SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF 

THE SECURITIES EXCHANGE ACT OF 1934



For the Year ended May 31, 1997                  	Commission
File Number 33-0878-A





     GRAYSTONE FINANCIAL 

SERVICES, INC.

(Exact name of registrant as specified in charter)



               Florida              		    	                     
              59 -2686448             

(State or other jurisdiction of			  (I.R.S. Employer
Identification Number) 

incorporation or organization)





P. O. Box 615 ,  Glen Ridge, NJ 070028-0615

(Address of principal executive offices)



  201-746-7818                

(Registrant's telephone number)





Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.



Yes         X	     No            



The number of shares of Common Stock outstanding as of  May 31,
1997 was 3,999,118.

<PAGE>







                                                             
PART I

Item 1. Business



History and Organization



Graystone Financial Services, Inc. (The Company), formerly known
as Capital Investment Development Corp. was incorporated under
the laws of the State of Florida on June 24, 1986 with a
authorized capital of 100,000,000 shares of common stock with a
par value of $.0001. On October 10, 1988 the Company amended its
Articles of Incorporation changing its name to Graystone
Financial Services, Inc.



On March 16, 1987, the Company formed a wholly-owned subsidiary,
Bradford-Taylor Clearinghouse, Inc. Bradford-Taylor
Clearinghouse, Inc. has been inactive from inception through
July 31, 1995. Bradford-Taylor Clearinghouse, Inc. entered into
a licensing agreement with Nico Electric, A.G. on August 1, 1995
in exchange for 11.3% of the common stock of         
Bradford-Taylor Clearinghouse, Inc. The licensing agreement
allows Bradford-Taylor Clearinghouse, Inc.'s use of Nico
Electric, A.G. technology for alarms and security devices up to
6Mhz and 1Mv for commercial use only. An additional 75.4% of the
common stock of  Bradford-Taylor Clearinghouse, Inc. was issued
to complete the transaction. This reduces the Company's
ownership in Bradford-Taylor Clearinghouse, Inc. to 13.3%.



On June 24, 1986, the Company issued 20,000,000 shares of its
common stock to private investors for a total cash consideration
of $20,000.



In connection with a public offering in September, 1986, the
Company sold 5,500,000 shares of its common stock for $.05 per
share. Expenses incurred in connection with the public offering
of  $62,458 were charged against additional paid in capital. Net
proceeds from the offering were $212,542.



Each share of common stock issued in connection with the public
offering included  one class A warrant and one class B warrant.
The purchase warrants were exercisable over an eight month
period ending May 18, 1987. Each redeemable warrant entitled the
holder to purchase one share of common stock at a price of $.075
per share in the case of class A warrants and a price of $.10
per share of class B warrants.



During the period ended May 31, 1987, 5,500,000 of class A
warrants were exercised at $.075 
<PAGE>
per share for a total cash consideration of $412,500. On May 18,
1987, the class B warrants were extended for a six months period.



In addition, in connection with the public offering 550,000
warrants were issued to the underwriter, which were exercised
commencing September, 1987 at a price of $.055 per share or an
aggregate of $30,250. The remaining 5,500,000 class B warrants
were exercised during the year ended May 31, 1988 for an
aggregate of $550,000.



On September 30, 1988, the Stock Purchase Agreement dated April
4, 1988 by and between the Company and Harp Investments, Inc., a
privately held New Jersey corporation, was approved by the
stockholders. The agreement provided for the Company to acquire
100% of the outstanding shares of capital stock of Graystone
Nash, Incorporated and 70% of the outstanding shares of Outwater
and Wells, Inc., (Graystone Nash owned 30% of the outstanding
shares prior to the exchange), in exchange for 59,675,000 shares
of the Company's common stock.



Additionally, 11,475,000 shares of the Company's common stock
was required to be returned to the Company by certain original
shareholders. The transaction was handled as a reverse merger.



On April 20, 1990, the National Association of Securities
Dealers, Inc. censured Graystone Nash, Incorporated and its
President, Thomas V. Ackerly. The Association fined Graystone
Nash, Incorporated and Thomas V. Ackerly $1,325,000, jointly and
severely, and expelled Graystone Nash, Incorporated from
membership in the Association and barred Thomas V. Ackerly from
association with a member of  the Association. 



Additionally, the Securities and Exchange Commission brought an
action against Graystone Nash, Incorporated and Thomas V.
Ackerly, its President, and on April 21, 1993, a judgment was
entered against the Company and Thomas V. Ackerly in the amount
of  $60,565,581.00 plus interest beginning January 1, 1989. The
action was appealed and on June 1, 1994, the judgment was
reversed. Graystone Nash, Incorporated was not represented by
counsel in the new review ordered and the judgment still stands
against it. Thomas V. Ackerly, acting as his own counsel,
presented to the Court additional information to review. Upon
review by the Court, on July 10, 1995, the judgment and
pre-judgment interest was waived as to Thomas V. Ackerly. As a
result of the above actions, the subsidiary Graystone Nash,
Incorporated was forced to close and cease operations.



Also, the subsidiary Outwater and Wells, Inc. was forced to
close and cease operations in accordance with the lockup rules
of the SEC.


<PAGE>
On April 16, 1990, the shareholders approved a 50:1 reverse
split of the Company's common stock. The reverse split reduced
the authorized shares of common stock to 4,000,000. An
additional 118 fractional shares were issued  in connection with
the reverse split.



