SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

                                 FORM 10-Q

                 Quarterly Report Pursuant to Section 13 or 15 (d) of the
                    Securities and Exchange Act of 1934



          For the Quarter Ended                         Commission File Number

                February 28, 1998                            0-12423       
        


                                        MERIT DIVERSIFIED INTERNATIONAL, INC.
                      (Exact name of registrant as specified in its charter)

             Nevada                                  94-2906927                
(state or other jurisdiction of                      (I.R.S. Employer 
 incorporation or organization)                     Identification No.)



                                  4570 Campus Dr # 307, Newport Beach, Ca 92667
                                  (Address of principal executive offices)


        Registrants telephone number, including area code:       (714) 252-2121

                                                                         

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 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                                     No       X             

The number of shares outstanding of each of the registrants classes of common 
stock, as of February 28, 1998 was 30,042,257 shares, all of one class of $.00 
par value Common Stock.

















                      MERIT DIVERSIFIED INTERNATIONAL, INC.
                                  FORM 10-Q
                       Quarter Ended February 28, 1998
                              TABLE OF CONTENTS

FINANCIAL INFORMATION                                                  PAGE

Item 1-  Consolidated Financial Statements

                Consolidated Balance Sheets as of February 28, 1998 
         and August 31, 1997                                            3

                Consolidated Statements of Operations for the three 
         months ended February 28, 1998 and February 29, 1997           4
                
                Consolidated Statements of Operations for the six months
                ended February 28, 1998 and February 29, 1997           5

                Consolidated Statements of Cash Flows for the three months
                       ended February 28, 1998 and February 29, 1997    6

                Notes to Consolidated Financial Statements            7,8

Item 2-         Managements Discussion and Analysis of Financial
                       Condition and Results of Operations           9-11

OTHER INFORMATION

Item 1-         Legal Proceedings                                    12

Item 2-  Changes in Securities                                       12

Item 3-         Defaults upon Senior Securities                      12

Item 4-         Submission of Matters to a Vote of Security Holders  12

Item 5-         Other Information                                    12

Item 6-  Exhibits and Reports on Form 8-K                            12


SIGNATURES                                                           13


















                      MERIT DIVERSIFIED INTERNATIONAL, INC.
                         (A Developmental Stage Company)
                          PART 1: FINANCIAL INFORMATION
                           CONSOLIDATED BALANCE SHEETS
                    AS OF FEBRUARY 28, 1998 AND AUGUST 31, 1997

                                 February 28,                August 31,
                                  1998                        1997           
                                 (Unaudited)                  (Note 1)

Assets                              $       -                 $       -
                                                     
Total Assets                        $       -                 $       -
                                                    

Liabilities and Shareholders Equity

Current liabilities

  Accounts and taxes payable        $  -                       $   8,000

Total current liabilities              -                           8,000

Commitments

Shareholders Equity

     Common Stock-no par value; 
 50,000,000 shares authorized, 
 30,042,257 issued and outstanding 
 as of February 28, 1998 and
 August 31, 1997                    1,332,349                   1,332,349

  Additional paid-in capital        1,130,215                   1,122,215

  Accumulated deficit-accumulated
  during the developmental stage   (2,462,564)                  (2,462,564)

Total shareholders equity          $  -                         $   (8,000)
                                                                             
Total liabilities and 
shareholders equity                $       -                    $       -
                                                                           
        



See Notes to Consolidated Financial Statements






















                 MERIT DIVERSIFIED INTERNATIONAL, INC.
                   (A Developmental Stage Company)

                CONSOLIDATED STATEMENTS OF OPERATIONS
            THREE MONTHS ENDED FEBRUARY 28, 1998 AND 1997
                                                                           
                           (UNAUDITED)
<TABLE>
<S>
<S>

                           Three Months       Three Months       Since Being
                              Ended           Ended                 A
                            February 28,    February 29,        Developmental
                             1998             1997             Stage Company
                            (Note 1)

Net revenue                $       -        $       -          $      -

Costs and expenses:

  General and administrative       -                -              2,244,147
  Depreciation and amortization    -                -                  6,200

