UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-QSB

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

                 FOR THE FISCAL QUARTER ENDED     MARCH 31, 1998

                     Commission File Number             0-8164

                           MICRO-MEDIA SOLUTIONS, INC.
                     
               (Exact name of registrant as specified in charter)

     UTAH                                  87-0280886
State or other jurisdiction of        (IRS Employer I.D. No.)
Incorporation or organization

501 Waller St., Austin, Texas 78702
(Address of principal executive offices)

Issuer's telephone number, including area code     (512) 476-6925

Securities registered pursuant to section 12(b) of the Act:

Title of each class   Name of each exchange on which registered
     None                                      N/A

Securities registered pursuant to section 12(g) of the Act:

Title of each class    Name of each exchange on which registered
Common Stock,                            None
Par Value  $.10
     
Check whether the Issuer (1) filed all reports required to be 
filed by section 13 or 15(d) of the Exchange Act during the past 
12 months (or for such shorter period that the registrant was 
required to file such report(s), and (2) has been subject to such 
filing requirements for the past 90 days.  
(1)  Yes  (  ) No  (X)    (2)  Yes (X)  No  (  )

Number of shares of common stock outstanding at June 30, 1998:  
10,885,227










Part I: Financial Information Item 1: Financial Statements

Index to Financial Statements

                                                        
                             Page

Balance Sheets                                3
     
Statements of Operation                       5

Statements of Stockholders' Equity            6     

Statements of Cash Flows                      7
     
Notes to Financial Statement                 10









































                          MICRO-MEDIA SOLUTIONS, INC.
                          Consolidated Balance Sheets
                                    ASSETS







                                            
                                       June 30        March 31
                                        1998           1998  
                                    (unaudited)     (audited) 
Current Assets
   
     Cash and Cash Equivalents    $      8,084       $    25,786
     Accounts Receivable - Trade       297,738           150,851
     Inventory                         221,490           285,023 
     Short-Term investment           1,350,000     
     Other Receivables - Advances      174,023            86,961
          Total Current Assets       2,051,335         1,898,621


Property, Plant and
     Equipment (at cost) - Net         940,911           800,831

 
Total Assets                     $   2,992,246       $ 2,699,452






















  



The accompanying notes are an integral part of these financial 
statements.
                          MICRO-MEDIA SOLUTIONS, INC.
                          Consolidated Balance Sheets
                      LIABILITIES AND STOCKHOLDERS EQUITY


                                      June 30          March 31
                                       1998             1998   
                                    (unaudited)      (audited) 

Current Liabilities
     Accounts Payable - Trade      $   181,202       $   300,034
     Other Accrued Expenses             66,737           153,241 
     Bank Line of Credit             1,070,000         1,228,966 
     Current Portion - Long Term Debt  151,267           151,267
     Current Portion - Obligation 
                 Under Capital Leases   41,097            41,097
     Other notes payable               200,000           200,000
          Total Current Liabilities  1,710,303         2,074,605

Long Term Notes
     Notes Payable                     192,413           367,522
     Obligations Under Capital 
       Leases for Equipment            127,156           149,560
          Total Long Term Notes        319,569           517,082

Stockholders Equity
   Preferred Stock, 10,000,000 shares
     Authorized:
    Series B, $5.30 stated value;
     490,000 shares authorized,
     issued & outstanding            2,597,000         2,597,000
    Series C, $10.60 stated value;
     99,057 shares authorized,
     issued & outstanding            1,050,004         1,050,004
    Series D, $10.60 stated value;
     198,807 shares authorized,
     issued & outstanding            2,107,354
    Common Stock at $.10 par value;
     Authorized 50,000,000 common shares
     10,885,227 and 10,851,261
     issued & outstanding            1,086,148         1,085,126 
   Additional paid-in capital        2,215,490         2,491,459 
   Accumulated Deficit              (8,093,622)       (7,115,824)

          Total Stockholders Equity    962,374           107,765

TOTAL LIABILITIES AND 
  STOCKHOLDERS EQUITY              $ 2,992,246       $ 2,699,452







The accompanying notes are an integral part of these financial 
statements.
                          MICRO-MEDIA SOLUTIONS, INC.
                     Consolidated Statements of Operation
                                  (UNAUDITED)


                             For the Three Months     
                                Ended June 30
                             1998         1997      

Net Revenues             $  601,629   $ 1,229,784    

Cost of Goods Sold          542,262       673,075

Gross Margin                 59,367       576,709

Selling, General 
and Administrative          970,424       580,275

Net Loss                 $( 911,057)  $ (   3,566)