On June 8, 1995, the Company issued 2,294,000 shares of its
common stock to its controlling stockholder for a total cash
consideration of $75,000.



On September 19, 1996, the Company incorporated G.S. Television
Productions, Inc. (The Corporation) in the State of Delaware. On
October 3, 1996, the Corporation received authority to do
business in the State of New Jersey. The Corporation is a wholly
owned subsidiary of the Company and has been inactive since its
date of inception.









Item 2.	 PROPERTIES



Corporate Offices 



The Company presently maintains its executive offices at 39
Lackawanna Plaza, Room 8, Bloomfield, NJ 07003. The Company's
office space consists of approximately 500 square feet,  on a
month to month basis, at the rate of $1,000 per month. There is
no written agreement.



Item 3.	 LEGAL PROCEEDINGS



	None



Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



There were no matters submitted to the Shareholders of the
Company during the three months period ended May 31, 1997.



PART II


<[AGE>
Item 5.	 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

		STOCKHOLDER MATTERS



The Company's common stock, $.0001 par value (Common Stock) has
been traded in the over-the-counter market on a limited and
sporadic basis since November 18, 1986. The last known high and
low bid price was $1.75 as of August 31, 1988. As far as is
known there has not been any high and low bid price for the
years ended May 31, 1997 and May 31, 1996. The following table
sets forth the high and low bid price of the Common Stock for
the period indicated as quoted from the over-the-counter listing.



              Fiscal 1997                          Low Bid      
                     High Bid



              1st Quarter                          Unknown      
                   Unknown

              2nd Quarter                        Unknown        
                 Unknown 

              3rd Quarter                         Unknown       
                  Unknown

              4th Quarter                         Unknown       
                  Unknown

  

               Fiscal 1996                         Low Bid      
                     High Bid



              1st Quarter                         Unknown       
                   Unknown

              2nd Quarter                       Unknown         
                 Unknown

              3rd Quarter                        Unknown        
                  Unknown

              4th Quarter                        Unknown        
                  Unknown                            

    

As of May 31, 1997 there were 6,061 shareholders of  record of
the Company's Common Stock.



Holders of common shares are entitled to receive such dividends
as may be declared by the Company's Board of Directors. No
dividends on the common shares have been paid by the Company,
nor does the Company anticipate that dividends will be paid in
the foreseeable future. Rather, the Company has determined to
utilize any earnings in the expansion of its business. Such
policy is subject to change based on current industry and market
conditions, as well as other factors beyond the control of the
Company.


<PAGE>
Item 6.	 SELECTED FINANCIAL DATA



The following selected financial data on the Company conveying
the three months period ended May 31, 1997 and 1996, should be
read in conjunction with the Financial Statements and related
notes included in Item 8 of this Form 10-K. (See "Financial
Statements and Notes Thereto.")

						        For Quarter Ended May 31,



                                  		  	                   
1997		           1996	                       

Income Statement Data:



Revenues				  	  $            0                   $      23,443

 

Other Income and (Loss)                                 $  
136,110                  $     452,121                          
                                            	  		  

Net Income (Loss)				 $     53,685                   $   
359,465   

Net Income (Loss) per share		             $         0.01	       
      $           NIL                        Dividends per share
                              	 $              0	              $
             0			                    

Weighted average shares outstanding:               3,999,118  	 
              3,999,118



Balance Sheet Data:

Total Assets                                                   
$ 2,396,977                  $    359,475

Retained Earnings (Deficit)	                        $    897,554
                 $   (758,689)		    

                                      					 	

Stockholders Equity			    	$ 2,203,814                  $    
547,571  		    





Item 7.	 MANAGEMENT'S DECISIONS AND ANALYSIS OF FINANCIAL

		CONDITION AND RESULTS OF OPERATION



The following is management's discussion and analysis of
significant factors which have affected registrant's financial
position and operations. 















Overall Situation



On September 30, 1988, the Company entered into a stock purchase
agreement dated April 4, 1988 with Harp Investments, Inc., a
privately held New Jersey corporation. The agreement  provided
for the Company to acquire 100% of the outstanding shares of
capital stock of Graystone Nash, Incorporated and 70% of the
outstanding shares of Outwater and Wells, Inc. (Graystone Nash,
Incorporated owned 30% of the outstanding shares prior to the
exchange), in exchange for 59,675,000 shares of the Company's
Common Stock.



Additionally, 11,475,000 shares of the Company's  Common Stock
was required to be returned to the Company by certain original
shareholders. The transaction was handled as reverse merger.     



On April 20, 1990, the National Association of Securities
Dealers, Inc. censured Graystone Nash, Incorporated and its
President, Thomas V. Ackerly. The Association fined Graystone
Nash, Incorporated and Thomas V. Ackerly $1,325,000, jointly and
severely, and expelled Graystone Nash, Incorporated from
membership in the Association and barred Thomas V. Ackerly from
association with a member of the Association.  

