SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

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

For the Quarter ended August 31, 1996
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         	     No       X   

The number of shares of Common Stock outstanding as of  August 31, 1996 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 6 MHz and 1 MV 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 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.

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.

Item 2.	 PROPERTIES

Corporate Offices 

The Company presently maintains its executive offices at 39 Lackawanna Plaza,
Room 8, Bloomfield, N.J. 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 August 31, 1996.

PART II

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 know there has not been any high and low bid
price for the three months period ended August 31, 1996 and 1995.  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
              Fiscal 1996            Low Bid     High Bid
             1st Quarter             Unknown   Unknown
              2nd Quarter           Unknown   Unknown
              3rd Quarter            Unknown   Unknown
              4th Quarter            Unknown   Unknown

As of August 31, 1996 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 will as other factors beyond the control of the Company.


Item 6.	 SELECTED FINANCIAL DATA

The following selected financial data on the Company conveying the three
months period ended August 31, 1996 and 1995, 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 August 31,

                       		  	                    1996		           1995
Income Statement Data:

Revenues			$    27,000		$              0
 Other Income and (Loss)	$  (122,316)		$     17,937  
Net Income (Loss)		$  (162,218)		$   (287010)   
Net Income (Loss) per share	$       ( 0.04)		$      ( 0 .16)  
Dividends per share                $              0		$              0
Weighted average shares outstanding:    3,999,118 	  3,999,118
Balance Sheet Data:
Total Assets			$ 2,176,225		$    187,315
Retained Earnings (Deficit)	$    830,349		$(1,146,174)
Stockholders Equity		$ 2,298,727		$     113,096


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 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 in 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,  August 31, 1996 and 1995.
	Balance Sheet at  August 31, 1996 and 1995.
	Statements of Operations for the three months period ended 
               August 31, 1996 and 1995.
	Notes to Financial Statements as of August 31, 1996 and 1995.

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 
 		48	President, and  Director   Sep 30, 1988 -  Present
Robert A. Spira
		45        Director                          Feb 1, 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. 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.

Item 11.	EXECUTIVE COMPENSATION

During the three months period ended August 31, 1996, Thomas V. Ackerly
received remuneration in the amount of $0. For the fiscal year ended May 31,
1995, no officer, director, employee, or affiliate of the Registrant received 
any remuneration. Moreover, for this period 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 director received no fees
for his 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 August 31, 1996 and 1995, 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 August 31, 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, and includes interest at the
rate of 9% per annum. By agreement between the parties, interest will 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
            Balance Sheet  - - - - - - - - - - - - -  F-2
            Statement of Income and Loss- - -  F-3
            Statement of Stockholders' Equity -F-4-F-7 
            Statement of Cash Flows  - - - - - -  F-8-F9
            Notes To Financial Statements  - - -F-10-F13

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.

 By: Thomas V. Ackerly, President and Director
                            
Date

                       C O N T E N T S
         
     Independent Auditors' Report - - - - - - - - - - - - -  F-1
     Balance Sheets at August 31, 1996 and 1995 - - -  F-2
     Statement of Operations for the Years Ended
       August 31, 1996 and 1995 - - - - - - - - - - - - - -  F-3
     Statement of Changes in  Stockholders' Equity from Inception
        through August 31, 1996- - - - - - - - - - - - - - - F-4 F-5
     Statement of Cash Flows for the Three Months Period Ended 
                   August 31, 1996 and 1995 - - - - - - - - - F6 F-7
     Notes to Consolidated Financial Statements - - - - F-8 F-12


INDEPENDENT AUDITORS' REPORT


Board of Directors
Graystone Financial Services, Inc.
Glen Ridge, New Jersey

We have audited the accompanying balance sheet of Graystone Financial
Services, Inc. as of August 31, 1996 and 1995 and the related statement of
operations, stockholders' equity and cash flows for the years 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 financial statements referred to above present fairly, 
in all material respects, the financial position of Graystone Financial 
Services, Inc. as of August 31, 1996 and 1995, in conformity
with generally accepted accounting principles.

