UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549

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

       For the quarterly period ended September 30, 1997

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

COMMISSION FILE NUMBER 0-26668

SYSTEMS COMMUNICATIONS, INC.
------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                                       <C>
FLORIDA                                                 65-0036344
------------------------------------------------------------------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                         Identification No.)

4707 140th Avenue North, Suite 107, Clearwater, FL.       33762
------------------------------------------------------------------------------
(Address of principal executive offices)                (ZIP Code)

</TABLE>

Registrant's  telephone number, including area code       813-530-4800
------------------------------------------------------------------------------

Indicate  by check mark whether the registrant (1) had  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___          No  x_

Number  of  shares outstanding of the issuer's Common  Stock,  par
value  .001  per  share,  as of September 30,  1997  -  11,442,143
shares.

<PAGE> 2

                       PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                    SEPTMBER 30,  DECEMBER 31,
                                                       1997           1996
                                                  -----------     -----------
                                                  (UNAUDITED)
            ASSETS
<S>                                                   <C>            <C>
Current assets:
   Cash and cash equivalents                         $    740     $    61,039
   Accounts receivable, less allowance for doubtful
     accounts of $8,458 in 1997 and $28,074 in 1996    66,062         802,079
   Notes receivable from officers and employees        52,000         102,000
   Other current assets                               184,542         438,763
                                                    ---------       ---------
Total current assets                                  303,344       1,403,881
                                                    ---------       ---------
Furniture and equipment                               988,830       1,812,867
   Less accumulated depreciation                     (317,774)       (587,598)
                                                    ---------       ---------
   Net furniture and equipment                        671,056       1,225,269

Note receivable from the sale of assets, less
   allowance of $500,000                                  --             --
Deferred compensation                                  84,508         662,199
Intangible assets, net of accumulated amortization
   of $150,000 in 1997 and $566,666 in 1996               --        1,083,334
Excess of cost over fair value of net assets
   acquired, net of accumulated amortization of
   $75,034 in 1996                                        --        1,298,950
Other non-current assets                              171,192         173,667
                                                    ---------       ---------
                                                  $ 1,230,100     $ 5,847,300
                                                    =========       =========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 3


                SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS (Continued)

<TABLE>
<CAPTION>

                                                  SEPTEMBER 30,   DECEMBER 31,
                                                     1997           1996
                                                   ----------    -----------
                                                   (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
    (DEFICIENCY OF ASSETS)
<S>                                                   <C>            <C>
Current liabilities:
    Borrowings under lines of credit               $    --       $   182,651
    Current portion of notes and debentures
      payable                                       3,419,200      3,180,758
    Current portion of obligations under capital
      leases                                          190,687        242,477
    Accounts payable                                  894,090      1,452,192
    Accrued expenses and other current liabilities    967,830        881,675
    Accrued compensation and employee benefits        723,580      1,528,153
    Deferred revenue                                     --          440,232
                                                    ---------      ---------
Total current liabilities                           6,195,387      7,908,138

Obligations under capital leases, less current
    portion                                           145,643        458,654
Accrued compensation                                  404,627        676,261
Other long-term liabilities                            63,578         72,573
                                                    ---------      ---------
Total liabilities                                   6,809,235      9,115,626
                                                    ---------      ---------
Common stock subject to rescission                    674,124        709,124
                                                    ---------      ---------
Stockholders' equity (deficiency of assets):
  Class A convertible preferred stock, stated 
   value and liquidation preference $1.00 per
   share; authorized 5,000,000 shares, issued and
   outstanding 192,000 shares in 1996                     --             630
  Class B convertible preferred stock, stated 
   value and liquidation preference - $1.00 per
   share; authorized 10,000,000 shares, issued 
   and outstanding 2,953,125 shares in 1997 and
   4,550,000 shares in 1996                         1,617,260      2,491,745
  Common stock - $.001 par value; authorized
   50,000,000 shares, issued and outstanding
   11,442,143 shares in 1997 and 10,626,874
   shares in 1996                                      11,443         10,627
  Common stock to be issued                              --        2,000,000
  Additional paid in capital                       16,804,504     16,823,526
  Accumulated deficit                             (24,686,466)   (25,303,978)
                                                   ----------     ----------
Total stockholders' equity (deficiency of assets) ( 6,253,259)   ( 3,977,450)
                                                   ----------     ----------
                                                  $ 1,230,100    $ 5,847,300
                                                   ==========     ==========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 4