     

Additionally, the Securities and Exchange Commission brought an
action against Graystone Nash, Incorporated and Thomas V.
Ackerly, its President, and on April 21, 1993 a  judgment was
entered against the Company and Thomas V. Ackerly in the amount
of $60,565,581.00 plus interest beginning January 1, 1989. The
action was appealed and on June 1, 1994, the judgment was
reversed. Graystone Nash, Incorporated was not represented by
counsel in the new review ordered and the judgment stands
against it. Thomas V. Ackerly, acting as his own counsel,
presented to the Court additional information to review. Upon
review by the Court on July 10, 1995, the judgment and
pre-judgment interest was waived as to Thomas V. Ackerly. As a
result of the above actions, the subsidiary Graystone Nash,
Incorporated was forced to close and cease operations.



Also, the subsidiary Outwater and Wells, Inc. was forced to
close and cease operations in accordance with the lockup rules
of the SEC.



The Company's business plan is to seek potential businesses that
may, in the opinion of Management, warrant the Company's
involvement. The Company acknowledges that as a result of its
limited financial resources, acquiring a suitable business will
be extremely difficult; however, the Company's principal
business objective will be to seek long term growth potential in
the business in which it participates, rather than immediate,
short term earnings. In seeking to attain its business
objectives, the Company will not restrict its search to any
particular industry. Management has no assurance that it will be
successful in its attempt to raise such capital.

                                     











Liquidity and Capital Resources



The Company has increased its assets principally by the increase
market value of trading securities of stocks that had little or
no value in the prior year and continues to have a very small
amount of liabilities. It is the intent of Management to seek
potential businesses in which to acquire through the issuance of
the Company's common stock. In addition, to make private
placement of common stock as a means of raising capital to
propel the Company into new arenas of high earnings potential.
Additional funding will be necessary in order to achieve these
goals.



Item 8.	FINANCIAL STATEMENT AND SUPPLEMENTAL DATA

	

	The financial statements are attached hereto commencing on Page
F-1:



	Audit report,  May 31, 1997 and 1996.

	Consolidated Balance Sheet at  May 31, 1997 and 1996.

	Consolidated Statements of Operations for the Year ended May
31, 1997 and 1996.

	Consolidated Statement of Changes in Stockholders' Equity from

               Inception through May 31, 1997.

            Consolidated Statement of Cash Flows for the nine
months period ended

               May 31, 1997 and 1996.  

            Notes to Financial Statements as of May 31, 1997 and
1996.



Item 9. CHANGES IN  AND DISAGREEMENTS WITH ACCOUNTANTS ON 		    
             ACCOUNTING AND FINANCIAL DISCLOSURE



	                                                     None



PART III



Item 10.	DIRECTORS  AND OFFICERS OF THE REGISTRANT



Name:				Age:		Position:			      Term:



Thomas V. Ackerly                 49                  President,
and               September 30, 1988 - 

	                                                            
Director                                   Present



Robert A. Spira                       45                 
Director                         February 1, 1996 -

                                                                
                                                 Present



Joseph Ben-Dak                      40                  Director
                        September 26, 1996  -

                                                                
                                                  Present

  



Mr. Thomas V. Ackerly, was elected to the Board of Directors on
September 30, 1988 at which time he was appointed as President.
Mr. Ackerly held the same offices in Bradford-Taylor
Clearinghouse, Inc.,  a subsidiary of the Graystone Financial
Services, Inc. until July 31, 1995. Mr. Ackerly holds the same
offices in Harp Investments, Inc., the controlling shareholder
of Graystone Financial Services, Inc and G.S. Television
Productions, Inc. He currently devotes a substantial amount of
his time to the Company's business. Mr. Robert A. Spira was
appointed as a Director on February 1, 1996. Mr. Joseph Ben-Dak
was appointed as a Director on September 26, 1996. 



Item 11.	EXECUTIVE COMPENSATION



During the year ended May 31, 1997 and 1996, Thomas V. Ackerly
received remuneration in the amount of $9,000 and $60,500,
respectively. For the fiscal year ended May 31, 1995, no
officer, director, employee, or affiliate of the Registrant
received any remuneration. Moreover, for these periods the
Company has had no bonus, profit sharing plan, or other
compensation plan in which the executive officers or director
are participants. The Company's directors receive no fees for
their services.





Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 		 
                      MANAGEMENT



Section 16(a) of the Securities Exchange of Act of 1934
(Exchange Act) requires the Company's directors, officers and
persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange
Commission. Directors, officers and persons with greater than
five percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all forms they
file with the Commission pursuant to Section (16a).    



At May 31, 1997 and 1996, there were issued and outstanding 
common shares of the Company stock to beneficial owners and
management, the Company's only class of voting securities. The
Company has no knowledge of any arrangements which could affect
the company.



The following table will identify, as of May 31, 1997 and 1996,
the number and percentage of outstanding shares of common stock
owned by (i) each person known to the Company who owns more than
five percent of the outstanding common stock, (ii) each officer
and director of the Company, and (iii) officers and directors of
the Company as a group:



Name of  Beneficial Owner			Amount of Ownership  	Percent of
Class 

  

Harp Investments, Inc.                                          
3,362,500                               84%







Name of Beneficial Owner			Amount of  Ownership	Percent of Class



All Executive Officers/Directors as a Group        3,362,500    
                           84%



Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Mr. Thomas V. Ackerly,  President of the Company, has loaned
money to and borrowed money from the Company. Currently,  Mr.
Ackerly has a demand note in the amount of $115,000, dated
January 1, 1991, with balances at May 31, 1997 and 1996, of
$448,647 and $149,996, and includes interest at the rate of 9%
per annum. By agreement between the parties, interest did not
begin to accrue on this note till January 1, 1996.



