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 October 31, 1996               Commission File Number: 
0-5105




MILASTAR CORPORATION
(Exact name of registrant as specified in its charter)



     DELAWARE     13-2636669
     (State or other jurisdiction of     (I.R.S. Employer
     incorporation or organization)     Identification No.)

     
     No. 9 Via Parigi, Palm Beach, Florida     33480
     (Address of principal executive offices)     (Zip code)

     
Registrant's telephone number, including area code (407) 655-9590


Not Applicable
Former name, former address and former fiscal year, if changed since last 
report.


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          

At October 31, 1996, 2,738,264 shares of common stock of the Registrant were 
issued and outstanding. 










MILASTAR CORPORATION AND SUBSIDIARIES



PART I

Item 1.     Financial Statements

     The condensed financial statements included herein have been prepared by 
Milastar Corporation (the "Company") without audit, pursuant to the rules and 
regulations of the Securities and Exchange Commission.  Certain information 
and footnote disclosures normally included in financial statements prepared in 
accordance with generally accepted accounting principles have been condensed 
or omitted pursuant to such rules and regulations. However, the Company 
believes that the disclosures are adequate to make the information presented 
not misleading.  It is suggested that these condensed financial statements be 
read in conjunction with the financial statements and the notes thereto 
included in the Company's annual report on Form 10-K for the fiscal year ended 
April 30, 1996.

     The condensed financial statements included herein, which are unaudited, 
include, in the opinion of management, all adjustments (consisting only of 
normal recurring accruals) necessary to present fairly the financial position 
and results of operations of the Company for the periods presented.





















<TABLE>
<CAPTION>
MILASTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS
                                                       October 31,   April 30,  
                                                            1996        1996 
<S>
                                                     <C>          <C>  
Current assets:
     Cash and cash equivalents                            144,000      144,000
     Marketable securities and other investments,
     at fair value                                         41,000       41,000
     Accounts receivable:
          Trade, less allowance for doubtful accounts
          of $39,000 (October 31, 1996) and $37,000
          (April 30, 1996)               
                                                        1,044,000      959,000
     Other                                                  7,000        6,000
     Inventory                                            185,000      224,000
     Prepaid expenses and other                           177,000      182,000
               Total current assets                     1,598,000    1,556,000

Property, plant and equipment:
     Land                                                 199,000      199,000
     Buildings and improvements                           738,000      662,000
     Equipment                                          6,229,000    5,465,000
                                                        7,166,000    6,326,000
          Less accumulated depreciation                (2,662,000)  (2,360,000)
                                                        4,504,000    3,966,000
Other assets:
     Non-compete agreements                                85,000      125,000
     Building held for sale, net of valuation
     allowance                                                         255,000

               Total assets                             6,187,000    5,902,000


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable to stockholders                         252,000     271,000
     Note payable to bank                                               60,000
     Current maturities of long-term debt                  208,000     208,000
     Accounts payable                                      331,000     416,000
     Income taxes payable                                    2,000       5,000
     Accrued payroll and benefits                          246,000     193,000
     Accrued real estate taxes                              51,000      96,000
     Other accrued liabilities                              96,000     184,000
               Total current liabilities                 1,186,000   1,433,000

Long-term debt, less current maturities                  1,312,000     842,000
Deferred tax refund, net                                   118,000      
               Total liabilities                         2,616,000   2,275,000

Stockholders' equity:
     Preferred stock, $1.00 par value; authorized
     5,000,000 shares, none issued              
     Common stock,  $.05 par value; authorized
     7,500,000 shares, issued and outstanding
     2,728,264 shares at October 31, 1996 and
     April 30, 1996                                        137,000     137,000 
     Note receivable from officer                          (20,000)    (20,000)
     Unrealized holding gains on marketable
     securities                                             36,000      36,000 
     Additional paid-in capital                          1,666,000   1,666,000 
     Retained earnings                                   1,752,000   1,808,000
           Total stockholders' equity                    3,571,000   3,627,000 
               
               Total liabilities and stockholders'
                     equity                              6,187,000   5,902,000 
</TABLE>
<TABLE>
<CAPTION>
MILASTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


