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, 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 June 30, 1997 - 11,183,961 shares.

<PAGE> 2

                       PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                 SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                     JUNE 30,    DECEMBER 31,
                                                      1997           1996
                                                    ----------    ----------
                                                    (UNAUDITED)
            ASSETS
<S>                                                    <C>           <C>
Current assets:
   Cash and cash equivalents                         $134,012     $   61,039
   Accounts receivable, less allowance for
     doubtful accounts of $8,404 in 1997 and
     $28,074 in 1996                                   53,677        802,079
   Notes receivable from officers and employees        52,000        102,000
   Other current assets                               193,671        438,763
                                                    ---------      ---------
Total current assets                                  433,360      1,403,881
                                                    ---------      ---------
Furniture and equipment                             1,060,045      1,812,867
   Less accumulated depreciation                     (290,316)      (587,598)
                                                    ---------      ---------
     Net furniture and equipment                      769,729      1,225,269

Note receivable from the sale of assets, less
   allowance of $500,000                                 --             --
Deferred compensation                                 116,075        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
                                                    ---------      ---------
                                                   $1,490,356    $ 5,847,300
                                                    =========      =========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 3

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

<TABLE>
<CAPTION>
                                                      JUNE 30,    DECEMBER 31,
                                                        1997          1996
                                                     ----------   -----------
                                                    (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIENCY IN ASSETS)
<S>                                                     <C>            <C>
Current liabilities:
   Borrowings under lines of credit                 $      --      $   182,651
   Current portion of notes and debentures payable    3,350,017      3,180,758
   Current portion of obligations under capital
       leases                                           193,134        242,477
   Accounts payable                                     902,713      1,452,192
   Accrued expenses and other current liabilities       946,746        881,675
   Accrued compensation and employee benefits           737,056      1,528,153
   Deferred revenue                                        --          440,232
                                                     ----------     ----------
Total current liabilities                             6,129,666      7,908,138

Obligations under capital leases, less current
   portion                                              176,235        458,654
Accrued compensation                                    491,720        676,261
Other long-term liabilities                              63,578         72,573
                                                     ----------     ----------
Total liabilities                                     6,861,199      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 3,553,125  shares  in  1997  and
    4,550,000 shares in 1996                          1,945,820      2,491,745
  Common stock - $.001 par value; authorized
    50,000,000 shares, issued and outstanding 
    11,183,961 shares in 1997 and 10,626,874 shares
    in 1996                                              11,184         10,627
  Common stock to be issued                                --        2,000,000
  Additional paid in capital                         16,472,515     16,823,526
  Accumulated deficit                               (24,474,486)   (25,303,978)
                                                     ----------     ----------
Total stockholders' equity (deficiency in assets)   ( 6,044,967)   ( 3,977,450)
                                                     ----------     ----------
                                                    $ 1,490,356    $ 5,847,300
                                                     ==========     ==========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 4


                         SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                    Six Months Ended    Three Months Ended
                                        June 30,            June 30,
                                 ----------------------------------------------
                                    1997        1996       1997       1996
                                 ----------  ----------  ----------  ----------
                                (UNAUDITED)  (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S>                                 <C>          <C>        <C>         <C>

Net revenues                    $ 1,467,344   $ 709,863  $ 341,620  $ 340,251
                                  ---------   ---------   --------    -------
Costs and expenses:
  Cost of revenues                   90,849     155,722     90,849     33,371
  Selling and administrative
     expenses                     2,588,603   3,228,933  1,214,133  1,995,461
  Depreciation and amortization     442,396     526,729    188,806    286,849
                                  ---------   ---------  ---------  ---------
                                  3,121,848   3,911,384  1,493,788  2,315,681
                                  ---------   ---------  ---------  ---------
                                 (1,654,504) (3,201,521)(1,152,168)(1,975,430)
Interest income                       3,044      10,431      1,026      7,072
Interest expense                   (248,529)   (149,737)  (136,964)  (111,299)
Other income(expense), net        2,166,470        --      278,456        --
                                  ---------   ---------  ---------  ---------
Income(loss) from continuing
 operations before income taxes     266,481  (3,340,827)(1,009,650)(2,079,657)
Provision(benefit) for income
 taxes                                 --    (1,079,500)      --     (625,595)
                                  ---------   ---------  ---------  ---------
Income(loss) from continuing
 operations                         266,481  (2,261,327)(1,009,650)(1,454,062)
                                  ---------   ---------  ---------  ---------

