UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549 
                                 FORM 10-Q 
                  QUARTERLY REPORT UNDER SECTION 13 OF 15(d) 
                    OF THE SECURITIES EXCHANGE ACT OF 1934 
  
                     For quarter ended October 31, 1996    

                        Commission File Number 0-3825 
 
                        Computer Transceiver Systems, Inc.         
            (Exact name of registrant as specified in its charter) 
 
             New York                               22-1842747                 
     (State of Incorporation)        (I.R.S. Employer Identification Number) 

                 Registrant's Telephone Number:  (201) 473-4700 
  

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange 
Act of 1934 during the preceding 12 months (or for such shorter period 
that the registrant was required to file such reports), and (2) has been 
subject to such filing requirements for the past 90 days. 
                     
                     Yes   X                       No      


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 court.            


                     Yes   X                       No      

The number of shares outstanding of the registrant's Common Stock, par value 
of $.001 per share, as of December 6, 1996 was 2,716,603.
<PAGE>
                       COMPUTER TRANSCEIVER SYSTEMS, INC.
                                        
                                  FORM 10 - Q

                                October 31, 1996
 
                                     INDEX

                                                                    Page

Part I.  Financial Information 
 
         Item 1.  Financial Statements  
         Balance Sheets - October 31, 1996
                   and July 31, 1996                                  3
                        
         Statements of Discontinued Operations-
         Three Months ended October 31, 1996
                   and October 31, 1995                               4
  
         Statements of Cash Flows-
         Three Months ended October 31, 1996
                   and October 31, 1995                               5

         Notes to Financial Statements                                6

         Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                7


  II. Other Information

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

         Signatures                                                   9

<PAGE>
<TABLE>
Part 1. Financial Information
Item 1. Financial Statements
                   COMPUTER TRANSCEIVER SYSTEMS, INC.
                             Balance Sheets

<CAPTION>
                                                      October 31, 1996                    July 31, 1996
                                                         (unaudited)                        (audited)
                                                          (note 2)
                                                      -----------------                 -----------------
<S>                                                   <C>                               <C>
ASSETS                     
------
Current Assets:

   Marketable Securities -
       Vertex Industries                               $         3,052                     $        3,052
                                                       ---------------                     --------------
   Total Assets                                        $         3,052                     $        3,052
                                                       ===============                     ==============

Liabilities and Stockholders' Equity
------------------------------------
   Commitments and Contingencies
  
Stockholders' Equity
------------------------------

   Common stock, par value $.001 per share
   authorized 15,000,000 shares; issued and
   outstanding 2,716,603 shares at October 31,
   1996 and at July 31, 1996, respectively                       2,716                              2,716

   Capital in excess of par value                            2,452,840                          2,452,840

   Accumulated deficit                                     (2,450,156)                        (2,450,156)

   Net unrealized loss on Marketable Securities                (2,348)                            (2,348)
                                                       ---------------                    ---------------

   Total Stockholders' Equity (Deficit)                          3,052                             3,052 
                                                       ---------------                    ---------------         
   Total Liabilities and Stockholders' Equity          $         3,052                 $            3,052
                                                       ===============                 ==================

<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
                                    -3-
<PAGE>
<TABLE>                      
                      COMPUTER TRANSCEIVER SYSTEMS, INC.
                     Statement of Discontinued Operations
                                 (Unaudited)
<CAPTION>
                                                      Three Months Ended   
                                                          October 31,    
                       
                                                     1996                     1995
                                                   --------                  --------
<S>                                          <C>                       <C>
Net Income                                     $      ---                $      ---
                                             --------------            ---------------

Retained (Deficit) at beginning of
period                                          (2,450,156)                2,450,156 
                                             ==============            ===============

Retained (Deficit) at end of period             (2,450,156)               (2,450,156)
                                             --------------            --------------

Earnings Per Share of Common Stock:

Net Income per share                         $     ---                 $        ---
--------------------                         ==============            ==============

Weighted Average Number of 
--------------------------
Shares Outstanding                                2,716,603                 2,716,603
------------------                           ==============            ==============

Dividends per share                          $         0.00            $         0.00
                                             ==============            ==============


<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
                                    
                                
                                    -4-
<PAGE>
<TABLE>
                        COMPUTER TRANSCEIVER SYSTEMS, INC.
                             Statements of Cash Flows
                                   (Unaudited)
<CAPTION>                                                              
                                                              Three Months Ended
                                              October 31, 1996                  October 31, 1995          
                                              ----------------                  ----------------
<S>                                           <C>                               <C>
Cash Flows from Discontinued
----------------------------
Operating Activities:
---------------------
Net Income                                    $          ---                       $      ---

Net Adjustments to Reconcile
Net Income to net cash used for 
operating activities:

Increase (decrease) in liabilities:

Accrued expenses                                         ---                         (43,000)

Net adjustments to reconcile net income
to net cash used for discontinued
operating activities                                     ---                         (43,000)                   
                                              ----------------                  ---------------
Net Cash used for discontinued                        
operating activities                                     ---                         (43,000)
                                              ----------------                  ---------------
Cash Flows From Financing Activities:
Proceeds from additional capital
contribution                                             ---                          43,000                   
                                              ----------------                  ---------------
     Net Cash Provided by Financing       
                         Activities                      ---                          43,000
                                              ----------------                 ----------------
     Net (Decrease) in Cash                              ---                             ---

     Cash at Beginning of Year                           ---                             ---
                                              ----------------                  ---------------

     Cash at End of Period                    $          ---                      $      ---
                                              ================                  ===============
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
                                    -5-
<PAGE>
                     COMPUTER TRANSCEIVER SYSTEMS, INC.
                 Notes to Financial Statements - Unaudited
                              October 31, 1995


Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying financial statements have been prepared by the Company 
pursuant to the rules and regulations of the Securities and Exchange 
Commission, and reflect all adjustments which, in the opinion of the 
management, are necessary for a fair statement of the results of the interim 
periods presented.  These financial statements do not include all disclosures 
associated with annual financial statements, and accordingly should be read in 
conjunction with the notes to financial statements contained in the Company's 
Form 10-K Annual Report for the fiscal year ended July 31, 1996.   

Note 2 - SALE OF ASSETS TO VERTEX AND FUTURE PLANS 

     On August 31, 1994, pursuant to an "Asset Purchase Agreement" dated May 
1, 1993 between the Company and Vertex Industries, Inc. ("Vertex"), the 
Company's majority stockholder, and with the approval of the Company's 
directors and shareholders, the Company sold all of its assets to Vertex and 
Vertex assumed the Company's liabilities.  The assets sold included inventory, 
equipment, receivables, proprietary technology, goodwill and other intangibles.
The selling price of $1,699,580 was paid by Vertex through the offset and 
cancellation of the Company's indebtedness to Vertex in the amount of 
$1,257,001, with the balance of $442,579 being paid through the issuance of 
236,042 shares of Vertex common stock to the Company.  CTSI subsequently 
distributed 233,170 shares of Vertex common stock in an exchange offer for 
746,161 shares of CTSI's common stock.  The Vertex shares reflected in the
balance sheet as marketable securities as of July 31, 1995 represents the 
remaining shares of 2,872 which were not distributed to the CTSI shareholders.  
After completion of the Exchange Offer, the number of issued and outstanding 
shares of the Company was reduced from 3,462,764 to 2,716,603.  As a result of
the transaction, Vertex's ownership of the Company is approximately 72.5%.

       The Company's current business purpose is to seek out and obtain an 
acquisition, and/or merger transaction, whereby its shareholders may benefit 
by owning an interest in a viable enterprise.  Since the Company has no 
operations or significant assets as a result of the sale, its potential for 
profits will come solely from operations it may undertake after any acquisition 
or merger transaction.  The Company has not received from, or made any specific 
proposals to, any possible merger or acquisition candidate and there is no 
guarantee that such transaction will occur.  Vertex will be responsible for, 
and shall be the source of, any funds necessary for the Company to continue 
operating and to comply with any regulatory requirements, taxes, and fees.  
It will fund any costs associated with pursuing merger or acquisition 
candidates.


                                    -6-
<PAGE>
ITEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS.

     The Company ceased operations on August 31, 1994 and, therefore, has no 
operating results for the three months ended October 31, 1996 and 1995.




  
                                    -7- 
<PAGE>                   
                     COMPUTER TRANSCEIVER SYSTEMS, INC. 
                                 PART II 
                                    
                            OTHER INFORMATION 
 

 
     Item 6.   EXHIBITS AND REPORTS ON FORM 8K 
 
                   (a)  Exhibits:  None 
 
                   (b)  The company filed a report on form 8-K on September 25,
                        1996 reporting on the change in the Company's
                        independent public accountants from Sax, Macy, Fromm
                        & Company to Arthur Andersen LLP for the fiscal year
                        ended July 31, 1996.



                                    -8-
<PAGE>

                              SIGNATURES 
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this Report to be signed on its behalf by the 
undersigned thereunto duly authorized. 
 
 
                                                              
 
                    COMPUTER TRANSCEIVER SYSTEMS, INC. 
                               (Registrant) 
 
 
 
Date:  December 3, 1996               By:   S/ Thomas J. Tully 
-------------------------------       ---------------------------------------
                                               Thomas J. Tully
                                               President
               
 
 
   
Date:  December 3, 1996               By:   S/ Ronald C. Byer
-------------------------------       ---------------------------------------
                                               Ronald C. Byer
                                               Treasurer



                                    -9-