Income (loss) from operations $     -               -          $  (2,250,347)

Other income (expense):

  Interest expense                  -               -               (22,518)
  Loss on sale of fixed assets      -               -                  (918)
  Loss on sale of investments       -               -              (269,800)
  Income from debt adjustment       -               -                86,419

Total other income (expense)        -               -              (206,817)

Income before taxes
 on income                          -               -            (2,457,164)

Taxes on income                     -               -                 5,400

Net income (loss)                   -               -            (2,462,564)

Net income (loss) per share        nil             nil   

Weighted average number of shares 
  and share equivalents 
  outstanding                 30,042,257      16,209,316



</TABLE>


See Notes to Consolidated Financial Statements



















                    MERIT DIVERSIFIED INTERNATIONAL, INC.
                      (A Developmental Stage Company)
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997
                               (UNAUDITED)
<TABLE>
<S>
<S>


                           Six Months       Six Months       Since Being
                             Ended            Ended               A
                           February 28,    February 28,    Developmental
                             1998              1997        Stage Company
                           (Note 1)

Net revenue               $       -        $       -        $       -

Costs and expenses:

  General and administrative      -                -           2,244,147
  Depreciation and amortization   -                -               6,200

Income (loss) from operations $   -                -      $   (2,250,347)

Other income (expense):

  Interest expense                -                -             (22,518)
  Loss on sale of fixed assets    -                -                (918)
  Loss on sale of investments     -                -            (269,800)
  Income from debt adjustment     -                -              86,419

Total other income (expense)      -                -            (206,817)

Income before taxes
 on income                        -                -          (2,457,164)

Taxes on income                   -                -               5,400

Net income (loss)                 -                -          (2,462,564)

Net income (loss) per share      nil              nil             

Weighted average number of shares 
  and share equivalents 
  outstanding               30,042,257       16,209,316


</TABLE>


See Notes to Consolidated Financial Statements





















                 MERIT DIVERSIFIED INTERNATIONAL, INC.
                     (A Developmental Stage Company)

                 CONSOLIDATED STATEMENTS OF CASH FLOWS
            THREE MONTHS ENDED FEBRUARY 28, 1998 AND 1997
                              (UNAUDITED)

Increase (Decrease) in Cash and Cash Equivalents

                                        Three Months          Three Months   
                                           Ended                 Ended       
                                        February 28,          February 28,
                                            1998                  1997 
                                                       

Operating activities:

  Net income (loss)                    $       -              $       -     
  Adjustments to reconcile net loss
    to cash used in operating activities:
    Amortization expense                       -                      -      
  Changes in operating assets and
     liabilities:
    Accounts payable                       (8,000)                    -      
Cash provided by (used in)
 operating activities                      (8,000)                    -      
Investing activities:                         -                       -     
Financing activities:
  Contribution by shareholder               8,000
  Loan proceeds                               -                       -      
  Issuance of capital stock                   -                       -      
Cash provided by financing
 activities                                 8,000                     -    
Net increase (decrease) in 
 cash and cash equivalents                    -                       -       
Cash and cash equivalents,
 beginning of period                          -                       -     
Cash and cash equivalents,
 end of period                        $       -                    $  -     



See Notes to Consolidated Financial Statements























                   MERIT DIVERSIFIED INTERNATIONAL, INC.
                     (A Developmental Stage Company)
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 1998

Note 1 - Basis of Presentation
                                                                

The accompanying consolidated financial statements have been prepared in 
accordance with United States generally accepted accounting principles for 
interim financial information and with the instructions to Form 10-Q and Rule 
10-01 of Regulation S-X.  Accordingly, they do not include all of the 
information and footnotes required by generally accepted accounting principles 
for complete financial statements.  In the opinion of management, all 
adjustments considered necessary for a fair presentation have been included.  
Operating results for the three months ended February 28, 1998 are not 
necessarily indicative of the results that may be expected for the year ended 
August 31, 1998.  For further information, refer to the consolidated 
financial statements and footnotes thereto included in the Companys Form 
10-K for the year ended August 31, 1997.        