Basic and diluted 
  net loss per share     $    (0.08)  $     (0.01)


Basic and Diluted 
 weighted average 
 shares outstanding      10,807,324     10,764,733
  


























The accompanying notes are an integral part of these 
financial statements.
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Year Ended March 31, 1998 (Audited), and
For the Three Months Ended June 30, 1998 (Unaudited)
(page 1 of 4)

                            Preferred Stock 
                      Series B          Series C          
                  Shares    Amount   Shares   Amount     
Balance
March 31, 1997

Common stock  issued:
  Interest
  Compensation 
  Preferred 
   stock dividend

Preferred stock 
  issued:
  Private 
   Placement      420,000  2,226,000 99,057  1,050,004  
  Senior Debt      70,000    371,000

Preferred stock 
  dividend           

Stock option for
compensation 

Cash received 
from stock 

Net loss

Balance
March 31, 1998    490,000 $2,597,000 99,057 $1,050,004 

Preferred stock 
  issued:
  Private 
   Placement 

Common stock issued:
  Preferred 
   stock dividend           

Net loss

Balance
June 30, 1998     490,000 $2,597,000 99,057 $1,050,004




The accompanying notes are an integral part of these 
financial Statements.
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Year Ended March 31, 1998 (Audited), and
For the Three Months Ended June 30, 1998 (Unaudited)
(page 2 of 4)

                  Preferred Stock 
                      Series D              
                  Shares    Amount     

Balance
March 31, 1997

Common stock issued:
  Interest
  Compensation 
  Preferred 
   stock dividend

Preferred stock 
  issued:
  Private 
   Placement      
  Senior Debt   

Preferred stock 
  dividend           

Stock option for
compensation 

Cash received 
from stock 

Net loss

Balance
March 31, 1998     

Preferred stock 
  issued:
  Private 
   Placement      198,807 $2,107,354

Common stock issued:
 Preferred 
 stock dividend           
Net loss

Balance
June 30, 1998     198,807 $2,107,354    




The accompanying notes are an integral part of these 
financial Statements.
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Year Ended March 31, 1998 (Audited), and
For the Three Months Ended June 30, 1998 (Unaudited)
(page 3 of 4)                                                 
                                                   Additional
                                                 (Discount on)
                                Common Stock         Paid-In
                             Shares      Amount      Capital  

Balance
March 31, 1997            10,764,733   1,076,473   (1,046,058)

Common stock issued:
  Interest                    10,286       1,029        4,114  
  Compensation                52,500       5,250       46,407
  Preferred 
   stock dividend             23,742       2,374       56,294

Preferred stock 
  issued:
  Private 
   Placement                                         (688,000)
  Senior Debt

Preferred stock 
  dividend                                          3,412,502

Stock option for
compensation                                          193,750

Cash received 
from stock                                            512,449
 
Net loss

Balance
March 31, 1998            10,851,261  $1,085,126   $2,491,458

Preferred stock 
  issued:
  Private 
   Placement                                         (341,689)

Common stock issued:
 Preferred 
 stock dividend               10,224       1,022       65,721  

Net loss

Balance
June 30, 1998             10,861,485  $1,086,148   $2,215,490



The accompanying notes are an integral part of these 
financial Statements.
MICRO-MEDIA SOLUTIONS, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Year Ended March 31, 1998 (Audited), and
For the Three Months Ended June 30, 1998 (Unaudited)
(page 4 of 4)                       


                                  Accumulated       
                                    Deficit      Total
Balance
March 31, 1997                   (  133,999)   (103,584)

Common stock issued:
  Interest                                        5,143
  Compensation                                   51,657
  Preferred 
   stock dividend                (   58,668)         

Preferred stock 
  issued:
  Private 
   Placement                                  2,588,004
  Senior Debt                                   371,000

Preferred stock 
  dividend                       (3,412,502)

Stock option for
compensation                                    193,750

Cash received 
from stock                                      512,449
 
Net loss                         (3,510,653) (3,510,653)

Balance
March 31, 1998                  $(7,115,822) $  107,766

Preferred stock 
  issued:
  Private 
   Placement                                  1,765,665

Common stock issued:
 Preferred 
 stock dividend                  (   66,743) 

Net loss                         (  911,057) $( 911,057) 

