UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549
                                   FORM 10-QSB
     (Mark One)
     [ X ]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended January 31, 1997
                   -----------------------------------------------

                                        OR
     [    ]        TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934
         For the transition period from                 to
                                        ---------------    --------------


                    Commission file number      1-11034
                                          --------------------


                          DIGITRAN SYSTEMS, INCORPORATED 
                --------------------------------------------------
                (Exact name of registrant as specified in charter)

                 DELAWARE                               72-0861671
       -------------------------------------------------------------------
      (State or other jurisdiction of              (I.R.S. Employer
       incorporation)                               Identification No.)

      90 North 100 East, Logan, Utah                              84321
      --------------------------------------------------------------------
      (Address of principal executive offices)                   Zip code

                                     801-752-9067
      --------------------------------------------------------------------
               (Registrant's telephone number, including area code)
               
                                    NOT APPLICABLE
      --------------------------------------------------------------------
      (Former name, former address, and former fiscal year, if changed
       since last report)

     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 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 [  ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
     Indicate by check mark whether the registrant has filed all documents
     and reports required to be filed by sections 12, 13, or 15(d) of the
     Securities Exchange Act of 1934 subsequent to the distribution of
     securities under a plan confirmed by a court.   YES [  ]   NO [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares outstanding of each  of the issuer's
     classes of common stock, as of the latest practicable date:

     As of March 19, 1997, the Registrant had 8,282,069 shares  of its common
     stock, par  value $.01, and 2,000,000 shares of it Class B common stock,
     $.01 par value,  that were outstanding.
     


                                      PART I

                              FINANCIAL INFORMATION


               ITEM 1.  FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q

     Digitran Systems, Incorporated (the "Registrant") files herewith
     unaudited condensed balance sheets of the Registrant as of January 31,
     1997, and April 30, 1996 ( the Registrant's most recent fiscal year ),
     unaudited condensed statements of operations for the three months and
     nine months  ended January 31, 1997 and 1996, and unaudited condensed
     statements of cash flows for the nine months ended January 31, 1997 and
     1996, together with unaudited condensed notes thereto.  In the opinion
     of management of the Registrant, the financial statements reflect all
     adjustments, all of which are normal recurring adjustments, necessary to
     fairly present the financial condition of the Registrant for  the
     interim periods presented.  The financial statements included in this
     report on Form 10-QSB should be read in conjunction with the audited
     financial statements of the Registrant and the notes thereto included in
     the annual report of the Registrant on Form 10-KSB for the year ended
     April 30, 1996.




                 DIGITRAN SYSTEMS, INCORPORATED AND SUBSIDIARY
<TABLE>
<CAPTION>
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                 ASSETS
                                                                 (Audited)
                                          January 31,             April 30,
                                             1997                   1996
                                          -----------            -----------
<S>                                       <C>                    <C>
   CURRENT ASSETS:
      Cash                                $   188,486            $    71,589
      Accounts receivable                     392,748                189,432
      Inventories                             778,619              1,535,613
      Prepaid expenses                         11,580                  1,380
      Note receivable, current portion        120,000                120,000
      Cost & earnings in excess of
        billings                              658,131                484,800
                                          -----------            -----------
           Total Current Assets             2,149,564              2,402,814

   PROPERTY AND EQUIPMENT, net                845,198                951,459
   SIMULATOR DEVELOPMENT COSTS, net           877,467              1,089,313
   NOTE RECEIVABLE                            280,000                280,000
   RENTAL & DEMO SYSTEMS, net                 522,968                260,996
   INVESTMENT IN JOINT VENTURE                      -                 47,052
                                          -----------            -----------
           Total Assets                   $ 4,675,197            $ 5,031,634
                                          ===========            ===========
</TABLE>

<TABLE>
<CAPTION>
                     LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                       <C>                    <C>
   CURRENT LIABILITIES:
      Accounts payable                    $   865,407            $   677,431
      Accrued liabilities                     413,733                474,637
      Current notes payable                   580,424                291,447
      Notes payable-current portion           366,495                448,050
                                          -----------            -----------
           Total Current Liabilities        2,226,059              1,891,565


   NOTES PAYABLE,  net of current
     portion                                  878,145                633,768
                                          -----------            -----------
           Total Liabilities              $ 3,104,204            $ 2,525,333
                                          -----------            -----------
   STOCKHOLDERS' EQUITY:
      Preferred stock                     $     3,717            $     3,717
      Common stock                             82,821                 82,821
      Class B common stock                     20,000                 20,000
      Additional paid in capital            5,984,101              5,984,101
      Accumulated deficit                  (4,519,646)            (3,584,338)
                                          -----------            -----------
           Total Stockholders' Equity       1,570,993              2,506,301
                                          -----------            -----------
           Total Liabilities and
             Stockholders' Equity         $ 4,675,197            $ 5,031,634
                                          ===========            ===========
</TABLE>

     NOTE:  The accompanying notes are an integral part of these financial
            statements.



