SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.  20549

                                      FORM 10-KSB

                   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                          THE SECURITIES EXCHANGE ACT OF 1934

                      For The Fiscal Year Ended January 31, 1997            
                             Commission File Number 1-9115

                                    COMPUTRAC, INC.
                    (Name of small business issuer in its charter)           

                     Texas                             75-1540265
          (State or other jurisdiction of    I.R.S. employer identification no.)
           incorporation or organization)               

          222 Municipal Drive, Richardson, Texas              75080
          (Address of principal executive offices)          (Zip Code)

              Issuer's telephone number, including area code (972) 234-4241

               SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                    Name of Each Exchange
                    Title of Each Class               on Which Registered


                Common Stock, $.01 par value       American Stock Exchange

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  NONE

          Check whether the issuer (1) filed all reports required to be filed by
          Section 13 or 15(d) of the Exchange Act during the past 12  months (or
          for such shorter period that the Registrant was required to  file such
          reports) and (2) has been subject to such filing requirements  for the
          past 90 days.  Yes (X)  No (  )

          Check if  disclosure of  delinquent filers  pursuant  to Item  405  of
          Regulation S-B is not contained in  this form, and no disclosure  will
          be contained, to  the best  of registrant's  knowledge, in  definitive
          proxy or information statements incorporated by reference in  Part III
          of this Form 10-KSB or any amendment to this Form 10-KSB [  ]

          The issuer's revenues for the fiscal year ended January 31,  1997 were
          $4,648,378.

          As of April 23, 1997, the  aggregate market value of the voting  stock
          held by non-affiliates of the issuer was $5,256,303.

          As of April 23, 1997, the number of shares outstanding of the issuer's
          common stock was 6,279,355.

                          DOCUMENTS INCORPORATED BY REFERENCE
                          
          Parts of the  issuer's Proxy  Statement for the  issuer's 1997  Annual
          Meeting of Shareholders are incorporated by  reference in Part III  of
          this Form 10-KSB Report.

          Transitional Small Business Disclosure Format (check one)
          Yes (  ) No  (X)
          <PAGE>

                                        PART I

          Item 1.   Description of Business

          General

                    The Company was  organized under the  laws of  the State of
          Texas in January, 1977.  The  Company develops, markets, services and
          supports  integrated  computer  systems   and  software  applications
          designed for law firms.  The  Company's products assist its customers
          in such applications as timekeeping, tracking disbursements, billing,
          accounting, management and financial  reporting, conflict of interest
          and other law firm management applications.   The Company markets its
          systems throughout the United States and Canada.

                    The Company believes that, historically, it has been one of
          the major suppliers of computer systems  and services to mid-size and
          large law firms. The majority of  customer systems currently in place
          utilize Hewlett-Packard equipment, which the Company is authorized to
          resell to  end-users.   Prices  for  these systems  have  ranged from
          $60,000 for a small firm to $650,000 or more for an integrated system
          for accounting  and practice  support  applications for  a  large law
          firm.   All  of these  systems  have been  sold  in  conjunction with
          services including a separately  priced annual maintenance agreement,
          customized conversion services, customer  training, customer support,
          product enhancements  and  software  maintenance  services.    Annual
          maintenance agreements and ongoing support services relative to these
          system, provide  the  Company  with a  continuing  source  of revenue
          during the term of the agreement.

                    The Company  recently  introduced a  new  time  and billing
          system designed for small law firms  called DimensionO.  This product
          is a client/server software system created exclusively with Microsoft
          development tools operating on  micro-computers with 32-bit Windows95
          or Windows NT operating environments.

          Software

                    Software  which  enables  law  firms  to  more  efficiently
          perform  and   evaluate   administrative   and   business   functions
          constitutes the  Company's  principal  product.    The  core  product
          designed for the mid-size to large law  firm market is called the Law
          Firm Management System (LFMS).   This product  runs on mini-computers
          in either  the  HP3000  Series  or  the  HP9000  Series,  while  some
          peripheral products  run  on  IBM-compatible  micro-computers.   Full
          interoperability  support  is   provided  for   all  popular  network
          operating systems,  including  Novell  NetwareO,  Banyan  VinesO, and
          Microsoft NTO,  thus  enabling a  law  firm to  upgrade  its computer
          hardware without  having  to  replace the  software.    The Company's
          software applications  run  in  several  different  operating  system
          environments,  including  UNIX,  MPE/iXO  (native  HP),  MS/DOSO  and
          MS/Windows.

                    The core  of  the  LFMS software  includes  the  ability to
          capture  time  and  disbursements  incurred  on  behalf  of  clients,
          billing, trust  accounting,  accounts  payable,  accounts receivable,
          general  ledger,  drill-down  inquiry,  profitability  analysis,  and
          management and  financial  reporting.   Practice  management software
          consists of modules such  as conflict of  interest software developed
          by the Company and products developed by third-party software vendors
          to accomplish  functions  including marketing,  file  management, and
          overall better management of the client's receivables effort.

                    The new Dimension  product provides  the ability  for small
          firms, including sole  practitioners, to manage  their business using
          professional business products.  The  product was created exclusively
          with Microsoft development  tools such as  MSAccess, SQL-Server, C++,
          OLE and ODBC.  Use of these  products allows the Company to integrate
          with the  Microsoft  Office  products  to  accomplish  tasks  such as
          uploading budgets from Excel, alerting  professionals within the firm
          when a value  has reached a  specified percentage of  the budget, and
          generating client invoices using  Microsoft Word with  the ability to
          deliver the invoice to the client via the Internet.  Dimension is the
          Company's first Windows-based law firm management system designed for
          use with personal computers, thus expanding  the potential market for
          the Company's products.

          <PAGE>
                    The  Company  does  not  sell  or  transfer  title  to  its
          software.  Software products are licensed  by the Company on a _right
          to use_ basis pursuant  to license agreements.   Each license is non-
          transferrable by the  customer and restricts  use of  the software to
          the customer's internal purposes  at one or  more designated computer
          sites.

          Intellectual Property Rights

                    The  Company  regards  all  of  its  software  products  as
          proprietary.  The Company's software  products are generally licensed
          to end-users on a _right  to use_ basis pursuant  to a perpetual non-
          transferable license that  restricts the use  of the  software to the
          customer's operations.    The  Company  relies  on  a  combination of
          copyright,  trademark,  and  trade  secret  laws,  as  well  as  non-
          disclosure agreements,  to  establish  and  maintain  its proprietary
          rights.  Computer software generally cannot  be patented and existing
          copyright laws afford only limited protection.  Also, there can be no
          assurance that  the  Company's  competitors  will  not  independently
          develop software that  is equivalent to  the Company's.   Further, no
          assurance can  be  given that  the  Company will  have  the financial
          resources to engage  in litigation  against parties who  may infringe
          its intellectual property  rights.   While the Company  realizes that
          its competitive position  may be affected  by its  ability to legally
          protect its  software,  the  Company  believes  the  impact  of  this
          protection is less significant to its commercial success than factors
          such as  the level  of experience  of  the Company's  personnel, name
          recognition, and increased investment in  research and development of
          new products.

          Hardware

                    The LFMS software is  designed for use  in conjunction with
          various network operating systems operating with either the HP3000 or
          HP9000 UNIX-based  computer  systems  which  the  customer  typically
          purchases from the Company.

                    The Dimension  single  user  software  version  operates on
          personal computers.  The Dimension client/server software version was
          designed  to  be   installed  in   a  Microsoft  or   Novell  network
          environment.

          Marketing

                    The Company markets  its products  through presentations at
          state,  regional   and   national   conferences   of   lawyers,  firm
          administrators and  information system  managers.   The  Company also
          advertises in  regional  and  national  publications  and  engages in
          direct marketing  campaigns  focused  on the  legal  market.   During
          fiscal 1997  the  Company  expended  approximately  $278,000  in  its
          Dimension marketing and advertising efforts.

                    The  Dimension  products  offer  a  significantly  expanded
          potential market to the Company.  With the LFMS product, market focus
          historically concentrated on  mid-size to  large law  firms.   In its
          first release, the Dimension product is designed to meet the needs of
          small law firms,  including sole practitioners.   Subsequent releases
          will accommodate the needs of larger law firms.