Discontinued operations:
  Loss from operations of
   discontinued telecommunications
   businesses (less income tax
   benefit of $237,500 and
   $140,527 in 1996, respectively) ( 76,381)  ( 428,507)      (961)  (192,395)
  Gain from disposition of
   telecommunication businesses     639,392        --      614,392        --
                                  ---------    --------  ---------   --------
                                    563,011   ( 428,507)   613,431   (192,395)
                                  ---------    --------  ---------   ---------
Net income(loss)                 $  829,492 $(2,689,834) $(396,219)$(1,646,457)
                                  =========   =========  =========   ==========
Earnings(loss) per share:
  Income(loss)from continuing
   operations                    $      .03 $      (.29) $    (.09)$      (.17)
  Income(loss) from discontinued
   telecommunications businesses        --         (.05)        --        (.02)
  Gain from disposition of
   telecommunications businesses        .05         --         .05          --
                                  ---------   ---------  ---------    --------
  Net income (loss)              $      .08 $      (.34) $    (.04)$      (.19)
                                  =========   =========  =========    ========
Weighted average number of
   common shares outstanding     10,936,609   7,894,808 11,272,699   8,398,362
                                  =========   ========= ==========   ==========
</TABLE>
See Notes to Consolidated Financial Statements

<PAGE> 5
                      SYSTEMS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                          June30,         
                                               ---------------------------     
                                                    1997          1996 
                                               ---------------------------
                                                (UNAUDITED)     (UNAUDITED)
<S>                                                <C>             <C>
Net cash used in operating activities          $(1,475,539)    $(2,458,875)
                                               -----------     -----------
Cash flows from investing activities:
 Acquisitions of businesses, net of cash
        acquired                                       --          (46,817)
 Disposition of businesses, net of cash
     of businesses disposed of                     368,343            --
 Expenditures for furniture and equipment          (23,751)       (448,509)
 Notes receivable from officers                        --          (50,000)
 Other                                               2,474            --
                                                ----------      ----------
Net cash provided by (used in)
   investing activities                            347,066        (545,326)
                                                ----------      ----------
Cash flows from financing activities:
 Proceeds from issuance of common stock            229,500       1,826,129
 Proceeds from notes and debentures payable      1,261,366         547,857
 Payments on notes, debentures and
   capital lease obligations                      (170,425)       (218,205)
 Payments on borrowings under lines of credit      (75,000)         (8,484)
 Payments on common stock subject to rescission    (35,000)            --
 Other                                              (8,995)            --
                                                ----------      ----------
Net cash provided by financing activities        1,201,446       2,147,297
                                                ----------      ----------
Net increase (decrease)in cash                      72,973        (856,904)
Cash and cash equivalents at beginning
   of the period                                    61,039         964,714
                                                ----------      ----------
Cash and cash equivalents at end of the period  $  134,012      $  107,810
                                                ==========      ==========

</TABLE>

<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>
<CAPTION>
                                                            June 30,
                                                     ---------------------
                                                       1997        1996
                                                     ----------  ---------
<S>                                                       <C>        <C>
   Equipment capital lease obligations              $    73,184  $ 701,475
   Issuance of common stock upon conversion
     of notes and debentures payable                    716,318    199,007
   Issuance of common stock as compensation             262,173    199,865
   Waiver of common stock to be issued                2,000,000       --
   Waiver of bonuses payable                            695,214       --
   Cash paid during the period for:
     Interest                                            76,217       --
     Income taxes                                           --        --