                   DIGITRAN SYSTEMS, INCORPORATED AND SUBSIDIARY
<TABLE>
<CAPTION>
             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       
                                          For the Three Months Ended             For the Nine Months Ended
                                                  January 31,                            January 31,
                                        ------------------------------         -------------------------------
                                             1997              1996                  1997              1996
                                        ------------     -------------         -------------     -------------
<S>                                     <C>              <C>                   <C>               <C>
NET SALES                               $   1,497,018    $   1,377,698         $   3,076,900     $   2,874,489
                                        -------------    -------------         -------------     -------------

OPERATING EXPENSES:
  Cost of Goods Sold                          629,537          707,045             1,866,711         1,461,197
  Selling, Marketing and
    Customer Support                          779,269          577,033             1,912,458         1,467,184
                                        -------------    -------------         -------------     -------------

     Total Operating Expenses               1,408,806        1,284,078             3,779,169         2,928,381
                                        -------------    -------------         -------------     -------------

INCOME (LOSS) FROM OPERATIONS                  88,212           93,620              (702,269)          (53,892)
                                        -------------    -------------         -------------     -------------

OTHER INCOME (EXPENSE):
  Interest expense                            (72,833)         (42,147)             (185,987)         (184,345)
  Equity loss from joint venture                  -0-          (99,414)              (47,052)         (126,723)
                                        -------------    -------------         -------------     -------------

     Total Other Income (Expense)             (72,833)        (141,561)             (233,039)         (311,068)
                                        -------------    -------------         -------------     -------------

INCOME (LOSS) BEFORE  INCOME TAXES             15,379          (47,941)             (935,308)         (364,960)
                                        -------------    -------------         -------------     -------------

CURRENT INCOME TAX
  EXPENSE (BENEFIT)                                 -                -                     -                  -

DEFERRED INCOME TAX
  EXPENSE (BENEFIT)                                 -                -                     -                  -
                                        -------------    -------------         -------------     --------------

NET INCOME (LOSS)                       $      15,379    $     (47,941)        $    (935,308)    $     (364,960)
                                        -------------    -------------         -------------     --------------

INCOME (LOSS) PER COMMON SHARE                                                                        
  PRIMARY                               $         .00    $        (.01)        $        (.09)    $        (.04)
  FULLY DILUTED                         $         .00    $         N/A         $         N/A     $         N/A
</TABLE>

     NOTE:  The accompanying notes are an integral part of these financial
            statements.



                   DIGITRAN SYSTEMS, INCORPORATED AND SUBSIDIARY
<TABLE>
<CAPTION>
             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                              For the Nine
                                                              Months Ended
                                                              January 31,
                                                      ---------------------------
                                                        1997              1996
                                                      ---------         ---------
<S>                                                   <C>               <C>
Cash Flows (To) From Operating Activities:

  Net loss                                            $(935,308)        $(364,960)
                                                      ---------         ---------

  Adjustments to reconcile net loss
       to net cash used by operating activities:

    Amortization and depreciation                       729,159           557,616
    Loss from joint venture                              47,052           126,723
     Gain on sale of equipment                                -            (2,366)

    Changes in assets and liabilities:
     Decrease (increase) in accounts receivable        (203,316)                -
     Decrease (increase) in inventory                   756,994           317,221
     Decrease (increase) in costs &  earnings
       in excess of billings                           (173,331)         (536,910)
     Decrease (increase) in other current assets        (10,200)           89,598


     Increase (decrease) in current liabilities         127,072           (22,240)
     Increase (decrease) in current notes payable       288,977                 -
                                                      ---------          ---------

        Total adjustments                             1,562,407           529,642
                                                      ---------          ---------


  Net Cash Flow Provided by Operating Activities        627,099           164,682
                                                      ---------          ---------

Cash Flows From (To) Investing Activities:

    Payments for capitalized simulator
      development costs                                (144,126)         (186,845)
    Purchase of  PP&E - net of retirements              (17,697)           (6,779)
    Proceeds from disposal of  PP&E                           -             6,665
    Purchase of truck demo unit                        (501,455)                -
                                                       ---------         ---------

