UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB



(Mark One)

[X      ]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1998

[       ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE 
ACT
For the transition period from __________ to __________

Commission file number 0-12551

               CREATIVE COMPUTER APPLICATIONS, INC.
               (Exact name of small business issuer
                  as specified in its charter)

California                                95-3353465
(State or other jurisdiction of        (I.R.S. Employer
incorporation or organization)         Identification No.)


26115-A Mureau Road, Calabasas, California 91302
(Address of principal executive offices)

(818) 880-6700
Issuer's telephone number:


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 reports), and (2) has been subject to such 
filing requirements for the past 90 days.

	Yes	X		No	

State the number of shares outstanding of each of the 
issuer's classes of common equity, as of the latest practicable 
date:  2,912,540 common shares as of July 6, 1998

Transitional Small Business Disclosure Format (check one):

	Yes			No	X



CREATIVE COMPUTER APPLICATIONS, INC.

FORM 10-QSB


I N D E X
                                    

PART I - Financial Information:                         PAGE

Condensed Balance Sheets at May 31, 1998
and August 31, 1997                                      3

Condensed Statements of Operation for the
three months ended May 31, 1998 and May 31, 1997         4

Condensed Statements of Operation for the
nine months ended May 31, 1998 and May 31, 1997          5

Condensed Statements of Cash Flows for the
nine months ended May 31, 1998 and May 31, 1997          6

Notes to Condensed Financial Statements                  7

Management's Discussion and Analysis                     7


PART II - Other Information:

Items 1 through 6                                        9

Signatures                                              10


CREATIVE COMPUTER APPLICATIONS, INC.


PART 1 - FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS
____________________________________

<TABLE>
<CAPTION>

<S>                                            <C>             <C>
                                                  May 31,        August 31,
                                                   1998            1997  *
                                                (Unaudited)

                             ASSETS
CURRENT ASSETS:
    Cash                                       $   368,149   $     534,430
    Receivables                                  1,777,761       1,933,685
    Inventories                                    731,272         675,795
    Prepaid expenses and other assets              102,927         78,951
    Deferred tax asset                             427,000         427,000

            TOTAL CURRENT ASSETS                 3,407,109       3,649,861

PROPERTY AND EQUIPMENT, net                        662,648         551,413
INVENTORY OF COMPONENT PARTS                       104,857         136,357
CAPITALIZED SOFTWARE COSTS, net of
  accumulated
    amortization of $450,902
     and $286,907                                1,051,941         917,937
INTANGIBLES, net                                   271,068         264,381
OTHER ASSETS                                         9,727          21,965
DEFERRED TAX ASSET                                 551,200         551,200

                TOTAL ASSETS                   $ 6,058,550   $   6,093,114

   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Notes payable to bank (Note 4)             $   620,000   $     287,296
    Accounts payable                               451,011         522,808
    Royalty obligation                              66,220               -
    Accrued liabilities:
         Vacation Pay                              196,677         187,367
         Other                                     320,007         363,027
    Deferred service contract income               709,667         569,734
    Deferred revenue                               470,681               -
    Capital lease obligations,
      current portion                                6,129          16,572

  TOTAL CURRENT LIABILITIES                      2,840,392       1,946,804

NOTES PAYABLE TO BANK, NET
  OF CURRENT PORTION                                21,609               0
CAPITAL LEASE OBLIGATIONS,
  net of current portion                                 0           4,679
DEFERRED RENT                                            0           5,034

   TOTAL LIABILITIES                             2,862,001       1,956,517

SHAREHOLDERS' EQUITY:
   Preferred shares, no par value;
     500,000 shares authorized; no
      shares outstanding                                 -               -
   Common shares, no par value;
     20,000,000 shares authorized;
      2,912,540 and 2,849,865 shares
        outstanding                              5,821,802       5,752,635
        Accumulated deficit                     (2,625,253)     (1,616,038)
    TOTAL SHAREHOLDERS' EQUITY                   3,196,549       4,136,597

                                               $ 6,058,550   $   6,093,114
</TABLE>

See Notes to Financial Statements.
* As presented in the audited financial statements



CREATIVE COMPUTER APPLICATIONS, INC.


CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

<S>                                            <C>                 <C>

                                                Three Months Ended May 31,
                                                   1998            1997

				                	(unaudited)
	
NET SYSTEM SALES AND SERVICE REVENUE
        System sales                           $   827,561   $   1,223,380
        Service revenue                            591,175         512,291
                                                 1,418,736       1,735,671

COST OF SALES AND SERVICES
        Systems                                    700,662         556,206
        Services                                   399,242         362,154
                                                 1,099,904         918,360

        Gross profit                               318,832         817,311

OPERATING EXPENSES:
  Selling, general and administrative              612,504         572,291

        Research and development                   165,666         146,115

                                                   778,170         718,406

        Operating income (Loss)                   (459,338)         98,905

INTEREST AND OTHER INCOME                            1,858          39,956

INTEREST EXPENSE                                   (17,577)         (9,341)

  Income (Loss) before taxes on income            (475,057)        129,520

TAXES ON INCOME                                          0          (2,000)

NET INCOME (LOSS)                              $  (475,057)  $     127,520

EARNINGS (LOSS) PER COMMON SHARE (Note 2):

        Basic                                 ($       .16)  $         .04
        Diluted                               ($       .16)  $         .04

WEIGHTED AVERAGE NUMBER OF COMMON
	SHARES AND COMMON STOCK 
	EQUIVALENTS OUTSTANDING	

        Basic                                    2,912,540       2,835,698
        Diluted                                  2,912,540       3,038,984

</TABLE>



See Notes to Financial Statements. 


CREATIVE COMPUTER APPLICATIONS, INC.


CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

<S>                                             <C>               <C>

                                                 Nine Months Ended May 31, 
                                                   1998           1997

                                                      (unaudited)



NET SYSTEM SALES AND SERVICE REVENUE
   System sales                                $ 2,793,677   $   3,726,836
   Service revenue                               1,719,558       1,582,971
                                                 4,513,235       5,309,807

COST OF SALES AND SERVICES
   Systems                                       2,007,212       1,786,511
   Services                                      1,126,099       1,012,847
                                                 3,133,311       2,799,358

   Gross profit                                  1,379,924       2,510,449

OPERATING EXPENSES:
   Selling, general and administrative           1,853,884       1,746,591

   Research and development                        486,791         414,718

                                                 2,340,675       2,161,309

   Operating income (Loss)                        (960,751)        349,140

INTEREST AND OTHER INCOME                            3,004          42,500

INTEREST EXPENSE                                   (37,317)        (25,829)

LOSS ON INVESTMENT                                 (14,151)              -

   Income (Loss) before taxes on income         (1,009,215)        365,811

TAXES ON INCOME                                          0         (11,200)

NET INCOME (LOSS)                              $(1,009,215)  $     354,611

EARNINGS (LOSS) PER COMMON SHARE (Note 2):
   Basic                                      ($       .35)  $         .13
   Diluted                                    ($       .35)  $         .12

WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES AND COMMON STOCK 
     EQUIVALENTS OUTSTANDING

   Basic                                         2,894,423       2,830,698
   Diluted                                       2,894,423       3,012,782
</TABLE>




See Notes to Financial Statements. 


CREATIVE COMPUTER APPLICATIONS, INC.


CONDENSED STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash

<TABLE>
<CAPTION>

<S>                                             <C>                <C>
      
                                                Nine Months Ended May 31,
                                                  1998             1997

                                                        (unaudited)

OPERATING ACTIVITIES:
   Net income (loss)                          $ (1,009,215)  $     354,611
   Adjustments to reconcile
    net income (loss)
       to net cash provided by
        (used in) operating activities:
            Depreciation and amortization          369,070         340,133
            Provision for possible losses           22,809           2,777
   Changes in operating assets and
     liabilities:
        Receivables                                133,115        (484,713)
        Inventories                                (55,477)         14,861
        Prepaid expenses and other assets          (14,858)        (59,682)
        Accounts payable                           (71,797)         96,525
        Other liabilities                          576,904         177,342

         Net cash provided by (used in)
             operating activities                  (49,449)        441,854

INVESTING ACTIVITIES 
   Additions to property and equipment            (244,064)       (190,193)
   Additions to intangibles                        (49,346)              -
   Capitalized software costs                     (298,000)       (288,000)
       Net cash used in investing
           activities                             (591,410)       (478,193)

FINANCING ACTIVITIES:
   Additions to notes payable, net                 420,533         125,421
   Decrease in capital lease obligations,
      net of payments                              (15,122)        (22,161)
   Proceeds from exercise of stock options          69,167          38,065
        Net cash provided by financing
           activities                              474,578         141,325

NET INCREASE (DECREASE) IN CASH                   (166,281)        104,986

Cash, beginning of period                          534,430         253,201

Cash, end of period                            $   368,149   $     358,187

</TABLE>



See notes to financial statements.


CREATIVE COMPUTER APPLICATIONS, INC.