                    A reseller  channel is  being developed  by the  Company to
          sell, install and train users on the Dimension products.  As of March
          31, 1997, thirty-four (34) resellers were  certified to represent the
          Company in locales across the United  States and one (1) reseller was
          certified in Canada.   The Company  plans to continue  its efforts to
          recruit and certify a greater number of resellers in fiscal 1998.

          Installation and Maintenance

                  The  Company and Hewlett-Packard  coordinate the  installation
          of hardware for the LFMS product at the customer's premises.   In most
          cases,  representatives  of  the  Company,  Hewlett-Packard   and  the
          customer meet at  the site  where the system  is to  be installed  and
          examine and approve the suitability of the ambient environment  at the
          installation  site.     Subsequently,  Hewlett-Packard  installs   the
          hardware  and  provides  its   standard  warranty.     Hewlett-Packard
          maintains and services the hardware pursuant to an agreement  with the
          customer.   Following hardware  installation, Company  personnel  then
          assist the customer with the installation of the LFMS software.

          <PAGE>
                  The Company provides software maintenance for  a fixed monthly
          fee which covers enhancements,  modifications and improvements to  the
          licensed software.   Such services do  not generally require  customer
          site visits from Company personnel.

                  The  Dimension product will  be provided to  customers on  CD-
          ROM,  together  with  written  installation  instructions.     Because
          Dimension is  designed  to  operate  on  personal  computers,  Company
          personnel generally are not required to be present at customers' sites
          to assist with the installation.

          Competition

                  The computer software systems industry  is highly competitive.
          Software designed to accomplish substantially the same purposes as the
          products  of   the  Company   is  readily   available  from   numerous
          competitors.   Although many  competitors have  announced  development
          plans to  release next  generation  client/server products,  few  such
          products are available today.   The Company competes  on the basis  of
          the quality of its products and services, its insights into  the needs
          of law  firms and  its  reputation.   The  Company believes  that  its
          pricing policies are competitive with those of other competitors.

          Multimedia Products

                  In  May  1992, the  Company  established its  Panamar  Systems
          division.  Panamar Systems provides  video and multimedia services  to
          targeted  market  segments   within  the   legal  industry,   selected
          commercial accounts and  the general corporate  community. During  the
          fiscal year ended January  31, 1997, the  operations of the  Company's
          Panamar Systems division were not  material to the Company's  business
          as a whole.

          Employees

                  As  of  March 31,  1997,  the Company  employed  56  full-time
          employees and 5 part-time employees.  During fiscal 1997, 27 employees
          provided technical support and  product development services, 18  were
          engaged in  sales  and marketing  and  16 were  employed  in  finance,
          accounting and  administration.   No employees  are  represented by  a
          union or covered by  a collective bargaining  agreement.  The  Company
          believes that its relationship with its employees is good.

          Research and Development

                  During the  year ended January 31, 1997, the  Company expended
          approximately $1.2  million  on  software  research,  development  and
          production costs compared with  approximately $934,000 for the  fiscal
          year ended January 31, 1996.   Net software research, development  and
          production  expenses,   after  capitalization   of  certain   software
          development costs,  amounted to  $407,000 for  the  fiscal year  ended
          January 31, 1997 versus $196,000 for the fiscal year ended January 31,
          1996.    The  Company  anticipates  its  expenditures   for  research,
          development and  production in  fiscal 1998  will approximate  current
          levels.

          Private  Securities  Litigation  Reform   Act  of  1995  Safe   Harbor
          Cautionary Language

                  This  Form 10-KSB  contains  _forward-looking_ statements,  as
          defined in Section  21E of  the Securities  Exchange Act  of 1934,  as
          amended,  that  are  based  on  current  expectations,  estimates  and
          projections.   Statements that  are  not historical  facts,  including
          statements about the Company's beliefs and expectations,  are forward-
          looking statements.   These  statements  contain potential  risks  and
          uncertainties and, therefore,  actual results  may differ  materially.
          There are  numerous  factors,  which  are  not  within  the  Company's
          control,  that  may  cause  actual   results  to  differ  from   those
          contemplated by  such forward-looking  statements, including  but  not
          limited to the rapid rate of change in computer hardware  and software
          technology and the  potential obsolescence of  the Company's  existing
          LFMS products; the development of

          <PAGE>

          superior products by competitors; increased competition  from existing
          and new competitors; the  lack of acceptance of  the Company's new  or
          existing products by customers; dependence on Hewlett-Packard  for the
          availability of hardware to support the LFMS software; the reliance on
          independent resellers, and the inability to engage a sufficient number
          of qualified resellers for the Dimension product; and  adverse changes
          in  economic  conditions  in  the  legal  profession  or  the  economy
          generally.  The  Company undertakes no  obligation to update  publicly
          any forward-looking statements whether as a result of new information,
          future events or otherwise.

          Item 2. Description of Property

                  The  Company owns  its  corporate headquarters  and  operating
          facilities located  in  Richardson  (Dallas  County),  Texas.      The
          building contains approximately 20,000 square  feet and has a  parking
          area of  approximately  50,000  square feet.    These  facilities  are
          subject to a $276,000 mortgage note payable at January 31, 1997.   The
          Company believes  its  current facility  is  adequate to  conduct  its
          business.   The Company  also owns  10.97  acres of  undeveloped  land
          located in Frisco, Texas.

                  In  connection  with  its systems  development  and  servicing
          programs, the Company owns and operates  one HP 1000 computer, one  HP
          3000 Micro Classic, one HP 3000 series 937LX, one HP 3000  series 957,
          one HP 9000 series 817  and one HP 9000  series 800/G50.  The  Company
          also owns and operates  various other peripheral equipment,  including
          printers,  micro-computers,  UNIX  workstations,  scanners  and  other
          equipment.

          Item 3. Legal Proceedings

                  The  Company is a party  to certain legal proceedings  arising
          in the ordinary course  of business, none of  which is believed to  be
          material to the financial position of the Company.  The Company is not
          aware  of  any  pending  or  contemplated  proceeding  against  it  by
          governmental  authorities  concerning  environmental  matters.     The
          Company knows  of  no legal  proceedings,  pending or  threatened,  or
          judgments entered against any  Director or Officer  of the Company  in
          his or her capacity as such.

          Item 4. Submission of Matters to a Vote of Security Holders

                  No  matters were submitted  to a vote  of shareholders of  the
          Company during the fourth quarter of the fiscal year ended January 31,
          1997.

          <PAGE>
                                        PART II


          Item 5.   Market for Common Stock and Related Stockholder Matters

                    The Company's Common Stock is  traded on the American  Stock
          Exchange under the trading symbol "LLB".  The Company has not declared
          or paid cash dividends since fiscal  1988 and does not anticipate  any
          dividends will be  declared or paid  in the foreseeable  future.   The
          Company intends to retain any earnings to finance the  development and
          expansion of the Company's operations.

                    At April 23, 1997, there  were approximately 300 holders  of
          record and  approximately 1,000  beneficial  owners of  the  Company's
          Common Stock.  For  the periods indicated  below, the following  table
          sets forth the high and low  sales prices as reported by the  American
          Stock Exchange.



                                                        Market Price


                                                  High          Low


          1995 Calendar Year:
               First Quarter                      1  7/8           7/8
               Second Quarter                     1  3/16         15/16
               Third Quarter                      2 15/16         15/16
               Fourth Quarter                     2 11/16        2

          1996 Calendar Year:
               First Quarter                      2  1/2         1 1/2
               Second Quarter                     3  3/4         1 5/8
               Third Quarter                      2  7/8         1 7/8
               Fourth Quarter                     2  5/8         1 5/8

          1997 Calendar Year:
               First Quarter                      2  1/2         1 1/8


          The closing sales price per share of the Common Stock on  the American
          Stock Exchange on April 23, 1997 was $1 1/4.