                               SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                   Nine Months Ended    Three Months Ended
                                      September 30,       September 30,
                                 ----------------------  ---------------------------
                                   1997         1996        1997         1996
                                 ----------  ----------  --------- ----------
                                (UNAUDITED)  (UNAUDITED)(UNAUDITED)(UNAUDITED)
<S>                                <C>            <C>       <C>         <C>
Net  revenues                    $1,467,344  $1,166,465  $   --    $    456,602
                                 ----------   ---------  --------   ----------
Costs and expenses:
   Cost of revenues                  90,849     200,342      --          44,620
   Selling and administrative
     expenses                     2,655,362   4,801,135     66,759    1,572,202
   Depreciation and amortization    490,873     809,347     48,477      282,618
                                 ----------   ---------   --------  ----------
                                  3,237,084   5,810,824    115,236    1,899,440
                                 ----------   ---------   --------  ----------
                                 (1,769,740) (4,644,359)  (115,236)  (1,442,838)
Interest income                       4,070      13,455      1,026        3,024
Interest expense                   (336,746)   (231,912)   (88,217)     (82,175)
Other income(expense), net        2,166,429    (  1,252)      ( 41)      (1,252)
                                 ----------   ---------   --------   ---------
Income(loss) from continuing
  operations before income taxes     64,013  (4,864,068)  (202,468)  (1,523,241)
Provision(benefit) for income 
  taxes                                 --   (1,683,173)       --      (603,673)
                                 ----------   ---------   --------   ----------
Income(loss) from continuing
  operations                         64,013  (3,180,895)  (202,468)    (919,568)
                                 ----------   ---------   --------   ----------

Discontinued operations:
  Loss from operations of
   discontinued telecommunications
   businesses (less income tax
   benefit of $304,650 and $140,527
   in  1996, respectively)          (85,893)   (538,044)    (9,512)    (109,537)
  Gain from disposition of
   telecommunication businesses     639,392        --          --           --
                                  ---------    --------   --------    ---------
                                    553,499    (538,044)    (9,512)    (109,537)
                                  ---------    --------   --------    ---------
Net income(loss)                  $ 617,512 $(3,718,939) $(211,980) $(1,029,105)
                                  =========   =========   ========    =========
Earnings(loss) per share:
  Income(loss)from continuing
    operations                    $     .01 $      (.39) $    (.02)  $    (.11)
  Income(loss) from discontinued
    telecommunications businesses      (.01)       (.07)        --        (.01)
  Gain from disposition of
    telecommunications businesses       .06         --          --          --
                                  ---------   ---------    --------    ---------
   Net  income(loss)               $    .06   $    (.46)   $   (.02)  $    (.12)
                                  =========   =========    ========    =========
Weighted average number of
    common shares outstanding    11,019,398   8,077,218  11,181,992    8,727,554
                                  =========   =========  ==========    =========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 5
                         SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                           September 30,
                                                    -------------------------
                                                       1997            1996
                                                    -----------    ----------
                                                    (UNAUDITED)    (UNAUDITED)
<S>                                                     <C>             <C>
Net cash used in operating activities              $(1,644,954)   $(3,746,364)
                                                    ----------     ----------
Cash flows from investing activities:
 Acquisitions of businesses, net of cash
    acquired                                               --          90,890
 Disposition of businesses, net of cash
    of businesses disposed of                          368,343           --
 Expenditures for furniture and equipment              (23,753)      (307,289)
 Loan to officer                                           --         (50,000)
 Other                                                   2,475           --
                                                     ---------      ---------
Net cash provided by (used in)
    investing activities                               347,065       (266,399)
                                                     ---------      ---------
Cash flows from financing activities:
 Proceeds from issuance of common stock                229,500      2,391,695
 Proceeds from notes and debentures payable          1,390,626        798,397
 Payments on notes, debentures and
    capital lease obligations                         (263,541)      (129,543)
 Payments on borrowings under lines of credit          (75,000)       (12,500)
 Payments on common stock subject to rescission        (35,000)          --
 Other                                                  (8,995)          --
                                                     ---------      ---------
Net cash provided by financing activities            1,237,590      3,048,049
                                                     ---------      ---------
Net decrease in cash                                   (60,299)      (964,714)
Cash and cash equivalents at beginning
   of the period                                        61,039        964,714
                                                     ---------      ---------
Cash and cash equivalents at end of the period       $     740      $    --
                                                     =========      =========
<PAGE> 6

                          SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (CONTINUED)

Supplemental Disclosure of Cash Flow Information and Non-cash Investing and
Financing Activities:


</TABLE>
<TABLE>
<CAPTION>
                                                           September 30,
                                                     ------------------------
                                                        1997          1996
                                                     ---------      ---------
<S>                                                     <C>            <C>
  Equipment capital lease obligations                $  73,184      $ 570,675
  Issuance of common stock upon conversion
    of notes and debentures payable                    716,318        199,007
  Issuance of common stock as compensation             266,861        260,192
  Waiver of common stock to be issued                2,000,000           --
  Waiver of bonuses payable                            695,214           --
  Cash paid during the period for:
     Interest                                          102,742           --
     Income taxes                                         --             --

</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 7

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1997


SIGNIFICANT  ACCOUNTING  POLICIES  -  The  unaudited  consolidated
balance  sheet  at September 30, 1997, the unaudited  consolidated
statements  of  operations for the nine  and  three  months  ended
September  30, 1997 and 1996 and unaudited consolidated statements
of  cash  flows for the nine months ended September 30,  1997  and
1996  have  been  prepared in accordance with  generally  accepted
accounting   principles   for   interim   financial   information.
Accordingly,  they  do  not include all  of  the  information  and
footnotes required by generally accepted accounting principles for
complete  financial statements. In the opinion of management,  all
adjustments,   consisting  of  normal   and   recurring   accruals
considered necessary for a fair presentation, have been  included.
Results of operations for the nine months ended September 30, 1997
are  not necessarily indicative of the results for the full fiscal
year.

