Washington, D. C. 20549  
  
  
FORM 10-Q  
Quarterly Report Pursuant to Section 13 or 15(d)  
of the Securities Exchange Act of 1934  
  
For the quarter ended      
December 31, 1996       
  
Commission File Number         
0-14757  
  
  
MEDMASTER SYSTEMS, INC.  
(Exact name of registrant as specified in its charter)  
  
		  
Delaware						  
(State of incorporation)  
  
No. 87-0400472  
(I.R.S. Employer Identification Number)  
  
    
2072 North Main  
Logan Utah 				  
(Address of principal executive offices)                		
		   
  
84341  
(Zip Code)  
  
801-753-4101  
Registrant's telephone number, including area code 			  
  
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   
requirementsfor the past 90 days:  
		  
		Yes     X                  No  
  
  
As of December 31, 1996, outstanding shares of common stock were 
10,844,117.  
  
  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES  
INDEX  
  
Part I.  Financial Information:  
  
	Consolidated Condensed Balance Sheets - December 31, 1996 
and March 31, 1996
  
	Consolidated Condensed Statements of Operations - Three 
Months and Nine Months 
		Ended December 31, 1996 and 1995  
  
	Consolidated Condensed Statements of Cash Flows - Three 
Months and Nine Months 
		Ended December 31, 1996 and 1995  
		  
	Notes to Consolidated Condensed Financial Statements  
  
	Management's Discussion and Analysis of Financial Condition 
and Results of  
Operations  
  
Part II. Other Information                                                 
  
	Item 1.  Legal Proceedings	  
  
	Item 2.  Changes In Securities  
  
	Item 3.  Defaults Upon Senior Securities  
  
	Item 4.  Submission Of Matters To A Vote Of Security Holders  
  
	Item 5.  Other Information	  
	  
	Item 6.  Exhibits and Reports on Form 8 - K  
  
	Signatures  
  
  


MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES   
<TABLE>  
Consolidated Condensed Balance Sheets  
(Unaudited)  
<CAPTION> 		  
Assets				  
						December 31, 1996	March 31, 1996  
						(Unaudited)  
<S>						<C>			<C>  
Current Assets		  
	Cash					$65,803			$216,463
	Accounts Receivable  (net of bad debt allowance of $45,829 
and $40,000):		 
	  
	   Trade					$99,014			$303,121  
	   Other					$1,892			$0  
	Prepaid Expenses				$21,147		
	$20,821  
	Note Receivable - Related Party 		$36,461		
	$46,767  

Total Current Assets				$224,317		$587,172  
		  
Property & Equipment net of   
accumulated depreciation of   
$221,894 and $207,068				$23,132		
	$19,597  
Other Assets					$74,268			$63,867
TOTAL ASSETS				$321,717		$670,636  
  
Liabilities & Shareholders' Equity				  
  
Current Liabilities				  
	Current Maturities of   
	Long-Term Debt				$0			$0  
	Accounts Payable				$95,298		
	$54,659  
	Funds Due To Providers			$342,239		$482,761  
	Accrued Expenses			$435,942		$405,010  
Total Current Liabilities				$873,479	
	$942,430  
 
Long-Term Debt less   
   current maturities				-			-  
  
Shareholders' Equity				  
	Common Stock - $.01 par value;   
	authorized - 30,000,000 shares;   
	issued - 10,844,117 shares.   
	Preferred Stock - $.01 par value;   
	authorized - 500,000 shares;   
	none issued and outstanding.		$108,441		$108,441  
	Additional Paid-in Capital		$3,140,825	
	$3,140,825  
	Retained (deficit)				($3,801,028)	
	($3,521,060)  
Sub-Total					($551,762)		($271,794)  
  
	Less: Treasury Stock			-			-  
  
Stockholders' Equity				($551,762)	
	($271,794)  
 
TOTAL LIABILITIES AND   
STOCKHOLDERS' EQUITY			$321,717		$670,636  
  
See accompanying notes to consolidated condensed financial 
statements
	  
</TABLE>  
  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES   
<TABLE>  
Consolidated Condensed Statements of Operations
<CAPTION>  
(Unaudited)

				Three Months Ended		Nine Months Ended
				December 31,			December 31,	
				1996		1995		1996		1995
<S>				<C>		<C>		<C>		<C>
Revenues:								  
	Factoring Commissions
	   and Fees		$38,650		$94,648		$139,215
	$306,809
	Software Fees		$9,995		$1,708		$20,554	
	$6,143
	Printing Fees		$3,659		$3,265		$20,492	
	$15,176
	Travel Fees		$247,252	$168,407	$732,714	$512,488