   Net Cash Used In Investing Activities               (663,278)         (186,959)
                                                       ---------         ---------

Cash Flows from Financing Activities:

    Proceeds from long-term obligations                   6,000            77,860
    Payments on long term obligations                  (229,173)         (158,470)
    Proceeds from notes payable and lines of credit     996,019           778,247
    Payments for notes payable and lines of credit     (619,770)         (624,084)
    Proceeds from stock issuance                              -            75,000
                                                       ---------         ---------

        Net Cash Provided by Financing Activities        153,076           148,553
                                                      ---------         ---------

Net Increase  in Cash                                   116,897           126,276

Cash at Beginning of Period                              71,589            18,899
                                                      ---------         ---------

Cash at End of Period                                 $ 188,486         $ 145,175
                                                      ---------         ---------

Supplemental Disclosure of Cash Flow Information:

    Cash paid during the year for:
        Interest                                      $ 132,218         $ 218,911
        Income taxes                                          -                 -
                                                      ---------         ---------
Supplemental Schedule of Noncash Investing and
Financing Activities:                 NONE
</TABLE>


     NOTE:  The accompanying notes are an integral part of these financial
            statements.



                  DIGITRAN SYSTEMS, INCORPORATED AND SUBSIDIARY

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     

     NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying financial statements have been prepared by the Company
     without audit.  In the opinion of management,  all adjustments (which
     include only normal recurring adjustments ) necessary to present fairly
     the financial position and results of operations at January 31, 1997 and
     for all periods presented have been made.

     Certain information and footnote disclosures normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted.  It is suggested
     that these condensed unaudited financial statements be read in
     conjunction with the financial statements and notes thereon included in
     the Company's April 30, 1996 audited financial statements.  The results
     of operations for the period ended  January 31, 1997 are not necessarily
     indicative of the operating results for the full year.

     The Company's simulator products result in annual sales characterized
     historically by  large dollar individual sales of relatively low volume
     which are project oriented.  The longer, variable length lead times
     required to complete the product projects, combined with the percentage
     completion method of recognizing revenues can lead to dramatically
     different results of operations between quarters, and may not be
     indicative of annual results.  All quarterly information should be
     considered in light of the last fiscal year and the current year to date
     operations of the Company.

     Principles of Consolidation - The unaudited consolidated financial
     statements include the accounts of the Company and its wholly-owned
     subsidiary.  All significant intercompany accounts and transactions have
     been eliminated in consolidation.

     Cash and Cash Equivalents - For purposes of the statement of cash flows,
     the Company considers all highly liquid debt instruments purchased with
     a maturity of three months or less to be cash equivalents.

     Net Income (Loss) per Common Share - The computation of  net income
     (loss) per share of common stock is based on the weighted average shares
     outstanding during the periods presented.  Fully diluted loss per share
     is not presented because the effect of outstanding options and other
     common stock equivalents is antidilutive.

     Inventories - Inventories are stated at the lower of cost or market.
     Cost is determined on the first-in, first-out method.

     Depreciation Methods - The cost of property and equipment is depreciated
     using the straight-line method over the estimated useful lives of the
     related assets.  The estimated useful lives range from 3 - 40 years.

     Research and Development - The Company expenses software development
     costs incurred prior to the establishment of technological feasibility
     as research and development costs.

     Capitalized Software Costs - The Company capitalizes software
     development costs incurred after technological feasibility of the
     software product has been established.  Amortization of the capitalized
     costs is computed on a product by product basis over the estimated
     useful lives of the products.  Software costs are carried at the net of
     unamortized cost or net realizable value.  Net realizable value is
     reviewed on an annual basis after assessing potential sales of the
     product.

     NOTE 2 - COMMITMENTS AND CONTINGENCIES

     Material commitments and contingencies at January 31, 1997 include
     certain shareholder litigation and possible going concern considerations
     as discussed below.