The  operating, investing and financing activities included in the
Unaudited  Consolidated  Statements of Cash  Flows  for  the  nine
months ended September 30, 1997 and 1996 are presented net of  the
assets  and  liabilities disposed of by the Company in  connection
with the rescission of the ATI and HMT acquisition agreements  and
the  assets  and liabilities acquired in connection with  business
acquisitions, respectively. See Note 2.

2.  ACQUISITIONS AND DISPOSITIONS OF BUSINESSES - Effective  March
12,  1996,  the Company acquired all of the outstanding  stock  of
Health  Management  Technologies, Inc.  ("HMT"),  whose  principal
business  is  the  development, sale and  maintenance  of  medical
management  computer software, for 309,837 shares  of  its  common
stock  valued  at  $2,000,000.   The  total  purchase  price   was
$2,140,000,  including  costs  of  $140,000.  The  excess  of  the
purchase  price  over  the fair value of the net  assets  acquired
(goodwill)  was $1,373,984 and was assigned a useful  life  of  15
years.  The  net  assets acquired included $1,500,000  of  medical
management computer software, which was assigned a useful life  of
3 years.

The  following unaudited pro forma summary operating  results  for
the  nine months ended September 30, 1996, include the results  of
operations of HMT (with pro forma adjustments for amortization  of
goodwill and intangible assets acquired) as if HMT was acquired as
of  January  1,  1996.  The  pro forma  summary  is  provided  for
information  purposes only. It is based on historical  information
and  does  not necessarily reflect the actual results  that  would
have occurred nor is it necessarily indicative of future operating
results of the combined companies.

<PAGE> 8

<TABLE>
<CAPTION>

                                                     Nine Months Ended
                                                    September 30, 1996
                                                    ------------------
<S>                                                         <C>
Net revenues from continuing operations                $ 1,369,537
                                                       -----------
Loss from continuing operations                        $ 3,231,029
                                                       -----------
Loss from operations of discontinued
    telecommunications businesses                      $   538,044
                                                       -----------
Net Loss                                               $ 3,751,073
                                                       -----------
Loss per share:
  Loss from continuing operations                      $       .39
  Loss from operations of discontinued
    telecommunications businesses                              .07
                                                       -----------
    Net loss                                           $       .46
                                                       ===========
</TABLE>

In   January   1997  and  May  1997,  the  Company   disposed   of
substantially    all   of   the   remaining    assets    of    its
telecommunications segment. In January 1997, the Company sold,  in
two  separate  transactions (i) TNI's long-distance customer  base
and  existing  customer receivables for $76,000 in cash  and  (ii)
TNI's utility audit division customer base, agreements and work-in-
process  for $25,000 in cash and a $500,000 convertible  debenture
issued  by  the  acquiring company. No value was assigned  to  the
$500,000  convertible debenture received by the  Company.  By  its
terms,  the convertible debenture is due on January 31,  1999  and
bears  interest  at 8% per annum beginning on April  2,  1997  and
through  the date of conversion. Such conversion is at the average
bid  and ask prices of the acquiring company's common stock on the
effective  date  of a registration statement covering  the  shares
issuable upon conversion of the convertible debenture. Included in
the  consolidated  statements of operations for  the  nine  months
ended  September 30, 1997, is a gain of $25,000 from the  sale  of
the assets of TNI's utility audit division.

In  May  1997,  the Company and ATI entered into an  agreement  to
rescind  the  August 1994 acquisition of ATI. The  ATI  rescission
agreement provides for the return of all of the ATI stock acquired
by  the  Company  to the former ATI shareholders in  exchange  for
684,410  shares of  the Company's common stock, the 6% acquisition
notes  payable  issued  to  the former  shareholders  of  ATI  and
unexercised  warrants to purchase 168,668 shares of the  Company's
common  stock.   In  connection with the  rescission  of  the  ATI
acquisition,  ATI issued a promissory note to the Company  in  the
amount  of  $180,000, payable upon the default by ATI of  payments
due under certain of its lease agreements (those quaranteed by the
Company). Payments due the Company under the promissory  note  are
to  be equal to the amount, if any, the Company may be required to
pay under the lease guaranty agreement(s) entered into between the
Company  and  ATI's  equipment lessor(s). In connection  with  the
rescission   of  the  ATI  acquisition  agreement,   the   Company
recognized a gain of approximately $614,000 in the second  quarter
of 1997.

The    operating    results   of   the   Company's    discontinued
telecommunications businesses and the gains from  the  disposition
of TNI's audit division and ATI have been reported as components of
discontinued operations in the accompanying unaudited statements of
operations for all periods presented.