				$299,556	$268,028	$912,975	$840,616

Cost and Expenses
	Cost of Software Fees	$1,575		$55		$3,354	
	$0
	Cost of Printing Fees	$1,632		$1,076	
	$9,539		$7,363
	Cost of Travel Fees	$225,835	$155,918	$667,256	$472,425
	General & administrative	$136,048	$171,776	$464,568
	$520,680
	Rent - related parties	$13,305		$13,305	
	$39,915		$39,915
	Net (recoveries) provision
	    for credit losses	($8,359)		$5,465	
	($18,263)	$8,118

				$370,036	$347,595	$1,166,369	$1,048,501
  
Income (Loss)   
from Operations			($70,480)	($79,567)	($253,394)
	($207,885) 
  
Other Income (Expenses):								  
Interest Income -   
  Related Party			$0		$0		$0		$0	
Interest Income -   
  Other				$1,437		$4,665		$5,327	
	$17,564
Dividends			$0		$0		$0		$0
Interest Expense			($10,276)	($11,678)	($31,900)
	($132,754)
Interest Expense - Related Party	$0		$0		$0	
	($7,656)
Gain (Loss) On Sale Of Securities	$0		($70,045)	$0	
	($70,045)

				($8,839)		($77,058)	($26,573)	($192,891) 
  
Income (Loss) Before Provision   
for Income Taxes    		($79,319)	($156,625)	($279,967)
	($400,776) 
Income Tax   
Expense (Benefit)		-		-		-		-

Net Income (Loss) Before
Extraordinary Item		($79,319)	($156,625)	($279,967)
	($400,776) 
								  
Extraordinary Item - Gain on
Settlement			-		-		-		$2,924,875

Net Income (Loss)		($79,319)	($156,625)	($279,967)
	$2,524,099
Per Share   
Earnings (Loss)			($0.01)		($0.01)	
	($0.03)		$0.23
								  
Weighted Average   
Number of Common Shares   
Outstanding			10,844,117	10,844,117	10,844,117
	10,844,117
								  
See accompanying notes to consolidated condensed financial 
statements.			  
</TABLE>  
				  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES   
<TABLE>  
Consolidated Condensed Statements of Cash Flows  
<CAPTION>  
(Unaudited)  
		  
						Nine Months Ended December 31,	
	  
						1996			1995  
<S>						<C>			<C>  
Cash flows from operating activities:						  
  
Net Gain (Loss)					($279,967)	
	$2,524,099  
  
Adjustments to reconcile net loss to net cash provided by 
operating activities:		 
		  
		  
Depreciation and amortization			$14,826		 
	$15,858  
Provision for losses on   
accounts receivable				$0			$0
  
Changes in assets and liabilities:					  
Decrease(increase) in   
  marketable securities				$0			$70,045  
Decrease in accounts receivable			$191,813	
	$171,977  
Decrease(increase) in   
  prepaid expenses				($326)			$2,972 
Increase(decrease) in current   
maturities of long term debt			$0		
	($1,362,087)  
Increase(decrease) in   
  accounts payable				40,639			($185,404)  
Increase(decrease) in   
  funds due to providers				($140,522)	
	$168,909  
Increase(decrease) in   
  accrued expenses				$30,932		
	($1,544,103)  
Total adjustments				$137,362		($2,661,833)  
  
Net cash (used) provided by   
  operating activities				($142,605)	
	($137,734)  
  
Cash flows from investing activities:						
	  
Capital expenditures				($18,361)		($3,250)
Payments received on   
  note receivable, related party			 $10,306		
	$175,903  
Net cash provided by (used in)   
  investing activities				($8,055)		
	$172,653  
  
Cash flows from financing activities:						
	  
Principal payments on long term debt		$0			$0  
Net cash used in financing activities		$0			$0  
  
Net increase(decrease) in cash			($150,660)	 
	$34,919  
Cash at beginning of period			$216,463		$27,026  
Cash at end of period				$65,803		
	$61,945  
  
Supplemental disclosure of cash flow information:				
		 
	  
Cash paid during the period for interest		$31,900		 
	$27,035  
								  
See notes to consolidated financial statements.				
		 
