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 March 31, 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 March 31, 1997 - 11,365,490 shares.

<PAGE> 2

                       PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                    MARCH 31,     DECEMBER 31,
                                                       1997           1996
                                                   -----------    -----------
                                                   (UNAUDITED)
            ASSETS
<S>                                                    <C>            <C>
Current assets:
    Cash and cash equivalents                     $   322,374      $   61,039
    Accounts receivable, less allowance for
      doubtful accounts of $14,563 in 1997 and
      $28,074 in 1996                                 839,284         802,079
    Notes receivable from officers and employees       52,000         102,000
    Other current assets                              329,204         438,763
                                                    ---------       ---------
Total current assets                                1,542,862       1,403,881
                                                    ---------       ---------
Furniture and equipment                             1,836,030       1,812,867
    Less accumulated depreciation                    (654,811)       (587,598)
                                                   ----------       ---------
    Net furniture and equipment                     1,181,219       1,225,269

Note receivable from the sale of assets, less
    allowance of $500,000                                --               --
Deferred compensation                                 372,077         662,199
Intangible assets, net of accumulated amortization
   of $691,666 in 1997 and $566,666 in 1996           958,334       1,083,334
Excess of cost over fair value of net assets
  acquired, net of accumulated amortization of
  $143,733 in 1997 and $75,034 in 1996              1,230,250       1,298,950
Other non-current assets                              171,193         173,667
                                                   ----------       ---------
                                                   $5,455,935      $5,847,300
                                                   ==========      ==========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 3


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

<TABLE>
<CAPTION>
                                                      MARCH 31,   DECEMBER 31,
                                                        1997         1996
                                                     -----------  -----------
                                                     (UNAUDITED)
<S>                                                      <C>         <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
  (DEFICIENCY IN ASSETS)
Current liabilities:
    Borrowings under lines of credit                  $ 111,036     $ 182,651
    Current portion of notes and debentures payable   3,775,017     3,180,758
    Current portion of obligations under capital
       leases                                           273,046       242,477
    Accounts payable                                  1,219,914     1,452,192
    Accrued expenses and other current liabilities      788,317       881,675
    Accrued compensation and employee benefits          923,672     1,528,153
    Deferred revenue                                    374,375       440,232
                                                      ---------     ---------
Total current liabilities                             7,465,377     7,908,138

obligations under capital leases, less current
     portion                                            448,574       458,654
Accrued compensation                                    582,359       676,261
Other long-term liabilities                              88,578        72,573
                                                      ---------      --------
Total liabilities                                     8,584,888     9,115,626
                                                      ---------     ---------
Common stock subject to rescission                      674,124       709,124
                                                      ---------     ---------
Stockholders' equity (deficiency in 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 4,550,000 shares in 1997 and 1996     2,491,745     2,491,745
  Common stock - $.001 par value; authorized
    50,000,000 shares, issued and outstanding
    11,365,490 shares in 1997 and 10,626,874 shares
    in 1996                                              11,366        10,627
  Common stock to be issued                                 --      2,000,000
  Additional paid in capital                         17,772,080    16,823,526
  Accumulated deficit                               (24,078,268)  (25,303,978)
                                                     ----------    ----------
Total stockholders' equity (deficiency in assets)   ( 3,803,077)  ( 3,977,450)
                                                     ----------    ----------
                                                    $ 5,455,935   $ 5,847,300
                                                     ==========    ==========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 4

                     SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                              March 31,
                                                     ------------------------
                                                        1997           1996
                                                     ----------     ---------
                                                     (UNAUDITED)
<S>                                                     <C>            <C>
Net revenues                                        $ 1,125,724    $  369,612
                                                     ----------     ---------
Costs and expenses:
    Cost of revenues                                        --        122,351
    Selling and administrative expenses               1,374,470     1,233,472
    Depreciation  and  amortization                     253,590       239,880
                                                      ---------     ---------
                                                      1,628,060     1,595,703
                                                      ---------     ---------
                                                       (502,336)   (1,226,091)
Interest income                                           2,018         3,359
Interest expense                                       (111,565)      (38,438)
Other income (expense), net                           1,888,014           --
                                                      ---------     ---------
Income(loss) from continuing operations
  before  income  taxes                               1,276,131    (1,261,170)

