FORM 10-Q

         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 June 30, 1998

( )   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)

FLORIDA                                                 65-0036344
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(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                    Identification No.)

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


Registrant's telephone number, including area code      727-530-4800
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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  x      No ___

Number of shares outstanding of the issuer's Common Stock,  par
value  $0.001  per  share, as of June  30,  1998  -  23,881,873
shares.

<PAGE> 2

                       PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
                                             JUNE 30,    DECEMBER 31,
                                                1998        1997
                                             ---------   -----------
                                            (UNAUDITED)
            ASSETS
<S>                                             <C>          <C>
Current assets:
  Cash and cash equivalents                $    12,940    $    65,556
  Accounts receivable from officers and 
    employees                                    4,569         60,908
  Other current assets                         145,086        130,419
                                              ---------    ----------
Total current assets                           162,595        256,883
                                              ---------    ----------
Furniture and equipment                        132,982        130,162
   Less accumulated depreciation               (67,428)       (56,774)
                                              ---------    ----------
   Net furniture and equipment                  65,554         73,388
Note receivable from the sale of assets, less
   allowance  of  $500,000  in  1997              --             --
Deferred compensation                             --           52,941
Other non-current assets                         4,982          4,982
                                               ---------    ----------
Total  assets                               $  233,131     $  388,194
                                               =========    ==========
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 3

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


<TABLE>
                                                 JUNE 30,     DECEMBER 31,
                                                   1998          1997
                                                ----------    -----------
                                                (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S>                                                 <C>            <C>
Current liabilities:
  Notes and debentures payable                 $ 2,785,928    $ 3,361,700
  Accounts payable                                 507,808        535,516
  Accrued compensation and employee benefits       758,910      1,176,578
  Liabilities and accruals for claims, 
    assessments and other losses                 1,084,012      1,129,823
  Accrued expenses and other current liabilities   470,786        524,576
                                                 ----------     ----------
Total current liabilities                        5,607,444      6,728,193
Deferred liabilities under employment agreements      --          310,794
                                                 ----------     ----------
Total liabilities                                5,607,444      7,038,987
                                                 ----------     ----------
Common stock subject to rescission                 674,124        674,124
                                                 ----------     ----------
Stockholders' deficit:
 Class A convertible preferred stock, stated value
  and liquidation preference $1.00 per share;
  authorized 5,000,000 shares; issued and
    outstanding   -   none                            --             --
 Class B convertible preferred stock, stated value
  and liquidation preference, $1.00 per share;
  authorized 10,000,000 shares; issued and
  outstanding, 100,000 shares in 1998 and
  2,953,125 shares in 1997                           54,764      1,617,260
 Common stock - $.001 par value; authorized
  50,000,000 shares; issued and outstanding,
  23,881,873 shares in 1998 and 12,083,646
  shares in 1997                                     23,882         12,084
Additional paid in capital                       19,592,281     16,866,883
Accumulated deficit                             (25,719,364)   (25,821,144)
                                                 ----------     ----------
Total stockholders' deficit                      (6,048,437)    (7,324,917)
                                                 ----------     ----------
Total liabilities and stockholders' deficit     $   233,131    $   388,194
                                                 ==========     ==========
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 4
                     SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                    UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>

                                            Six Months Ended  Three Months Ended
                                                June 30,          June 30,
                                        ---------------------   ---------------------
                                           1998        1997        1998      1997
                                        ---------   ---------   ----------  ---------
<S>                                        <C>        <C>          <C>        <C>
Net revenues                          $      --   $ 1,467,344  $     --     $ 341,620
                                        ---------   ---------   ----------  ---------
Costs and expenses:
  Cost of revenues                           --        90,849        --        90,849
 Selling, general and administrative
   expenses                               752,861   2,658,089     481,626     891,973
 Impairment and other losses                 --       625,728        --       322,160
 Depreciation and amortization             10,356     442,396       3,852     188,806
                                         ---------   ---------    ---------  ---------
Total costs and expenses                  763,217   3,817,062     485,478   1,493,788
                                         ---------   ---------    ---------  ---------
Operating loss                           (763,217) (2,349,718)   (485,478) (1,152,168)