	  
</TABLE>  
  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES  
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS  
  
Note 1 - In  the  opinion of the Company,  the accompanying 
unaudited consolidated condensed financial statements  contain   
all adjustments (consisting  of only normal recurring  accruals) 
necessary  to  present   
fairly the financial  position  as  of December 31, 1996 and the 
results of operations for the three months and nine months ended 
December 31, 1996 and 1995 and changes in cash flows for the  
three months and nine months ended December 31, 1996 and 1995.  
The consolidated condensed financial statements should be read in 
conjunction with the Company's audited consolidated financial 
statements for the year ending March 31, 1996.  
  
Note 2 - The  results of operations for the three months and nine 
months ended December 31, 1996 are not necessarily indicative of 
the results to be expected for the full year.  
  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL   
CONDITION AND RESULTS OF OPERATIONS  
  
Management has been reviewing all options and sources of revenue 
available to the Company. Services which, in the past, required 
substantial upfront capital, such as factoring, have now been 
discontinued. Services, such as providing credit reports, 
collection letters and collection services have been pursued on a 
fee for service basis with a limited amount of success. Under a 
dealership agreement with Financial Computer Services, Inc., the 
Company has been marketing computer business software and has had 
somewhat promising results. However, management foresees 
difficulty in meeting financial obligations if revenues and 
cashflow do not improve very soon. The Company has had a going 
concern opinion from their auditors since 1988 and management 
is seriously evaluating whether there is any viable future for 
the Company, whether a bankruptcy should be filed, or if the 
Company should be shut down. Additionally, the President of the 
Company, David C. Marx, has an employment agreement that expires 
on March 31, 1997. As of December 31, 1996, the Company owed Mr. 
Marx approximately $410,706 in deferred compensation which is 
secured by all assets of the Company. There have been no 
discussions as to whether or not Mr. Marx is willing to continue 
to defer what is owed him or is willing to continue with the 
Company. There is no assurance, that if the Company decides not 
to shut down, that it will have any viable future.
Gross transactions (the total amount of sales, including factored 
billings which was discontinued during the period, as well as a 
portion of income from other operations) decreased $258,951 or 
43% and $738,984 or 40% for the three months and nine months 
ended December 31, 1996 as compared to the same period in 1995 
from $607,167 to $348,216 and from $1,850,041 to $1,111,057, 
respectively. Revenues increased $31,528 or 12% and $72,359 or 9% 
for the three months and nine months ended December 31, 1996 as 
compared to the same period in 1995 from $268,028 to $299,556 and 
from $840,616 to $912,975, respectively. Costs and expenses 
increased $22,441 or 7% and $117,868 or 11% for the three months 
and nine months ended December 31, 1996 as compared to the same 
period in 1995 from $347,595 to $370,036 and from $1,048,501 to 
$1,166,369, respectively. The Company has tried to redirect its 
efforts to generate revenues by focusing on  "fee for services 
and products". Management had to redirect the focus of the 
Company because it did not have the capital resources available 
to continue its factoring operation. Services that do not require 
the Company to provide upfront cash but, instead, will operate in 
a fee for service situation. The Company is an authorized 
reseller of TRW credit reports and provides credit reports, 
billing services and pre-collection & collection services to a 
limited number (less than seventy) of clients.
General and administrative expenses decreased $35,728 or 21% and 
decreased $56,112 or 11% for the three months and nine months 
ended December 31, 1996 as compared to the same period in 1995 
from $171,776 to $136,048 and from $520,680 to $464,568, 
respectively.
  

LIQUIDITY AND CAPITAL RESOURCES    
The Company's working capital for the nine months ended December 
31, 1996 of a negative ($649,162) decreased $293,904 from the 
March 31, 1996 balance of a negative ($355,258).  The change is 
primarily due to the reduction in revenues, the reduction in 
accounts receivable and the operating loss that resulted during 
the nine month period.

PART  II. OTHER INFORMATION  
  
Item 1.  LEGAL PROCEEDINGS  
NONE.  There are no pending legal proceedings outside of the 
normal course of business to which the Company is a party or to 
which any of its property is the subject other than the 
following: a dispute exists where a former client claims he is 
owed approximately $235,000 by the Company. The Company believes 
that the former client owes the Company in excess of any amount 
he claims he has coming. There can be no assurance as to the 
outcome of this dispute.

Item 2.  CHANGES 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.   
  
SIGNATURES  
Pursuant to the requirements of Section 13 of the Securities   
Exchange Act of 1934, the registrant has duly caused this   
Report to be signed on its behalf by the undersigned, thereunto   
duly authorized.  
  
							  
  
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES  
  
  
Date: February 12,  1996	BY____[ SIGNED]____________  
 		    	      David  C.  Marx   
			      President and  
			      Chief Executive Officer