Note 2 - Net Income (Loss) Per Share
                                                         

Net income (loss) per share and common equivalent share is computed using the 
weighted average number of shares outstanding during each period.

During April, 1996, the Board of Directors declared a reverse stock split, 
reducing the number of common shares outstanding through the distribution of 
one common share in exchange for twenty (20) common shares held by 
shareholders of record as of April 30, 1996.  All references to common 
share and per share amounts in the accompanying financial statements have 
been retroactively adjusted to reflect the effect of this transaction.  

Note 3- Related Party Transactions
                                                                     

The Company has been able to continue in existence and reduce its debts and 
obligations through the assistance of certain major shareholders who continue 
to fund the Companys general and administrative expenses and to pay 
outstanding obligations.  There can be no assurance that these shareholders 
will continue such funding in the future.

Note 4- Going Concern
                                                                  

The Company has incurred significant losses since its inception and as of 
February 28, 1998, has no source of revenue.  The Company has no cash and has 
maintained its existence and paid ongoing expenses through the issuance of 
common stock.




















                  MERIT DIVERSIFIED INTERNATIONAL, INC.
                    (A Developmental Stage Company)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                         FEBRUARY 28, 1998


The Company has been able to continue because major shareholders have continued
to invest in the Company to meet its expenses.  As of February 28, 1998, 
the Company has been successful in converting most of its debt to equity.

The Company is considered a development stage Company and will remain in this 
status until operations begin.  There can be no assurance that the Company will 
be able to merge with an operating company, acquire an ongoing business, or 
that the major shareholders will continue to pay the expenses of the Company.















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                       MERIT DIVERSIFIED INTERNATIONAL, INC.
                         (A Developmental Stage Company)
                               FEBRUARY 28, 1998


Item 2 - Managements Discussion and Analysis of Financial Condition and 
           Results of Operations or Plan of Operation
                                                                        

The following review concerns the three and six month periods ended February
28, 1998 and February 28, 1997, which should be read in conjunction with 
the financial statements and notes thereto presented in the Form 10-Q.

The information set forth in Managements Discussion and Analysis of Financial 
Condition and Results of Operations below includes forward looking statements 
within the meaning of Section 27A of the Securities Act, and is subject to the 
safe harbor created by that section.  Factors that could cause actual results 
to differ materially from these contained in the forward looking statements are 
set forth in Managements Discussion and Analysis of Financial Condition and 
Results of Operations.

Plan of operation.

The Company has continued its efforts to acquire, merge with or enter into 
another form of business combination with another entity, and the Company plans 
to continue these efforts in the current fiscal year.  It is presently unknown 
whether any transaction will be concluded. The Company considers it current 
cash and cash equivalent balances inadequate to satisfy its cash requirements 
for the next twelve months.  Legal and accounting and other expenses required 
could increase significantly in connection with any contemplated business 
combination.  The Company may not have the liquidity and capital resources to 
consummate such business combination.  Due to the nature of the Companys 
present activities, however the Company is unable to predict its likely 
expenditure for professional fees and other expenses.  The Company has no 
major capital commitments nor access to mechanisms to fund working or operating
capital, and there can be no assurance that it will be successful in its 
efforts to raise additional capital to maintain its plan of operation.

Results of Operations Three and Six Months Ended February 28, 1998 and 
February 28, 1997

The Company has no assets and has not engaged in any operational activities 
during the past four years.  At present, the Company has no employees.   The 
Company does not expect any changes in its operations unless the Company 
concludes a merger or other business combination.

During the three months ended February 28, 1998, the Company had no 
operations.  The Company maintained its existence through contributions from 
its shareholders to satisfy its general and administrative expenses.  As 
detailed on the accompanying consolidated statements of cash flows, there were 
no significant adjustments between the net loss and net change in cash.



