                                                           Three Months Ended           Six Months Ended
                                                               October 31,                 October 31,     
                                                           1996        1995            1996        1995     
<S>
                                                        <C>         <C>             <C>         <C>
Net Sales                                                1,884,000   1,715,000       3,740,000   3,646,000
Cost of Sales                                            1,406,000   1,267,000       2,785,000   2,687,000

Gross margin                                               478,000     448,000         955,000     959,000
Selling general and administrative expenses                455,000     447,000         905,000     872,000
Amortization of non-compete agreement                       20,000      14,000          40,000      28,000

Operating income (loss)                                      3,000     (13,000)         10,000      59,000 

Other income (expense):
     Dividend and interest income                            2,000       4,000           5,000      10,000
     Interest expense                                      (35,000)     (8,000)        (69,000)    (16,000)
     Net loss on sale of property and equipment                                        (53,000)           
     Unrealized gain (loss) on valuation of 
     building held for sale                                                             43,000     (30,000)
          Total other income (expense)                     (33,000)     (4,000)        (74,000)    (36,000)     
Income (loss) before income taxes                          (30,000)    (17,000)        (64,000)     23,000
Provision (benefit) for income taxes                        (8,000)                     (8,000)     

Net income (loss)                                          (22,000)    (17,000)        (56,000)     23,000

Net income (loss) per common share                            (.01)       (.01)           (.02)        .01

Weighted average number of shares outstanding
    during the period                                    2,738,264   2,738,264       2,738,264   2,738,264
</TABLE>
<TABLE>
<CAPTION>
MILASTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended October 31,
(Unaudited)
                                   
                                                            1996         1995
<S>
                                                       <C>          <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                    (56,000)      23,000
     Adjustments to reconcile net income to net cash
          provided by operating activities:
          Depreciation and amortization                   342,000      269,000
          Net loss on sale of property and equipment       53,000             
          Unrealized market loss (gain) on valuation 
          of building held for sale                       (43,000)      30,000 

     Changes in operating assets and liabilities:
          Accounts receivable                             (86,000)     243,000 
          Inventory                                        39,000       21,000 
          Prepaid supplies and other assets                 5,000       58,000 
          Accounts payable and accrued expenses          (168,000)    (373,000)
          Income tax refund, net                          118,000           

     Net cash provided by operating activities            204,000      271,000 

     CASH FLOWS FROM INVESTING ACTIVITIES:
          Additions to property, plant and equipment     (840,000)    (320,000)
          Proceeds from sale of property and equipment    245,000          

     Net cash used in investing activities               (595,000)    (320,000)

     CASH FLOWS FROM FINANCING ACTIVITIES:
          Proceeds from bank line of credit                25,000       
          Repayments on bank line of credit               (85,000)         
          Proceeds from issuance of long-term debt        564,000       47,000 
          Principal payments on long-term debt            (94,000)     (39,000)
          Proceeds from issuance note payable 
            - stockholder                                   6,000          
          Repayments on note payable - stockholder        (25,000)     (60,000)

     Net cash provided by (used in) financing activities  391,000      (52,000)

     NET INCREASE (DECREASE) IN CASH AND CASH
          EQUIVALENTS                                                 (101,000) 
     CASH AND CASH EQUIVALENTS BALANCE AT BEGINNING
          OF YEAR                                         144,000      365,000 
     CASH AND CASH EQUIVALENTS BALANCE AT END OF
          THE SECOND QUARTER                              144,000      264,000 

     Supplemental disclosures of cash flow information:
          Cash paid during the first two quarters for:
               Interest                                   116,000        2,000 

               Income taxes                                 3,000      
</TABLE>

MILASTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Nature of business --Milastar Corporation ("Milastar" and sometimes 
the "Company") is primarily involved in selling special metallurgical and 
secondary metal processing services to a diversified list of customers located 
in the greater Midwest and New England regions who manufacture a wide variety 
of end-products and depend upon out- sourcing of specialized processing of 
their metal components.  The Company extends credit to many of its customers. 

          Principles of consolidation--The consolidated financial statements 
include the accounts of the Company and its wholly owned subsidiaries, Flame 
Metals Processing Corporation ("Flame Metals"), Northwest Engineering Labs, 
Inc., Jardun Apparel Corp., Milastar Services Corporation and Flame Metals' 
wholly owned subsidiary New England Metal Treating Corporation ("New England 
Metal").  In consolidation, all significant intercompany accounts and 
transactions are eliminated.