Gain from sale of license agreement          --     2,695,214        --         --
Gain from rescission of business
  acquisitions                               --       281,421        --       281,421
Interest income                               892       3,044         892       1,026
Interest  expense                         (136,855)   (248,529)    (62,393)  (136,964)
Other  income (expense), net               408,725    (114,951)    408,725     (2,965)
                                         ---------   ---------    ---------  ---------
Income (loss) from continuing
  operations                            (  490,455)    266,481    (138,254) (1,009,650)
                                         ---------   ---------    ---------  ---------
Discontinued operations:
 Income (loss) from operations of
  discontinued telecommunications
  businesses (less income tax benefit
  of $29,000 and $19,500 in 1997,
  respectively)                            305,647     (47,381)       (758)      18,539
 Gain from disposition of
  telecommunications businesses
 (less income tax expense of
  $29,000 and $19,500 in 1997,
  respectively)                               --        610,392         --      594,892
                                         ---------   ---------    ---------   ---------
Income (loss) before extraordinary
  item                                    (184,808)     829,492    (139,012)   (396,219)

Extraordinary item - Gain from
  extinquishment of debt                   286,588         --           --        --
                                         ---------   ---------    ---------    ---------
Net  income (loss)                     $   101,780  $  829,492 $  (139,012)   $ (396,219)
                                         =========   =========    =========    =========
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 5
                     SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
               UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

<TABLE>
                                           Six Months Ended       Three Months Ended
                                                June 30,              June 30,
                                        ---------------------   ---------------------
                                            1998       1997        1998       1997
                                        ---------   ---------   ---------  ---------
<S>                                        <C>         <C>         <C>        <C>
Basic earnings per share:

Income (loss) from continuing
  operations                           $   (0.04)   $    0.02   $   (0.01)  $    (0.09)
Income (loss) from operations of
 discontinued telecommunications
  businesses                                0.02          --           --      --
Gain from disposition of
  telecommunications businesses               --         0.06          --       0.05
Extraordinary item - Gain from
  extinquishment of debt                    0.02          --           --      --
                                         ---------   ---------    ---------  ---------
Net income (loss)                      $      --    $    0.08    $    (0.01)  $    (0.04)
                                         =========   =========    =========  =========
Weighted average number of
  common shares outstanding             13,810,977  10,936,609   16,525,089  11,272,699
                                        ==========  ==========   ==========  ==========
Diluted earnings per share:

Income (loss) from continuing
  operations                           $    (0.04)  $     0.02   $    (0.01) $    (0.09)
Income (loss) from operations of
 discontinued telecommunications
  businesses                                 0.02          --           --       --
Gain from disposition of
  telecommunications businesses               --          0.05          --       0.05
Extraordinary item - Gain from
  extinquishment of debt                     0.02          --           --       --
                                         ---------   ---------    ---------   ---------
Net  income (loss)                     $      --    $     0.07   $    (0.01)  $    (0.04)
                                         =========   =========    =========   =========
Weighted average number of
  common shares outstanding,            13,810,977  12,243,826   16,525,089    11,272,699
  assuming  dilution                     ==========  ==========  ==========   ==========
</TABLE>