Item 14.	SUBSEQUENT EVENTS

 

                                    none   





PART IV



Item 15.	Exhibits and Reports on Form 8-K



	Exhibits:



	  Statement Name                                               
                          Page No.



           Report of Independent Certified Public Accountant - -
- - - - - - -  F-1

           Consolidated Balance Sheet - - - - - - - - - - - - -
- - - - - - - - - - -    F-2 F-3

           Consolidated Statement of Income and Loss- - - - - -
- - - - - - - -  F-4                                            
  Consolidated Statement of Stockholders' Equity- - - - - - - -
- - -   F-5 F-6                                      
Consolidated  Statement of Cash Flows  - - - - - - - - - - - - -
- - -    F-7 F8

          Notes To Financial Statements - - - - - - - - - - - -
- - - - - - - - - - -   F-9 F14





	Reports on Form 8-K:



  	None

   

























 

                                                       
SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed	below by the following person
on behalf of the Registrant and in capacities and on the dates
indicated.



                    			                 GRAYSTONE FINANCIAL
SERVICES, INC.







                                                                
 (s) Thomas V. Ackerly                                     

                                                              
By: Thomas V. Ackerly, President and Director				



                                                              

                                                                
                                                                
      

                                                              
Date























  C O N T E N T S









         

                Independent Auditors' Report - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - -  F-1



               Consolidated Balance Sheets at February 28, 1997
and 

                      February 29, 1996- - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - -   F-2 F-3



               Consolidated Statement of Operations for the
Three months and

                    Nine Months Periods Ended February 28, 1997
and

                    February 29, 1997- - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - -  F-4 F-5



               Consolidated Statement of Changes in 
Stockholders' Equity from 

                   Inception through February 29, 1997  - - - -
- - - - - - - - - - - - - - - - - - -  F-6 F-7



              Consolidated Statement of Cash Flows for the Six
Months Period Ended 

                   February 28, 1997 and February 29, 1996- - -
- - - - - - - - - - - - - - -- - -  F8 F-9



              Notes to Consolidated Financial Statements - - - -
- - - - - - - - - - - - - - - - -  F-10 F-14

     













INDEPENDENT AUDITORS' REPORT



Board of Directors

Graystone Financial Services, Inc.

Glen Ridge, New Jersey



We have audited the accompanying consolidated balance sheet of
Graystone Financial Services, Inc. as of May 31, 1997 and 1996
and the related consolidated statement of operations,
stockholders' equity and cash flows for the periods then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.



We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by

management, as well as evaluating the overall financial
statement presentation. We believe that our audit of the
financial statements provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Graystone Financial Services,
Inc. as of May 31, 1997 and 1996, in conformity with generally
accepted accounting principles.







Clancy and Co., P.L.L.C.

Phoenix, Arizona

August 28, 1997









                                                                
        ASSETS		

	MAY 31,    1997       	MAY 31,    1996       

Current Assets      		

Cash                                                            
                             	$            60,870  	$      
130,448    

Accounts Receivable                                             
                  	14,206 	0 

Marketable Securities - Trading - Note 4                        
        	1,514,986 	2,180,735 

Total Current Assets	1,589,500 	2,311,183 

		

Property and Equipment Net  - Note 3                            
                   	0 	0 

		

Other Assets		

   Receivables - Related Companies - Note 5 	448,647 	149,996 

Accrued Interest Receivable                                     
               	48,974 	6,166 

Security Deposits                                               
                      	16,060 	0 

Organization Costs                                              
                     	1,297 	0 

   Investment - Digital Acoustic Systems Inc. - Note 1          
                                 	      500 	       500 

  Total Other Assets	515,478 	156,662 

		

Total  Assets	$      2,104,978          ======= 	$    2,467,845 
       ====== 

		

		

		

		

		

		

		

		

		

		

		

		

		

                                    LIABILITIES AND
STOCKHOLDERS	EQUITY            	

	MAY 31,   1997       	MAY 31,   1996     

Current Liabilities		

  Accounts Payable                                              
                            	$             6,600 	$      
122,791 

  Accounts Payable - Related Company - Note 5                   
       	29,955 	46,327 

Notes Payable                                                   
                        	155,000 	                    0         
          

Total Current Liabilities                                       
                    	191,555 	169,118 

		

Stockholders' Equity		

Preferred Stock: No Par Value, Authorized 10,000,000           
Shares; Issued and Outstanding, NONE                            
    	 0 	 0 

  Common Stock: Par Value $0.0001, Authorized 4,000,000;        
 Issued and Outstanding, 3,999,118 Shares at May 31, 1997      
and May 31, 1996	      400 	  400 

  Additional paid in capital	1,305,860 	  1,305,860

  Deficit Accumulated During the Development Stage	   607,163 	 
 992,467 

  Total Stockholders' Equity	1,913,423 	2,298,727 

		

Total Liabilities and Stockholders' Equity	$      2,104,978     
   ======= 	$    2,467,845        ======= 

		

		

		

		

		

		

	  	

		

		

		 

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

	

	   For the Year Ended May 31, 1997	   For the Year Ended May
31, 1996	   For the Year Ended May 31, 1995	Retained Earnings 
Accumulated During The Development Stage

Revenues                                                        
             				

   Consulting Income	$     108,154   	$       36,000 	$         
  0	$       144,154 