<PAGE> 9

The   assets   and  liabilities  of  the  Company's   discontinued
telecommunications   businesses  included  in   the   accompanying
consolidated balance sheets as of September 30, 1997 and  December
31, 1996 are summarized as follows:

                                    September 30,      December 31,
                                         1997               1996
                                     -----------        ----------
      Current assets                $     --            $  332,856
      Total assets                        --               660,094
      Current liabilities              299,322             886,206
      Total liabilities                291,322           1,078,026

The  revenues,  costs  and expenses of the Company's  discontinued
telecommunications businesses, included in loss from operations of
discontinued  telecommunications businesses  in  the  accompanying
consolidated  statements of operations for  the  nine  months  and
three months ended September 30, 1997 and 1996, are summarized  as
follows:

                                    Nine Months               Three Months
                                 Ended September 30,      Ended September 30,
                                 ---------------------    -------------------
                                   1997         1996       1997       1996
                                 ---------   ---------    --------   --------
Net revenues                    $  405,617  $1,715,674    $    --   $ 447,197
Cost of revenues                      --     1,107,982         --     254,918
Selling and administrative
  expenses                         417,590   1,305,952       9,179    371,686
Depreciation and amortization       47,460     117,699         --     (16,052)
Interest income                       --           971         --         (55)
Interest expense                    32,383      26,867         333     12,438
Other income (expense), net          5,923        (837)        --         837
Loss from operations of 
  discontinued businesses,
  before income taxes              (85,893)   (842,692)     (9,512)  (176,685)
Income tax benefit                     --      304,648         --      67,148
Loss from operations of 
  discontinued businesses          (85,893)   (538,044)     (9,512)  (109,537)

In  June  1997,  the  Company entered into an agreement  with  the
former  shareholders  of HMT to rescind the Company's  March  1996
acquisition of HMT. The HMT rescission agreement provides for  the
return  of  all  of the HMT stock acquired by the Company  to  the
former  shareholders of HMT in exchange for $450,000 in  cash  (in
payment  of inter-company loans to HMT from the Company)  and  the
309,837  shares of the Company's common stock issued in connection
with the acquisition. In connection with the rescission agreement,
the  Company and HMT entered into a separate Cooperative Marketing
and   Option  Agreement.  The  Cooperative  Marketing  and  Option
Agreement  provides  both the Company and  HMT  the  non-exclusive
right,  for  a  five  (5)  year period,  to  market  each  other's
products,  on  a  fee  basis,  and  granted  the  Company  a  non-
transferable  option, exercisable at any time for eighteen  months
after  the  date of grant (June 9, 1997), to acquire approximately
10%   of   HMT,  adjusted  for  stock  splits,  stock   dividends,
reclassifications, reorganizations, consolidations or mergers, for
approximately  $45,000 in cash. The HMT rescission agreement  also
had  the  effect  of  relieving the Company of its  obligation  to
provide   financing   to HMT under the terms of   the  acquisition
agreement.   In  connection  with  the  rescission  of   the   HMT
acquisition  agreement, the Company recognized  a  second  quarter
1997  gain of approximately $281,000, which is reported  in  other
income (expense), net as a component of operations from continuing
businesses.

On  November  14,  1997, the Company and the stockholders  of  HMG
Health Care Claims Auditing, Inc.("HMG") entered into an agreement
to exchange stock (the "Agreement to Exchange Stock"). Pursuant to
the Agreement to Exchange Stock, the Company is to acquire all  of
the  outstanding  stock  of  HMG in exchange  for  shares  of  the
Company's common stock (the "HMG Acquisition Shares"). The  number
of  HMG Acquisition Shares is to be determined at closing and  are
to be equal to 30% of the  then  outstanding  common stock of the
Company  after  giving effect  to  the  issuance  of  the  HMG  
Acquisition  Shares.   The acquisition of HMG is subject to, among
other things, the  Company obtaining debt financing to refinance 
the existing indebtedness of HMG (approximately $850,000)and pay
other  costs and expenses related  to  the  acquisition.  The 
Agreement  to  Exchange  Stock originally contemplated a
December 31, 1997 closing.  The  Company and  HMG now contemplate
a closing as soon as both the Company and HMG  meet  all  of  the
conditions contained in the  Agreement  to Exchange Stock.

<PAGE> 10

As  of December 31,1996, the Company had not issued the $2,000,000
of  additional shares of common stock ( common stock to be  issued
as  shown  in  the accompanying consolidated balance sheet  as  of
December  31, 1996) which were to have been issued to the founders
and  management of NSC ("Retiring Management") pursuant to the NSC
acquisition  agreement.  In  connection  with  the  January   1997
agreement between  the Company and Retiring Management, Retiring 
Management waived  the  issuance by the Company of the $2,000,000
shares of common stock which were to have been issued in connection
with the acquisition  agreement.  As a result of  the  waiver  by
Retiring Management of the issuance of the $2,000,000 of additional
shares of  common  stock  which  were to have been  issued,  the 
Company removed   the  common  stock  to  be  issued  from  the  
Company's consolidated  balance sheet and recorded a non-recurring
gain of $2,000,000 as of March 31, 1997. Such gain is included in
other income (expense), net.