Balance
June 30, 1998                   $(8,093,622) $  962,374




The accompanying notes are an integral part of these 
financial statements.
                          MICRO-MEDIA SOLUTIONS, INC. 
                     Consolidated Statements of Cash Flow
                      For the Three Months Ended June 30
                                (UNAUDITED)
                          
                                       1998                1997 
Cash Flows from Operating 
                   Activities:
     Net Income (Loss)           $ (  911,057)       $(   3,566)
     Adjustments to reconcile 
        net loss to net cash,
        provided by operating 
        activities:
          Amortization and 
          Depreciation expense         52,991            29,746
          Change in accounts 
                    receivable     (  146,887)        ( 320,983)
          Change in inventory          63,533         ( 178,618)
          Change in account payable(  118,832)          476,489
          Change in accrued and 
                other liabilities  (   86,504)          102,627
     Net Cash Provided by (Used by)
           Operating Activities    (1,146,755)          105,695

Cash Flows from Investment Activities:
          Investment in property 
                    & equipment    (  193,071)        ( 382,368)
          Change in other assets   (   87,062)        ( 452,327)
     Net Cash Provided by (Used by)
            Investing Activities   (  280,133)        ( 834,695)
   

Cash Flows from Financing Activities:
      Net change in Line of Credit (  158,966)          711,090
      Increase of long term debt   (  175,109)        
      Change in capital lease 
              obligations          (   22,369)             -
      Proceeds from issuance of
              Preferred Stock       1,765,630              -
     Net Cash Provided by (Used by) 
            Financing Activities    1,409,186           711,090

     Net Increase (Decrease) 
                    in Cash        (   17,702)        (  17,910)

Cash at Beginning of Period            25,786            47,833

Cash at End of Period              $    8,084       $    29,923

Supplemental Disclosure:
  Cash paid for interest           $   60,276       $    25,000




The accompanying notes are an integral part of these financial 
statements.
                       MICRO-MEDIA SOLUTIONS, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            June 30, 1998
                               (unaudited)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:
  The accompanying unaudited interim financial statements have 
been prepared in accordance with generally accepted accounting 
principals and the rules of the Securities and Exchange 
Commission (the SEC), and should be read in conjunction with the 
audited financial statements and notes thereto contained in the 
Company's latest annual Report filed with the SEC on Form 10-KSB.  
In the opinion of management, all adjustments consisting of 
normal recurring adjustments, necessary for the fair presentation 
of financial position and results of operations for the interim 
periods presented have been reflected herein.  The results of 
operation are not necessarily indicative of the results to be 
expected for the full year.  Notes to the financial statements 
which would substantially duplicate the disclosure contained in 
the audited financial statements for the year ended March 31, 
1998, as reported in the Form 10-KSB have been omitted.

Nature of Business and Organization
  MICRO-MEDIA SOLUTIONS, INC.       
Micro-Media Solutions, Inc., (formerly Mountain States 
Resources Corporation) was organized under the laws of the 
state of Utah on April 15, 1969.  The operating subsidiary of 
MSI was organized in 1993 in Austin, Texas.  On June 23, 
1997, Mountain States Resources Corporation, a Utah 
corporation ("MSRC"), entered into an agreement and plan of 
reorganization with the shareholders of Micro-Media 
Solutions, Inc., a Texas Corporation whereby the Company 
acquired a non-operating company in exchange for common stock 
of the Company (the "Combination Agreement").  Pursuant to 
the Combination Agreement, MSRC issued 9,310,000 shares of 
its Common Stock for all of the outstanding shares of Micro-
Media Solutions, Inc., a Texas corporation.  As part of the 
reorganization, MSRC changed its name to Micro-Media 
Solutions, Inc. on September 29, 1997.  The transaction was 
accounted for as a recapitalization.

MSI is a technology corporation formed to provide computer 
hardware and peripherals, Internet Services, service and 
support, maintenance, installation services, Network 
Systems Integration, LAN/WAN distribution services, and 
related turnkey services to the public and private sectors.  
MSI maintains certification as a minority-owned business 
enterprise ("MBE") and status as a Historically 
Underutilized Business ("HUB").  As such, MSI has been 
qualified by a number of City, State and Federal agencies 
to provide these services.




                        MICRO-MEDIA SOLUTIONS, INC.
                   
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           June 30, 1998
                               (Continued)
Principles of Consolidation
The consolidated financial statements the years ended March 
31, 1998 and 1997, include the accounts and transactions of 
MSI and MSI-Texas.  All significant inter-company accounts 
and transactions have been eliminated in the accompanying 
consolidated financial statements.  MSI, however, did not 
have any material asset or liability accounts or account 
balances. With the exception of MSI's equity accounts, 
the significant account balances belong to MSI-Texas.