NOTES TO CONDENSED FINANCIAL STATEMENTS


Note 1.      In the opinion of management, the accompanying 
             unaudited condensed financial statements reflect 
             all adjustments (which include only normal 
             recurring accruals) necessary to present fairly the 
             Company's financial position as of May 31, 1998 and 
             August 31, 1997, the results of its operations for 
             the three months and nine months ended May 31, 1998 
             and May 31, 1997, and cash flows for the nine months 
             ended May 31, 1998 and May 31, 1997.


Note 2.      The Company adopted SFAS No. 128, "Earnings Per 
             Share,".  SFAS No. 128 requires presentation of 
             basic and diluted earnings per share.  Basic 
             earnings per share is computed by dividing income 
             or loss available to common shareholders by the 
             weighted average number of common shares 
             outstanding for the reporting period.  Diluted 
             earnings per share reflects the potential dilution 
             that could occur if securities or other contracts, 
             such as stock options, to issue common stock were 
             exercised or converted into common stock.  All 
             prior period weighted average and per share 
             information has been restated in accordance with 
             SFAS No. 128.


Note 3.      The Company elected early adoption of Statement of 
             Position 97-2, "Software Revenue Recognition", 
             ("SOP 97-2").  SOP 97-2 supersedes SOP 91-1 
             regarding software revenue recognition.  SOP 97-2 
             required the Company to change the method of 
             recognizing revenues on software sales and related 
             services, in accordance with SOP 97-2.  The SOP 
             requires companies to recognize revenue when (i) 
             persuasive evidence of an arrangement exists, (ii) 
             delivery has occurred, (iii) the vendor's fee is 
             fixed and determinable, and (iv) collectability is 
             probable.  The SOP also requires companies to 
             allocate the fee on a multiple element contract 
             between the various elements based on vendor-
             specific objective evidence of fair value.  The 
             impact of this adoption was recorded in the 
             Company's Statements of Operations during the three 
             months ended February 28, 1998 and the nine months ended 
             May 31, 1998.


Note 4.      Subsequent to August 31, 1997, the Company borrowed 
             on its line of credit with its bank.  The funds 
             were used for working capital and capital 
             expenditures.  The outstanding balance is 
             approximately $640,000.  The Company was not in 
             compliance with all covenants and financial ratios 
             required by its bank as of May 31, 1998, but it 
             believes it can cure such deficiencies or obtain a 
             waiver from its bank.



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

		This following section of the report contains 
forward-looking statements within the meaning of the Private 
Securities Litigation Reform Act of 1995.  Such forward-looking 
statements involve risks and uncertainties so that the actual 
results may vary materially.


Results of Operations

		In October 1997 the American Institute of Certified 
Public Accountants issued Statement of Position (SOP) 97-2, Software 
Revenue Recognition, which became effective for fiscal years 
beginning after December 15, 1997 although earlier adoption was 
recommended.  The new SOP affects all companies that sell software 
and provide related services.  Its provisions necessitate 
significant modifications in the way the Company structures software 
transactions and reports revenues from those activities.  Because 
SOP 97-2 significantly changes the way in which the Company accounts 
for the sale of its Clinical Information Systems, management decided 
to adopt the change in accounting method immediately on January 
1,1998 instead of waiting until the beginning of its next fiscal 
year.  The Company expects that the change in accounting method will 
significantly impact the recording of revenues and its results of 
operations for the next one to two quarters beyond the second 
quarter ended February 28, 1998.

		SOP 97-2 requires that the Company modify its 
revenue recognition policies on a going forward basis and no 
restatement of prior periods is required.  Accordingly the following 
discussion takes into consideration the effect of SOP 97-2 for the 
current periods only and therefore the comparisons are not fully 
representative  The change in accounting method brought about by SOP 
97-2 primarily affects reporting of revenues from the sale of the 
Company's CIS products and related data acquisition products bundled 
into CIS transactions.  All other components of the Company's 
business from which it derives revenues were already compliant with 
the provisions of SOP 97-2.  Under the SOP 97-2 guidelines revenues 
from the sale of the Company's CIS products will be recognized as 
hardware and standard software is delivered to a customer, custom 
software such as interfaces to other vendors systems will be 
recognized when delivered and operational, and revenues associated 
with the  installation and implementation of systems will be 
recognized as the services are performed.  Other provisions of the 
SOP that require, among other things, a 

CREATIVE COMPUTER APPLICATIONS, INC.


defined contract and definitive sales price have been met by the 
Company's internal sales policies that were already in place for 
many years.