          Cash and cash equivalents--The Company considers cash equivalents to 
include all investments purchased with an original maturity of 90 days or 
less.

          Marketable securities and other investments--On May 1, 1994 the 
Company adopted the provisions of Statement of Accounting Standards No. 115, 
Accounting for Certain Investments in Debt and Equity Securities (Statement 
115).  Under Statement 115, the Company classifies its debt and equity 
securities in one of three categories: trading, available-for-sale, or 
held-to-maturity.  Trading securities are bought and held principally for the 
purpose of selling them in the near term.  Held-to-maturity securities are 
those securities in which the Company has the ability and intent to hold the 
security until maturity.  All other securities not included in trading or 
held-to-maturity are classified as available-for-sale.  Trading and 
available-for-sale securities are recorded at fair value.  Held-to-maturity 
securities are recorded at amortized cost, adjusted for the amortization or 
accretion of premiums of discounts.  Unrealized holding gains and losses on 
trading securities are included in earnings.  Unrealized holding gains and 
losses on available-for-sale securities are excluded from earnings and are 
reported as a separate component of stockholders' equity until realized.  
Transfers of securities between categories are recorded at fair value at the 
date of transfer.  A decline in the market value of any available-for-sale or 
held-to-maturity security below cost that is deemed other than temporary is 
charged to earnings resulting in the establishment of a new cost basis for the 
security.  At April 30, 1994 marketable securities were carried at the lower 
of aggregate cost or market.

          Inventory--Inventory is carried at cost as determined by the 
First-In-First-Out (FIFO) method.

          Prepaid supplies--Prepaid supplies are expensed as used.

          Property, plant and equipment--Property, plant and equipment are 
carried at cost.  Depreciation is computed using the straight-line method.  
When assets are retired or otherwise disposed of, the cost and related 
depreciation are removed from the accounts, and any gain or loss is reflected 
in income for the period.  The cost of maintenance and repairs is charged to 
income as incurred, whereas significant renewals and betterments are 
capitalized and deductions are made for retirements resulting from the 
renewals or betterments.

          The estimated useful lives of the fixed assets are as follows:

                    Buildings          35 years
                    Equipment          5 to 12 years
                    Vehicles           3 to 5 years



     Other assets--Other assets are comprised of two five-year non-compete 
agreements which are being amortized over 60 months using the straight-line 
method and one four-year non-compete agreement which is being amortized over 
48 months using the straight-line method.

     Income taxes-- The Company accounts for income taxes under Financial 
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement 109).  
Statement 109 requires the use of the asset and liability method of accounting 
for income taxes.  Under the asset and liability method of Statement 109, 
deferred tax assets and liabilities are recognized for the estimated future 
tax consequences attributable to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax 
bases.  Deferred tax assets and liabilities are measured using enacted tax 
rates in effect for the year in which those temporary differences are expected 
to be recovered or settled.  Under Statement 109, the effect on deferred tax 
assets and liabilities of a change in tax rates is recognized in income in the 
period that includes the enactment date.

     Accounting estimates -- The preparation of financial statements in 
conformity with generally accepted accounting principles requires management 
to make estimates and assumptions that affect the reported amounts of assets 
and liabilities and disclosure of contingent assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from those 
estimates.

     Fair value of financial instruments -- The Company's financial 
instruments are recorded on its balance sheet.  The carrying amount for cash, 
accounts receivable, accounts payable, and accrued expenses approximates fair 
value due to the immediate or short-term maturity of these financial 
instruments.  The fair value of notes receivable and notes payable approximate 
their carrying value.

2     MARKETABLE SECURITIES AND OTHER INVESTMENTS

     Marketable securities and other investments consists of bonds and common 
stock and are being used to invest excess cash until an appropriate 
acquisition or operating need arises.  In accordance with Statement 115, at 
October 31, 1996 and 1995, marketable securities and other investments are 
classified as available-for-sale and as such unrealized gains and losses are 
reported as a separate component of stockholders' equity until realized.  
Dividend income, interest income, and prepayment losses on debt securities are 
accrued as earned.  The Company uses specific identification to determine the 
fair value of marketable securities and other investments.  