</TABLE>

See Notes to Consolidated Financial Statements

<PAGE> 7

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


1.   SIGNIFICANT ACCOUNTING POLICIES - The unaudited consolidated
balance  sheet  at  June  30,  1997, the  unaudited  consolidated
statements of operations for the six and three months ended  June
30,  1997 and 1996 and unaudited consolidated statements of  cash
flows  for the six months ended June 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  six months ended  June  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  six
months  ended  June 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. 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  six  months  ended  June 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>

                                                       Six Months Ended
                                                         June 30, 1996
                                                         -------------
<S>                                                            <C>
Net revenues from continuing operations                    $   912,935
                                                           -----------
Loss from continuing operations                            $ 2,293,461
                                                           -----------
Loss from operations of discontinued
    telecommunications businesses                          $   428,507
                                                           -----------
Net Loss                                                   $ 2,721,968
                                                           -----------
Loss per share:
  Loss from continuing operations                          $       .27
  Loss from operations of discontinued
     telecommunications businesses                                 .05
                                                           -----------
       Net loss                                            $       .32
                                                           ===========
</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 six months
and  three months ended June 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 (  including
$105,000 attributable to common stock purchase warrants issued in
1995  to  the  former  shareholders of ATI  in  consideration  of
extension of indebtedness).

<PAGE> 9

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 June 30, 1997 and December  31,
1996 are summarized as follows:
<TABLE>
<CAPTION>
                               June 30,           December 31,
                                  1997               1996
                                --------            --------
<S>                                 <C>                <C>     
Current assets                $     --            $  332,856
Total assets                        --               660,094
Current liabilities              291,542             886,206
Total liabilities                291,542           1,078,026
</TABLE>

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  six  months  and
three  months  ended June 30, 1997 and 1996,  are  summarized  as
follows:
<TABLE>
<CAPTION>

                                         Six Months            Three Months
                                        Ended June 30,         Ended June 30,
                                    --------------------  --------------------
                                      1997     1996         1997      1996
                                    -------- -----------  ---------  ---------
<S>                                    <C>       <C>        <C>       <C>
Net revenues                        $405,617 $ 1,268,477  $ 171,974  $ 610,534
Cost of revenues                        --       853,064       --      386,102
Selling and administrative expenses  408,411     934,266    142,119    432,148
Depreciation and amortization         47,460     133,751     18,984     74,262
Interest income                         --         1,026       --           55
Interest expense                      32,049      14,429     11,832      7,390
Other income (expense), net            5,922        --         --          (55)
Loss from operations of discontinued
   businesses, before income taxes   (76,381)   (666,007)      (961)  (289,368)
Income tax benefit                      --       237,500       --       96,973
Loss from operations of discontinued
    businesses                       (76,381)   (428,507)      (961)  (192,395)
</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 reported in
other  income  (expense), net as a component of  operations  from
continuing businesses.

<PAGE> 10

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.

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.

<PAGE> 11

5.STOCKHOLDERS' EQUITY - Following is a summary of common stock
  transactions for the period from January 1, 1997 to June 30, 1997:
<TABLE>
<CAPTION>
<S>                                                   <C>       <C>
                                                    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    362,500       --
       Conversion  of  convertible  debt            577,421     716,318
      Issuance of common stock as compensation      311,857     262,173
      Rescission  of  business  acquisitions       (994,247) (2,000,000)
</TABLE>

