SECURITIES AND EXCHANGE COMMISSION   
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       
September 30, 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 September 30, 1996, outstanding shares of common stock  
were 10,844,117.   
   
   
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES   
INDEX   
   
Part I.  Financial Information:   
   
	Consolidated Condensed Balance Sheets - September 30,  
1996 and March 31, 1996		   
   
	Consolidated Condensed Statements of Operations - Three  
Months and Six Months  
		Ended September 30, 1996 and 1995   
   
	Consolidated Condensed Statements of Cash Flows - Three  
Months and Six Months  
		Ended September 30, 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				   
						September 30, 1996	March 31,  
1996   
						(Unaudited)   
<S>						<C>		<C>   
Current Assets		   
	Cash					$210,049	$216,463 
	Factor Receivables  (net of bad debt allowance of  
$45,736 and $40,000):		  
	   
	   Trade					$126,403	$303,121   
	   Other					$1,902		$0   
	Prepaid Expenses				$22,383	 	$20,821   
	Note Receivable - Related Party 		$40,387	 	$46,767   
 
Total Current Assets				$401,124	$587,172   
		   
Property & Equipment net of    
accumulated depreciation of    
$217,555 and $207,068				$27,472	 	$19,597   
Other Assets					$71,668		$63,867 
TOTAL ASSETS				$500,264	$670,636   
   
Liabilities & Shareholders' Equity				   
   
Current Liabilities				   
	Current Maturities of    
	Long-Term Debt				$0		$0   
	Accounts Payable				$84,199		$54,659   
	Funds Due To Providers			$467,588	$482,761   
	Accrued Expenses			$420,928	$405,010   
Total Current Liabilities				$972,715 
	$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)				($3,721,717) 	($3,521,060)   
Sub-Total					($472,451)	($271,794)   
   
	Less: Treasury Stock			-		-   
   
Stockholders' Equity				($472,451) 	($271,794)   
   
TOTAL LIABILITIES AND    
STOCKHOLDERS' EQUITY			$500,264	$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		Six Months Ended		
				September 30,		 	September 30,	 
				1996		1995		1996		1995		 
<S>				<C>		<C>		<C>		<C>		 
Net Revenues:								   
	Factoring Commissions 
	   and Fees		$31,643		$105,085	$103,634 	$212,161	 
	    
	Computer Software	$6,541		$2,109	 	$8,780		$4,490	 
	Printing			$4,804		$2,826	 	$8,926		$5,624		 
	Travel			$22,651		$10,861	 	$52,879		$27,574 
				$65,639		$120,881	$174,219 	$249,849	 
   
General and Administrative Expenses:					 
		  
	   
	Related Parties		$13,305		$13,305	 	$26,610		$26,610	  
	Bad Debt		$0		$0		$0		$0		 
	Other			$164,299	$163,887	$330,523 	$351,557	 
   
				$177,604	$177,192	$357,133	$378,167	 
   
Income (Loss)    
from Operations			($111,965)	($56,311) 	($182,914)	($128,318)  
   
Other Income (Expenses):								   
Interest Income -    
  Related Party			$0		$0		$0	 	$0	 
Interest Income -    
  Other				$2,145		$7,378	 	$3,890		$12,899 
Dividends			$0		$0		$0		$0 
Interest Expense			($11,418)	($64,935)	($21,624) 	($128,732) 
 
				($9,273)		($57,557)	($17,734) 	($115,833)  
   
Income (Loss) Before Provision    
for Income Taxes    		($121,238)	($113,868) 	($200,648)	($244,151)  
Income Tax    
Expense (Benefit)		-		-		-		- 
 
Net Income (Loss) Before 
Extraordinary Item		($121,238)	($113,868) 	($200,648)	($244,151)  
								   
Extraordinary Item - Gain on 
Settlement			-		$2,924,875	-	 	$2,924,875 
 
Net Income (Loss)		($121,238)	$2,811,007 	($200,648)	$2,680,724 
Per Share    
Earnings (Loss)			($0.01)		$0.26	 	($0.02)		$0.25 
								   
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)   
		   
						Six Months Ended September 30, 
		   
						1996			1995   
<S>						<C>			<C>   
Cash flows from operating activities:					 
	   
   
Net Income (Loss)				($200,648)		$2,680,724   
   
Adjustments to reconcile net loss to net cash provided by  
operating activities:		  
		   