		Sales for the third quarter of fiscal 1998 ended 
May 31, 1998 decreased by $316,935 or 18% compared to the same 
quarter of fiscal 1997.  For the nine-month period ended May 31, 
1998 sales decreased $796,572 or 15% compared to the same period in 
fiscal 1997.  When analyzed by product category for the quarter and 
nine month periods, sales of Clinical Information Systems (CIS)decreased 
$261,310 or 27% and $586,435 or 20% respectively, sales of data 
acquisition products decreased $127,081 or 57% and $334,807 or 44% 
respectively, and service revenues increased by $78,884 or 15% and 
$136,587 or 9% respectively.

		The decrease in revenues associated with the 
Companies CIS products was primarily attributable to the deferral of 
a portion of its revenues of approximately $470,000 to subsequent 
periods in accordance with SOP 97-2.  These revenues will be 
recognized as products are delivered and implementation services are 
performed.  The decrease in the sale of data acquisition products is 
primarily attributable to a lower number of units shipped to OEM 
customers, and the deferral of some shipments to subsequent periods 
under the SOP guidelines.  The increase in service revenues was 
attributable to a greater number of customer sites on contract.

		Cost of sales for the third quarter and nine month 
period ended May 31, 1998 increased by $181,544 or 20% and $333,953 
or 12% respectively as compared to the same quarter and nine month 
period of 1997.  For the quarter and nine month period the increase 
in costs of sales was primarily attributable to an increase in labor 
costs of $108,928 or 31% and $340,567 or 34% respectively, and 
increases in other costs of $37,380 or 11% and $120,327 or 12% 
respectively.  Material costs increased $35,236 or 15% for the 
quarter compared to the same quarter of 1997, and material costs 
decreased $126,941 or 16% compared to the same nine month period in 
1997. The increase in material costs in the three months ending May 
31, 1998, is attributable to a lesser volume of software revenues in 
the quarter, in part due to the deferral of a portion of such 
revenues to subsequent periods.  The decrease in material costs for 
the nine months ending May 31, 1998, compared to the same period of 
fiscal 1997, is attributable to a greater volume of software only 
revenues that improve gross margins and a lower volume of sales of 
Clinical Information Systems.

		The overall increases in labor costs were attributable to a 
conversion of temporary personnel to full-time status and the hiring 
of additional trainers and managers to handle an anticipated 
increase in sales of Clinical Information Systems.

		Selling and administration expenses increased 
$40,213 or 7% and $107,293 or 6% in comparing the current quarter 
and nine months ending May 31, 1998 with the same periods of fiscal 
1997.  The increase was primarily attributable to planned 
expenditures in sales and marketing associated with the Company's 
CIS products.  Management anticipates the increased level of sales 
and marketing expenditures to continue through the remaining of the 
fiscal year 1998 as the Company expands its sales and marketing activities 
related to the sale of its CIS products across a broader market 
spectrum.

		Research and Development expense increased $19,551 
or 13% and $72,073 or 17% for the current quarter and nine months 
ending May 31, 1998 compared to the same periods of fiscal 1997.  
The increases were primarily attributable to a greater amount of 
labor costs incurred in the current periods due to a number of new 
software products in development.

		As a result of the aggregate factors discussed 
above the Company incurred net losses of $475,057 or basic and 
diluted loss per share of $.16 and $1,009,215 or basic and diluted 
loss of $.35 per share for the current quarter and nine month period 
ending May 31, 1998 compared to net income of $127,520 or basic and 
diluted earnings per share of $.04, and a net income of $354,611 or 
basic and diluted earnings per share of $.13 and $.12 respectively 
in the comparable quarter and nine month period one year ago.


Capital Resources and Liquidity

                As of May 31, 1998, the Company's working capital 
amounted to $556,717 compared to $1,703,057 at August 31, 1997.  The 
ratio of the Company's current assets to current liabilities was 
approximately 1.2 to 1 at May 31, 1998 compared to 1.9 to 1 at 
August 31, 1997.

                The Company's bank line of credit as of May 31, 
1998 amounted to approximately $740,000, of that amount $642,000 was 
outstanding as of that date.  The Company was not in compliance with 
all covenants and financial ratios required by its bank as of May 31, 
1998 but it believes it can cure such deficiencies or obtain a waiver 
from its bank.

CREATIVE COMPUTER APPLICATIONS, INC.


		The Company believes that its cash flows from 
operations together with its bank credit facilities should be 
sufficient to fund its working capital requirements for its 1998 
fiscal year.


Seasonality, Inflation and Industry Trends

		The Company sales are generally lower in the summer 
and higher in the fall and winter.  Inflation has had no material 
effect on the Company business since the Company has been able to 
adjust the prices of its products and services.  Management  
believes that most phases of the healthcare segment of the computer 
systems industry will continue to be competitive and that the 
changes making place in healthcare will have a long term positive 
impact on its business.  In addition, management believes that the 
industry will experience more significant technological advances 
which will improve the quality of service and reduce costs.  The 
Company is poised to meet these challenges by continuing to employ 
new technologies when they become available, diversifying its 
product offerings, and by constantly enhancing its software 
applications.


