenue over the prior year may be attributed to the group operating 
at full capacity throughout the first six months of the current fiscal year. In
the prior year, the Company was in the process of rebuilding it's software 
development service business.  During the third quarter of the current year the
Company began another rebuilding phase after completing a significant project 
for one customer, Learjet, which accounted for approximately 36% of the total 
current year nine-month service revenue.  Negotiations are currently underway 
with potential customers to help replace the level of revenue generated under 
the Learjet contract.  The Company secured new contracts late in the third 
quarter, and management expects that additional contracts will be secured in 
the fourth quarter to bring the software services group back to capacity. 
However, the Company can give no assurance as to when, or if, any of these 
software development service contracts will be finalized.  If negotiations are 
not successful or other new contracts can not be secured, revenue from software
development services may continue to decline.  Management is prepared to take 
the appropriate cost cutting measures in the event that software development 
service revenues do not increase. 

<PAGE>  6

Document conversion service revenue for the third quarter of fiscal 1997 was 
$244,124 compared to $229,349 for the third quarter of fiscal 1996, an increase
of $14,775 or 6%. For the first nine months of the current year, document 
conversion service revenue was $503,122 compared to $792,670 for the same 
period last year, a decrease of $289,548, or 37%. During the first nine months 
of fiscal 1996, service under the Toro contract, which was substantially 
completed during March of 1996, accounted for approximately $393,000 or 50% 
of the total document conversion service 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 in process 
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 continues to adjust the number of 
document conversion employees to a level that is commensurate with service 
contract demand and is prepared to make additional adjustments as necessary.   


Operating Costs and Expenses
Total operating costs and expenses for the third quarter ended May 31, 1997, 
were $1,427,217 compared to $1,332,910 for the same quarter in fiscal 1996, an 
increase of $94,307 or 7%. For the first nine months, operating costs and 
expenses approximated $4,100,000 in both the current and prior period. 

The cost of licensing and royalties increased $18,192, or 8%, for the third 
quarter of fiscal 1997, and increased $28,343, or 4%, for the first nine months
of fiscal 1997 compared to the same periods a year ago. The gross profit margin
for licensing and royalties approximated 75% for the current year third quarter
and 66% for prior year third quarter. For the first nine months of the current 
year the gross profit margin for licensing and royalties was 71% compared to 
73% for the same period last year. Fluctuations in gross profit margins result 
from the mix of product versus royalty revenue reported, as royalty revenue 
results in little or no cost to the Company when it is received.  Third quarter
revenue from royalties increased approximately $120,000, or 27%, over the same 
period last year which primarily accounts for the significant increase in the 
third quarter margins over last year.  

The cost of software development services increased $36,156 or 23%, for the 
third quarter of fiscal 1997, and increased $184,342, or 42%, for the first 
nine months of fiscal 1997, compared to the same periods a year ago. The 
gross profit (loss) margins for software development services were (18%) and 
35% for the current and prior year third quarters, respectively.  For the first
nine months of the current year the gross profit margin was 39% compared to 33%
for the same period last year. The increased cost of software development 
services is primarily attributable to the additional personnel needed to 
satisfy contract requirements through the first six months of the current year.
The negative margins for the current third quarter reflects management's 
decision to maintain the current engineering capacity in preparation for 
new contracts that are in the process of being secured.  The Company expects to
be at or near full capacity midway into the fourth quarter of the current year.
Improved gross margins for the first nine months are a direct result of the 
engineering service group operating at full capacity throughout the first six 
months of the current year.  

<PAGE>  7

The cost of document conversion services, when compared to the prior year, 
decreased $57,659, or 32%, for the third quarter of fiscal 1997, and decreased 
$284,620, or 47%, for the first nine months of fiscal 1997. The gross profit 
margins for document conversion services were 50% and 21% for the current and 
prior year third quarters, respectively. Gross profit margins for the first 
nine months of both the current and prior year were 37% and 24%, respectively. 
The decrease in costs is the direct result of management adjusting the number 
of document conversion employees to help offset the decline in revenues. Gross 
margins for the current year third quarter and nine months were higher than 
last year because of the type of projects being serviced and a more experienced
staff. 

Selling, general and administrative expenses for the second quarter of fiscal 
1997 increased $97,618, or 13%, and for the first nine months increased 
$73,274, or 3%, when compared to the same periods last year. The Company 
incurred approximately $230,000 in non-recurring legal, accounting and other 
professional fees during the first nine months of the prior year related to the
merger with Sequoia Data Corporation. The 100% decrease in merger costs over 
the prior year was partially offset by increased investments in tradeshow, 
advertising and other marketing activities, and a shift in certain employee 
responsibilities from service providers to managerial and business development 
positions. 

Income Taxes
Deferred tax expense of approximately $17,300 for the nine months ended May 31,
1997, was reported at a 38% effective income tax rate. During the prior year,
the Company decreased it's valuation allowance for deferred tax assets by 
$210,000 to give additional recognition to net operating loss carryforwards 
that the Company has available to offset income tax liabilities. 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. 

FINANCIAL CONDITION

Working capital, at May 31, 1997 was $1,896,344 with a current ratio of  4.1:1 
compared to $1,838,181, with a current  ratio of 3.9:1, at August 31, 1996. Net
cash provided by operations for the nine months ended May 31, 1997 was $285,991
compared to net cash provided by operations of $415,846 for the same nine month
period last year. Lower net income in the current year and slower customer 
billing cycles associated with custom software services were the primary 
factors that affected operating cash flows as compared to last year. Net cash 
used in investing activities for the first nine months of fiscal 1997 was 
$463,593 compared to $444,358 for the same period in fiscal 1996. 

During the first nine months ended May 31, 1997, the Company did not borrow 
against it's $800,000 line of credit. At May 31, 1997, the Company's long-term 
debt was $339,252.  Current obligations under the long-term debt total $21,833.

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. 

<PAGE>  8

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 nine month period 
                ended May 31, 1997.  






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.

                                 

      July 1, 1997               /s/ Maxwell Steinhardt
Date: -------------                  -----------------------
                                     Chief Executive Officer

      July 1, 1997               /s/ Deborah D. Mosier
Date: -------------                  -----------------------                   
                                     Chief Financial Officer