See Notes to Consolidated Financial Statements


<PAGE> 6
                  SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                            Six Months
                                                          Ended June 30,
                                                      ------------------------
                                                        1998          1997
                                                      ---------    -----------
<S>                                                      <C>           <C>           
Net cash used in operating activities               $  (237,796)   $(1,475,539)
                                                      ---------    -----------
Cash flows from investing activities:
 Disposition of businesses, net of cash of
   businesses disposed of                                  --          368,343
   Expenditures for furniture and equipment              (2,820)       (23,751)
   Other                                                   --            2,474
                                                       ---------    -----------
Net cash used in investing activities                    (2,820)       347,066
                                                       ---------    -----------
Cash flows from financing activities:
 Proceeds from issuance of common stock                  40,000        229,500
 Proceeds from notes and debentures payable             288,500      1,261,366
 Payments on notes, debentures and capital
   leases                                               (80,500)      (170,425)
 Payments on borrowings under lines
   of credit                                               --          (75,000)
 Payments on common stock subject
   to rescission                                           --          (35,000)
 Other                                                     --           (8,995)
                                                        ---------    ----------
Net cash provided by financing activities               188,000      1,201,446
                                                        ---------    ----------
Net increase (decrease) in cash                         (52,616)        72,973
Cash and cash equivalents at
  beginning of the period                                65,556         61,039
                                                        ---------    ----------
Cash and cash equivalents at
  end of the period                                  $   12,490      $  134,012
                                                        =========    ==========
</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 7
                  SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
             UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)


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

<TABLE>

                                                             Six Months
                                                           Ended June 30,
                                                     ------------------------
                                                       1998            1997
                                                     ---------      ---------
 <S>                                                    <C>            <C>
 Equipment capital lease
    obligations                                      $    --        $  73,184
 Issuance of common stock upon conversion
    of notes and debentures payable                    276,125        716,318
 Recovery of note receivable from
    sale of assets                                     305,345           --
 Redemption of debentures payable                      286,588           --
 Issuance of common stock in
  settlement of accrued and other
  liabilities                                          526,862           --
 Conversion of Class B preferred
  stock                                              1,562,496           --

Cash paid during the period for:
  Interest                                               7,277         76,217
  Income taxes                                            --             --

</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 8

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               JUNE 30, 1998


NOTE 1  SIGNIFICANT ACCOUNTING POLICIES

The unaudited consolidated balance sheet as of June 30, 1998,
the unaudited consolidated statements of operations for the six
months and three months ended June 30, 1998 and 1997 and the
unaudited consolidated statements of cash flows for the six
months ended June 30, 1998 and 1997, 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 six months ended June 30, 1998 are not
necessarily indicative of the results for the full fiscal year.

Certain amounts in the 1997 financial statements have been
reclassified to conform to the 1998 presentation.

Earnings per Share

Basic and diluted earnings per share for the six months ended
June 30, 1998 and three months ended June 30, 1998 and 1997 are
the same because the inclusion of incremental shares in the
computation of diluted earnings per share from the assumed
conversion of convertible notes, debentures and preferred stock
and exercise of outstanding options and warrants and warrants
to be issued in connection with conversion of convertible notes
and debentures would have had the effect of reducing the per
share loss from continuing operations for the respective
periods. The number of potential common shares issuable as of
June 30, 1998 upon conversion of convertible notes, debentures
and preferred stock and exercise of outstanding options and
warrants and warrants to be issued in connection with the
conversion of convertible notes and debentures are summarized
as follows(see Notes 3 and 4):
<TABLE>

                                                           Number of
                                                             Shares
                                                           ---------
<S>                                                          <C>
Convertible preferred stock                                   36,364
Convertible notes and debentures                           9,699,721
Outstanding common stock purchase warrants                 9,531,835
Outstanding options                                        1,417,500
Warrants issuable upon conversion of outstanding
 notes and debentures                                      2,807,175
</TABLE>

Following is a reconciliation of basic and diluted earnings per
share for income from continuing operations for the six months
ended June 30, 1997.
<TABLE>

                                                                    Per
                                             Income      Shares    Share
                                           ---------   ----------  ------
<S>                                           <C>         <C>       <C>
Basic earnings per share                  $  266,481   10,936,609  $ 0.02
                                                                   ======
Effect of dilutive securities:
 Options and warrants                           --        638,611
 Convertible preferred stock                    --        848,606
                                           ---------   ----------
Diluted earnings per share                $  266,481   12,243,826  $ 0.02
                                           =========   ==========  ======
</TABLE>