     Shareholder Litigation

     On April 1, 1993, the Securities and Exchange Commission (the
     "Commission" or "SEC") issued an order directing that an investigation
     be conducted by the Salt Lake City office of the Commission to determine
     whether the Company or any of its affiliates or any other person has
     engaged in violations of certain Federal laws.  On May 21, 1993, the
     Commission issued an order suspending trading of the Company's
     securities. On December 29, 1994, a complaint against the Company was
     filed in U.S. District Court, District of Utah, Northern Division by the
     Securities and Exchange Commission.  The complaint named, as defendants,
     Digitran Systems, Inc., Donald Gallent (a former officer and director)
     and James R. Bryan (a former officer).  Mr. Gallent is no longer
     associated with the Company.  Mr. Bryan has resigned as an officer and,
     while still an employee of the Company, is not involved in financial
     disclosure.  The complaint cited violations of Sections 17(a) of the
     Securities Act of 1933, as amended, and Sections 10(b), 13(a) and 13(b)
     of the Securities Exchange Act of 1934, as amended, and Rules 10b-5,
     12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2 promulgated thereunder.  A
     Final Judgment was filed by the Securities and Exchange Commission on
     September 25, 1995 in the United States District Court, District of
     Utah, Northern Division.  Without admitting or denying the allegations
     of the complaint except as to the jurisdiction of the court, the Company
     has consented to the Judgment.  The Judgment permanently restrains and
     enjoins the Company from engaging in acts and practices which constitute
     and will constitute violations of all applicable rules and regulations
     from the securities acts.  There was no monetary penalty assessed by the
     SEC in this matter.

     In May 1994, a consolidated amended complaint was filed for a proposed
     Class Action by Gregory McEwen and Larry Parker, on behalf of themselves
     and all those similarly situated, in the United States District Court
     for the District of Utah, Salt Lake City Division.  The action
     consolidated two separate actions filed in August 1993 and February
     1994, respectively, against Digitran Systems, Inc., Digitran, Inc.,
     Donald G. Gallent, Loretta P. Trevers; Chris S. Coray; Harris G. LeRoy,
     II; James R. Bryan; and the accounting firm, Grant Thornton.  Included
     as Plaintiffs was a proposed class consisting of all persons who
     purchased securities of Digitran Systems, Incorporated during the period
     from March 19, 1992 to May 21, 1993.  The Complaint alleged that the
     Company published or released false or misleading information relating
     to the recognition of income on certain contracts and improperly
     capitalized certain simulator development costs.  The complaint also
     alleged that certain of the defendants engaged in insider trading
     activities.  The complaint sought the following relief:  1)  declaring
     the action to be a proper class action; 2) awarding compensatory and
     punitive damages, including interest and that such damages be trebled;
     3) awarding extraordinary equitable and/or injunctive relief and 4)
     awarding costs and expenses, including attorney's fees and other costs.
      The court certified the Plaintiff's class, with the exception of the
     Utah Securities Act Claim.
     
     In May 1994, Grant Thornton filed a cross-claim against Digitran
     Systems, Incorporated, Digitran, Inc., Donald G. Gallent, Loretta P.
     Gallent and James R. Bryan.  The cross-claim 1) alleged common law fraud
     based on activities relating to the April 30, 1992, 1991 and 1990
     financial statements and 2) sought contribution under federal securities
     laws and the Utah Uniform Securities Act. The cross-claim sought damages
     to be established at trial and indemnification with respect to any
     judgment that may be entered against Grant Thornton in this action.

     In June 1994, the Company filed a cross-claim against Grant Thornton.
     The cross-claim alleged breach of contract and negligence for failure of
     Grant Thornton to follow generally accepted auditing standards in the
     audit of the Company's financial statements.  The cross-claim also
     sought contribution under federal and state securities laws.  The cross-
     claim sought damages to be established at trial, indemnification with
     respect to any judgment that may be entered against the Company,
     contribution and consequential damages.

     On October 6, 1995, an intervention was filed by a number of
     shareholders who purchased securities during the class period, but who
     purportedly excluded themselves from the class.  The intervention also
     concerned Shareholders of the corporation who had owned stock in the
     corporation for a number of years.  The alleged violations of securities
     laws mirrored those filed by the class plaintiffs. As a result of the
     rising costs associated with the litigation, the Company has agreed to a
     settlement with the Intervenors which requires issuance of common stock
     valued at approximately $134,000, conversion of approximately 86,000
     shares of preferred stock to common stock on a three for one basis, and
     the assignment of its action against Grant Thornton to the Intervenors
     in exchange  for the payment of all costs associated with the action and
     for dismissal of all claims by the Intervenors against the Company. In
     the event that Intervenors are successful in this matter against Grant
     Thornton, the Company shall share equally with the Intervenors in the
     recovery, less costs and attorney's fees.  As of August 12, 1996, the
     Intervenors' action was dismissed by the Court against Grant Thornton,
     with the exception of the action assigned by the Company against Grant
     Thornton, and the actions of all those Intervenors who have identical
     claims as those set forth by the class plaintiffs.