                    MERIT DIVERSIFIED INTERNATIONAL, INC.
                    (A Developmental Stage Company)
                           FEBRUARY 28, 1998

Item 2 - Managements Discussion and Analysis of Financial Condition and 
                Results of Operations or Plan of Operation (Continued)
                                                                     

As stated above in the Plan of Operation, due to the nature of the Companys 
activities, the Companys prospects for the future are dependent on a number of 
variables which cannot be predicted.  Generally, after identifying a potential 
business opportunity, the Company could incur significant costs in evaluating
the desirability of an acquisition or other form of business combination. 
Should the Company determine to proceed with the business combination, the 
transaction costs could be significant.  Thereafter, results of operation would
likely be materially affected by the business acquired or merge with the
Company.

Recent accounting pronouncements:  On March 3, 1997, the Financial Accounting 
Standards Board (FASB) issued the Statement of Financial Accounting Standards 
SFAS) No. 128, Earning Per Share.  This pronouncement provides a different 
method of calculating earnings per share than is currently used in accordance 
with Accounting Principles Board Opinion No. 15, Earnings Per Share.  SFAS No. 
128 provides for the calculation of Basic and Diluted earnings per share.  
Basic earnings per share includes no dilution and is computed by dividing 
income available to common shareholders by the weighted average number of 
common shares outstanding for the period.  Diluted earnings per share 
reflects the potential dilution of securities that could share in the 
earnings of an entity, similar to fully diluted earnings per share.  The 
Company will adopt SFAS No. 128 in the fiscal 1998 and its implementation 
is not expected to have a material effect on the financial statements.

In June 1997, FASB issued SFAS No. 130, Reporting Comprehensive Income which 
establishes standards for reporting and display of comprehensive income, as 
components and accumulated balances.  Comprehensive income is defined to 
include all changes in equity except those resulting from investments by 
owners and distributions to owners.  Among other disclosures, SFAS No. 120 
required that all items that are required to be recognized under current 
accounting standards as components of comprehensive income be reported in a 
financial statement that is displayed with the same prominence as other 
financial statements.

Also, in June 1997, FASB issued SFAS No. 131, Disclosures about Segments of an 
Enterprise and Related Information which supersedes SFAS No. 14, Financial 
Reporting for Segments of a Business Enterprise.  SFAS No.131 establishes 
standards for the way that public companies report information bout operating 
segments in annual financial statements and required reporting of selected 
information about operating segments in interim financial statements issued to 
the public.  It also establishes standard for disclosure regarding products and 
services, geographic areas and major customer.  SFAS No. 131 defines operating 
segments as components of a company about which separate financial information 
is available that is evaluated regularly by the chief operating decision maker 
in deciding how to allocate resources in assessing performance.


















                   MERIT DIVERSIFIED INTERNATIONAL, INC.
                     (A Developmental Stage Company)
                              FEBRUARY 28, 1998

Item 2 - Managements Discussion and Analysis of Financial Condition and 
                Results of Operations or Plan of Operation (Continued)
                                                                         

Both SFAS No. 130 and 131 are effective for financial statements for periods 
beginning after December 15, 1997 and require comparative information for 
earlier years to be restated.  Because of the recent issuance of these 
standards, management has been unable to fully evaluate the impact, if any, 
they may have on future financial statement disclosures.  Results of 
operations and financial position, however, will be unaffected by 
implementation of these standards.
























(Balance of Page Left Blank Intentionally)
























                     MERIT DIVERSIFIED INTERNATIONAL, INC.
                        (A Developmental Stage Company)
                                FEBRUARY 28, 1998


Item 1                  Legal Proceedings                         

                                None

Item 2                  Change in Securities                            

                                None

Item 3                  Defaults Upon Senior Securities                         

                        None

Item 4                  Submission of Matters to a Vote of Security Holders   

                                None

Item 5                  Other Information                           

                                None

Item 6                  Exhibits and Reports on Form 8-K               

                                None














                      MERIT DIVERSIFIED INTERNATIONAL, INC.
                        (A Developmental Stage Company)

           SIGNATURES


Pursuant to the requirements of Section 13 of 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.



        MERIT DIVERSIFIED INTERNATIONAL, INC.
        (Registrant)




Date:  November 7, 1998         By :__________________/s/__________________

                                  Dwight Mallette, Secretary, Chief Accountant