		   
Depreciation and amortization			$4,982		  	$10,249   
Provision for losses on    
accounts receivable				$0			$0 
   
Changes in assets and liabilities:					   
Decrease(increase) in    
  marketable securities				$0			$0   
Decrease in accounts receivable			$172,511	 	$86,721   
Decrease(increase) in    
  prepaid expenses				($1,562)		 	$4,858  
Increase(decrease) in current    
maturities of long term debt			$0		 	($1,362,087)   
Increase(decrease) in    
  accounts payable				29,540		 	($187,890)   
Increase(decrease) in    
  demand reserve deposits				($15,173)	 	$197,847   
Increase(decrease) in    
  accrued expenses				$15,918		 	($1,452,921)   
Total adjustments				$206,216	 	($2,703,223)   
   
Net cash (used) provided by    
  operating activities				$5,568		 	($22,499)   
   
Cash flows from investing activities:					 
		   
Capital expenditures				($18,362)	 	($3,787) 
Payments received on    
  note receivable, related party			 $6,380		 	$170,337   
Net cash provided by (used in)    
  investing activities				($11,982)	 	$166,550   
   
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			($6,414)		  	$144,051   
Cash at beginning of period			$216,463	 	$27,026   
Cash at end of period				$210,049	 	$171,077   
   
Supplemental disclosure of cash flow information:			 
			  
	   
Cash paid during the period for interest		$21,624	 		$16,378   
								   
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 September 30, 1996  
and the results    
of operations for the three months and six months ended  
September 30, 1996 and 1995 and changes in cash flows for  
the six months ended   September 30, 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  
six months ended September 30, 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   
   
Company management has worked on improving the Company's  
financial condition and future by providing more services  
for fees; less factoring & financing; and considered areas  
of focus other than Health Care given that industry's  
uncertain future. Management is reviewing all options and  
sources of revenue available to the Company at this time and  
believes that a re-direction of the Company focus is  
imperative to provide a viable future for the Company. There  
is no plan to discontinue all of the services the Company  
has provided in the past. However, some services which  
require substantial upfront capital, such as factoring, will  
be discontinued. Services, such as providing credit reports,  
collection letters and collection services will be pursued  
on a fee for service basis. In addition, the Company is  
considering the opportunities that are available for its'  
printing and travel services. There can be no assurance that  
the Company will be successful in these efforts. Gross  
transactions (the total amount of sales, including billings  
submitted by Health Care Providers during the period, as  
well as a portion of income from    
other operations) decreased $229,550 or 38% and $480,033 or  
39% for the three months and six months ended September 30,  
1996 as compared to the same period in 1995 from $601,767 to  
$372,217 and from $1,242,874 to $762,841, respectively.  Net  
revenues    
decreased $55,242 or 46% and $75,630 or 30% for the three  
months and six months ended September 30, 1996 as compared  
to the same period in 1995 from $120,881 to $65,639 and from  
$249,849 to $174,219, respectively.   These decreases are a  
result of the Company    
discontinuing to provide some of the services that have been  
provided in the past and redirecting the efforts of the  
company to generate revenues by focusing on  "fee for  
services". These services do not require the Company to  
provide upfront cash to its clients but, instead, will  
operate in a fee for service situation. Consequently, the  
Company has become a TRW authorized reseller of credit  
reports and is providing credit reports, billing services  
and pre-collection & collection services to clients.  
Although this direction will initially result in a decrease  
in revenues, management has determined that it is in the  
best interest of the Company.   
   
General and administrative expenses increased $412 or less  
than one-half percent and decreased $21,034  or 6% for the  
three months and six months ended September 30, 1996 as  
compared to the same period in 1995 from $177,192 to  
$177,604 and from $378,167 to $357,133, respectively.  
Management will continue to focus on controlling expenses  
and increasing revenues in an effort to become profitable.    
   
LIQUIDITY AND CAPITAL RESOURCES     
The Company's working capital for the six months ended  
September 30, 1996 of a negative $(571,591) decreased  
$216,333 from the March 31, 1996 balance of a negative  
$(355,258).  The change is primarily due to the reduction in  
revenues and the operating loss that resulted during the six  
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 of  
which any of    
its property is the subject.   
   
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: November 14,  1996	BY____[ SIGNED]____________   
 		    	      David  C.  Marx    
			      President and   
			      Chief Executive Officer