    Interest Income	0 	                  0	              0	     
    232,031 

Miscellaneous Income                                            
 	         0 	           0 	         0 	  45,049 

Total Revenues                                                  
      	108,154 	36,000 	0 	421,234 

Expenses				

  General and                                               
Administrative	 289,382 	 108,065 	           0 	 834,818 

  Total Expenses	289,382 	108,065 	          0 	834,818 

				

Operating Loss	(181,228)	$      (72,065)     	$            0 	$ 
    (413,584)

				

Other Income and (Loss)                                         
    				

   Gain or (Loss) on Sale of Securities     	 490,849	165,855 	0
	500,293 

Dividends and Interest Income            	42,886 	6,213 	0
	49,099 

   Other Income - Judgment                                      
    	0 	0 	0 	371,094 

   Loss on Disposal of  Discontinued              Subsidiaries -
                                                       				

      Graystone Nash, Incorporated and                          
            Outwater & Wells, Inc.                              
                                                             	 0
	          (5,250)	 (1,172,556)	  (1,177,806)

  Temporary Increase (Decrease) in              Marketable
Securities                                                      
                	 (737,811) 	 2,015,878 	              0 	
1,278,067 

Total Other Income and (Loss)                            
	(204,076) 	2,182,696 	(1,172,556)	1,020,747 

				

Net Income or (Loss)                                            
          	$   (385,304)       =======    	$    2,110,631 
======= 	$(1,172,556)  =======  	$        607,163    ====== 

Net Income or (Loss) Per Share of Common Stock  	$        
(0.09)  === 	$           0.53              ===	$         (0.69) 
           ===       	$              0.15                  ===

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				



	

	    Common Shares           	    Stock Amount	   Additional
Paid In Capital	Retained Earnings Accumulated During the
Development Stage	     Total

Sale of shares for cash in              private placement at
$.001	                     20,000,000 	                  $      
   2,000	         $        18,000	 $         	 $       20,000

Issuance of common stock          public offering for cash      
       (net  of expenses)                           	  5,500,000
	  550 	  211,992		         212,542             

Issuance of common stock in      connection with the exercise  
of stock warrants                     	  5,500,000 	  550 	 
411,950		            412,500             

Net loss year ended                 May 31, 1987	               
   	             	              	 (29,350)	          (29,350)   
        

Balance - May 31, 1987             	31,000,000 	 3,100 	641,942
	 (29,350)	       615,692             

Issuance of common stock in     connection with the             
    exercise of stock warrants       	  6,050,000 	  605 	 
579,645		         580,250             

Net loss  year  ended                    May 31, 1988	          
        	            	              	 (55,625)	                 
        (55,625)            

Balance - May 31, 1988	37,050,000 	$         3,705  	$ 1,221,587
     	$       (84,975)                       	$  1,140,317    

Shares returned in                       connection with stock  
           purchase agreement                 September 30, 1988
               	   (11,475,000)	   (1,148)	   1,148		   0       
  

Issuance of shares in                    connection with        
                acquisition of                            
Graystone/Nash, Inc. and           Outwater and Wells, Inc.     
     on September 30, 1988	     59,675,000 	      5,968 			    
5,968          

Net loss year ended                       May 31, 1989	         
          	           	                	 (115,097)	 (115,097)   
     

Balance - May 31, 1989	85,250,000 	8,525
	1,222,735	(200,072)	1,031,188          

50:1 reverse split on                     April 16, 1990 	
(83,545,000)	 (8,354)	 8,354		 0           

					

	   Common Shares        	   Stock Amount	  Additional Paid In
Capital	Loss Accumulated During the Development Stage	    Total

Fractional shares issued in           connection with 50:1      
          reverse split	  118 	  $            0  	  $           
     	  $                    	  $                  0          

Net loss year ended    May 31, 1990	                 	         	
                	  (24,240)	 (24,240)

Balance - May 31, 1990	1,705,118 	171 	1,231,089	(224,312)	     
1,006,948          

Net  income year ended               May 31, 1991               
          	                 	        	                	 302,842
	          302,842          

Balance - May 31, 1991             	1,705,118 	171
	1,231,089	78,530 	      1,309,970       

Net loss year ended                    May 31, 1992             
           	                                        	           
      	                       	          (13,256)	         
(13,256)

Balance - May 31, 1992	1,705,118 	171 	1,231,089	65,274 	     
1,296,534          

Net loss year ended   May 31, 1993 	                  	        	
               	    (8,343)	              (8,343)

Balance - May 31, 1993	1,705,118 	171 	1,231,089	56,931 	      
1,288,191          

Net income year ended   May 31, 1994	                 	       	 
               	   (2,539)	            (2,539)

Balance - May 31, 1994	1,705,118 	171 	1,231,089	54,392 	      
1,285,652          

Net loss year ended   May 31, 1995	                 	       	   
                	        (1,172,556)	 (1,172,556)

Balance - May 31, 1995             	1,705,118 	171 	
1,231,089	(1,118,164)	         113,096          

Issuance of shares for cash,          June 8, 1995              
                	 2,294,000 	 229 	 74,771		            75,000  
       

Net income year ended               May 31, 1996                
         	                  	     0 	                	
2,110,631	        2,110,631          

Balance - May 31, 1996            	3,999,118 	400
	1,305,860	992,467 	       2,298,727          