     Following the conclusion of the Class Action trial against the Company,
     its officers and directors, a federal jury awarded the Class Plaintiffs
     $11,878,211 against Donald G. Gallent, the Company's former president,
     Digitran Systems, Inc. and Digitran, Inc., apportioning this award with
     50% liability against Mr. Gallent  individually, and 25% against each of
     the companies under the Section 10(b) of the Securities Exchange Act and
     Rule 10b-5 Claims.  The jury also awarded the Class Plaintiffs  the sum
     of $2,002,306 against each of these three defendants under Section 12(2)
     of the Securities Act of 1933.  All of the other individual defendants,
     including Loretta Trevers, the present Chairman of the Board, James
     Bryan, former CFO and present General Manager of the Company, as well as
     the former outside directors, Chris Coray and Harris LeRoy, were
     exonerated from all of the claims asserted by the Class Plaintiffs.

     After considering the jury verdict, the court entered a judgment on
     February 14, 1997, dividing the Rule 10B-5 liability among the three
     defendants as follows:  against Donald G. Gallent, individually, the sum
     of $5,939,105.50; against Digitran Systems, Inc., the sum of
     $2,969,552.75; and  against Digitran, Inc., the sum of $2,969,552.75.
     These sums bear interest according to the Judgment at the rate of 5.64%
     per annum on and after entry of Judgment.  The Court did not alter the
     award as to the Section 12(2) claims.  The judgment concurred with the
     jury's finding exonerating the individual defendants, excluding Donald
     G. Gallent.  Following the entry of the Judgment, Digitran Systems, Inc.
     and Digitran, Inc.  Filed a Motion for Judgment Notwithstanding the
     Verdict, and for a New Trial.  The Class Plaintiffs have likewise filed
     similar Motions.  These matters remain before the Court and no ruling
     has been made.  Currently, the Company continues to negotiate with Class
     Plaintiffs in an attempt to resolve the judgment and all outstanding
     disputes between the parties.

     In the normal course of business, there may be various other legal
     actions and proceedings pending which seek damages against the Company.
     In the opinion of management, the ultimate resolution of these matters
     will not have a material adverse impact upon the Company, its business
     or property.

     Going Concern

     The accompanying financial statements have been presented on a going
     concern basis which contemplates the realization of assets and the
     satisfaction of liabilities in the normal course of business. The
     Company is the defendant in a class action lawsuit in which the Court
     entered a judgment on February 14, 1997, leaving the Company with a
     potential liability of approximately $7,000,000. Should the Company fail
     to prevail in its Motions now pending before the court, or in its
     efforts to negotiate a more favorable settlement with Class Counsel, it
     may be unable to continue in existence.

     The Company has settled with certain shareholders based on an issuance
     of the Company's stock and is continuing to attempt to find a similar
     equitable settlement with the remaining shareholder litigants which
     would be in the best interests of all parties involved.

     The Company has been unable to resume trading and has been denied access
     to its traditional lines of credit.  However, the Company has been able
     to obtain short term borrowings and lines of credit with local
     government agencies, a financial institution and certain private
     individuals, which have been backed by certain Company receivables.
     During the last three years, the Company has relied primarily on cash on
     hand from new sales and borrowing to fund operations.  During 1993 and
     1994, the Company committed significant amounts of its cash on hand to
     finance the build up of inventories.  From late 1993 through December
     1994, management was required to spend significant amounts of time and
     resources on the critical matters regarding the SEC investigation and
     shareholder suit, which are peripheral to operations. Consequently,
     management has had difficulty attracting additional management personnel
     to assume some of the tasks created, due to the factors noted above and
     cash flow constraints.  This scarcity of management resources has
     resulted in operational results being diminished from those which
     otherwise might be anticipated by the Company.  The combination of these
     factors has resulted in periods of cash liquidity shortfalls which were
     funded primarily by the sales of simulators from inventory, the sale of
     certain operating assets, the placing of mortgages on real estate which
     was previously debt free, and loans from quasi public institutions, and
     the forbearance of the Company's vendors in accepting late payments on
     outstanding invoices.  The Company anticipates that funding for
     operations in the following quarters will come from growing sales
     proceeds, and/or equity funding.

     The Company's continued existence is dependent upon its ability to focus
     on operational considerations in order to create the growth in sales
     opportunities and to continue bringing to closure the proposals
     currently outstanding to potential customers.  Management plans to
     devote more focus and financial resources on operational considerations.

     If management is unable to achieve expected results, or obtain equity
     funding, due to sales shortfalls or other unanticipated events, it may
     be required to reduce operations, refinance significant assets, or
     undertake other actions as may be appropriate.