          <PAGE>

          Item 6.   Management's Discussion and Analysis of Financial  Condition
          and Results of Operations


          Results of Operations

               The following table sets forth,  for the fiscal years  indicated,
          items in  the Consolidated  Statements of  Operations  expressed as  a
          percentage of operating revenues:

          <TABLE>

                                                           Year Ended
                                                          January 31,
                                                         1997     1996
          <S>                                           <C>      <C>
          Operating revenues:
           System sales                                    11 %     14 %
           Services and support                            89       86

                                                          100      100

          Costs and expenses:
           Cost of system sales                             8        9
           Cost of services and support                     6        6
           Amortization of capitalized software             7        5
           Operating expenses                              29       25
           Selling, general and administrative expenses    60       43
           Software research and development costs          9        4

                                                          119       92

          Operating (loss) income                        (19)        8
          Interest income, net                              5        5
          (Loss) income before taxes                     (14)       13
          Income taxes

           Net (loss) income                             (14) %     13 %

          </TABLE>
          <PAGE>

          Year Ended January 31, 1997 compared to Year Ended January 31, 1996

               Total revenues from  operations declined $611,000,  or 12%, from
          $5.3 million in fiscal 1996  to $4.6 million in  fiscal 1997.  System
          sales revenues  declined $213,000,  or 29%,  from $727,000  in fiscal
          1996 to $515,000 in fiscal 1997.   Substantially all of the Company's
          system sales revenues in fiscal 1997  and fiscal 1996 were related to
          client system upgrades and peripheral sales  activities as opposed to
          new system sales.  The Company believes that its fiscal 1994 decision
          to abandon  certain software  projects and  to focus  its development
          efforts in the direction of current Windows-based software technology
          has contributed to the decline in  system sales as competitors' host-
          based, client server products became available  in the legal industry
          marketplace.    With  the Company's  new  Dimension time  and billing
          system, coupled  with other  add-on software  products  scheduled for
          completion in mid-year 1997,  the Company believes  that system sales
          revenues should improve in  the later half of  fiscal 1998.  However,
          there can  be  no  assurance that  the  new  Dimension  products will
          successfully compete with competitive products  or that the Company's
          revenues or results of operations will improve in future periods with
          the introduction  of  the  Dimension  product  line.    See  _Revenue
          Recognition  and  Company   Operations_  in   Notes  to  Consolidated
          Financial Statements.

               Services and  support revenues  declined $398,000,  or  9%, from
          $4.5 million in  fiscal 1996  to $4.1 million  in fiscal  1997.  This
          decrease was primarily attributable to reduced training, support, and
          conversion service revenue due  to fewer new system  sales and system
          upgrade sales during the year.

               Cost of system  sales as a  percentage of  system sales revenues
          was 69% in fiscal 1997 compared to 62%  in the prior year.  Increased
          cost of systems sales are attributable to lower discounts received on
          hardware purchases from distributor  channels.  Cost  of services and
          support as  a percentage  of  services and  support  revenue remained
          constant at 7% for both  fiscal years.  Cost  of services and support
          is  primarily  comprised  of  programming  and  support  staff  costs
          directly associated with the  performance of the  service and certain
          third party costs  associated with  maintenance revenues  included in
          service and support  revenues.  Amortization  of capitalized software
          increased 10%, from  $288,000 in  fiscal 1996  to $318,000  in fiscal
          1997.  This  increase was due  to the Company's  re-evaluation of the
          economic life of certain capitalized  software products, resulting in
          an  additional  charge  to  amortization   expense  in  fiscal  1997.
          Operating expenses  increased  a  nominal 4%,  from  $1.3  million in
          fiscal 1996  to  $1.4 million  in  fiscal 1997  due  to  increases in
          miscellaneous  Dimension-related   costs.     Selling,   general  and
          administrative expenses increased $519,000, or 23%, from $2.3 million
          in fiscal 1996 to  $2.8 million in fiscal  1997.  Significant factors
          contributing to the  increase in selling,  general and administrative
          expenses were: (1) an increase in  marketing and advertising expenses
          of $208,000  associated with  the  Company's new  Dimension  time and
          billing software  product, (2)  an increase  in professional  fees of
          $168,000  of  which  $128,000  was  associated  with  legal  expenses
          incurred by the Company  to protect its  intellectual property rights
          and (3)  an increase  of $143,000  in  other general  costs  of which
          $69,000 related to increases in bad debt expenses.

               Software research and  development expenses  increased $211,000,
          or 108%, from  $196,000 in  fiscal 1996 to  $407,000 in  fiscal 1997.
          This increase  primarily relates  to research  and  development costs
          associated with software  products not  qualifying for capitalization
          during the year.  Amortization of Dimension product development costs
          will commence in the first quarter of the Company's fiscal year 1998.
          The Company will continue  to capitalize those  costs associated with
          continued enhancements  and  improvements to  the  Dimension software
          product line.

               Net interest income decreased 15%, from  $261,000 in fiscal 1996
          to $221,000  in fiscal  1997.   In fiscal  1996, interest  income was
          comprised of  approximately  $303,000  in  interest  income, relating
          primarily to  investment  interest  income,  offset  by approximately
          $42,000 in  mortgage  interest  expense  on  the  Company's corporate
          facility.  In  fiscal 1997,  interest income  comprised approximately
          $278,000  of  interest  income,   relating  primarily  to  investment
          interest income, offset by approximately  $44,000 of interest expense
          of which $32,000 was related to mortgage interest expense.

               Net (loss) income declined  201% from net income  of $664,000 in
          fiscal 1996 to a net loss of $668,000  in fiscal 1997.  As previously
          discussed, this loss  is attributable to  reduced revenues associated
          with fewer sales of hardware, software, services and support, coupled
          with increases in Dimension-related expenses.

          <PAGE>

           Recent Accounting Pronouncements

               In February 1997, Statement of Financial Accounting Standards No.
          128, _Earnings per Share_ (FAS 128) was issued.  FAS 128 specifies the
          computation, presentation and disclosure requirements for earnings per
          share (EPS) for entities with publicly held common stock  or potential
          common stock.   FAS  128 simplifies  the standards  for computing  EPS
          previously found  in  Accounting  Principles  Board  Opinion  No.  15,
          _Earnings  per  Share_   (APB  15)  and   makes  them  comparable   to
          international EPS standards.  It replaces the presentation  of primary
          EPS with  a  presentation  of  basic  EPS.    It  also  requires  dual
          presentation of basic and dilutive EPS on the face of the statement of
          operations for  all  entities  with  complex  capital  structures  and
          requires a  reconciliation of  the numerator  and  denominator of  the
          basic EPS computation to the numerator and denominator of the dilutive
          EPS computation.      FAS 128  is effective  for financial  statements
          issued for periods ending after  December 15, 1997, including  interim
          periods; earlier  application  is not  permitted.   FAS  128  requires
          restatement of all prior-period EPS data presented.  The Company plans
          to adopt FAS 128 in  its financial statements as  of and for the  year
          ended January 31, 1998.  Based on current circumstances,  the adoption
          of this pronouncement  would not  have had  a material  effect on  the
          January 31, 1997 and 1996 EPS  amounts reported.  Pro forma basic  EPS
          and pro forma dilutive EPS computed assuming FAS 128 had  been adopted
          are equivalent to the historical amounts reported for primary  EPS and
          dilutive EPS, respectively.

          Fluctuations in Interim Period Operating Results

               Management of the  Company believes  that, historically,  interim
          results and period-to-period comparisons have been neither predictable
          nor an accurate measure of the annual performance of the Company.  The
          Company has experienced and expects to continue to  experience period-
          to-period fluctuations in the number of systems sold, revenues and net
          income.   Although  recent  operating revenues  of  the  Company  have
          primarily been derived from service and support revenues, fluctuations
          in LFMS system sales revenues have historically resulted from the sale
          of a small number of relatively  expensive systems, the policy of  the
          Company of  recognizing  revenue upon  delivery  of the  hardware  and
          delivery and acceptance of the software, the equipment availability of
          hardware from the Company's hardware supplier,  and the desire of  the
          customer to accelerate or delay the  date of delivery.  These  factors
          tend  to  distort  the  operating   results  of  an  interim   period.
          Additionally, sales are not made  or recognized evenly throughout  the
          fiscal year  or any  interim period,  thus  making meaningful  interim
          period comparisons  difficult.   These fluctuations  may  also have  a
          significant impact on profitability in any interim period as  a result
          of the relatively fixed nature of operating costs and selling, general
          and administrative expenses.