Provision(benefit) for income taxes                         --       (453,905)
                                                      ---------     ---------
Income(loss) from continuing operations               1,276,131      (807,265)
                                                      ---------     ---------
Discontinued operations:
  Loss from operations of discontinued
    telecommunications businesses (less income
    tax benefit of $140,527 in 1996)                    (75,420)     (236,112)
  Gain from disposition of telecommunications
    businesses                                           25,000           --
                                                      ---------      --------
                                                        (50,420)     (236,112)
                                                      ---------      --------
Net income(loss)                                     $1,225,711   $(1,043,377)
                                                     ==========     =========

Income(loss) per share:
  Income(loss) from continuing operations            $      .12   $      (.11)
  Income(loss) from operations of discontinued
    telecommunications businesses                          (.01)         (.03)
                                                     ----------     ---------
Net income (loss)                                    $      .11   $      (.14)
                                                     ==========     =========
Weighted average number of
    common shares outstanding                        10,747,700     7,576,417
                                                     ==========     =========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 5
                  SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                  Three Months Ended March 31,
                                                  ---------------------------
                                                      1997           1996
                                                  -----------     -----------
                                                  (UNAUDITED)
<S>                                                   <C>             <C>
Net cash used in operating activities             $ (897,429)    $(1,336,956)
                                                  -----------     -----------
Cash flows from investing activities:
    Acquisition of businesses, net of cash
           acquired                                      --         (47,034)
    Expenditures for furniture and equipment         (12,659)      (480,110)
    Notes receivable from officers and employees         --         (50,000)
    Other                                              2,474            --
                                                  ----------      ----------
       Net cash used in investing activities         (10,185)      (577,144)
                                                  ----------      ----------
Cash flows from financing activities:
    Proceeds from issuance of common stock           152,000      1,341,208
    Proceeds from notes and debentures payable     1,211,732         29,500
    Payments on notes, debentures and capital
       leases                                        (88,168)      (208,262)
    Payments on borrowings under lines of credit     (71,615)        (2,083)
    Payments on common stock subject to rescission   (35,000)           --
                                                   ---------      ----------
       Net cash provided by financing activities   1,168,949      1,160,363
                                                   ---------      ----------
Net increase (decrease) in cash                      261,335       (753,737)
Cash and cash equivalents at beginning of the
       period                                         61,039        964,714
                                                   ---------      ----------
Cash and cash equivalents at end of the period     $ 322,374      $ 210,977
                                                   =========      ==========

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

   Equipment capital lease obligations             $  73,184     $  570,675
   Issuance of common stock upon conversion of 
     notes and debentures payable                    596,318         21,617
   Issuance of common stock as compensation          200,344           --
   Waiver of common stock to be issued             2,000,000           --
   Waiver of bonuses payable                         695,214           --
   Cash paid during the period for:
       Interest                                       19,363           --
       Income taxes                                      --            --

</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 6

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               MARCH 31, 1997

1.   SIGNIFICANT ACCOUNTING POLICIES - The unaudited consolidated
balance  sheet  at March 31, 1997 and the unaudited  consolidated
statements  of  operations and cash flows for  the  three  months
ended  March  31,1997 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 three  months
ended  March  31,  1997  are not necessarily  indicative  of  the
results for the full fiscal year.

2.  ACQUISITIONS AND DISPOSITION 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  three  months ended March 31, 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.

<TABLE>
<CAPTION>
                                                      Three Months
                                                  Ended March 31, 1996
                                                  --------------------
<S>                                                         <C>
Net revenues from continuing operations                 $ 572,684
                                                        ---------
Loss from continuing operations                         $(839,399)
                                                        ---------
Loss from operations of discontinued
     telecommunications businesses                      $(236,112)
                                                        ---------
Loss per share:
Loss from continuing operations                         $    (.11)
  Loss from operations of discontinued
     telecommunications businesses                           (.03)
                                                        ---------
     Net loss                                           $    (.14)
                                                        =========
</TABLE>

<PAGE> 7

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 statement of operations for the three months
ended  March 31, 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 $509,000 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.