Clancy and Co., P.L.L.C.
Phoenix, Arizona
April 30, 1997
GRAYSTONE FINANCIAL SERVICES, INC.
BALANCE SHEET
AUGUST 31, 1996 AND 1995
ASSETS                               	AUGUST  31, 1996   	AUGUST   31, 1995   
Current Assets      		
Cash 				$                 147	$         11,144 
Accounts Receivable		 	   11,233		       0
Marketable Securities - Trading - Note 4    	2,001,608	23,187 
Total Current Assets	2,012,988	34,331
Property and Equipment Net  - Note 3       	0	0 
Other Assets		
   Receivables - Related Companies - Note 5   161,562	152,984 
Security Deposits                            1,175	      0 
  Investment - Digital Acoustic Systems Inc. - Note 1      500     0 
  Total Other Assets                   163,237	152,984 
		
Total  Assets	                         $       2,176,225  $  187,315 
                 LIABILITIES AND STOCKHOLDERS EQUITY		
Current Liabilities		
  Accounts Payable              	     	   6,550	 27,229 
  Accounts Payable - Related Company - Note 5         33,066	 0 
Total Current Liabilities               39,616	27,229 
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 August 31,
   1996 and August 31, 1995	         400	 	     400 
  Additional paid in capita;       1,305,860	       1,305,860
  Deficit Accumulated During the Development Stage  830,349 (1,146,174)
  Total Stockholders' Equity	2,136,609	    160,086 
Total Liabilities and Stockholders' Equity	$       2,176,225  $ 187,315 













GRAYSTONE FINANCIAL SERVICES, INC.  
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS PERIOD ENDED AUGUST 31, 1996 
AND AUGUST 31, 1995 AND FROM  INCEPTION (JUNE 24, 1986)
THROUGH AUGUST 31, 1996
For the Three Months Period Ended August 31, 1996 (Col 1)
For the  Three Months Period Ended  August 31, 1995 (Col 2)
Deficit  Accumulated During The Development Stage (Col 3)
Revenues  
   Consulting Income	$        27,000  	$              0	$         63,000
    Interest Income	                  0	                0	         232,031 
Miscellaneous Income  	      0		    0	           45,049 
Total Revenues		 27,000	    0 	         340,080 
Expenses:  General and Administrative
				66,802	      45,947 	         612,238 
  Total Expenses	         66,802 	      45,947 	         612,238 

Operating Loss	$      (39,802)     $(45,947) 	$    (272,158)
Other Income and (Loss)
 Gain on Sale of Securities   50,202	 	0 	     59,646 
Other Income - Judgment             0 		0 	     371,094 
  Loss on Disposal of Discontinued Subsidiaries -  
Graystone Nash, Incorporated And      
       Outwater & Wells, Inc.        0        (5,250)	     (1,178,806)
Temporary Increase (Decrease) in  Marketable
       Securities                (172,573)	 23,187 	 1,843,305 
Dividend Income      		   55 	         0 	       6,268 
Total Other Income and (Loss)
			  (122,316)	17,937 	1,102,057 
Net Income or Loss      (162,118)	(28,010)	830,349 
Net Income or (Loss) Per Share of Common Stock  	
		    $          (0.04)          $  (0.16)     $         0.27

The accompanying notes are an integral part of these financial statements.

F-3


GRAYSTONE FINANCIAL SERVICES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (JUNE 24, 1986)
THROUGH AUGUST 31, 1996
Common Shares (Col 1)
Stock Amount  (Col 2)
Additional Paid In Capital (Col 3)
Loss Accumulated During the Development Stage (Col 4)
Total (Col 5)
Sale of shares for cash in
  private placement at $.001  20,000,000	$2,000		$18,000	$0	$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 for 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  
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 three months
   period ended
  August 31, 1996 							(162,118)   (162,118) 
Balance - August 31, 1996   	3,999,118  	400	1,305,860	830,349  	2,136,609
The accompanying notes are an integral part of these financial statements.