     NOTE 3 - CONFIDENTIALITY AND NON-DISCLOSURES AGREEMENTS

     The Company relies on confidentiality and non-disclosure agreements with
     its employees and customers, appropriate security measures, and the
     encoding of its software  in order to protect the proprietary nature of
     its technology.

     NOTE 4 - CONCENTRATIONS OF CREDIT RISK

     Most of the Company's business activity is with oil companies, port
     authorities, training institutions and various other entities, often
     outside the United States.  Normally, the Company attempts to secure
     shipments outside the United States through letters of credit and/or
     progress payments in advance of delivery.

     In cases for which shipments are made on open accounts, the Company
     normally retains title or ownership claims to the equipment shipped by
     terms of its contracts or agreements until significant payment has been
     secured.

     NOTE 5 - CAPITAL STOCK

     The Company's capital stock consists of common stock, Class B common
     stock, and preferred stock.  The common stock provides for a
     noncumulative, $.05 per share annual dividend and a $.01 per share
     liquidation preference over Class B common.  In addition, the Company
     must pay the holders of the common stock a dividend per share at least
     equal to any dividend paid to the holders of Class B common.  Holders of
     the common stock are entitled to one-tenth of a vote for each share
     held.

     Class B common may not receive a dividend until an annual dividend of at
     least $.05 is paid on the common stock.  Holders of Class B common have
     preemptive rights with respect to the Class B common stock and may
     convert each share of Class B common into one share of the common stock
     at any time.  Holders of Class B common are entitled to one vote per
     share held.

     The Series 1 Class A 8% Cumulative Convertible Preferred Stock has a par
     value of $.01 per share.  As of October 31, 1996 there were 371,695
     shares outstanding.  Holders of preferred shares are entitled to
     cumulative dividends of 8% per annum on the stated value of the stock,
     designated as $7 per share.  Holders of Preferred Stock are entitled to
     receive cumulative dividends at the annual rate of $.56 per share,
     payable semi-annually on September 15 and March 15, beginning September
     15, 1992. As part of a settlement with intervenor preferred stock
     shareholders 86,155 preferred shares were consented to be converted to
     three shares of Common Stock reducing dividends in arrears by $144,740
     and the semi-annual dividend payment by $24,123.  The Company paid
     dividends of $27,362 for September 15, 1992 and $136,682 for March 15,
     1993.  No dividends have been paid since March 15, 1993 resulting in
     dividends in arrears in excess of $750,000 after the conversion referred
     to above.  The future payment of dividends on the Preferred Stock is
     dependent on further settlements and also upon the generation of future
     cash flow and profit by the Company sufficient to meet such obligations
     and allow the Company to pay such dividends under Delaware and Utah
     corporate law. There may be legal restrictions on the payment of
     dividends for periods in which losses are incurred and/or the Company
     has an accumulated deficit.  Dividends are not payable on any other
     class of stock ranking junior to the preferred stock until the full
     cumulative dividend requirements of the preferred stock have been
     satisfied.  The preferred stock carries a liquidation preference equal
     to its stated value plus any unpaid dividends.  Subject to certain
     registration requirements, convertibility of any preferred stock issued
     may be exercised at the option of the holder thereof at two shares of
     common stock for each preferred share converted.  Holders of the
     preferred stock are entitled to one tenth of a vote for each share of
     preferred stock held.  The Company may, at its option, redeem at any
     time all shares of the preferred stock or some of them on notice to each
     holder of preferred stock at a per share price equal to the stated value
     ($7.00) plus all accrued and unpaid dividends thereon (whether or not
     declared) to the date fixed for redemption, subject to certain other
     provisions and requirements.
     

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     CAPITAL AND LIQUIDITY

     At January 31, 1997, the Registrant had total current assets of
     $2,149,564 and total current liabilities of $2,226,059 representing a
     negative working capital position.  This  working capital position is
     reflective of Registrant's overall financial struggle.

     At January 31, 1997, the level of inventory decreased significantly from
     $1,535,613 at April 30, 1996 (end of the previous fiscal year) to
     $778,619. Due to pending terms with potential truck customers, the
     Registrant determined that the existing finished truck simulation system
     should be used as a demonstration unit and/or a rental unit as
     customizations are completed for certain truck simulation customers.
     The $501,155 cost of the system was reclassified from inventory to a
     fixed asset demonstration/rental system. This reclassification may
     enable the Registrant to immediately place the rental system at a
     customer's facilities while customizations are made for that customer,
     possibly helping the Registrant expedite cash inflows.  The Registrant
     has also placed several finished simulation systems during the past two
     quarters, further reducing the level of inventory.
     