3.  NOTES  AND  DEBENTURES PAYABLE - On  February  24,  1997,  the
Company issued $1,120,000 of 4% convertible debentures due October
1,  1998  in reliance upon exemptions under Regulation  S  of  the
Securities  Act of 1993. These debentures are convertible  at  any
time  after 45 days from the date of their issuance until maturity
into the Company's common stock at a conversion price equal to the
lessor  of  (a)  80%  of  the average closing  bid  price  of  the
Company's  common stock for the 5 days preceding the  issuance  of
the  debentures or (b) 70% of the average closing bid price of the
Company's  common  stock for the 5 days preceding  the  conversion
date. The Company incurred costs in connection with this financing
of  $120,000 and received net proceeds of $1,000,000. The proceeds
from the issuance of these debentures were used to pay amounts due
trade and other creditors.

During the nine months ended September 30, 1997, the Company  also
issued other notes and debentures payable totaling $270,626.

4.  EMPLOYMENT  AGREEMENTS  - Subsequent  to  December  31,  1996,
certain  key employees subject to employment agreements  resigned.
As  a  result of such resignations, the Company wrote-off deferred
compensation assets of approximately $304,000 and $340,000 in  the
first  and  second  quarters  of 1997, respectively.  The  related
liabilities associated with such employment agreements continue to
be outstanding obligations of the Company and were not adjusted as
a result of such resignations.

5.STOCKHOLDERS'  EQUITY - Following is a summary of  common  stock
transactions for the period from January 1, 1997 to September  30,
1997:

                                                 Shares    Amount
                                                 -------   --------
Issuance of common stock for cash                203,556   $229,500
Issuance of common stock upon:
 Conversion of Class A Preferred Stock            96,000         --
 Conversion of Class B Preferred Stock           580,682         --
 Conversion of convertible debt                  577,421    716,318
Issuance of common stock as compensation         311,897    262,861
Rescission of business acquisitions             (994,247)(2,000,000)

<PAGE> 11

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

The  following table sets forth certain information  derived  from
the  Consolidated Financial Statements of the Company for the nine
months  and  three months ended September 30, 1997 and  1996.  The
results from continuing operations include the operations of  NSC,
acquired  in  October 1995,and HMT, acquired  in  March  1996  and
disposed of in June 1997 in connection with the rescission of  the
HMT  acquisition  agreement. NSC and HMT  comprise  the  Company's
healthcare  segment. The results of operations  from  discontinued
telecommunications  businesses  include  the  operations  of   TNI
(including the operations of LCI and Comstar), ATI and CCI.  These
businesses  were sold or otherwise disposed of in 1996  and  1997;
consequently,  the results of operations of these  businesses  and
the gains from the disposition of these businesses for all periods
presented   have  been  reported  as  components  of  discontinued
operations   in   the  accompanying  consolidated  statements   of
operations.

<TABLE>
<CAPTION>
                                    Nine Months Ended      Three Months Ended
                                      September 30,           September 30,
                                   ---------------------   ------------------
                                       1997      1996        1997      1996
                                   ----------  ---------   --------  --------
<S>                                    <C>        <C>         <C>       <C>
Operations of continuing
   businesses:
Net revenues                      $1,467,344  $1,166,465   $   --    $ 456,602
Cost of revenues                      90,849     200,342       --       44,620
Selling and administrative
   expenses                        2,655,362   4,801,135    66,759   1,572,202
Depreciation and amortization        490,873     809,347    48,477     282,618
Interest income                        4,070      13,455     1,026       3,024
Interest expense                     336,746     231,912    88,217     (82,175)
Other income(expense), net         2,166,429      (1,252)      (41)     (1,252)
Income(loss) from continuing 
   operations before income taxes     64,013  (4,864,068) (202,468) (1,523,241)
Income(loss) from continuing 
   operations                         64,013  (3,180,895) (202,468) (  919,568)
Operations of discontinued 
   telecommunications businesses:
Net revenues                         405,617   1,715,674       --      447,197
Cost of revenues                         --    1,107,982       --      254,918
Selling and administrative 
   expenses                          417,590   1,305,952     9,179     371,686
Depreciation and amortization         47,460     117,699       --      (16,052)
Interest income                          --          971       --          (55)
Interest expense                      32,383      26,867       333      12,438
Other income(expense), net             5,923        (837)      --          837
Loss from operations of
  discontinued telecommunications
  businesses before income taxes    ( 85,893)   (842,692)  ( 9,512)  ( 176,685)
Loss from operations of discontinued
   telecommunications businesses    ( 85,893)   (538,044)  ( 9,512)  ( 109,537)
Gain from disposition of 
   telecommunications businesses     639,392         --        --          --
</TABLE>

<PAGE> 12

The  following discussion should be read in conjunction  with  the
Consolidated  Financial  Statements and notes  thereto,  appearing
elsewhere herein.

NET REVENUES

Net  revenues from continuing businesses for the nine months ended
September 30, 1997 increased by $300,879 as compared to  the  nine
months  ended September 30, 1996. This increase is the  result  of
the  acquisition of HMT. HMT was acquired by the Company in  March
1996  and disposed of in a rescission transaction on June 9,  1997
(see  Note  2 to the accompanying Unaudited Consolidated Financial
Statements).  HMT revenues included in the accompanying  Unaudited
Consolidated  Statements of Operations for the nine  months  ended
September  30,1997 were $1,311,055, compared to $845,081  for  the
nine months ended September 30, 1996. This increase was offset  by
lower  revenues from NSC's healthcare cost recovery services.  The
decrease in NSC revenues is the result of the termination  of  the
Chrysler services agreement, effective in September 1997,  due  to
performance issues among NSC, Chrysler and HMS, and the expiration
of  the Ford Motor Company services agreement, effective March 31,
1997.