Cash and Cash Equivalents
  The Company considers all highly liquid investments purchased 
with an original maturity of three months or less to be cash 
equivalents.

Loss/Earnings Per Common Share Calculation
  The loss/earnings on Common and Common Equivalent shares is 
computed on the basis of the weighted average number of Common 
shares and Common Equivalent shares outstanding during the 
period.  

Use of Estimates and Certain Concentrations 
  Management of the Company has made a number of estimates and 
assumptions relating to the valuation and reporting of assets and 
liabilities and the disclosure of contingent assets and 
liabilities to prepare these consolidated financial statements in 
conformity with generally accepted accounting principles.  
Although actual results could differ from those estimates, 
Management believes its estimates are reasonable. Certain 
components, subassemblies and software included in the Company's 
computer systems are obtained from sole suppliers or a limited 
number of suppliers.  The Company relies, to a certain extent, 
upon its suppliers' abilities to enhance existing products in a 
timely and cost-effective manner, to develop new products to meet 
changing customer needs and to respond to emerging standards and 
other technological developments in the computer industry. 

  The Company's reliance on a limited number of suppliers 
involves several risks, including the possibility of shortages 
and/or increases in costs of components and subassemblies, and 
the risk of reduced control over delivery schedules.

  The Company has a large number of customers on which it 
performs ongoing credit evaluations and generally does not 
require collateral from its customers.  Historically, the Company 
has not experienced significant losses related to receivables 
from individual customers or groups of customers in any 
particular industry of geographic area. 




                        MICRO-MEDIA SOLUTIONS, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           June 30, 1998
                             (Continued)

NOTE 2.  SHORT-TERM BORROWINGS.

The Company has a secured line of credit agreement with 
Compass Bank for $1,350,000 secured by two certificates of 
deposit aggregating $1,350,000 held in the Company's name by 
Compass Bank and payable in monthly installments of interest 
only.  The balance as of June 30, 1998, was $1,070,000  
and the note matures February 5, 1999.

NOTE 3.  CAPITAL TRANSACTIONS

During the three months ended June 30, 1998, the Company received 
gross proceeds of $2,107,354 from the Private Placement of 
198,807 shares of Series D, 6% Cumulative Convertible Non-Voting 
Preferred Stock, Stated value $10.60 per share. The Company 
issued 9,467 shares of the Series D Preferred Stock as agreed for 
payment of commission fees of the Private Placement. Each share 
of Preferred D stock is initially convertible into ten shares of 
the Company's Common Stock. Total expenses of the Private 
Placement including broker fees, commissions, and legal and 
accounting expenses totaled $341,741.
 
NOTE 4.  SUBSEQUENT EVENTS

On July 2, 1998, the Company received $708,421 completing the 
Private Placement of 80,850 shares of Series D, 6% Cumulative 
Convertible Non-Voting Preferred Stock for a purchase price of 
10.60 per share. Each share of Preferred C stock is initially 
convertible into ten shares of the Company's Common Stock. Total 
expense of the Private Placement including broker fees, 
commissions, and legal and accounting fees totaled $148,589. 

The Company has been notified that holders' of Class A warrants 
will convert 420,000 warrants in August 1998. The proceeds from 
the conversion of these warrants will approximate $334,000.

NOTE 5.  CONTINGENCIES AND LEGAL MATTERS

MSI is engaged in various litigation and has a number of 
unresolved claims pending.  While the amounts claimed are not 
material and the ultimate liability in respect to such litigation 
and claims cannot be determined at this time, MSI is of the 
opinion that such liability is not to be of material importance 
in relation to its accounts.

NOTE 6.  GOING CONCERN

As shown in the accompanying consolidated financial statements, 
the Company has incurred a net loss in the current quarter of 
$911,057. As of that date, the Company's current assets 
exceeded its current liabilities by $341,032.   

The Company is working to improve its internal 
controls through conversion to a new accounting system, 
continuing efforts toward efficiency in operations and 
development of marketing budgets.  Management has 
identified and closed substantial contracts in 1999 and 
believes it can produce the level of revenue necessary to 
return the Company to a positive earnings trend. The 
financial statements do not include any adjustments that 
might be necessary if the Company is unable to continue as 
a going concern.
 