          Liquidity and Capital Resources

               The Company's financial position remains  strong with cash, cash
          equivalents and  short-term investments  of $4.8  million, or  48% of
          total assets at January 31, 1997, compared to $5.5 million, or 50% of
          total assets at   January 31, 1996.   The Company's primary source of
          liquidity  has  been   cash  flow  from   operating  activities  with
          additional liquidity  provided  by periodic  sales  of  Company stock
          through various  employee  benefit  plans.    Net  cash  provided  by
          operating activities  decreased  $1.4 million  from  $1.9  million at
          January 31, 1996 to  $532,000 at     January 31, 1997  due to reduced
          operating revenues resulting from  fewer sales of  the Company's LFMS
          products and services,  coupled with increased  costs associated with
          the Company's  initial  launch  of  its  Dimension  time  and billing
          software  product.     Liquidity  was  further   reduced  by  capital
          expenditures totaling  $1.3 million  for the  year ended  January 31,
          1997, compared to  $966,000 in  the prior fiscal  year.   Of the $1.3
          million expended  in  fiscal 1997,  $800,000  related  to capitalized
          software development  activities, $300,000  related to  equipment and
          software acquired for  use in  the Company's support  and development
          efforts and the remaining $200,000 for  improvements to the Company's
          corporate facility.  Cash flows from financing activities of $120,000
          during the year  were related  to cash  receipts from  employee stock
          purchases associated  with  the  Company's  employee  stock  purchase
          plans.

               The Company has  not made  any material commitments  for capital
          expenditures,   however,   the    Company   anticipates   substantial
          expenditures will be  made during  fiscal year 1998  in the  areas of
          development, sales, marketing  and support of  its Dimension software
          products.

          <PAGE>

               At January 31, 1997 and 1996, the Company has established  a 100%
          valuation allowance  to  fully  offset  the  net  deferred  tax  asset
          balances of $970,000 and  $731,000, respectively.  Factors  considered
          in  management's  assessment  that  significant  uncertainties   exist
          regarding the realization  of these  assets include (1)  a decline  in
          system sales revenues,  (2) uncertainty regarding  the future  success
          and timing of sales of the  Company's new Windows-based products,  and
          (3) financial and economic pressures in the Company's primary customer
          market (i.e. legal industry).

             Working  capital  and  the  ratio   of  current  assets  to
          current liabilities are as follows:

                                          Working           Current
                                          capital           ratio

                     At January 31:

                     1997               $ 5,217,305         8.3 to 1

                     1996               $6,094,071          6.6 to 1


             Current assets consist primarily of cash, short-term investments,
          accounts receivable and unbilled revenues from system sales and
          services.

          <PAGE>
          <TABLE>

          Item 7. Financial Statements

          CONSOLIDATED BALANCE SHEETS
          <CAPTION>
                                                 Year Ended January 31,
                                                  1997            1996
          <S>                                  <C>            <C>
          ASSETS

          Current assets:
            Cash and cash equivalents              $449,304      $807,965
            Short-term
              investments                         4,334,869     4,648,774
            Accounts receivable, net of
              allowance of $180,000and $170,000
              at January 31, 1997 and 1996,
              respectively                          722,683     1,161,224
            Unbilled revenue                        122,584       338,774
            Other current
              assets                                304,211       224,022
              Total current
               assets                             5,933,651     7,180,759
          Property, furniture and equipment,
            net of accumulated depreciation       1,881,348     2,152,718
          Capitalized software, net of
          accumulated amortization                1,637,025     1,150,575
          Other assets                              429,898       391,256
             Total assets                        $9,881,922   $10,875,308

          LIABILITIES AND SHAREHOLDERS' EQUITY

          Current liabilities:
            Accounts payable                       $191,349      $448,965
            Accrued expenses                        247,424       264,002
            Accrued contract completion
              costs                                 110,400       214,100
            Deferred systems revenues                90,744        89,915
            Short-term portion of mortgage
            note payable                             76,429        69,706
              Total current liabilities             716,346     1,086,688
            Long-term portion of mortgage note
              payable                               199,561       274,031
              Total liabilities                     915,907     1,360,719

          Commitments and contingencies (Note 10)
          Shareholders' equity:
            Preferred stock, $1.00 par value,
              2,000,000 shares authorized, no
              shares issued and outstanding
            Common stock, $.01 par value,
              13,000,000 shares authorized,
              6,988,706 shares issued,
              respectively                           69,887        69,887
            Additional paid-in capital            9,846,543     9,928,011
            Retained earnings                     1,503,255     2,171,460
                                                 11,419,685    12,169,358
            Less:  treasury stock, 722,631 and
            842,106 shares, respectively        (2,453,670)   (2,654,769)
              Total shareholders' equity          8,966,015     9,514,589

             Total liabilities and
             shareholders' equity                $9,881,922   $10,875,308




          <FN>
          See accompanying notes to consolidated financial statements.

          </TABLE>
          <PAGE>
          <TABLE>
          CONSOLIDATED STATEMENTS OF OPERATIONS
          <CAPTION>
                                                            Year Ended January 31,
                                                              1997         1996
          <S>                                              <C>          <C>
          Operating revenues:
            System sales                                  $   514,830 $    727,463
            Services and support                            4,133,548    4,531,668

                                                            4,648,378    5,259,131

          Costs and expenses:
            Cost of system sales                              355,730      448,756
            Cost of services and support                      297,121      329,947
            Amortization of capitalized software              318,079      288,000
            Operating expenses                              1,354,423    1,307,651
            Selling, general and administrative expenses    2,804,975    2,285,600
            Software research and development costs           406,998      195,700

                                                            5,537,326    4,855,654

          Operating (loss) income                           (888,948)      403,477
          Interest income, net                                220,743      260,640
          (Loss) income before taxes                        (668,205)      664,117
          Income taxes

          Net (loss) income                               $ (668,205) $    664,117


          Net (loss) income per common share              $     (.11) $        .11

          Weighted average shares outstanding               6,237,291    6,210,164






          <FN>
          See accompanying notes to consolidated financial statements.

          </TABLE>
          <PAGE>
          <TABLE>

          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
          <CAPTION>

                                       Additional                       Share-
                      Common Stock      paid-in   Retained   Treasury   holders'
                     Shares   Amount   capital   earnings    stock       equity
          <S>      <C>       <C>     <C>         <C>       <C>         <C>
          Balance
           at
           January
           31, 1995 6,910,692   69,107  9,947,369  1,507,343 (2,852,518)   8,671,301

          Issuance
           of
           common
           stock       53,573     536    (54,074)               204,518     150,980
          Stock
           options
           exer-
            cised      24,441      244     34,716                            34,960
          Purchase
           of
           treasury
           stock                                               (6,769)      (6,769)
          Net
           income                                  664,117                  664,117

          Balance
           at
           January
           31, 1996  6,988,706   69,887  9,928,011 2,171,460 (2,654,769)    9,514,589

          Treasury
           stock
           reissued                      (81,468)               201,099      119,631
          Net
           loss                                    (668,205)                (668,205)

          Balance
           at
           January
           31, 1997  6,988,706  $69,887 $9,846,543 $1,503,255 $(2,453,670) $8,966,015

          </TABLE>
          <PAGE>
          <TABLE>
          CONSOLIDATED STATEMENTS OF CASH FLOWS
          <CAPTION>
                                                            Year Ended January 31,
                                                              1997         1996
          <S>                                              <C>         <C>
          Cash flows from operating activities:

            Net (loss) income                            $  (668,205)$     664,117
            Adjustments to reconcile net (loss) income
              to net cash provided by operating
              activities:
                Depreciation of property, furniture and
                  equipment                                   723,610      582,143
                Amortization of capitalized software
                costs                                         318,079      288,000

                Changes in assets and liabilities:
                   Accounts receivable                        438,541        (708)
                   Unbilled revenue                           216,190      627,328
                   Other current assets                      (80,189)      258,586
                   Other assets                              (38,642)     (53,136)
                   Accounts payable and accrued expenses    (377,894)    (440,510)
                   Deferred systems revenues                      829     (41,083)
                Net cash provided by operating
                activities                                    532,319    1,884,737

          Cash flows from investing activities:

            Additions to property, furniture and
              equipment                                     (460,606)    (228,350)
            Additions to capitalized software               (804,528)    (737,881)
            Net sale (purchase) of certificates of
              deposit                                         125,000    (581,000)
            Net sale (purchase) of U.S. Treasury
              Bills                                           188,905  (1,186,744)
            Other                                               8,365       41,711
              Net cash used in investing activities         (942,864)  (2,692,264)

          Cash flows from financing activities:

            Issuance of treasury stock                        119,631      185,940
            Payments of mortgage note payable                (67,747)     (63,412)
            Purchase of treasury shares                                    (6,769)
              Net cash provided by (used in) financing
                activities                                     51,884      115,759
          Net decrease in cash                              (358,661)    (691,768)
          Cash and cash equivalents at beginning of
          period                                              807,965    1,499,733
          Cash and cash equivalents at end of period     $    449,304 $    807,965


          Supplemental disclosures of cash flow information:
            Interest paid                                $     43,970$      42,000
            Income taxes paid





          <FN>
          See accompanying notes to consolidated financial statements.