The Company had no net revenues from continuing businesses for the
three  months  ended September 30, 1997 due to the termination  of
the  Chrysler  services agreement, expiration of  the  Ford  Motor
Company   services  agreement  and  the  rescission  of  the   HMT
acquisition agreement. Net revenues from continuing businesses for
the  three months ended September 30, 1996 included $379,921  from
HMT and $76,681 from NSC.

The  decrease  in  net  revenues from the  Company's  discontinued
telecommunications businesses from period to period is the  result
of the discontinuance of TNI's operations effective as of December
31,  1996  and the disposal of ATI in May 1997. Net revenues  from
the  Company's discontinued telecommunications businesses for  the
nine  months  ended  September 30, 1997 do,  however,  reflect  an
increase   in  the  revenues  of  the  Company's  ATI  subsidiary,
principally from PPV services in Mexico.

COST OF REVENUES

The   decrease  in  cost  of  revenues  applicable  to  continuing
operations  for  the  nine  months ended  September  30,  1997  as
compared  to  the  nine  months  ended  September  30,   1996   is
principally  the  result of lower revenues from  NSC's  healthcare
cost   recovery  services,  offset  by  adjustments   related   to
recoverable   healthcare  claims  under   the   Chrysler   service
agreement.

The   decrease  in  cost  of  revenues  applicable  to  continuing
operations  for  the  three months ended  September  30,  1997  as
compared  to  the  three  months  ended  September  30,  1996   is
principally  due  to  the  termination of  the  Chrysler  services
agreement  and  the expiration of the Ford Motor Company  services
agreement. During the three months ended September 30,  1997,  the
Company  did not generate any revenues from NSC's healthcare  cost
recovery services.

The   decreases   in  the  cost  of  revenues  of  the   Company's
discontinued  telecommunication businesses from period  to  period
are   the  result  of  the  discontinuance  of  TNI's  operations,
effective as of December 31, 1996, and the disposal of ATI in  May
1997.

<PAGE> 13

SELLING AND ADMINISTRATIVE EXPENSES

The decreases in selling and administrative expenses applicable to
continuing  operations from period to period reflect the  reversal
of  accrued bonuses of $695,214 in the first quarter of 1997 which
were  payable  to  Retiring Management  but,  waived  by  Retiring
Management in connection with an agreement between the Company and
the  retiring management of NSC, cost reductions initiated by  the
Company  during  the  first  quarter  of  1997  due  to  continued
operating  losses and the disposition of HMT in June  1997.  These
decreases were offset to some extent by the write-off of  deferred
compensation assets of approximately $304,000 and $340,000 in  the
first and second quarters of 1997, respectively.

The decrease in selling and administrative expenses applicable  to
the  operations  of  the Company's discontinued telecommunications
businesses  is  principally the result of  the  discontinuance  of
TNI's  operations,  effective as of December  31,  1996,  and  the
disposal of ATI in May 1997.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization applicable to continuing  operations
for  the  nine and three months ended September 30, 1997 decreased
as  compared to the same periods of last year. These decreases are
principally due to lower amortization of intangibles and  goodwill
recorded  in  connection with the Company's March 1996 acquisition
of  HMT  and  the  write of intangibles and goodwill  recorded  in
connection  with the acquisition of NSC, effective as of  December
31,  1996.  As mentioned above, the HMT acquisition agreement  was
rescinded on June 9, 1997.

Depreciation and amortization applicable to the operations of  the
Company's discontinued telecommunications businesses declined from
period to period principally as a result of the write-off in  1996
of  goodwill  related to the acquisitions of TNI and Comstar,  the
discontinuance of TNI's operations, effective December  31,  1996,
and the disposal of ATI in May 1997.

INTEREST EXPENSE

The  increases from period-to-period in interest expense from both
continuing   operations  and  the  operations  of  the   Company's
discontinued telecommunications businesses are principally due  to
higher levels of borrowings outstanding.

OTHER INCOME (EXPENSE), NET

Other  income  (expense), net for the nine months ended  September
30,  1997  reflect a one-time gain of $2,000,000 recorded  in  the
first  quarter  to remove from the Company's consolidated  balance
sheet  additional shares of the Company's common stock which  were
to  have been issued to Retiring Management in connection with the
NSC  acquisition  agreement  and a gain  recorded  in  the  second
quarter  of  approximately $281,000 from the disposition  of  HMT.
Income  (expense),  net for the first nine  months  of  1997  also
includes  financing fees related to the issuance of the  Company's
4% $1,120,000 convertible debentures due October 1, 1998.