Part I: Financial Information Item 2: Management's Discussion and 
analysis of financial condition and results of operations.

               CAUTIONARY STATEMENT REGARDING FACTORS THAT 
                       MAY AFFECT FUTURE RESULTS

The purpose of this discussion is to focus on significant 
changes in the financial condition and results of operations 
of the Company during the past two years.  The discussion and 
analysis is intended to supplement and highlight information 
contained in the accompanying consolidated financial 
statements.  

This report may contain forward-looking statements which are 
subject to numerous assumptions, risk and uncertainties.  
Statements pertaining to future periods are subject to 
uncertainty because of the possibility of changes underlying 
factors and assumptions.  Actual results could differ 
materially from those contained in or implied by such 
forward-looking statements for a variety of factors 
including, but not limited to; significant changes in the 
economic conditions from what is currently anticipated; 
significant delay in or inability to execute strategic 
initiatives designed to grow revenues and/or control 
expenses; and significant changes in accounting, tax or 
regulatory practices or requirements.









The operating company of MSI was organized in 1993 in Austin, 
Texas to provide computer hardware, software programming, 
system support, maintenance, media duplication and kitting to 
the public and private sectors.  MSI maintains certification 
as a minority-owned business enterprise and status as a 
Historically Underutilized Business.  On June 23, 1997, the 
shareholders of Micro-Media Solutions, Inc., a Texas 
Corporation ("Operating Company"),  entered into an agreement 
and plan of reorganization with Mountain States Resources 
Corporation  (now known as Micro-Media Solutions, Inc.), 
(MSRC), whereby the Operating Company acquired MSRC in 
exchange for the Common Stock of the Operating Company (the 
"Combination Agreement").  Pursuant to the Combination 
Agreement, MSRC issued 9,310,000 shares of its Common Stock 
for all of the outstanding shares of Micro-Media Solutions, 
Inc., a Texas corporation (the "Combination"),(the 
"Company").  The Combination was accounted for as a 
recapitalization.

The Company's sales consist of hardware sales and delivery 
of technical services.  During the quarter ending June 30, 
1997, the sales mix consisted of a significant concentration in 
hardware sales with hardware deliveries to one public entity 
representing over 50% of the sales for that period.   First 
quarter fiscal year 1999 reflects a more normal sales mix 
although the hardware sales production has decreased somewhat as 
a result of the declining hardware profit margins attributable to 
the increased competition for the pure hardware sales.

For the quarter ended June 30, 1998 the Company's 
total assets were $2,992,246 with liabilities of $2,029,872. 
Current liabilities of $1,710,303 represent 83.4% of current 
assets of $2,051,335 for a current ratio of 1.20.  Improvements 
in cash and cash equivalents are a result of collection of 
accounts receivable and funds from increases in shareholders 
equity. Company liabilities include a cash secured line of credit 
that was instituted in 1998 and certain other Company 
obligations.  

Net shareholders equity as of June 30, 1998 was $962,374.  During 
the fiscal three months ending June 30, 1998, the Company 
partially completed phase III of a private placement of preferred 
stock The completion of the funding was on July 2, 1998.  Receipt 
of these funds enabled the Company to reduce its outstanding debt 
and pay delinquent accounts payable.  Company expansion will be 
funded through additional funds from Phase III of the private 
placement, a debt offering and a possible public 
offering in 1999.

Revenues for the quarter ended June 30, 1998 of $601,629 reflect 
the Company's sales efforts in its markets.  Revenues for the 
quarter ended June 30, 1998 decreased $628,155 or (49%) from the 
$ 1,229,784 recorded in the quarter ended June 30,1997.  This 
reduction in 1998 occurred as a result of management's attention 
being focused on conversion to a publicly traded company, 
development of longer term service contracts, expansion of the 
technical staff to service the expanded service contracts and 
identification of an appropriate source of investment to support the 
Company's expansion.These goals have been accomplished and the Company 
anticipates an increase in revenue for 1999.  Sales efforts for the year 
ending March 31, 1999, from larger service contracts are expected 
to produce revenue levels that could return the Company to 
a more positive earnings trend.

Cost of goods sold for the quarter ended June 30, 1998 declined 
$130,813 or 20% from the quarter ended June 30, 1997.  Cost of 
goods sold for 1998 of $542,262 or 90% of net revenue is 
extraordinarily high, Resulting in a gross margin of $59,367 or 
10% of revenues for the quarter. The gross margin the quarter 
ended June 30, 1997 was $576,709 or 47% of the quarter ended June 
30, 1997 revenues. Gross margin percentages experienced in 1997 
more closely represent the margins management is working to 
attain. Gross margins are expected to improve in 1999.