<PAGE> 12

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 six
months and three months ended June 30, 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  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>
                                        Six Months Ended    Three Months Ended
                                            June 30,             June 30,
                                        --------------------  --------------------
                                           1997      1996        1997      1996
                                        ---------  ---------  ----------  ---------
<S>                                        <C>        <C>         <C>        <C>
Operations of continuing businesses:
Net revenues                           $1,467,344   $709,863  $  341,620  $ 340,251
Cost of revenues                           90,849    155,722      90,849     33,849
Selling and administrative expenses     2,588,603  3,228,933   1,214,133  1,995,461
Depreciation and amortization             442,396    526,729     188,806    286,849
Interest income                             3,044     10,431       1,026      7,072
Interest expense                          248,529    149,737     136,964    111,299
Other income(expense), net              2,166,470       --       278,456       --
Income(loss) from continuing 
  operations before income taxes          266,481 (3,340,827) (1,009,650)  (2,079,657)
Income(loss) from continuing operations   266,481 (2,261,327) (1,009,650)  (1,454,062)
Operations of discontinued
  telecommunications businesses:
    Net revenues                          405,617  1,268,477     171,974      610,534
    Cost of revenues                          --     853,064         --       386,102
    Selling and administrative expenses   408,411    934,266     142,119      432,148
    Depreciation and amortization          47,460    133,751      18,984       74,262
    Interest income                          --        1,026         --            55
    Interest expense                       32,049     14,429      11,832        7,390
    Other income(expense), net              5,922       --           --     (      55)
    Loss from operations of discontinued
      telecommunications businesses
      before income taxes                 (76,381)  (666,007)       (961)    (289,368)
    Loss from operations of discontinued
    telecommunications businesses         (76,381)  (428,507)       (961)    (192,395)
Gain from disposition of
    telecommunications businesses         639,392        --      614,392         --
</TABLE>

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

<PAGE> 13

NET REVENUES

The  increase in net revenues from continuing businesses for  the
six  months  ended June 30, 1997 as compared to  the  six  months
ended June 30, 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  (see  Note  2  to  the
accompanying  Unaudited Consolidated Financial  Statements).  HMT
revenues included in the accompanying Consolidated Statements  of
Operations for the six months ended June 30,1997 were $1,311,055,
compared to $465,160 for the six months ended June 30, 1996. This
increase  was  offset,  slightly, by lower  revenues  from  NSC's
healthcare  cost  recovery services under the Chrysler  and  Ford
Motor service agreements.

The  increase in net revenues from continuing businesses for  the
three  months ended June 30, 1997 as compared to the three months
ended  June  30,  1996 reflects a decrease  in  HMT  revenues  of
$79,182,  principally as a result of the rescission  of  the  HMT
acquisition  agreement,  and  an  increase  in  NSC  revenues  of
$80,551,  principally as a result of adjustments  to  recoverable
healthcare claims under the Chrysler service agreement.

The   decrease   in  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.  These decreases  were  somewhat  offset  by
increases  from period to period in the revenues of the Company's
ATI  subsidiary,  principally from PPV services  in  Mexico.  The
Company's acquisition of ATI was rescinded in June 1997. See Note
2 to the accompanying Unaudited Consolidated Financial Statements
included elsewhere herein.

COST OF REVENUES

The  decrease  in  cost  of  revenues  applicable  to  continuing
operations for the six months ended June 30, 1997 as compared  to
the  six months ended June 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 services agreement.

The  increase  in  cost  of  revenues  applicable  to  continuing
operations  for the three months ended June 30, 1997 as  compared
to the three months ended June 30, 1996 is principally the result
of adjustments related to recoverable healthcare claims under the
Chrysler services agreement.

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.

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 and cost  reductions
initiated by the Company during the first quarter of 1997 due  to
continued operating losses. These decreases were offset  to  some
extent by increases resulting from the March 1996 acquisition  of
HMT  and  the  write-off  of  deferred  compensation  assets   of
approximately  $304,000  and $340,000 in  the  first  and  second
quarters of 1997, respectively.

<PAGE> 14

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.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization applicable to continuing operations
for  the  six  and three months ended June 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.

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 six and three months  ended
June  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  six
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.

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 first or second  quarters
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.

<PAGE> 15

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.
The  Company also generated cash of approximately $ 358,000  from
the  disposition of businesses during the second quarter of 1997.
See  the  accompanying Unaudited Consolidated Statements of  Cash
Flows  for  the  six  months ended June 30, 1997  and  1996.  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
$4,356,944 from December 31, 1996 to June 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  decreased by  $2,254,427  and  $2,067,517,
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.  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  from  the  Company's
consolidated   balance  sheet,  as  of  March   31,   1997,   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.

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

(a)  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)5.  *    Financial Data Schedule ( Six Months  Ended  June  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 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 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


                                  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)5.  *   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