PART II - OTHER INFORMATION


Items 1 through 5.  NOT APPLICABLE.


Item 6.	Exhibits and Reports on Forms 8-K

(a)	Exhibit 11 - Statement re: computation of per share 
                     earnings.

        Exhibit 27 - Financial Data Schedule.

(b)	There were no reports filed on Form 8-K during
	the quarter ended May 31, 1998.


CREATIVE COMPUTER APPLICATIONS, INC.


SIGNATURES


In accordance with the requirements of the Exchange Act, the Company 
caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.


CREATIVE COMPUTER APPLICATIONS, INC.
(Company)


Date:	July 10, 1998		/S/  Steven M. Besbeck
				Steven. M. Besbeck, President
				Chief Executive Officer, Chief
				Financial Officer



Date:	July 10, 1998		/S/  Carol Bessel
				Carol Bessel
				Controller and Chief 
                                Accounting Officer


CREATIVE COMPUTER APPLICATIONS, INC.


COMPUTATION OF EARNINGS PER COMMON SHARE

Exhibit 11

<TABLE>
<CAPTION>

<S>                        <C>            <C>             <C>         <C>

                             Nine Months Ended          Three Months Ended
                                    May 31,                  May 31,

                             1998          1997         1998          1997


AVERAGE MARKET PRICE
 PER SHARE                $     1.57   $      1.85   $     1.39    $     1.94


NET INCOME (LOSS)        ($1,009,215)  $   354,611  ($  475,057)   $  127,520

BASIC EARNINGS
 PER SHARE:
   Weighted average
    number of common
    shares outstanding     2,894,423     2,830,698    2,912,540     2,835,698

   Basic earnings
    per share:           ($      .35)  $       .13  ($      .16)   $      .04


DILUTED EARNINGS
  PER SHARE:
 Shares:
  Weighted average
     number of common
     shares outstanding    2,894,423     2,830,698    2,912,540     2,835,698
  Shares issuable upon
   exercise of options
   and warrants                    0       638,000            0       648,000
  Shares assumed to be
   repurchased under the
   treasury stock
   method (1) (2)                  0  (    455,916)           0   (   444,714)
  Adjusted weighted
   average number of
   common shares
   outstanding             2,894,423     3,012,782    2,912,540     3,038,984

  Diluted earnings
   per share:            ($      .35)  $       .12  ($      .16)   $      .04

</TABLE>






(1)    Shares assumed to be repurchased under the treasury stock 
       method using the average market price.


(2)    Options to purchase 851,755 shares were outstanding at May 
       31, 1998, but were not included in the computation
       Of diluted loss per common share because the effect 
       would be anti-dilutive.


<TABLE>
<CAPTION>

<S>                                   <C>

[ARTICLE]	5
[RESTATED]

</TABLE>
<TABLE>
<S>                                   <C>
[PERIOD-TYPE]		9-MOS
[FISCAL-YEAR-END]                     AUG-31-1997
[PERIOD-END]                          MAY-31-1997
[CASH]                                     358187
[SECURITIES]                                    0
[RECEIVABLES]                             2160500
[ALLOWANCES]                                    0
[INVENTORY]                                627926
[CURRENT-ASSETS]                          3707525
[PP&E]                                    1636385
[DEPRECIATION]                            1098019
[TOTAL-ASSETS]                            5584377
[CURRENT-LIABILITIES]                     1965456
[BONDS]                                         0
[PREFERRED-MANDATORY]                           0
[PREFERRED]                                     0
[COMMON]                                  5752635
[OTHER-SE]                               (2152427)
[TOTAL-LIABILITY-AND-EQUITY]              5584377
[SALES]                                   5309807
<TOTAL REVENUES>                          5352307
[CGS]                                     2799358
[TOTAL-COSTS]				  4960667
[OTHER-EXPENSES]                                0
[LOSS-PROVISION]                                0
[INTEREST-EXPENSE]			    25829
[INCOME-PRETAX]				   365811
[INCOME-TAX]				    11200
[INCOME-CONTINUING]			   354611
[DISCONTINUED]				        0
[EXTRAORDINARY]				        0
[CHANGES]				        0
[NET-INCOME]				   354611
[EPS-PRIMARY]				      .13
[EPS-DILUTED]				      .12
</TABLE>


CREATIVE COMPUTER APPLICATIONS, INC.