          </TABLE>
          <PAGE>

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          Note 1 - Organization and Summary of Significant Accounting Policies

               CompuTrac, Inc. (the  _Company_) was formed  in 1977 to  develop,
          market, service and  support integrated turnkey  computer systems  for
          law firms.    The Company's  significant  accounting policies  are  as
          follows:

          Use of Estimates in the Preparation of Financial Statements

               The  preparation  of  financial  statements  in  conformity  with
          generally accepted accounting principles  requires management to  make
          estimates and assumptions that affect  the reported amounts of  assets
          and liabilities and disclosure of contingent assets and liabilities at
          the date  of the  financial statements  and  the reported  amounts  of
          revenues and expenses  during the  reporting period.   Actual  results
          could differ from those estimates.

          Revenue Recognition and Company Operations

               The Company  develops, markets,  services and  supports  computer
          systems for the legal profession.   The Company develops the  software
          and is a  Distributor Authorized Reseller  of Hewlett-Packard  systems
          hardware.  System  sales, service and  support revenues are  generally
          realized  pursuant  to  a  contract  with  the  customer.    Contracts
          typically provide  for  the  shipment  of  hardware  direct  from  the
          supplier to the  customer, where  it is  installed by  Hewlett-Packard
          personnel.  After  hardware installation, personnel  from the  Company
          install the software components.   Hardware and software  installation
          is generally provided  for all significant  components within four  to
          six weeks after the hardware delivery process begins.

               The Company enters into  software license agreements whereby  the
          Company licenses software to a customer, providing that  customer with
          the right to use the software.   In accordance with the provisions  of
          the American Institute of  Certified Public Accountants' Statement  of
          Position No.  91-1, _Software  Revenue  Recognition_ (SOP  91-1),  the
          Company recognizes  software  license  revenue upon  delivery  of  the
          hardware, software  and confirmation  of customer  acceptance per  the
          terms of the contract.  Each  software license agreement is  evaluated
          by management to  determine if significant  vendor obligations  exist,
          such as  post-contract  customer  support, and  to  determine  whether
          collection of the  associated receivable is  probable.   Post-contract
          customer support revenue is deferred and amortized over the  period of
          the service, usually not exceeding one year from the inception  of the
          contract.

               Other  contractual  services  may  include  data  conversion  and
          training conducted by Company personnel following installation  of the
          major components of hardware and software.  Revenues related  to these
          services are  deferred  and recognized  as  revenue at  the  time  the
          services are rendered, usually not  exceeding one year from  inception
          of the contract.   In addition,  the contract may  provide for  add-on
          software applications  which are  still  under development  and  which
          complement the  core  system,  but  are  not  integral  to  the  basic
          functionality  of  the  core  system.    Uncompleted  add-on  software
          application revenue is deferred until delivery occurs and  evidence of
          customer acceptance has  been obtained.   Unbilled revenue  represents
          the excess of system sales contracts over progress billings.   Accrued
          contract  completion  costs   represent  estimated  software   project
          completion costs necessary to fulfill client contract obligations.

          Cash Equivalents

               The Company considers investments with original maturity dates of
          90 days or less to be cash equivalents.

          <PAGE>

          Short-Term Investments

               The Company considers  investments with  original maturity  dates
          that are greater than 90  days, but less than  one year, to be  short-
          term investments.    The  carrying values  of  these  investments  are
          approximately equal to  their fair market  values at the  end of  each
          fiscal year.

          Capitalized Software

               The Company capitalizes the costs  of developing and testing  new
          or significantly  enhanced software  products in  accordance with  the
          provisions of  Statement of  Financial  Accounting Standards  No.  86,
          _Accounting for the Costs of Computer  Software to be Sold, Leased  or
          Otherwise Marketed_.    Capitalized  software  development  costs  are
          amortized on  a  product-by-product basis  using  the greater  of  the
          amount computed by the ratio of current year net revenue  to estimated
          future net revenue, or the amount computed by the straight-line method
          over a period which  approximates the estimated  economic life of  the
          products, which historically has been four years.  The amount by which
          unamortized software costs exceed the net realizable value, if any, is
          recognized in the period the excess is determined.

          Property, Furniture, Equipment and Depreciation

               Property, furniture and equipment are recorded at cost.  The cost
          of such assets,  other than  land, is depreciated  on a  straight-line
          basis over the estimated useful life of the asset (generally  three to
          seven years).  The Company's  corporate facility is being  depreciated
          using the straight-line  method over  an estimated useful  life of  30
          years.  Maintenance and repair expenditures are charged to operations;
          renewals and betterments are capitalized.

          Income Taxes

               The Company  presents  income  taxes  pursuant  to  Statement  of
          Financial Accounting Standards No. 109, _Accounting for Income Taxes,_
          (FAS 109).  FAS  109 uses an asset  and liability approach to  account
          for income  taxes.   In the  event differences  between the  financial
          reporting basis  and  the  tax  basis  of  the  Company's  assets  and
          liabilities result  in  deferred  tax assets,  an  evaluation  of  the
          probability of being able to realize the future benefits  indicated by
          such assets is  required.   A valuation  allowance is  provided for  a
          portion or all  of the deferred  tax assets when  there is  sufficient
          uncertainty regarding the Company's ability to recognize  the benefits
          of the assets in future years.

          Accounting for Stock-Based Compensation

               Statement of Financial Accounting Standards No.  123, _Accounting
          for Stock-Based Compensation_      (FAS 123), encourages, but does not
          require,  companies  to  record  compensation  cost   for  stock-based
          employee compensation plans at fair value.  The Company has elected to
          continue to account for  stock-based compensation using the  intrinsic
          value method prescribed in Accounting Principles Board Opinion No. 25,
          _Accounting for  Stock  Issued to  Employees_  (APB 25),  and  related
          Interpretations.  Accordingly, compensation cost for stock  options is
          measured as  the excess,  if any,  of  the fair  market value  of  the
          Company's stock at the date of the grant over the amount  the employee
          must pay to acquire the stock.

          Reclassification

               Certain prior  year  financial  statement  information  has  been
          reclassified to conform to the current year presentation.

          <PAGE>

          Recent Accounting Pronouncements

               In February 1997, Statement of Financial Accounting Standards No.
          128, _Earnings per Share_ (FAS 128) was issued.  FAS 128 specifies the
          computation, presentation and disclosure requirements for earnings per
          share (EPS) for entities with publicly held common stock  or potential
          common stock.   FAS  128 simplifies  the standards  for computing  EPS
          previously found  in  Accounting  Principles  Board  Opinion  No.  15,
          _Earnings  per  Share_   (APB  15)  and   makes  them  comparable   to
          international EPS standards.  It replaces the presentation  of primary
          EPS with  a  presentation  of  basic  EPS.    It  also  requires  dual
          presentation of basic and dilutive EPS on the face of the statement of
          operations for  all  entities  with  complex  capital  structures  and
          requires a  reconciliation of  the numerator  and  denominator of  the
          basic EPS computation to the numerator and denominator of the dilutive
          EPS computation.      FAS 128  is effective  for financial  statements
          issued for periods ending after  December 15, 1997, including  interim
          periods; earlier  application  is not  permitted.   FAS  128  requires
          restatement of all prior-period EPS data presented.  The Company plans
          to adopt FAS 128 in  its financial statements as  of and for the  year
          ended January 31, 1998.  Based on current circumstances,  the adoption
          of this pronouncement  would not  have had  a material  effect on  the
          January 31, 1997 and 1996 EPS  amounts reported.  Pro forma basic  EPS
          and pro forma dilutive EPS computed assuming FAS 128 had  been adopted
          are equivalent to the historical amounts reported for primary  EPS and
          dilutive EPS, respectively.