     Accounts payable increased from $677,431 at April 30, 1996 to $865,407
     at January 31, 1997, a further indication of the Registrant's reliance
     on vendors to obtain the necessary credit on which to operate.

     The Registrant relied extensively on proceeds from sales and short term
     borrowings on sales contracts for operating capital during the first
     nine months of fiscal 1997, as it continued to be without access to
     traditional lines of credit with the it's bank or capital markets during
     that period; however, the Registrant was able to rely on alternative
     sources of credit to partially fund operations.

     Cost and earnings in excess of billings increased to $658,131 at January
     31, 1997 from $484,800 at April 30, 1996.  The balance under this
     caption reflects the Registrant's sales of systems which require
     software customization prior to delivery.

     The Registrant currently has no material commitments for capital
     expenditures.

     The Registrant was able to lease certain office space in its
     headquarters building to others at a reasonable return to the
     Registrant.

     Through the first nine months of the current fiscal year, the Registrant
     has remained in a "tight" cash and liquidity position.  Management's
     intended marketing and sales efforts have been distracted by the on-
     going legal matters of the Registrant.  (See Part II, Item 1, "Legal
     Proceedings".)  Management hopes that a final settlement can be reached
     with class counsel in the near future, and management can again focus on
     the sales and marketing efforts necessary to bring the level of sales
     required for profitability.  In the interim, the Registrant may be
     required to obtain the needed financing that is not provided through
     product sales using the alternatives available to it, which alternatives
     are usually more expensive.

     MANAGEMENT'S PLAN FOR NEAR TERM OPERATIONS

     Pursuant to an agreement with Evans and Sutherland, Inc. ("E & S"), a
     Utah corporation specializing in simulation and graphics, the Registrant
     has begun the creation of the next generation of crane and truck
     simulation products based on the E & S "Liberty Series" image generator.
     The Registrant anticipates receiving contracts from customers for
     upgrades to the new system.  The conversion of many of the Registrant's
     software modules to the E & S system has already taken place and
     additional modules will be converted as requested  by specific
     customers.

     The Registrant hired a new marketing director for the petroleum market.
     This market is being aggressively pursued and, hopefully, will be
     expanded further through the sales of upgrades for the systems owned by
     existing customers, by providing support and maintenance services, in
     addition to the sale of new systems.  The petroleum simulator has been
     upgraded to a Windows-based application and additional upgraded features
     are currently in development.

     Due to the need for the Registrant to operate in large part from its own
     capital resources, it has been forced to adjust its disbursements
     relative to marketing and property and equipment purchases. Management
     has attempted to prioritize the expenditures and to maximize the
     benefits from the expenditures being made. If the current trend
     continues into the future, the current low levels of expenditures on
     property and equipment may also lead to inefficiencies which would not
     otherwise occur.

     RESULTS OF OPERATIONS

     Three Months Ended-January 31, 1997

     The Registrant's revenues from operations for the quarter ended January
     31, 1997 were $1,497,018 as compared to $1,377,698 for the quarter ended
     January 31, 1996.  The increase in sales reflects the commitment by
     management to renewed marketing efforts.

     Overall operating expenses have increased to $1,408,806 for the three
     months ended January 31, 1997 from a total of $1,284,078 for the same
     period in 1996.  The increase reflects the increased cost of sales and
     increasing amortization of intangible costs, along with some increased
     legal and professional fees.

     Selling, marketing and customer support expenses increased to $779,269
     for the quarter ended January 31, 1997 as compared to $577,033 for the
     same period in 1996.  The increase is attributable to increased
     professional fees, and the increased costs of some marketing personnel.

     During the quarter ended January 31, 1997, the Registrant recorded
     operating income of $88,212 for the three months then ended.  With the
     inclusion of interest expense, the Registrant had overall net income of
     $15,379 for the three months ended January 31,1997, as compared to a net
     loss of $(47,941) for the three months ended January 31, 1996.

     Nine Months Ended January 31, 1997

     Revenues for the nine months ended January 31, 1997 were $3,079,900 an
     increase of approximately 7% over the revenues of $2,874,489 recorded
     during the first nine months of fiscal 1996.  For the most part,
     management believes the Registrant to be fortunate to have maintained a
     level of sales comparative to the prior year, given the distraction of
     key marketing personnel during the two quarters ended January 31, 1997.