<PAGE> 9

NOTE 2  NOTE RECEIVABLE FROM THE SALE OF ASSETS

In March 1998, the Company, TNI, International Teledata
Corporation ("ITD") and certain former employees of the Company
(the "Employees") entered into an agreement (the "Agreement")
which provided for the transfer of certain ITD assets to the
Employees. The assets transferred pursuant to the Agreement
were sold to ITD by TNI pursuant to the Purchase and Sale
Agreement, dated as of January 31, 1997, between TNI and ITD.
In connection with the transfer of assets pursuant to the
Agreement, the Company canceled the $500,000 convertible
debenture note issued by ITD (the "ITD Note") in conjunction
with the Purchase and Sale Agreement in exchange for 496,902
shares of the Company's common stock beneficially owned by the
Employees, the waiver by the Employees of accrued and unpaid
compensation due to them by the Company and the cancellation of
employment agreements between the Company and the Employees.
Included in income (loss) from operations of discontinued
telecommunications businesses for the six months ended June 30,
1998 is income of approximately $306,000 from the cancellation
and partial recovery of the ITD note.

NOTE 3  REDEMPTION OF CONVERTIBLE DEBENTURE NOTES

Effective as of March 31, 1998, the Company redeemed its $450,000
of outstanding 10% convertible debenture notes in exchange for an
aggregate of 893,278 shares of its common stock and 450,000 stock
purchase warrants. The carrying amount of the debt extinguished
exceeded the fair value of the common stock and warrants issued
in exchange for the debt. The excess is classified as an
extraordinary gain in the accompanying unaudited consolidated
statement of operations for the six months ended June 30, 1998.
Of the 450,000 stock purchase warrants issued in connection with
the redemption, 225,000 are exercisable at $1.50 per share at any
time over a period of two years and 225,000 are exercisable at
$0.20 per share at any time over a period of five years.

NOTE 4  EMPLOYMENT AGREEMENTS

On June 30, 1998, the Company and its former Chief Executive
Officer (the "Former CEO") entered into an agreement and mutual
release (the "Release"). Pursuant to the Release, the Company
agreed to issue 300,000 shares of its common stock and release
the Former CEO from any and all claims, demands, contracts, and
obligations of any kind whatsoever which the Company had, has
or may have against the Former CEO in exchange for a release
from the Former CEO of any and all claims, demands, contracts
and obligations of any kind whatsoever which the Former CEO
had, has or may have against the Company arising out of an
employment agreement dated as of February 8, 1995 between the
Company and the Former CEO (the "Employment Agreement"). As a
result of the Release, the Company removed all liabilities
previously accrued by the Company under the Employment
Agreement from its consolidated balance sheet as of June 30,
1998 and recorded other income of approximately $380,000.

NOTE 5  STOCKHOLDERS' EQUITY

During the three months ended June 30, 1998, the Company
recorded the issuance to Timboon, LTD ("Timboon") of 5,000,000
shares of the Company's common stock, at $0.001 par value, and
increased additional paid-in-capital by $218,773 for the
partial conversion by Timboon of the Company's 4% cumulative
convertible debentures. The dollar amount of debentures held
and to be converted by Timboon into shares of the Company's
common stock from time-to-time is determined based on the
proceeds received by Timboon from the sale, in open market or
block transactions, of the shares of common stock issued to
Timboon by the Company.
<PAGE> 10

As of June 30, 1998, the Company has been informed by Timboon
that it has sold approximately 1.6 million shares of the
Company's common stock and has received proceeds of
approximately $220,000; and, the Company estimates that Timboon
holds approximately $980,000 of unconverted debentures and
approximately 3.4 million shares of the Company's common stock
into which the debentures are convertible. The Company expects
that it will either (i) issue additional shares of its common
stock to Timboon until such time as the debentures held by
Timboon are fully converted or (ii) liquidate the remaining
debentures held by Timboon by the payment of cash. The Company
is not able to determine (i) the number of additional shares,
if any, that it may issue in the future in order for Timboon to
fully convert the debentures or (ii) if it will have sufficient
cash to satisfy any remaining debentures, after the sale by
Timboon of shares issued to date, or which may be issued in the
future, in conversion of the debentures.