<PAGE>

GRAYSTONE FINANCIAL SERVICES, INC. 
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS PERIOD ENDED AUGUST 31, 1996
AND FOR THE YEAR ENDED MAY 31, 1996 AND FROM 
INCEPTION (JUNE 24, 1996) THROUGH AUGUST 31, 1996
      .
For The  Three Months  Period Ended August 31, 1996 (Col 1)
For The Three Months Period Ended August 31,  1995 (Col 2)
From Inception Through August 31, 1996 (Col 3)

Cash Flows from Operating Activities			
  Net Income or Loss		$  (162,118)	$   (28,010)	$   830,349
  Temporary (Increase) or Decrease in
    Marketable Securities 	172,573 	 (23,187)	 (1,843,305)
  Loss on Disposal of Subsidiaries
	                                  		0 	0 	1,209,756
Gain on Sale of Securities 	  50,202 		50,202 
Adjustments to Reconcile Net Income
   to Net Cash Provided by Operating Activities            			
Depreciation                                   0	 	0 	41,931
 Changes in Operating Assets and Liabilities
   (Increase) or Decrease in Accounts Receivable
				(11,233)	0 	(11,233)
   (Increase) or Decrease in Security Deposits
                                    	 (1,175)	0 	(1,175)
   Increase or (Decrease) in Accounts Payable
			   	(116,241)   (11,876)	   6,550 
   Total Adjustments	   	94,126      (35,063)	(547,274)
Net cash provided (used) by operating Activities
		           	   	(67,992)   (63,073)	  283,075 
Cash Flows from Investing Activities                             			
 Purchase of Office Equipment         	0 	0 	(41,931)
Advances to Subsidiaries                   	 0 	0 	(1,203,788)
Investment in Related Company       	0 	0 	(500)
Purchases of Marketable Securities (300,366) 0 	(399,091)
   Proceeds from Sales of Marketable Securities
				256,718          0	  256,718 
Net cash flows from investing activities
				(43,648)	0 	(1,388,592)
Cash Flows From Financing Activities			
Proceeds from sale of Common Stock 
	                         	0 	75,000 	1,300,292 
 Advances to and from Related Companies
	                                  	   (5,400)	(783)	(161,562)
  Advances to and from Related Company
                                            	(13,261)	          0	  (33,066)
Net Cash Provided by Financing Activities
				(18,661)	74,217 	1,105,664
Increase (Decrease) in Cash and Cash Equivalents	    
				(130,301)	  11,144 	            147
Cash and Cash Equivalents at Beginning of Period
					 130,448 	       0 	         0  
Cash and Cash Equivalents at End of Period	 
					$147  		$11,444  $  147     
			
Supplemental Information			
Assets Purchased in Exchange for Common Stock    
					$   0 		$ 0 	$    5,968 
Cash Paid for:			
  Interest				$   0      	$ 0      $ 121,310
 Income taxes				$   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 eighth 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 

<PAGE>
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 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.

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. Earnings or (Loss) Per Share

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

NOTE 3 - PROPERTY AND EQUIPMENT


					August 31,		August 31,
					1996			1995

	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 August 31, 1996:
        			                    Number of      Cost	Market	 
				   	Shares	                        Value
    Trading Securities owned
    NJS Acquisitions Corp.	     397,677   $         0      $2,087,804
    Reed Systems, Inc.		      19,444			    0
    E Data Corp.		       5,000      46,187  	       48,125	
    Great American Lumber Co.      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	       14,33   
    Evans Environmental Corp.       700	240	         1,203 
    Money Market Funds	         24	  24                    24
    Cash Account 				  18                    18
      Total                                      $2,001,608          

 The following is a summary of trading securities owned as of August 31, 1995:

ATC Capital Group Limited    61,832                0          $  23,187 
Reed Systems, Inc.                  97,221                0                   0
Great American Lumber Co., Inc. 8,695             0                      0
           Total                                                 $  23,187  

NOTE 4 - 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 $46,562 and $37,200 as of August 31,
 1996 and 1995. At August 31, 1995, Bradford Taylor Clearinghouse, Inc. had
 been advanced $784. Thomas V. Ackerly,  President of the Company, is a note
 dated  January 1, 1991 in the original amount of $115,000, with a balance of
 $115,000 as of August 31, 1996 and 1995. The notes are payable on demand
 and include interest at the rate of 9% per annum.By agreement with the parties,
 interest will not begin to accrue on these notes till January 1, 1996. 

NOTE 5- 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 will be $108,000.

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