Selling, General and Administrative Expenses the quarter ended 
June 30, 1998 of $970,424 represents 161% of Revenues.  The 1998 
figure represents an increase over the quarter ended June 30, 
1997 of $390,149 or 40%.  The majority of the expense increase 
represents the increased staff that has been identified to 
enable the Company to work on larger service contracts and 
accomplish increased marketing of Company products.  Staff 
additions include service technicians, sales staff, 
accounting staff and middle management.  The majority of 
the remaining increase in expenses is attributable to 
training for expansion, marketing cost associated with new 
service contracts, and other expenses associated with the 
start up of new service contracts.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1998, the Company had a working capital of $341,032 
compared to working capital deficit of $175,984 at March 31, 
1998. This increase in the Company's working capital was 
primarily due to an increase in accounts receivable and a decrease in 
short term borrowings and accounts payable.

The Company received a net $1,765,630 in proceeds from outsiders 
in the form of a private placement  during the three months ended 
June 30, 1998. Additional funding of $708,421 was received 
through July 2, 1998.

The company has financed its operations primarily through 
borrowings. As of June 30, 1998, the Company's sources of 
internal financing were limited. It is not expected that internal 
sources of liquidity will improve until net cash is provided by 
operating activities which is expected in second quarter of 
fiscal 1998, and until such time, the company will rely upon 
external sources for liquidity.


                          PART II: Other Information

Item 1: Legal Proceedings

On December 18, 1997, Argus Management, Inc. filed 
Plaintiff's Original Petition in the 216th District Court of 
Kerr County, Texas.  Argus claims the Company and Mr. Jose G. 
Chavez, as joint obligors, defaulted on their obligation to 
Argus pursuant to two promissory notes for $100,000 each, 
both dated June 2, 1997.  Argus is seeking a judgment for 
$200,000, together with interest on the notes at the rate of 
20% per annum from June 2, 1997, through the date the notes 
are satisfied.  As of June 30, 1998, $65,000 had been 
disbursed to third parties in satisfaction of obligations of 
Argus Management, Inc. The $65,000 has been recorded in other 
receivables in the accompanying financial statements.

On February 6, 1998, the Company filed Plaintiff's Original 
Petition in the above-referenced case.  The Company asserts 
breach of contract, fraud, defamation, usury, and civil 
conspiracy claims against Argus Management, Inc.  The Company 
strongly disagrees with Argus' contentions and denies 
liability to Argus under the notes and plans to oppose 
vigorously Argus' claims.  

A lawsuit was filed by Manpower, Inc. to preserve its claims 
for certain delinquent obligations that were reduced to 
approximately $38,000.  The full amount of the principal and 
interest was paid on April 29, 1998, and a Notice of 
Dismissal was filed on May 8, 1998.

On January 22, 1998, the Company filed a lawsuit against Bits 
Technical Corporation for damages attributable to a breach of 
commitment.  This matter is still pending.


Item 2: Changes in Securities

From April 22, 1998 to July 2, 1998, the Company completed the 
private placement of 279,657 shares of Series D Preferred Stock, 
Stated Value $10.60 per share all to "accredited Investors" as 
that term is defined in rule 501(a) of Regulation D Promulgated 
under the Securities Act of 1933, as amended.

The company is obligated to issue up to 1,500,000 shares of 
common stock to employees and consultants.

Item 3: Defaults on Senior Securities

None

Item 4: Submission of matters to a vote of the security holders

None

Item 5: Other Matters

None




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the 
Securities Exchange Act of 1934, the Registrant has duly caused 
this Report to be signed on its behalf by the undersigned, 
thereunto duly authorized.





Date____8/14/1998_        By /s/ Jose G Chavez
                                 Jose G. Chavez, President


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

Signature                      Capacity                    Date

/s/ Jose G Chavez                                    8/14/1998
Jose G. Chavez           Chairman of the Board of        
                          Directors and President

/s/ Mitchell Kettrick                                8/14/1998
Mitchell Kettrick        Vice-President and Director     


/s/ Stephen Hoelscher                                8/14/1998
Stephen Hoelscher, CPA           Controller             

/s/ David Hill                                       8/14/1998
David Hill                  Chief Financial Officer

/s/ Ernesto Chavarria                                8/14/1998
Ernesto Chavarria            Director