In addition to the shares of common stock issued to Timboon
during the six months ended June 30, 1998, the Company issued
358,333 shares for $40,000 in cash and 6,951,712 shares for the
purpose and amounts set forth in the following table.

<TABLE>

 Number
of Shares        Purpose of Issuance                          Amount
---------        ---------------------------------------    -----------
  <S>              <C>                                         <C>
  701,783        Conversion of Class B Preferred Stock      $ 1,562,496
4,458,621        Exercise of stock options granted to
                 employees and consultants                      470,862
  893,278        Extinguishment of debt                         223,320
  200,000        CCI arbitration award                           56,000
  500,830        Conversion of debt                              52,342
  197,200        Consulting services                             22,788

</TABLE>

In July 1998, the Company issued an aggregate of 7,742,929
shares of its common stock and 2,000,000 common stock purchase
warrants in conversion of $1,195,000 of its 10% cumulative
convertible debentures due on various dates through November
1997. Of the common stock purchase warrants issued in
connection with the conversion of the 10% cumulative
convertible debentures, 1,000,000 warrants are exercisable at
$0.20 per share and 1,000,000 warrants are exercisable at $0.25
per share. All of these warrants are exercisable at any time
over a period of two years from the date of issue.


NOTE 6  BUSINESS ACQUISITIONS

On July 28, 1998, a subsidiary of the Company, Affiliated
Communications Intergrators, Inc. ("Affiliated"), agreed to
purchase FiberOptic Network, Inc. ("FiberOptic"), a Florida
company located in Winter Park, Florida. On the same date
Affiliated changed its name to FiberOptic Holding,
Inc.("Holding"). On August 5, 1998, Holding mailed a notice to
the shareholders of FiberOptic that it was rescinding the
acquisition agreement based on material misrepresentations and
breach of representations and warranties in connection with the
acquisition agreement.

Holding is pursuing a business strategy independant of the
Company. The Company owns 850,000 shares of Holding out of
4,450,000 shares issued and outstanding. The Company intends to
use up to 250,000 of its Holding shares to compensate
consultants and to distribute the remaining 600,000 shares to
its stockholders as a dividend in kind. A date for the dividend
distribution has not been set.

<PAGE> 11

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


The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto, appearing
elsewhere herein.

NET REVENUES

The Company had no revenues for the six months or three months
ended June 30, 1998. Net revenues for the six months and three
months ended June 30, 1997 were  $1,125,724 and $341,620,
respectively. The decrease in net revenues from period-to-
period is due to the disposition of HMT coupled with the lack
of revenues in 1998 from the operations of NSC. The net
revenues of HMT and NSC in the first half of 1997 were
$1,311,055 and $156,289, respectively.

As of June 30, 1998, the Company has not realized any
significant income from its alliance agreement with HMG Health
Care Auditing, Inc. ("HMG") or from HMG's services agreement
(the "Agreement") with a "Big 3" U.S.automotive company. Under
the terms of the alliance agreement between the Company and
HMG, the Company and HMG are to share approximately $1,192,000
from the Agreement upon completion of the healthcare cost
recovery phase, as provided for in the Agreement. The Company
anticipates that it will recognize approximately $548,000 in
income from the Agreement.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses were $752,861 and
$2,658,089, respectively, for the six months ended June 30,
1998 and 1997 and $481,626 and $891,973, respectively, for the
three months ended June 30, 1998 and 1997. The principal
reasons for the decreases in selling, general and
administrative expenses for the respective periods were the
effects of the disposition of HMT,  cost reduction measures
undertaken in 1997 due to continued operating losses and cash
flow constraints and lower costs from redirection of the
Company's business. The disposition of HMT had the effect of
reducing selling, general and administrative expenses by
approximately $1.1 million for the six months ended June 30,
1998 versus the same period last year; and, net cost reductions
from continuing businesses totaled approximately $800,000.