Net loss year ended                                             
May 31, 1997                         	                  	      
	                	  (385,304)	        (385,304)

Balance- May 31, 1997                 	3,999,118   ======= 	$   
      400  === 	$ 1,305,860 =======	$      607,163  ====== 	$   
1,913,423          ======          

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					







	  For The            Year Ended      May 31, 1997              
 	  For The  Year Ended May 31, 1996	  For The Year Ended May
31, 1995	From      Inception Through May 31, 1997

Cash Flows from Operating Activities				

  Net Income or Loss	$     (385,304)	$   2,110,631	$ (1,172,556)
	$      607,163

Temporary (Increase) or Decrease in                             
       Marketable Securities                                    
                                      	 737,811 	 (2,015,878) 	
0 	 (1,278,067)

Loss on Disposal of Subsidiaries                                
   	0 	0 	1,172,556 	1,203,788 

Gain on Sale of Securities                                      
       	(490,849)	0 	0 	(490,849)

Adjustments to Reconcile Net Income to            Net Cash
Provided by Operating Activities                                
                     				

    Depreciation                                                
              	0 	 0 	0 	41,931 

 Changes in Operating Assets and Liabilities                    
                              				

   (Increase) Decrease in Accounts Receivable                   
                                     	(14,206)	0 	0 	(14,206)

(Increase) Decrease in Accrued Interest        Receivable       
                                        	 (42,808)	 (6,166)		
(48,974)

   (Increase) Decrease in Security Deposits                     
                    	(16,060)	0 	  0 	(16,060)

   (Increase) Decrease in Organization Costs                  
	(1,297)	0 		(1,297)

   Increase  (Decrease) in Accounts Payable   	(116,191)	     
83,687 	               0 	     6,600 

   Total Adjustments	   56,4391
	(1,938,357)	(1,172,556)	(597,134)

 Net Cash Provided (Used) by Operating               Activities 
         	 (328,913)	    172,274 	    0 	   10,029 

				

Cash Flows from Investing Activities                            
				

   Purchase of Office Equipment                                 
    	0 	0 	0 	(41,931)

   Advances to Subsidiaries                                     
        	0 	 0 	0 	(1,203,788)

   Investment in Related Company                                
 	0 	(500)	0 	(500)

   Purchases of Marketable Securities                           
  	(645,218)	(164,857)	0 	(711,849)

   Proceeds from Sales of Marketable                    
Securities	 1,031,814 	           0 	          0	   1,031,814 

Net Cash Flows from Investing Activities	386,596 	(165,357)	0
	(925,849)

				

				

	  For The            Year Ended                    May 31, 1997
               	  For The  Year Ended May 31, 1996	  For The 
Year Ended May 31, 1995	From      Inception Through May 31, 1997 

Cash Flows From Financing Activities				

Sale of Common Stock                                  	0 	75,000
	0 	1,300,292 

  Loan Proceeds                                                 
             	155,000 	0 	0 	155,000 

  Advances to and from Related Companies                        
             	(298,651)	   2,204 	0 	(448,647)

  Advances to and from Related Company                          
                 	   16,390 	46,327 	          0 	  (29,955)

Net Cash Provided by Financing Activities	(127,261)	123,531 	   
     0 	      976,690

Increase (Decrease) in Cash and Cash                
Equivalents	 (69,578)	                                 130,448	 
   0 	           60,870

Cash and Cash Equivalents at Beginning of       Period	 130,448
	             0 	          0 	          0 

Cash and Cash Equivalents at End of Period	$         60,870 
====== 	 $       130,448          ======    	$                 0
          =====	$        60,870          =====       

				

				

				

				

Supplemental Information				

Assets Purchased in Exchange for Common Stock                   
                                       	$                   0 
===== 	$                  0  ===== 	$                 0  =====
	$          5,968  ===== 

Cash Paid for:				

  Interest	$                   0  ===== 	$                  0   
        =====	$                 0            =====	$     
121,310        ======

  Income taxes	$                   0  ===== 	$                 
0             =====	$                 0            =====	$      
          0           =====

				

				

 				

 				

				

				

				

				

				

				

				

				

				

			 	

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

		 		

				

				

				

				

				

				

				

				

				

				

				

				

				







NOTE 1 - ORGANIZATION       



Graystone Financial Services, Inc. (The Company), formerly known
as Capital Investment Development Corp. was incorporated under
the laws of the State of Florida on June 24, 1986 with an
authorized capital of 100,000,000 shares with a par value of
$.0001.  On October 10, 1988 the Company amended its Articles of
Incorporation changing its name to Graystone Financial Services,
Inc.



On March 16, 1987, the Company formed a wholly-owned subsidiary,
Bradford-Taylor Clearinghouse, Inc.  Bradford-Taylor
Clearinghouse, Inc. has been inactive from inception through
July 31, 1995.  Bradford-Taylor Clearinghouse, Inc. entered into
a licensing agreement with Nico Electric, A.G. and/or overseas
assignees on August 1, 1995 in exchange for 82.67% of the common
stock of Bradford-Taylor Clearinghouse, Inc.  The licensing
agreement allows Bradford-Taylor Clearinghouse, Inc.'s use of
Nico Electric, A.G. technology for alarms and security devices
up to 6Mhz and 1Mv for commercial use only.  This reduced the
Company's ownership in Bradford-Taylor Clearinghouse, Inc. (now
Digital Acoustic System Inc.) to 13.3%.