     Operating expenses for the first nine months of fiscal 1997 have
     increased to $3,779,169 from a total of $2,928,381 for the nine months
     ended January 31, 1996, an increase of approximately 29%. The major
     single component was the increase in amortization and depreciation of
     intangibles and fixed assets. Additionally, management has continued its
     commitment to using more resources for the selling and marketing
     efforts.  General and administrative expenses include the increased
     legal and professional fees as the legal activity increased during the
     period of the class action trial.

     The Registrant has a net loss of $935,308 for the nine months ended
     January 31, 1997 as compared to a net loss of $364,960 for the nine
     months ended January 31, 1996.  The level of sales for the first nine
     months of fiscal 1997 exceeds the prior year by approximately 7%, and
     management is hopeful the trend can be maintained and expanded in the
     future as the Registrant attempts to focus on marketing its products
     more, as it achieves final resolution to its legal matters.  However,
     some of the increase in sales was achieved by using pricing discounts to
     bring the contract to fruition.  Hence, cost of sales increased to
     $1,866,711 for the nine months ended January 31, 1997 an approximate
     increase of 28% over  the similar period in the prior fiscal year.  Cost
     of Sales as a percentage of revenues increased to approximately 61% for
     the nine months ended January 31, 1997 versus being approximately 51%
     for the similar period of the nine months ended January 31, 1996.

     Due to the somewhat lengthy period of time required between the
     generation of a sales lead with a potential customer and the completion
     of a contract with that customer, results of efforts taken in the past
     few periods will likely start to be realized during the next few
     quarters. Management is encouraged by the progress observed in its sales
     and marketing efforts.


                                     PART II

                                OTHER INFORMATION



                           ITEM 1.   LEGAL PROCEEDINGS


     Following the conclusion of the Class Action trial against the Company,
     its officers and directors, a federal jury awarded the Class Plaintiffs
     $11,878,211 against Donald G. Gallent, the Company's former president,
     Digitran Systems, Inc. and Digitran, Inc., apportioning this award with
     50% liability against Mr. Gallent  individually, and 25% against each of
     the companies under the Section 10(b) of the Securities Exchange Act and
     Rule 10b-5 Claims.  The jury also awarded the Class Plaintiffs  the sum
     of $2,002,306 against each of these three defendants under Section 12(2)
     of the Securities Act of 1933.  All of the other individual defendants,
     including Loretta Trevers, the present Chairman of the Board, James
     Bryan, former CFO and present General Manager of the Company, as well as
     the former outside directors, Chris Coray and Harris LeRoy, were
     exonerated from all of the claims asserted by the Class Plaintiffs.

     After considering the jury verdict, the court entered a judgment on
     February 14, 1997, dividing the Rule 10B-5 liability among the three
     defendants as follows:  against Donald G. Gallent, individually, the sum
     of $5,939,105.50; against Digitran Systems, Inc., the sum of
     $2,969,552.75; and  against Digitran, Inc., the sum of $2,969,552.75.
     These sums bear interest according to the Judgment at the rate of 5.64%
     per annum on and after entry of Judgment.  The Court did not alter the
     award as to the Section 12(2) claims.  The judgment concurred with the
     jury's finding exonerating the individual defendants, excluding Donald
     G. Gallent.  Following the entry of the Judgment, Digitran Systems, Inc.
     and Digitran, Inc.  Filed a Motion for Judgment Notwithstanding the
     Verdict, and for a New Trial.  The Class Plaintiffs have likewise filed
     similar Motions.  These matters remain before the Court and no ruling
     has been made.  Currently, the Company continues to negotiate with Class
     Plaintiffs in an attempt to resolve the judgment and all outstanding
     disputes between the parties.

     Presently, the Registrant (the parent company only, not the operating
     subsidiary) remains in Chapter 11 and is protected under the bankruptcy
     laws. Although a judgment from the trial court has been entered in the
     shareholder class action, numerous post-judgment motions are expected,
     during which time the Registrant continues in its efforts to negotiate
     with class counsel for a resolution of the matter in full, and the
     ultimate extent of the damages to be paid by  the Registrant remains an
     unknown.
     

           ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were put to a vote of shareholders during the quarter ended
     January 31, 1997.


                     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     Exhibits

     None.

     Reports on Form 8-K

     None.

                                    SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
     amended, the Registrant has duly caused this report to be signed on its
     behalf by the undersigned thereunto duly authorized.


                                   Digitran Systems, Incorporated
                                   

     Date:  March 21, 1997         By     /s/ Kitt R. Finlinson
                                     Kitt R. Finlinson, Chief Financial Officer
                                     (Duly Authorized Officer and Principal
                                     Financial Officer)