          Note 2 - Accrued Expenses

               Included in accrued expenses at January  31, 1997 are legal  fees
          totaling $50,000 and sales taxes totaling $60,000.

          <TABLE>
          Note 3 - Property, Furniture and Equipment

               Property, furniture and equipment costs are summarized as
               follows:
          <CAPTION>
                                                            January 31,

                                                       1997             1996

          <S>                                       <C>             <C>
               Equipment                           $  6,882,189   $   6,704,956

               Building                               1,410,297       1,208,179

               Land                                     554,122         554,122

               Furniture, fixtures and leasehold        758,925         721,143
                 improvements

                                                      9,605,533       9,188,400

               Less accumulated
                 depreciation                       (7,724,185)     (7,035,682)


                                                   $  1,881,348   $   2,152,718





          </TABLE>
          <PAGE>

          Note 4 - Capitalized Software

              Capitalized software costs are summarized as follows:
<TABLE>
                                                              January 31,
                                                         1997           1996
          <S>                                         <C>            <C>
              Capitalized software costs            $    3,887,960  $   3,083,431

              Less accumulated amortization            (2,250,935)    (1,932,856)
                                                    $    1,637,025  $   1,150,575

</TABLE>

          Note 5 - Income Taxes

          The effective income tax rates differed from the statutory federal
          tax income rates for the following reasons:
<TABLE>

                                                       January 31,
                                                       1997      1996
          <S>                                         <C>       <C>
          Statutory rate                                 (34)%       34%


          (Reduction) addition resulting from:

               Permanent differences                        2         1

               MediaMagic net operating loss                0      (37)
                  carryover

               Change in valuation allowance               36         0


               Other                                      (4)         2

          Effective rate                                    0%        0%

          </TABLE>
          <PAGE>
          <TABLE>

          Deferred tax (assets) liabilities comprised the following:

                                                         January 31,
                                                     1997            1996
          <S>                                    <C>             <C>
          Deferred tax assets:
          Net operating loss carryforward       $   (952,000)   $   (672,000)
          Allowance for doubtful accounts            (68,000)        (65,000)
          Deferred revenue                           (22,000)         (9,000)

          Building and land writedown               (791,000)       (791,000)
          Accrued liabilities                        (42,000)        (63,000)

          State taxes and other                      (58,000)        (57,000)
             Total deferred tax assets            (1,933,000)     (1,657,000)
          Deferred tax liabilities:
          Tax over book depreciation                  535,000         521,000
          Net capitalized software costs              387,000         362,000
          Other                                        41,000          43,000
            Total deferred tax liabilities            963,000         926,000
          Less valuation allowance                    970,000         731,000
          Net deferred tax assets              $            0   $           0


          </TABLE>
          At January  31, 1997  and 1996,  the Company  had  net operating  loss
          carryforwards   of    approximately   $2,506,000    and    $1,767,000,
          respectively, which begin to expire in 2010.  Under section 382 of the
          Internal Revenue Code, annual use  of the operating loss  carryforward
          may be limited if  a cumulative change in  ownership of more than  50%
          has occurred within a three-year period.

          <PAGE>

          Note 6 - Mortgage Note Payable

               In April 1986, the  Company purchased its corporate  headquarters
          for $2,900,000 through the  assumption of a  first lien mortgage  note
          payable having a  principal balance of  $1,308,558 with the  remainder
          funded in  cash.   The note  was dated  May 1983,  having an  original
          principal balance of  $1,370,000, with the  principal payable  monthly
          plus interest at 12.875% over a term of 10 years ended May,  1993.  In
          February 1994, the Company obtained a  new, ten year, 9.5% fixed  rate
          mortgage on  its  corporate headquarters.    The closing  on  the  new
          mortgage occurred on May 1, 1994.  The amount of  principal maturities
          for the years subsequent to January 31, 1997, are:


                                                   Principal
                           Fiscal Year           Maturities

                               1998               $76,429

                               1999               $84,015

                               2000               $92,353

                               2001               $23,193


          Note 7  - Related Party Transactions

               In  December,  1992,  the   Company  entered  into  a   five-year
          employment agreement with its Chairman which expires in January, 1998.
          The agreement currently provides for an annual salary of $560,000, and
          entitles the  Chairman to  receive minimum  raises  equivalent to  any
          annual increase in the Consumer Price  Index for Dallas, Texas  during
          the previous year.

          Note 8 - Shareholders' Equity

             Stock Purchase Plans

               In December 1985,  the Company's Board  of Directors adopted  the
          CompuTrac, Inc. Employee Stock Purchase Plan and in May  1991, adopted
          the CompuTrac, Inc. 1991  Employee Stock Purchase  Plan.  The  Company
          reserved 300,000 and 500,000 shares, respectively, of its Common Stock
          for purchase by its  employees pursuant to the  terms of these  plans.
          Under both plans, eligible participating employees of the  Company may
          elect to have  an amount up  to, but not  in excess of,  10% of  their
          regular salary or  wages withheld  for the purpose  of purchasing  the
          Company's Common Stock.  The Company contributes to  the participant's
          account an  amount of  money equal  to     33  1/3% of  the  aggregate
          contribution made by each participant since the  immediately preceding
          stock purchase date.  All Common Stock of the Company purchased by the
          participating employees  pursuant to  the plans  may be  voted by  the
          employee; any shares not  so directed to vote  are not voted.   During
          fiscal 1996,  the  Company registered  500,000  of its  shares  to  be
          reserved for future  employee stock purchase  activities.  At  January
          31, 1997,  919,475 shares of the Company's Common Stock had  been sold
          pursuant to these plans.

             1983 Incentive Stock Option Plan

               In  June,  1983,   the  Board  of   Directors  adopted  and   the
          shareholders approved the 1983 Incentive Stock Option Plan.  Under the
          terms of the plan, the Company's  Board of Directors is authorized  to
          grant options to purchase up to 450,000 shares of Common Stock  to key
          employees of the Company, including officers.   The exercise price  of
          an option must be at least 100% of the fair market value of the Common
          Stock as determined by the Board of Directors on the effective date of
          the grant.    Each  option  granted  under the  option  plan  must  be
          exercised, if at all, during a period established in the grant  by the
          Board of Directors, but not exceeding 10 years from the date of grant.
          Options must be exercised by an optionee within three to twelve months
          after termination of employment.  At  January 31, 1997, there were  no
          shares available for future grant.

          <PAGE>

             1990 Stock Option Plan

               In May, 1991, the Board of Directors adopted and the shareholders
          approved the 1990 Stock Option Plan.  Under the terms of the plan, the
          Company's Board  of  Directors  is  authorized  to  grant  options  to
          purchase up to 500,000 shares of Common Stock to key employees  of the
          Company, including officers and  directors.  Option  grants may be  in
          the form  of either  Incentive Stock  Options  or Non-Statutory  Stock
          Options.  The remaining  terms of the option  grants are identical  to
          those of the 1983 Incentive Stock  Option Plan.  At January 31,  1997,
          there were no shares available for future grant.

             Non-Qualified Stock Options

               In May, 1990,  the Board  of Directors  approved a  grant by  the
          Company of options to purchase 65,000  shares of Common Stock to  four
          directors of the Company.  The exercise price of the options  is $2.45
          per share  and may  be exercised  at any  time during  the seven  year
          period ending May, 1997.  Options to purchase 15,000 shares  of Common
          Stock granted one director were subsequently canceled.

             Stock-Based Compensation

               Effective  in   1997,  the   Company   adopted  the   disclosure
          requirements of Statement of  Financial Accounting Standards  No. 123
          (FAS 123), _Accounting for  Stock-Based Compensation._   As permitted
          under FAS  123,  the Company  will  continue to  measure  stock-based
          compensation cost  using  the intrinsic  value  method prescribed  in
          Accounting Principles  Board Opinion  No. 25,  _Accounting for  Stock
          Issued  to  Employees_   (APB  25),   and  related   Interpretations.
          Accordingly, compensation cost for  stock options is measured  as the
          excess, if any, of the quoted  market price of the  Company's capital
          stock at the grant date over the amount the employee must pay for the
          stock.