The   assets   and  liabilities  of  the  Company's  discontinued
telecommunications  businesses  included  in   the   accompanying
consolidated balance sheets as of March 31, 1997 and December 31,
1996 are summarized as follows:
<TABLE>
<CAPTION>
                                     March 31,          December 31,
                                        1997                1996
                                     ---------          ----------
<S>                                     <C>                 <C>
      Current assets                $  294,677          $  332,856
      Total assets                     620,330             660,094
      Current liabilities              887,182             886,206
      Total liabilities              1,120,547           1,078,026
</TABLE>
<PAGE> 8

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 three months  ended
March 31, 1997 and 1996, are summarized as follows:
<TABLE>
<CAPTION>

                                           Three Months Ended March 31,
                                           ----------------------------
                                               1997             1996
                                           -----------       ----------
<S>                                            <C>               <C>
Net revenues                               $   233,643       $  657,943
Cost of revenues                                  --            466,962
Selling and administrative expenses            266,292          502,118
Depreciation and amortization                   28,476           59,489
Interest income                                   --                971
Interest expense                                20,217            7,039
Other income (expense), net                      5,922               55
Loss from operations of discontinued
   businesses, before income taxes             (75,420)        (376,639)
Income tax benefit                                --            140,527
Loss from operations of discontinued
   businesses                                  (75,420)        (236,112)
</TABLE>

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  to  be
reported  in  other  income (expense),  net  as  a  component  of
operations from continuing businesses.

<PAGE> 9

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 Acuisition 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.
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.

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 - During the period from January 1, 1997
to  March 31, 1997, the Company issued shares of its common stock
for  an  aggregate cash consideration of approximately  $152,000,
96,000 shares upon conversion of class A preferred stock, 321,060
shares  upon  conversion  of $582,000 of convertible  debt,  plus
accrued  interest,  and 169,000 shares, valued  at  approximately
$200,000, in consideration for services rendered to the Company.

<PAGE> 10

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
three  months  ended March 31, 1997 and 1996.  The  results  from
continuing operations include the operations of NSC, acquired  in
October  1995,and  HMT,  acquired in  March  1996.  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  any  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>
                                                   Three Months Ended
                                                       March 31,
                                               -------------------------
                                                   1997         1996
                                               -----------   -----------
<S>                                                <C>           <C>
Operations of continuing businesses:
Net Revenues                                   $ 1,125,724   $   369,612
Cost of revenues                                      --         122,351
Selling and administrative expenses              1,023,039     1,233,472
Depreciation and amortization                      605,021       239,880
Interest income                                      2,018         3,359
Interest expense                                   111,565        38,438
Other income(expense), net                       1,888,014          --
Income(loss) from continuing operations before
    income taxes                                 1,276,131    (1,261,170)
Income(loss) from continuing operations          1,276,131      (807,265)
Operations of discontinued telecommunications
  businesses:
    Net Revenues                                   233,643       657,943
Cost of revenues                                      --         466,962
Selling and administrative expenses                266,292       502,118
Depreciation and amortization                       28,476        59,489
Interest income                                       --             971
Interest expense                                    20,217         7,039
Other income(expense), net                           5,922            55
Loss from operations of discontinued
  telecommunications businesses before
    income taxes                                   (75,420)     (376,639)
Loss from operations of discontinued
    telecommunications businesses                  (75,420)     (236,112)
Gain from disposition of telecommunications
    businesses                                      25,000           --
</TABLE>

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

<PAGE> 11

NET REVENUES

The  increase in net revenues from continuing businesses for  the
three months ended March 31, 1997 as compared to the three months
ended March 31, 1996 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 This increase was  offset
by  a  reduction  in revenues from the Company's NSC  subsidiary.
HMT's  revenues in the first quarter of 1997 were  $1,048,987  as
compared  to  $123,910  for  the period  from  the  date  of  the
Company's  acquisition of HMT to March 31, 1996.  HMT's  revenues
for the first quarter of 1997 as compared to the first quarter of
1996  also  reflect  an increase in revenues  from  the  sale  of
medical management computer software to a large hospital chain in
the  State  of Florida. The revenues of NSC were $76,737  in  the
first  quarter of 1997 compared to $245,702 in the first  quarter
of  1996.  The decrease in NSC's revenues is the result of  lower
revenues from the Chrysler and Ford Motor Company contracts.

The  revenues  of  the Company's discontinued  telecommunications
businesses  were $233,643 in the 1997 first quarter  compared  to
$657,943 in the 1996 first quarter. The decrease in revenues from
the  Company's discontinued telecommunications businesses is  the
result of the discontinuance of TNI's operations effective as  of
December  31,  1996.  This decrease was  somewhat  offset  by  an
increase in the revenues of the Company's ATI subsidiary from PPV
services  in  Mexico.  The  Company's  acquisition  of  ATI   was
rescinded  in June 1997. See Note 2 to the Unaudited Consolidated
Financial Statements included elsewhere herein.