On June 24, 1986, the Company issued 20,000,000 shares of its
common stock to private investors for a total cash consideration
of $20,000.



In connection with a public offering in September 1986, the
Company sold 5,500,000 shares of its common stock for $.05 per
share.  Expenses incurred in connection with the public offering
of $62,458 were charged against additional paid in capital.  Net
proceeds from the offering were $212,542.



Each share of common stock issued in connection with the public
offering included one class A warrant and one class B warrant. 
The purchase warrants were exercisable over an eight month
period ending May 18, 1987.  Each redeemable warrant entitled
the holder to purchase one share of common stock at a price of
$.075 per share in the case of class A warrants and a price of
$.10 per share of class B warrants.



During the period ended May 31, 1987, 5,500,000 of class A
warrants were exercised at $.075 per share for a total cash
consideration of $412,500.  On May 18, 1987, the class B
warrants were extended for a six months period.



In addition, in connection with the public offering 550,000
warrants were issued to the underwriter, which were exercised
commencing September, 1987 at a price of $.055 per share or an
aggregate of $30,250.  The remaining 5,500,000 Class B warrants
were exercised during the year ended May 31, 1988 for an
aggregate of $550,000.



On September 30, 1988, the Stock Purchase Agreement dated April
4, 1988 by and between the Company and Harp Investments, Inc., a
privately held New Jersey 

NOTE 1 - ORGANIZATION - (CONTINUED)



corporation, was approved by the stockholders.  The agreement
provided for the Company to acquire 100% of the outstanding
shares of capital stock of Graystone Nash, Incorporated, a New
Jersey corporation engaged in securities brokerage, trading and
research, investment banking activities and related financial
services, and 70% of the outstanding shares of Outwater and
Wells, Inc. (Graystone Nash owned 30% of the outstanding shares
prior to the exchange), a New Jersey corporation engaged in
providing a full range of securities clearance services to
Graystone Nash,  Incorporated, in exchange for 59,675,000 shares
of the Company's common stock.



Additionally, 11,475,000 shares of the Company's common stock
was required to be returned to the Company by certain original
shareholders.  The transaction was handled as a reverse merger.



On April 20, 1990, the National Association of Securities
Dealers, Inc. censured Graystone Nash,  Incorporated and its
President, Thomas V. Ackerly.  The Association fined Graystone
Nash,  Incorporated and Thomas V. Ackerly $1,325,000, jointly
and severely, and expelled Graystone Nash,  Incorporated from
membership in the Association and barred Thomas V. Ackerly from
association with a member of the Association.  



Additionally, the Securities and Exchange Commission brought an
action against Graystone Nash,  Incorporated and Thomas V.
Ackerly, its President, and on April 21, 1993 a judgment was
entered against the Company and Thomas V. Ackerly in the amount
of $60,565,581 plus interest beginning January 1, 1989.  The
action was appealed and on June 1, 1994, the judgment was
reversed.  Graystone Nash,  Incorporated was not represented by
counsel in the new review ordered and the judgment still stands
against 

it.  Thomas V. Ackerly, acting as his own counsel, presented to
the Court additional information to review.  Upon review by the
Court, on July 10, 1995, the judgment and pre-judgment interest
was waived as to Thomas V. Ackerly.  As a result of the above
actions, the subsidiary Graystone Nash,  Incorporated was forced
to close and cease operations. Graystone Nash,  Incorporated
discontinued its operations as of May 31, 1991, and the
subsidiary was disposed of on July 31, 1994, the date the
corporation was dissolved by the State of New Jersey.



Also, the subsidiary Outwater and Wells, Inc., was forced to
close and case operations in accordance with the lockup rules of
the SEC.  Outwater and Wells, Inc. discontinued its operations
as of May 31, 1991, and the subsidiary was disposed of August
31, 1994, the date the corporation  was dissolved by the State
of New Jersey.







NOTE 1 - ORGANIZATION - (CONTINUED)



On April 16, 1990, the shareholders approved a 50:1 reverse
split of the Company's common stock.  The reverse split reduced
the authorized shares of common stock to 4,000,000.  An
additional 118 fractional shares were issued in connection with
the reverse split.



On June 8, 1995, the Company issued 2,294,000 shares of its
common stock to its controlling stockholder for a total cash
consideration of $75,000.



On September 19, 1996, the Company incorporated G. S. Television
Productions, Inc. (The Corporation) in the State of Delaware. On
October 3, 1996, the Corporation received authority to do
business in the State of New Jersey. The Corporation is a wholly
owned subsidiary of the Company and has been inactive since its
date of incorporation.



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES



	A.  Basis of Financial Statement Presentation



	     The records of the Company (A Corporation) are maintained
using the accrual method   	     of accounting.



	B.  Cash and Cash Equivalents



	     The Company considers all highly liquid debt instruments
with a maturity of three                          months or less
to be cash and cash equivalents.



            C. Principles of Consolidation

           

                 The accompanying consolidated financial
statements include the accounts of the                          
 Company and its wholly owned subsidiary, G.S. Television
Productions, Inc. (Inactive                  since its date of
incorporation September 19, 1996). Intercompany transactions and
                      balances have been eliminated in
consolidation.