     Marketable securities and other investments were comprised of the 
following at October 31:

     Description                              1996     1995     

First Colonial Bank Shares Common Stock       5,000    5,000
Total cost                                    5,000    5,000
Gross unrealized holding gains               36,000   36,000          
Fair Value                                   41,000   41,000


     Prior to the adoption of Statement 115, the Company recorded unrealized 
gains and losses in accordance with Statement of Financial Accounting 
Standards No. 12, Accounting for Certain Marketable Securities. 


3     RELATED PARTY TRANSACTIONS

     Notes Receivable

     In fiscal 1993, with the encouragement of the Company, Michael McGurk, 
President, Chief Operating Officer and a director of the Company bought 15,000 
shares of Milastar Class A Common Stock and entered into a note agreement with 
the Company to finance this purchase.  The note of $20,000 is dated August 15, 
1992 and bears interest at 50 basis points over NYC Prime adjustable upward or 
downward at the end of each six-month period, which interest rate is subject 
to an 8% "cap" during the life of the loan.  Interest on the principal is 
payable each year on the anniversary date of the note.  The principal portion 
of the note that was originally due on August 15, 1995 has been extended until 
August 15, 1997.  The Company is holding Mr. McGurk's 15,000 shares of 
Milastar Class A Common Stock as collateral for the note. Total interest 
income related to this note for the fiscal quarters ended October 31, 1996 and 
1995 amounted to $600 and $500, respectively.

     Notes Payable

     During fiscal 1995 the Company entered into a series of note payable 
transactions which at October 31, 1996 had a balance of $152,000, including 
accrued interest, payable to J. Russell Duncan, Chairman of the Board and a 
director of the Company.  The notes bear a interest rate of 8% and are payable 
on demand.  The Company classifies the notes payable as a current liability.  
Total interest expense related to the notes payable for the fiscal quarters 
ended October 31, 1996 and 1995 was $4,100 and $7,000, respectively.

     During fiscal 1996 the Company entered into a $100,000 note payable to L. 
Michael McGurk, President, Chief Operating Officer and a director of the 
Company.  The note bears an interest rate of 8.7% and is payable on demand.  
The Company classifies the note payable as a current liability.  Total 
interest expense related to this note payable for the fiscal quarters ended 
October 31, 1996 and 1995 was $2,100 and $0, respectively.

4     INCOME TAXES

     The Company has provided for current income taxes on earnings at the 
appropriate statutory state and federal rates applicable to such earnings, and 
any deviation is solely the result of book/tax differences arising mainly from 
the recognition of tax depreciation expense.


5     EARNINGS PER COMMON SHARE

     The computation of earnings per share is as follows:

                                                      Three Months Ended
                                                          October 31,     
                                                    1996              1995     
Weighted average number of shares of series
     A Common stock outstanding                   2,738,264          2,738,264
Dilutive effect of stock options after application
     of treasury stock method              
Weighted average number of shares of Class A
     common stock outstanding during the period   2,738,264          2,738,264

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

Results of Operations

     Three Months Ended October 31, 1996 Compared to Three Months Ended 
October 31, 1995.  The Company recorded sales of $1,884,000 during the second 
quarter of fiscal 1997 as compared to $1,715,000 for the same period last 
year, a $169,000 (10%) increase.  The sales increase was caused by a 
combination of decreased sales in the Midwest market area (3%) and increased 
sales due to the acquisition of New England Metal (13%). 

     Cost of sales of $1,406,000 (75% of net sales) increased $139,000 (11%) 
from $1,267,000 (74% of net sales) for the same period a year earlier.  The 
increase in cost of sales is primarily due to a combination of decreased cost 
of sales at Flame Metals as a result of decreased sales and improved efficiencie
s (5%) and increased sales resulting from the addition of New England Metal 
(16%). Gross margin increased to $478,000 compared to $448,000 in the prior 
year second quarter.

     Selling, general and administrative expenses of $455,000 (24% of net 
sales) increased $8,000 (2%) from $447,000 (26% of net sales) recorded during 
the second quarter of fiscal 1996.  The increase is primarily the result of 
the addition of New England Metal.  Management's goal is to reduce or hold 
constant selling and G&A expenses while increasing sales.