COST OF REVENUES

The  decrease  in  cost  of  revenues  applicable  to  continuing
operations is principally the result of lower revenues from NSC's
healthcare  cost  recovery services and  adjustments  related  to
recoverable claims under the Chrysler contract.

The   decrease   in  the  cost  of  revenues  of  the   Company's
discontinued  telecommunication businesses is the result  of  the
discontinuance of TNI's operations effective as of  December  31,
1996.

SELLING AND ADMINISTRATIVE EXPENSES

The decrease in selling and administrative expenses applicable to
continuing  operations  is principally due  to  the  reversal  of
accrued  bonuses of $695,214 payable to Retiring Management  but,
waived  by  Retiring Management in connection with  an  agreement
between  the Company and the retiring management of NSC  and  the
effect  of  cost reduction measures undertaken during  the  first
quarter  of  1997  due  to  continued  operating  losses.   These
decreases   were   offset   by  an  increase   in   selling   and
administrative  expenses arising from the March 1996  acquisition
of HMT and charges to income related to employment agreements.

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.

<PAGE> 12

DEPRECIATION AND AMORTIZATION

Depreciation  and amortization applicable  to continuing
operations  for the three months ended March 31, 1997 increased
over the same period of last year by  $365,141.  This  increase
is  principally  due  to  the  amortization  of intangibles and

goodwill  recorded  in connection with the Company's  March  1996
acquisition  of HMT, offset by lower amortization of  intangibles
and  goodwill recorded in connection with the acquisition of NSC.
The  intangibles  and  goodwill recorded in connection  with  the
acquisition  of NSC were written-off by the Company effective  as
of December 31, 1996.

Depreciation and amortization applicable to the operations of the
Company's  discontinued  telecommunications  businesses  declined
principally  as  a  result of the write-off in 1996  of  goodwill
related to the acquisitions of TNI and Comstar.

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  first  quarter  of  1997,
includes  a  one-time  gain  of $2,000,000  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.
Pursuant  to  an  agreement  between  the  Company  and  Retiring
Management,  Retiring  Management waived  the  issuance  of  such
shares. Other income (expense), net for the first quarter of 1997
also  includes  financing fees related to  the  issuance  of  the
Company's  4%  $1,120,000 convertible debentures due  October  1,
1998.

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  provision  for  income  taxes   applicable   to
continuing operations was made in the first quarter 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 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.
See  the  accompanying Unaudited Consolidated Statements of  Cash
Flows  for  the three months ended March 31, 1997 and  1996.  The
Company  also  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 Unaudited Consolidated  Financial
Statements included elsewhere herein).

<PAGE> 13

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.

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> 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, 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

(a)  Exhibits:

(4)14.#    Form of Offshore Securities Subscription Agreement for
           $1,120,000 4% Convertible Debentures.
(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)4.  *  Financial Data Schedule ( Three Months Ended March  31, 1997).

(b)  Reports on Form 8-K:

1.  The Company filed a Form 8-K on March 27, 1997.  The date  of
the  earliest event reported was November 21, 1996.  On  November
21,  1996 and November 26, 1996, the Company issued $300,000  and
$200,000,  respectively, of 10% Cumulative Convertible Debentures
to  RIC  Investment  Fund,  Ltd.  and  RANA  Investment  Company,
respectively.  Each of these debentures are due one year from the
date  of  issuance.  On February 28, 1997, the Company  issued  a
$1,120,000  4%  Cumulative Convertible Debenture due  October  1,
1998  to  Timboon, Ltd.  The issuance of all of these  Debentures
were  made  in reliance on Regulation S pursuant to  an  Offshore
Offering  and  Distribution Agreement  between  the  Company  and
Victory Investments, LLC, as placement agent.


<PAGE> 15

2.  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.

3. 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 Acuisition
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 March 27, 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

<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: February 20,1998


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> 17

                                  INDEX TO EXHIBITS

EXHIBIT NUMBER

(4)14.#    Form of Offshore Securities Subscription Agreement for
           $1,120,000 4% Convertible Debentures.
(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)4.  *  Financial Data Schedule ( Three Months Ended March  31, 1997).

#    Incorporated by reference to the Company's Current Report on
     Form 8-K as filed on March 27, 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