            D. Earnings or (Loss) Per Share



                Earnings or (loss) per share is computed using
the weighted average number of shares                   of
common stock outstanding.











             E.   Provision for Taxes



                  At May 31, 1997, 1996 and 1995, the Company
had net operating loss carryforwards                    of
approximately $2,257,794, $2,175,722, and $2,169,005 that may be
offset against                     future taxable income through
the years 2012, 2011 and 2009. Additionally, the                
            Company has available capital loss carryovers of
$776,317, $1,267,166 and 265,715                     that may be
offset against future capital gains.



             F.   Use of Estimates



                  Management uses estimates and assumptions in
preparing financial statements in                          
accordance with generally accepted accounting principles. Those
estimates and                              assumptions affect
the reported amounts of amounts of assets and liabilities, the  
                          disclosure of contingent assets and
liabilities, and the reported revenues and expenses.            
       Actual results could vary from the estimates that were
assumed in preparing the                             financial
statements.

  

            G.  Pending Accounting Pronouncements



                   It is anticipated that current pending
accounting pronouncements will not have an                      
   adverse impact on the financial statements of the Company.



NOTE 3 - PROPERTY AND EQUIPMENT

								May 31,		May 31,

								1997			1996



		Machinery and Equipment		         $	25,002		         $ 25,002

		Furniture and Fixtures				16,929 		16,929

								41,931			41,931

		Less Accumulated Depreciation		41,931			41,931



		Net Book Value	                                  $         0		
         $         0

	

            Expenditures for repairs and maintenance and minor
renewal and betterments are charged             to operations in
the year incurred.  Major renewals and betterments are
capitalized.                        Depreciation is recorded
under the straight line method, utilizing a 5 year estimated 

            useful life.













NOTE 4 - OTHER CURRENT ASSETS



               The following is a summary of Trading Securities
owned as of May 31, 1997:



                           			                    Number of	
Cost	   Market								           Shares	                        
   Value

             Trading Securities owned

	    NJS Acquisitions Corp.	                        261,877   $ 
        0     $ 1,473,058

	    Reed Systems, Inc.				  19,444	    0 		    0

	    Great American Lumber Co.		    8,695	    0		    0 

    G L Intelligent Systems, Inc.                        20,000 
    46,253             32,500   

    XO Systems Corp.                                     
200,000    100,005               9,400

    Cash Account 					              28                    28	 	

             Total                                              
                             $146,286     $1,514,986            
                                           

		                                                              
               ======      =======



             The following is a summary of trading securities
owned as of May 31, 1996:



             NJS Acquisitions Corp.                             
 397,677   $          0      $ 2,087,804   

             Reed Systems, Inc.                                 
      19,444               0                       0

             E Data Corp.                                       
            5,000      46,187              48,125            

             Great American Lumber Co., Inc.                  
8,695               0                       0

             Classic International Entertainment, Inc.     
20,630        9,554                9,036

             Ambase Corporation                                 
   10,000      18,200              20,200

             BNN Corporation                                    
      2,500                0              14,335

             Evans Environmental Corp.                          
   700            240                1,203

             Money Market Funds                                 
        24              24                     24

             Cash Account                                       
                                18                     18       
     

             Total                                              
                           $    74,223      $ 2,180,745    

                                                                
                                    =====            ====== 



NOTE 5 - TRANSACTIONS WITH RELATED PARTIES



	Receivables - Related Companies represent advances to Harp
Investment, Inc., the                        controlling
shareholder of the Company in the original amount of $37,200,
dated March                31, 1995, with a balance of $40,636
and $37,200 as of May 31, 1997 and 1996. Thomas               
V. Ackerly,  President of the Company, represents a note dated 
January 1, 1991 in the                  original amount of
$115,000, with a balance of $448,647 and $149,996 as of May 31, 
                 1997 and 1996. The notes are payable on demand
and include interest at the rate of 9%                  per
annum. By  agreement with the parties, interest did not begin to
accrue on these                       notes till January 1,
1996. Interest is accrued on the above in the amount of $48,974
and               $6,166 as of May 31, 1997 and 1996.
Additionally, the Company has advanced 0 and      



NOTE 5 - TRANSACTIONS WITH RELATED PARTIES (C0NTINUED)



              $28,600 to Kali Trading Co., a related company, at
May 31, 1997 and 1996. Accounts                   Payable -
Related Companies represents advances to and from related
companies in the                 amounts of  $29,955 and
$46,327, respectively as of May 31, 1997 and 1996. 





NOTE 6 - LEASES



            The Company presently maintains its executive
offices at 39 Lackawanna Plaza, Room 8,

            Bloomfield, NJ 07003. the Company's office space
consists of approximately 500 square              feet, on a
month to month basis, at the rate of $1,000 per month. There is
no written                      agreement. The Company leases an
additional office located at 45 Wall Street, New                
    York, NY and consist of approximately 1,000 square feet. The
lease is for a one year                     period ending August
31, 1998, at the rate of $2,400 per month/



NOTE 7- OTHER MATTERS



	Effective February 1, 1996, the Company entered into a
consulting agreement with                        Chapman Spire
and Carson LLC to provide assistance in developing clients who
are           	seeking access to public markets through the
merger or acquisition of a public company                or
entry to trading markets through the introduction to financing
institutions or                              broker/dealers. 
The contract is for one year and the fee for services was
$108,000.











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