     The Company recorded operating income of $3,000 in the second quarter of 
fiscal 1997 as compared to an operating loss of $13,000 recorded in the prior 
year second quarter.  Higher operating income was primarily due to reduced 
labor costs at Flame Metals.  Management continues to reduce labor costs 
relative to sales and as such has increased the Company's revenue per 
employee.

     Total other expense amounted to $33,000 in the second quarter of fiscal 
1997 compared to other expense of $4,000 in the second quarter of last year.  
The increase was primarily due to higher interest expense related to the 
purchase and financing of a new mesh belt furnace at Flame Metals and to the 
debt incurred on the financing of the New England Metal acquisition.

     The Company recorded a net loss in the second quarter of fiscal 1997 of 
$22,000 compared to a $17,000 net loss in the prior year second quarter.  The 
loss in the current second quarter was primarily due to New England Metal 
which experienced lower than expected sales as a result of a major customer 
moving out of the market.
         
     Six Months Ended October 31, 1996 Compared to Six Months Ended October 
31, 1995.  The Company recorded sales of $3,740,000 during the first half of 
fiscal 1997 as compared to $3,646,000 for the same period last year, a $94,000 
(3%) increase.  The increase was caused by a combination of decreased sales in 
the Midwest market area (9%) and increased sales due to the acquisition of New 
England Metal Treating (12%).

     Cost of sales of $2,785,000 (75% of net sales) increased $98,000 (4%) 
from $2,687,000 (74% of net sales) for the same period a year earlier.  The 
increase in cost of sales is primarily due to a combination of decreased cost 
of sales at Flame Metals as a result of decreased sales and improved 
efficiencies (11%) and increased sales resulting from the addition of New 
England Metal Treating (15%).  Gross margin decreased slightly to $955,000 
compared to $959,000 in the prior year first half.

     Selling, general and administrative expenses of $905,000 (24% of net 
sales) increased $33,000 (4%) from $872,000 (24% of net sales) recorded during 
the first half of fiscal 1996.  The increase is primarily due to the 
acquisition of New England Metal Treating.

     The Company recorded operating income of $10,000 in the first half of 
fiscal 1997 as compared to operating income of $59,000 recorded in the same 
period last year.  Lower operating income was primarily caused by lower sales 
revenues.  The new mesh belt furnace installed at Flame Metals will be in 
operation in the third quarter and is  expected to reduce costs and increase 
sales.

     Total other expense amounted to $74,000 in the first half of fiscal 1997 
compared to other expense of $36,000 in the same period last year.  The 
increase was primarily due to higher interest expense related to the purchase 
and financing of a new mesh belt furnace at Flame Metals and to the debt 
incurred on the financing of the New England Metal acquisition.

     The Company recorded a net loss in the first half of fiscal 1997 of 
$56,000 compared to net income of $23,000 in the first half of the prior 
year.  The loss in the first half of fiscal 1997 was primarily due to New 
England Metal which experienced lower than expected sales as a result of a 
major customer moving out of the market.

         
Liquidity and Capital Resources

     At October 31, 1996, the Company's working capital was $412,000 compared 
to $123,000 at April 30, 1996 and the ratio of current assets to current 
liabilities was 1.3 to 1 and 1.1 to 1, respectively.  Cash, marketable 
securities and other investments and current receivables represented 77% (74% 
at April 30, 1996) and 20% (19% at April 30, 1996) of total current assets and 
total assets, respectively.  During the first half of fiscal 1997, cash 
provided by operating activities amounted to $204,000 compared to $271,000 
provided by operating activities in  the first half of fiscal 1996.  Working 
capital requirements for the first half of fiscal 1997 were funded primarily 
from available cash and from operations.


PART II

Items 1 thru 5

No response to these items is furnished, since in each case the appropriate 
response would be either not applicable or none.

Item 6.     Exhibits and Reports on Form 8-K

   (a)      Exhibits:  None

   (b)      Reports on Form 8-K:  None 

MILASTAR CORPORATION AND SUBSIDIARIES






S I G N A T U R E


     Pursuant to the requirements of the Securities Exchange Act of
 1934, the Registrant has duly caused this interim report to be signed
 on its behalf by the undersigned, thereunto duly authorized.


          MILASTAR CORPORATION



          /s/ J. RUSSELL DUNCAN     
          J. Russell Duncan
          Chairman of the Board and Chief Executive Officer

          Dated: December 10, 1996