IMPAIRMENT AND OTHER LOSSES

In the first half of 1997, the Company wrote off approximately
$625,700 of deferred compensation assets related to certain
employment agreements.

DEPRECIATION AND AMORTIZATION

The decreases in depreciation and amortization from period-to-
period are primarily due to the disposition of HMT in June 1997
and the removal in December 1997 of repossessed capital lease
assets from the Company's consolidated balance sheet.

INTEREST EXPENSE

The decreases in interest expense from period-to-period are
principally due to the effects of lower aggregate amounts of
notes and debentures outstanding during the periods, the
removal in December 1997 of capital lease liabilities, related
to repossessed leased assets, from the Company's consolidated
balance sheet and the elimination of interest expense on the
Company's 4% cumulative convertible debentures due October 1,
1998, as a result of the Settlement

<PAGE> 12

Agreement entered into, effective as of March 2, 1998, between
the Company and Timboon.

OTHER ITEMS

Results of operations for the six months ended June 30, 1998,
include a gain, recorded as other income, of approximately
$380,000 from the removal from the Company's consolidated
balance sheet of liabilities previously accrued under an
employment agreement (see Note 4).

Results of operations for the six months ended June 30, 1997,
include a gain of $2,695,000 from the sale of a license
agreement, a gain from the disposition of HMT in the amount of
approximately $281,000 and financing fees of approximately
$112,000.

INCOME TAXES

As of June 30 and March 31, 1998 and 1997, the Company's
deferred tax assets exceeded its deferred tax liabilities and
were fully reserved at each of those dates. Income taxes that
otherwise would have been applicable to income (loss) from
continuing operations during the periods were fully offset by
changes in the valuation reserve.

DISCONTINUED OPERATIONS

Income (loss) from operations of discontinued
telecommunications businesses for the six months ended June 30,
1998 includes income of approximately $306,000, recognized in
the first quarter of 1998, from the cancellation and partial
recovery of the $500,000 note receivable from the sale of
assets in exchange for the elimination of certain liabilities
of the Company (see Note 2).

For the six months ended June 30, 1997, the Company recorded an
after tax gain of approximately $610,000 from the disposition
of certain assets of TNI and from the rescission of the ATI
acquisition agreement. The pre-tax gain from the sale of the
TNI assets was $25,000; and, the pre-tax gain from the
disposition of ATI was approximately $614,400. The TNI assets
were sold in January 1997 and ATI was disposed of in May 1997.

EXTRAORDINARY GAIN

The Company's operating results for the first six months of
1998 include an extraordinary gain of approximately $287,000
from the extinguishment of its $450,000 10% convertible
debentures (see Note 3).

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 1998, the Company received
cash of $40,000 from the issuance of 358,333 shares of its
common stock and $288,500 from the issuance of notes and
debentures payable. For the corresponding 1997 period, the
Company received cash of approximately $229,500 and $1.3
million from the issuance of common stock and notes and
debentures payable, respectively. Payments on notes, debentures
and capital leases during the respective periods were $80,500
and $170,425. In 1997, the Company also used approximately
$75,000 and $35,000 in cash, respectively, to repay borrowings
outstanding under lines of credit and for the repurchase of
common stock subject to rescission and generated approximately
$368,000 in cash from the disposition of businesses. Capital
expenditures were $2,820 for the six months ended June 30, 1998
versus $23,751 in 1997.

The net proceeds from financing activities were used
principally to fund operating losses. For the six months ended
June 30, 1998 and 1997, the Company

<PAGE> 13

used cash of approximately $238,000 and $1.5 million,
respectively, in operating activities.

Over the past several years, the Company has incurred
substantial operating losses; and, at June 30, 1998, the
Company has an excess of total liabilities over total assets of
approximately $6.0 million and an excess of current liabilities
over current assets of approximately $5.4 million. These
factors, among others, have diminished the Company's ability to
attract equity or debt capital, have required the Company to
cease further development of its healthcare management software
technology and redirect its business and have made it difficult
for the Company to carry on normal operating activities. As of
June 30, 1998, the Company does not have any used or unused
lines of credit or any other committed and unused financing
facilities. Consequently, it is uncertain whether or not the
Company will have available sufficient cash resources to
continue operations, in which case the Company would be
required to seek other alternatives, including sale, merger or
discontinuance of operations.