<PAGE> 14

INCOME TAXES

As  of December 31, 1996, the Company's deferred income tax assets
exceeded  its  deferred  income tax liabilities  by  approximately
$4,000,000.   No  provisions  for  income  taxes   applicable   to
continuing  operations were made in the third quarter or  for  the
first  nine months of 1997 due the Company having a net loss  from
continuing  operations for income tax purposes. No provisions  for
tax applicable to the operations of discontinued businesses or the
gain  from  the  disposition  of the Company's  telecommunications
businesses  were made in the third quarter or for the  first  nine
months  of 1997 due to the Company having an overall net loss  for
income tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

The  Company has continued to use cash in its operations  and  has
relied on debt and equity financing to support its operations.  In
the  nine  months  ended  September 30,  1997,  the  Company  used
$1,644,954 in cash from operating activities, which is net of non-
cash  gains  recorded  during the period from  the  rescission  of
business acquisitions, the reversal of accrued bonuses payable  to
the Retiring Management of NSC and the removal of common stock  to
be  issued  to  Retiring Management. In the first nine  months  of
1997,  the Company generated cash of approximately $ 358,000  from
the   rescission  of  business  acquisitions  and  cash,  net   of
repayments,  of  $1,237,590  from financing  activities.  See  the
accompanying Unaudited Consolidated Statements of Cash Flows.  The
Company  anticipates that it will continue to consume  cash  until
such  time  as it is able to successfully market NSC's  healthcare
management  information systems technology and/or  consummate  the
acquisition  of HMG and generate profits from that  business  (see
Note  2  to  the  accompanying  Unaudited  Consolidated  Financial
Statements included elsewhere herein).

The total assets of the Company and its subsidiaries decreased  by
$4,617,200  from  December 31, 1996 to September  30,  1997.  This
decrease  is principally the result of the rescission of  the  ATI
and HMT acquisition agreements in May and June 1997, respectively,
amortization  and  depreciation  and  the  write-off  of  deferred
compensation    assets.   Similarly,   total    liabilities    and
stockholders'   equity   (deficiency  in  assets)   decreased   by
$2,306,391  and  $2,275,809, respectfully. The decrease  in  total
liabilities  principally reflects the effect of the rescission  of
the  ATI  and HMT acquisition agreements and reductions in amounts
due  trade and other creditors (including the reversal of  bonuses
due to Retiring Management), offset by a net increase in notes and
debentures payable and other accrued liabilities. The decrease  in
total stockholders' equity principally reflects the effect of  the
rescission  of the HMT acquisition agreement, the sale  of  common
stock  by the Company in reliance upon exemptions under Regulation
D  of  the Securities Act of 1933, conversions of debt into common
stock  and  earnings for the period, which included  non-recurring
gains  of $2,000,000 from the removal of common stock to be issued
to  Retiring  Management from the Company's  consolidated  balance
sheet  and approximately $920,000 from the rescission of  the  ATI
and  HMT  acquisition agreements ( see Note 2 to the  accompanying
Unaudited Consolidated Financial Statements).

The  Company does not currently have any used or unused  lines  of
credit,  any  other committed and unused financing  facilities  or
other sources of liquidity other than from operations. The Company
has  continued  to  use cash in its operations, is  continuing  to
experience  cash  flow  difficulties and is  subject  to  numerous
proceedings  by  its creditors for repayment of  trade  and  other
obligations.  Consequently, it is uncertain  whether  or  not  the
Company   will  have  sufficient  cash  resources,   either   from
operations  or  from  financing  transactions,  to  carry  on  its
business  operations, in which case the Company would be  required
to   seek   other   alternatives,  including   sale,   merger   or
discontinuance of operations.

<PAGE> 15

The Company is pursuing numerous avenues to finance its continuing
operations and consummate the acquisition of HMG but, there is  no
assurance  that the Company will be able to obtain any  additional
financing, consummate the acquisition of HMG or, in the event  the
Company  is  able to consummate the acquisition of HMG,  that  the
combined  companies  will  generate  sufficient  cash  flows  from
operations in order to sustain operations.


<PAGE> 16


                     SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                            PART II - OTHER INFORMATION

Item 1. Legal Proceedings

All material pending legal proceedings to which the Registrant and
its  subsidiaries  are a party are described in  the  Registrant's
Annual  Report on Form 10-K for the year ended December 31,  1996.
There have been no changes in the status of such legal proceedings
or  any  new  information concerning such cases  as  of  the  date
hereof.

Item 6. Exhibits and Reports on Form 8-K

Exhibits:

(10)35.##  Heads of Agreement for change in Management of National
           Solutions Corporation.
(10)36.##  Rescission Agreement, dated May 21, 1997 by and between the
           Company, Ameristar Telecommunications, Inc., Mark Woodward
           and Russell Armstrong.
(10)37.##  Promissory note dated May 21, 1997 between ATI and the
           Company.
(10)38.##  Agreement dated as of June 9,1997  by  and  among  the
           Company, Karen Wolfe and Eric Wolfe, Eric Wolfe, on behalf
           of his infant son, Tyler Wolfe, and Lori Wolfe, wife of Eric
           Wolfe, on behalf of herself and her infant son Tyler Wolfe.
(10)39.##  Cooperative Marketing and Option Agreement dated  June 9, 1997
           between HMT and the Company.
(10)40.##  Purchase   and  Sale  Agreement   between   TNI   and
           International TeleData Corporation dated January 31, 1997.
(10)41.##  Form of Convertible Debenture in the amount of $500,000
           between International TeleData Corporation and TNI.
(10)42.##  Memorandum dated June 16, 1997 from the Department  of
           the Army regarding renewal of the Cooperative Research and 
           Development Agreement between the Company and the Department
           of the Army.
(10)43.### Agreement to Exchange Stock, dated November  14,  1997,
           by and  between Grant Kolb and Patrick Loeprich (as "Sellers")
           and the Company.
(17)1.##   Resignation Letter of Stephen Williams.
(17)2.##   Resignation Letter of David J. Olivet.
(27)6.  *  Financial Data Schedule ( Nine Months Ended September 30, 1997).

(b)  Reports on Form 8-K:

1.  The Company filed a Form 8-K on July 28,1997. The date of  the
earliest  event  reported was the sale, on January  31,  1997,  of
substantially  all  of the operating assets of TNI.  Other  events
reported  in the Form 8-K were the rescission of the ATI  and  HMT
acquisition  agreements  in  May  and  June,  1997,  respectively,
disclosure  regarding the late filings of reports required  to  be
filed by Section 13 or 15(d) of the Securities and Exchange Act of
1934  and  certain other events, including recent  management  and
directorship  changes,  and  the  status  of  certain  legal   and
administrative proceedings in which the Company is involved.

<PAGE> 17

2.  The Company filed a Form 8-K on November 21, 1997. The date of
the earliest event reported was November 14, 1997. On November 14,
1997,  the Company and the stockholders of HMG Health Care  Claims
Auditing, Inc.("HMG") entered into an agreement to exchange  stock
( the "Agreement to Exchange Stock"). Pursuant to the Agreement to
Exchange  Stock, the Company is to acquire all of the  outstanding
stock  of HMG in exchange for shares of the Company"s common stock
(  the  "HMG  Acquisition Shares"). The number of HMG  Acquisition
Shares  is to be determined at closing and are to be equal to  30%
of  the  then outstanding common stock of the Company after giving
effect  to  the  issuance  of  the  HMG  Acquisition  Shares.  The
acquisition of HMG is subject to, among other things, the  Company
obtaining debt financing to refinance the existing indebtedness of
HMG  ($850,000)  and pay other costs and expenses related  to  the
acquisition.  The  Agreement  to  Exchange  Stock  contemplated  a
December 31, 1997 closing.


##   Incorporated by reference to the Company's Current Report  on
     Form 8-K, as filed on July 28,1997.

###  Incorporated by reference to the Company's Current Report  on
     Form 8-K, as filed on November 21,1997.

*    Filed herewith

<PAGE> 18

                                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.

SYSTEMS  COMMUNICATIONS, INC.          Date: February  24, 1998


By /s/ James T. Kowalczyk
  ----------------------------
  James T. Kowalczyk
  President, Principal Executive Officer
  and Director

By /s/ Edwin B. Salmon
  ----------------------------
  Edwin B. Salmon
  Principal Accounting Officer
  and Director

<PAGE>19

                                  INDEX TO EXHIBITS

EXHIBIT NUMBER

(10)35.##  Heads of Agreement for change in Management of National
           Solutions Corporation.
(10)36.##  Rescission Agreement, dated May 21, 1997 by and between
           the Company, Ameristar Telecommunications, Inc., Mark 
           Woodward and Russell Armstrong.
(10)37.##  Promissory note dated May 21, 1997 between ATI and the
           Company.
(10)38.##  Agreement dated as of June 9,1997  by  and  among  the
           Company, Karen Wolfe and Eric Wolfe, Eric Wolfe, on behalf
           of his infant son, Tyler Wolfe, and Lori Wolfe, wife of Eric
           Wolfe, on behalf of herself and her infant son Tyler Wolfe.
(10)39.##  Cooperative Marketing and Option Agreement dated  June 9,1997 
           between HMT and the Company.
(10)40.##  Purchase and Sale Agreement between TNI and International
           TeleData Corporation dated January 31, 1997.
(10)41.##  Form of Convertible Debenture in the amount of $500,000
           between International TeleData Corporation and TNI.
(10)42.##  Memorandum dated June 16, 1997 from the Department  of
           the Army regarding renewal of the Cooperative Research and 
           Development Agreement between the Company and the Department
           of the Army.
(10)43.### Agreement to Exchange Stock, dated November  14,  1997,
           by and between Grant Kolb and Patrick Loeprich (as "Sellers")
           and the Company.
(17)1.##   Resignation Letter of Stephen Williams.
(17)2.##   Resignation Letter of David J. Olivet.
(27)6.  *  Financial Data Schedule ( Six Months Ended  June  30, 1997).

##   Incorporated by reference to the Company's Current Report  on
     Form 8-K, as filed on July 28,1997.

###  Incorporated by reference to the Company's Current Report  on
     Form 8-K, as filed on November 21,1997.

*    Filed herewith