               FAS 123 requires disclosure of  pro forma net income  (loss) and
          pro forma net income  (loss) per common share  as if the  fair value-
          based method  had  been applied  in  measuring compensation  cost  of
          stock-based awards  granted  in  fiscal  1997  and  1996.  Management
          believes that 1997 and 1996 pro forma amounts  are not representative
          of the effects of stock-based awards  on future pro forma  net income
          (loss) and pro forma  net income (loss)  per share because  those pro
          forma amounts exclude the  pro forma compensation expense  related to
          unvested stock options granted before fiscal 1996.

               Reported and pro forma net  (loss) income and net  (loss) income
          per share amounts  for the  fiscal year  ended January  31, 1997  and
          1996, respectively, are set forth below:

                                                   1997               1996   



               Reported
               Net (loss) income             $(668,205)          $664,117
               Net (loss) income per share   $   (0.11)          $   0.11

               Pro forma (unaudited)
               Net (loss) income             $(739,149)          $557,915
               Net (loss) income             $   (0.12)          $   0.09

          <PAGE>

               During fiscal  1997 and  1996, the  fair values  of the  options
          granted were estimated on  the date of  their grant using  the Black-
          Scholes option-pricing model based on the  following weighted average
          assumptions:

                                             1997           1996

               Risk free interest rate       6%             6%
               Expected life                 5 years        5 years
               Expected volatility           60%            60%
               Expected dividend yield       0%             0%


          <TABLE>
          Stock option activity for 1997 and 1996 is set forth below:

                                            1997                    1996
                                               Weighted               Weighted
                                                Average                Average
                                     Options   Exercise     Options   Exercise
                                                 Price                  Price
          <S>                       <C>      <C>    <C>    <C>      <C>   <C>
              Outstanding at        
              beginning of year     609,346    $  1.65       488,467  $  2.05
              Granted                70,000       2.90       338,000     1.51
              Canceled                                     (192,680)     2.25
              Exercised                                     (24,441)     1.46

              Outstanding at end of
              year                  679,346      1.78        609,346     1.65

              Exercisable at end of 491,540       1.74       351,700     1.79
              year

              Weighted average fair
               value of options
               granted during the
               year whose exercise
               price equaled
                grant price                     $ 1.65                  $0.85

              Weighted average fair
               value of options
               granted during the
               year whose exercise
               price exceeded
                grant price                                            $ 0.65


          </TABLE>
          <PAGE>
          <TABLE>

          Stock options outstanding at January 31, 1997:

          <CAPTION>
                            Options Outstanding                Options Exercisable
                                     Weighted
                                      Average      Weighted              Weighted
                                     Remaining     Average               Average
              Range of              Contractual    Exercise              Exercise
           Exercise Price  Options     Life         Price      Options    Price
          <C>      <C>     <C>     <C>           <C>          <C>      <C>
          $ 0.69 to$ 1.52   384,211  4.1 years      $  1.30    279,030   $  1.00
          $ 1.53 to$ 2.50   250,135  2.8 years         2.22    212,510      2.10
          $ 2.51 to$ 3.50    45,000  6.3 years         3.40

          </TABLE>

          Note 9 - 401(k) Retirement Plan

               In December, 1987, the Board of Directors authorized a simplified
          401(k) Retirement Plan which was implemented in February, 1988.  Under
          the terms of the plan, eligible participating employees of the Company
          may elect to have an amount up to, but not in excess of,  15% of their
          regular salary or wages withheld for  purposes of setting aside  funds
          available at retirement.  Amounts withheld are invested in one or more
          available investment  alternatives  as   selected  by  the  individual
          employee.  Under  current tax  law, amounts withheld  under the  plan,
          subject to annual limitations, and any interest earnings  thereon, are
          tax deferred  until  such  time  as  distributions  are  made  to  the
          employee.  The Company does not contribute to the  employee's account.
          All costs  and expenses  of administering  the plan  are  paid by  the
          Company.

          Note 10 - Commitments and Contingencies

               The Company is subject to  certain legal proceedings, claims  and
          disputes which arise in the ordinary course of its business.  Although
          the Company cannot  predict the outcomes  of these legal  proceedings,
          the Company's management does  not believe these  actions will have  a
          material adverse effect on  the Company's financial position,  results
          of operations or liquidity.   However, if unfavorably resolved,  these
          proceedings could  have a  material adverse  effect  on the  Company's
          financial position, results of operations and liquidity.

          Note 11 - Trademarks

               CompuTrac, Dimension,  and  other  names  of  CompuTrac  products
          referenced  herein  are   trademarks  or   registered  trademarks   of
          CompuTrac, Inc.  All other product and company names  mentioned herein
          are the trademarks of their respective owners.

          <PAGE>

          REPORT OF INDEPENDENT ACCOUNTANTS


          To the Board of Directors and Shareholders of
          CompuTrac, Inc.


          In our opinion, the accompanying consolidated balance  sheets and the
          related consolidated statements of operations, cash flows and changes
          in shareholders' equity present fairly, in all material respects, the
          financial position of CompuTrac,  Inc. and its subsidiary  at January
          31, 1997 and 1996, and the results of their operations and their cash
          flows for each of the two years in the period ended January 31, 1997,
          in conformity with generally  accepted accounting principles.   These
          financial  statements  are   the  responsibility  of   the  Company's
          management; our  responsibility is  to express  an  opinion on  these
          financial statements based on our audits.  We conducted our audits of
          these statements  in  accordance  with  generally  accepted  auditing
          standards which require that we plan and perform the  audit to obtain
          reasonable assurance about whether the financial  statements are free
          of material misstatement.   An  audit includes examining,  on a  test
          basis,  evidence  supporting  the  amounts  and  disclosures  in  the
          financial statements, assessing  the accounting  principles used  and
          significant estimates made by management, and  evaluating the overall
          financial statement presentation.  We believe that our audits provide
          a reasonable basis for the opinion expressed above.




          PRICE WATERHOUSE LLP

          Dallas, Texas
          March 25, 1997

          <PAGE>

          Item 8.        Changes  In  and  Disagreements  with  Accountants   on
          Accounting and Financial Disclosure

                    The Company has reported no disagreements with or  change of
          its independent accountants during the 24 months prior to  January 31,
          1997 or any subsequent period.

                                         PART III

                    The information required  by Part III  is omitted from  this
          Report and will be included in the registrant's 1997  definitive proxy
          statement pursuant to Regulation 14A (the "Proxy Statement")  which is
          expected to be  filed not later  than 120  days after the  end of  the
          fiscal year  covered  by this  Report,  and the  information  included
          therein is incorporated herein by reference.

          Item 9.        Directors, Executive  Officers, Promoters  and  Control
          Persons; Compliance with Section 16(a) of the Exchange Act

                    The information  required by  this Item  is incorporated  by
          reference to the  information under  the heading  _Management_ in  the
          Company's Proxy Statement for its 1997 Annual Meeting.

          Item 10.  Executive Compensation

                    The information  required by  this Item  is incorporated  by
          reference  to   the   information   under   the   heading   _Executive
          Compensation_ in the  Company's Proxy  Statement for  its 1997  Annual
          Meeting.

          Item 11.  Security  Ownership   of  Certain   Beneficial  Owners   and
          Management

                    The information  required by  this Item  is incorporated  by
          reference to the information under the heading _Security Ownership_ in
          the Company's Proxy Statement for its 1997 Annual Meeting.

          Item 12.  Certain Relationships and Related Transactions

                    The information  required by  this Item  is incorporated  by
          reference  to   the   information   under   the   heading   _Executive
          Compensation-Employment Agreements_ in  the Company's Proxy  Statement
          for its 1997 Annual Meeting.