<PAGE> 14

                       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, 1997 and in the Registrant's Current Report on
Form 8-K dated June 15, 1998. There have been no material
changes in the status of such legal proceedings or any material
new information concerning such proceedings as of the date
hereof, except that on August 14, 1998, the Company issued
500,000 shares of its Class A Preferred Stock in contemplation
of settlement of the February 3, 1998 arbitration award issued
in favor of Coast Communications, Inc. and the scheduling of a
hearing for September 8, 1998 in connection with the
Involuntary Petition filed June 1, 1998 against the Company
under Chapter 7 of the Bankruptcy Act. See Item 6(b) Reports on
Form 8-K.

Item 2. Changes in Securities

During the six months ended June 30, 1998, the Company issued
5,000,000 shares of its common stock in partial conversion of
its $1,200,000 4% cumulative convertible debentures and, in
July 1998, the Company issued an aggregate of 7,742,929 shares
of its common stock upon conversion of its $1,195,000 10%
cumulative convertible debentures. The Company also issued
approximately 7.3 million shares during the six months ended
June 30, 1998 upon conversion of Class B Preferred Stock,
exercise of stock options granted to employees and consultants
and for other purposes (see Note 5 to the consolidated
financial statements included in Part I).

Item 5. Other Information

On July 28, 1998, a subsidiary of the Company, Affiliated
Communications Intergrators, Inc. ("Affiliated"), agreed to
purchase FiberOptic Network, Inc. ("FiberOptic"), a Florida
company located in Winter Park, Florida. On the same date
Affiliated changed its name to FiberOptic Holding,
Inc.("Holding"). On August 5, 1998, Holding mailed a notice to
the shareholders of FiberOptic that it was rescinding the
acquisition agreement based on material misrepresentations and
breach of representations and warranties in connection with the
acquisition agreement.

Holding is pursuing a business strategy independant of the
Company. The Company owns 850,000 shares of Holding out of
4,450,000 shares issued and outstanding. The Company intends to
use up to 250,000 of its Holding shares to compensate
consultants and to distribute the remaining 600,000 shares to
its stockholders as a dividend in kind. A date for the dividend
distribution has not been set.

The notice to the shareholders of FiberOptic demanded the
return of 3,100,000 shares, in the aggregate, issued in
connection with the the acquisition for cancellation. The
shares issued in connection with the acquisition and rescinded
are not included in the 4,450,000 issued and outstanding shares
of Holding.


Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

27.8  Financial Data Schedule ( Six Months Ended June 30, 1998).

      Filed herewith

<PAGE> 15

(b)  Reports on Form 8-K:

The following report was filed on Form 8-K for the three months
ended June 30, 1998, and prior to the filing date hereof:

1. On June 15, 1998, the Company filed a Form 8-K. The date of
the earliest event reported was June 1, 1998. The event
reported was the filing of an involuntary bankruptcy petition
(the "Petition") against the Company in the United States
Bankruptcy Court for the Middle District of Florida (Case No.
98-09299-8P7). The Company has denied all allegations as set
forth in the Petition and has requested the Court to dismiss
the Petition and assess damages including attorney fees, cost
and punitive damages against the petitioning creditors for
filing the Petition in bad faith. A hearing has been scheduled
for September 8, 1998 in the United States Bankruptcy Court for
the Middle District of Florida (see "Item 1 Legal
Proceedings").

In the Report on Form 8-K filed on June 15,1998, the Company
also revised the description of its business, previously
included in its Annual Report on Form 10-K for the year ended
December 31, 1998, and disclosed a redirection in the Company's
business.

<PAGE> 16
                                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:  August 17, 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