                                         PART IV

          Item 13.  Exhibits and Reports on Form 8-K

               (a)  The following documents are filed as a part of this Report:

                1.  Financial Statements:                                  Page


                    Report of Independent Accountants                      24
                    Consolidated Balance Sheets at
                      January 31, 1997 and 1996                            11
                    Consolidated Statements of Operations
                      for the two years ended January 31, 1997             12
                    Consolidated Statements of Changes in
                      Shareholders' Equity for the two years
                      ended January 31, 1997                               13
                    Consolidated Statements of Cash Flows for
                      the two years ended January 31, 1997                 14
                    Notes to Consolidated Financial Statements             15-23

          <PAGE>
                    3.1*      -    Restated Articles of Incorporation of
                                   Registrant

                    3.2**     -    Bylaws of the Registrant

                    3.3***    -    Articles  of   Amendment   to   Articles   of
                                   Incorporation   of   the   Registrant   dated
                                   December 1, 1987

                    4.1       -    Articles of Incorporation  and Bylaws of  the
                                   Registrant constituting Instruments  Defining
                                   the    Rights    of    Common    Stockholders
                                   (incorporated by reference  to Exhibits  3.1,
                                   3.2, and 3.3 hereto)

                    10.1****  -    Employment Agreement  between the  Registrant
                                   and Harry W. Margolis dated December 1, 1992

                    10.2*     -    Incentive Stock Option Plan of the Registrant

                    10.3***** -    CompuTrac, Inc. 1991 Employee Stock  Purchase
                                   Plan, as amended

                    10.4*     -    Cash Bonus Plan of the Registrant

                    10.5*     -    Form of Indemnification Agreement between the
                                   Registrant and Texas E. Schramm, dated  as of
                                   July 11, 1983

                    10.6**    -    Contract of  Sale, dated  February 28,  1986,
                                   between Harry W. Margolis and the Registrant

                    10.7***   -    Form of Indemnification Agreement between the
                                   Registrant and its  Directors as ratified  by
                                   the Registrant's Shareholders in their Annual
                                   Meeting of November 19, 1987

                    10.8******-    Employment Agreement  between the  Registrant
                                   and George  P. McGraw dated February 1, 1992

                    10.9******-    Form  of  Employment  Agreement  between  the
                                   Registrant and its Executive Officers.

                    10.10*******-  Amendment dated  July 8,  1989 to  CompuTrac,
                                   Inc. Employee Stock Purchase Plan

                    11.1      -    Statement  re:  Computation  of    Per  Share
                                   Earnings

                    23.1      -    Consent of Independent Accountants

                    27        -    Financial Data Schedule

                    99        -    Annual Report on Form 11-K for the CompuTrac,
                                   Inc. Employee Stock Purchase Plan
          <PAGE>
          ____________

          *         Incorporated by reference to the same numbered exhibit filed
                    with the Registrant's Registration Statement on Form S-1 and
                    Amendment Nos.  1 and  2 thereto,  File  No. 2-84218,  which
                    became effective July 19, 1983.

          **        Incorporated by reference to the same numbered exhibit filed
                    with the Registrant's Registration Statement on Form S-1 and
                    Amendment No.  1 thereto,  File  No. 33-4582,  which  became
                    effective April 24, 1986.

          ***       Incorporated by reference to the same numbered exhibit filed
                    with the Registrant's  Annual Report  on Form  10-K for  the
                    fiscal year ended January 31,  1988, Commission File No.  1-
                    9115.

          ****      Incorporated by reference to the same numbered exhibit filed
                    with the Registrant's  Annual Report  on Form  10-K for  the
                    fiscal year ended January 31,  1993, Commission File No.  1-
                    9115.

          *****          Incorporated   by   reference   to   the   Registrant's
                    Registration Statement on Form S-8, File No. 33-61577, filed
                    with the Commission on August  4, 1995, Commission File  No.
                    1-9115.

          ******         Incorporated by reference to the same  numbered exhibit
                    filed with the Registrant's Annual  Report on Form 10-K  for
                    the fiscal year ended January 31, 1994, Commission  File No.
                    1-9115.

          *******        Incorporated by reference to exhibit number  28.1 filed
                    with the Registrant's  Annual Report  on Form  10-K for  the
                    fiscal year ended January 31,  1990, Commission File No.  1-
                    9115.

          Management Contracts and Compensatory Plans


               The documents filed  as Exhibits  10.1, 10.2,  10.3, 10.4,  10.8,
          10.9 and (10.10) constitute management contracts or compensatory plans
          or arrangements within the meaning of SEC rules.

                (b) Reports on Form 8-K.   No reports on Form 8-K were  filed by
                    the Company during the  fiscal fourth quarter ended  January
                    31, 1997.

          <PAGE>
                                          SIGNATURES

                    In accordance with Section 13 or 15(d) of the Exchange Act,
          the registrant caused this report to  be signed on its behalf  by the
          undersigned, thereunto duly authorized.

                                        COMPUTRAC, INC.

                                   By: /S/ Harry W. Margolis

                                           Harry W. Margolis
                Chairman of the Board of Directors and Chief Executive Officer

                                     Date:  April 23, 1997

                    In accordance with the  Exchange Act, this report  has been
          signed below by the following persons on behalf of the registrant and
          in the capacities and on the dates indicated.

               Signature                     Title                       Date  


          /S/ Harry W. Margolis    Chairman of the Board of      April 23, 1997
              Harry W. Margolis          Directors and
                                    Chief Executive Officer

          /S/ George P. McGraw             President             April 23, 1997
              George P. McGraw   (Principal Operating Officer)


          /S/ Cheri L. White       Vice President - Finance      April 23, 1997
              Cheri L. White      and Chief Financial Officer
                                   (Principal Financial and
                                      Accounting Officer)
                                                      

          /S/ Dana E. Margolis       Secretary, Treasurer        April 23, 1997
              Dana E. Margolis           and Director


          /S/ Cesar L. Alvarez             Director              April 23, 1997
              Cesar L. Alvarez



          /S/ Kenneth R. Nicholas          Director               April 23, 1997
              Kenneth R. Nicholas



          /S/ Gerald  D. Harris            Director               April 23, 1997
              Gerald D. Harris

          <PAGE>
          <TABLE>
                                                                 EXHIBIT 11.1
                                     COMPUTRAC, INC.
             COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
          <CAPTION>
                                                           Year Ended January 31,
                                                           1997            1996
          <S>                                           <C>           <C>
          NET (LOSS) INCOME

             Net (loss) income                         $ (668,205)   $      664,117

          PRIMARY

             Weighted average number of shares
             outstanding                                 6,206,841        6,071,436

             Issuance of common stock                       30,450           68,608

             Common stock equivalents                                        70,120

                                                         6,237,291        6,210,164

             Earnings Per Share:

             Net (loss) income                         $    (0.11)   $         0.11 


          FULLY DILUTED

             Weighted average number of shares
             outstanding                                 6,206,841        6,071,436

             Issuance of common stock                       30,450           68,608

             Common stock equivalents                                       135,342

                                                         6,237,291        6,275,386

             Earnings Per Share:

             Net (loss) income                         $    (0.11)   $         0.11


          </TABLE>
          <PAGE>
                                     CompuTrac, Inc.

                   Exhibit 23.1 - Consent of Independent Accountants



          We  hereby  consent  to  the  incorporation  by  reference  in  the
          Registration Statements on Form  S-8 (Nos. 33-40732; 33-40734;  33-
          02906; 33-07319; 33-61577) of CompuTrac,  Inc. of our report  dated
          March 25, 1997 appearing on page  24 of this annual report on  Form
          10-KSB.




          PRICE WATERHOUSE LLP
          Dallas, Texas
          April 25, 1997
          <PAGE>
          <TABLE>
                                     COMPUTRAC, INC.
                                 FINANCIAL DATA SCHEDULE
          <CAPTION>
                                                    Year Ended
                                                 January 31, 1997
          <S>                                    <C>
          Fiscal Year End                             01/31/97

          Period End                                  01/31/97

          Period Type                                   YEAR

          Cash                                   $         449,304

          Securities                             $       4,334,869

          Receivables                            $         902,683

          Allowances                             $         180,000

          Inventory                                              0

          Current Assets                         $       5,933,651

          PP&E                                   $      13,493,493

          Depreciation                           $       9,975,120

          Total Assets                           $       9,881,922

          Current Liabilities                    $         716,346

          Bonds                                  $         199,561

          Preferred - Mandatory                                  0

          Preferred                                              0

          Common                                 $          69,887

          Other SE                               $       8,896,128

          Total Liabilities and Equity           $       9,881,922

          Sales                                  $         514,830

          Total Revenue                          $       4,648,378

          CGS                                    $         355,730

          Total Costs                            $         652,851

          Other Expenses                         $       4,884,475

          Loss Provision                                         0

          Interest Expense                       $          43,970

          Income - pretax                        $       (668,205)

          Income - tax                                           0

          Income - continuing                    $       (668,205)

          Discontinued                                           0

          Extraordinary                                          0

          Changes                                                0

          Net Income                             $       (668,205)

          EPS - Primary                          $          (0.11)

          EPS Diluted                            $          (0.11)
          </TABLE>