U.S. SECURITIES AND EXCHANGE   COMMISSION
                            WASHINGTON, D.C. 20549
                                  FORM 10-KSB

[X]  ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE  ACT  OF  1934  For  the  Fiscal  Year  Ended  December 28, 1997
[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934  FOR  THE TRANSITION PERIOD FROM _______________ TO ______

                        Commission File Number 0-24768

                             MEDIX RESOURCES, INC.
                (Formerly INTERNATIONAL NURSING SERVICES, INC.)
                (Name of small business issuer in its charter)

     Colorado                                           84-1123311
(State  or  Other  Jurisdiction of                    (IRS Employer
Incorporation  or  Organization                     Identification  No.)

                     Suite 400, 360 South Garfield Street
                            Denver, Colorado 80209
                   (Address of Principal Executive Offices)

                 Issuer's Telephone  Number:  (303)  393-1515

      Securities Registered Under Section 12(b) of the Exchange Act: None

        Securities Registered Under Section 12(g) of the Exchange Act:

                        Common Stock.  $.001 Par Value;
                    1994 Warrants to Purchase Common Stock

Check whether the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Securities 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  [  ]

Check  if  there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to  the  best  of  registrant's  knowledge, in definitive proxy or information
statements  incorporated  by  reference in Part III of this Form 10-KSB or any
amendment  to  this  Form  10-KSB.[    ]

Registrant's  revenues  for  its  most  recent  fiscal  year:    $24,875,000

The  aggregate  market  value  of  the  registrant's  Common  Stock  held  by
non-affiliates  of  the  registrant  as  of  March  24, 1998 was approximately
$6,219,000  (for  purposes  of  the  foregoing  calculation  only, each of the
registrant's  officers  and  directors  is  deemed  to  be  an  affiliate).

There  were  20,343,787  shares of registrant's Common Stock outstanding as of
March  24,  1998.

DOCUMENTS  INCORPORATED  BY  REFERENCE:  Portions  of  the  registrant's Proxy
Statement  that  will  be filed with the Securities and Exchange Commission in
connection  with  the  registrant's  annual  meeting  of  stockholders  are
incorporated  by  reference  into  Part  III  of  this  Form  10-KSB.

Transitional  Small  Business  Disclosure  Format (Check one): Yes [ ]  No [X]

<PAGE>
                                    ------
                               TABLE OF CONTENTS


PART  I                                                             3

ITEM  1.     DESCRIPTION  OF  BUSINESS                              3
ITEM  2      DESCRIPTION  OF  PROPERTY                             12
ITEM  3.     LEGAL  PROCEEDINGS                                    12
ITEM  4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS   14

PART  II                                                           15

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED
              STOCKHOLDER  MATTERS                                 15
ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN
              OF  OPERATION                                        15
ITEM  7.     FINANCIAL  STATEMENTS                                 27
ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS
              ON  ACCOUNTING  AND  FINANCIAL  DISCLOSURE           27

PART  III                                                          28

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND
              CONTROL  PERSONS;  COMPLIANCE  WITH  SECTION
              16(A)  OF  THE  EXCHANGE  ACT                        28
ITEM  10.    EXECUTIVE  COMPENSATION                               29
ITEM  11.    SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS
              AND  AGREEMENT                                       35
ITEM  12.    CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS       35
ITEM  13.    EXHIBITS  AND  REPORTS  ON  FORM  8-K                 36


<PAGE>

                                    PART I
                                    ------

ITEM  1.      DESCRIPTION  OF  BUSINESS

GENERAL

     Medix  Resources,  Inc.,  a  Colorado  corporation,  formerly  known  as
International  Nursing Services, Inc. (the "Company"), has two principal lines
of  business,  healthcare  services  and  medical  information  software.

      The Company, doing business as National Care Resources, STAT Health Care
Services,  Ellis  Health  Services,  and  TherAmerica,  Inc., provides skilled
nursing,  therapists,  rehabilitation  and  other  medical  personnel  for
supplemental  staffing in home care and in a broad spectrum of health care and
educational  facilities.    The  Company's  supplemental staffing services are
provided  through  a pool of approximately 1,500 caregivers including licensed
and registered nurses, rehabilitation, physical, respiratory, occupational and
speech  therapists,  medical  social  workers,  home  care  aides  and  other
unlicensed  personnel.    The  Company's  supplemental  and  home  care  staff
currently serves over 500 hospitals, clinics, nursing homes, physician groups,
assisted  living facilities, health maintenance organizations and other health
care  institutions,  a  variety  of educational facilities and individual home
care  clients. The Company operates through offices located in Yonkers and the
Bronx,  New  York,  Houston  and  San  Antonio, Texas, Emoryville and Ontario,
California,  and  Denver  and  Englewood,  Colorado.    The  Company currently
provides  supplemental  staffing  services  and therapists in New York, Texas,
Colorado  and  California.    Travel  nurses  and  therapists  are provided in
seventeen  states  and  the  District  of  Columbia.

     The Company recently acquired Cymedix Corporation, which has developed an
Internet-based  communications  and  information  management  product, Cymedix
Lynx,  which  the Company began marketing to medical professionals nationwide.
Growth  of  the  medical information management marketplace is being driven by
the  need  to  share  significant  amounts  of clinical and patent information
between  physicians,  their outpatient service providers, hospitals, insurance
companies  and  managed  care  organizations.    This  market  is  one  of the
fastest-growing sectors in healthcare today, commanding a projected two-thirds
of  health  care  capital  investments.    Cymedix  Lynx  is  a secure medical
communications product, with patent application pending, that makes use of the
Internet.   Using Cymedix Lynx, medical professionals can order, prescribe and
access  medical  information  from  insurance  companies  and  managed  care
organizations,  as  well as from any participating outpatient service provider
such  as  a  laboratory,  radiology center, pharmacy or hospital.  The Company
will  provide  its software free of charge to physicians and clinics, and will
collect  user  fees  whenever  these  products  connect  to the Internet.  The
product's relational database technology provides physicians with a permanent,
ongoing  record  of  each  patient's  name, address, insurance or managed care
affiliation, referral status, medical history, personalized notes and an audit
trail  of  past  encounters.    Physicians  can  electronically  order medical
procedures,  receive  and  store test results, check patient eligibility, make
medical  referrals, request authorizations, and report financial and encounter
information  in  a  cost-effective,  secure  and  timely  manner.

HISTORY  OF  THE  COMPANY;  PENDING  DISPOSITIONS

     The  Company was incorporated in the State of Colorado on April 22, 1988.
On  August 12, 1988, the Company completed a self-underwritten public offering
pursuant  to  which an aggregate of 150,100 units, each unit consisting of one
share  of common stock and one redeemable warrant, were offered and sold.  The
Company  received  gross proceeds of $150,100 from its initial public offering
of such units.  On September 19, 1994, the Company completed a public offering
of  225,000  Units, each Unit consisting of two shares of preferred stock, one
share  of  common  stock  and three 1994 Warrants.  This offering raised gross
proceeds of $5,287,500.  A portion of the proceeds of this public offering was
used  to  finance  the  Company's  acquisitions  in September, 1994 of certain
assets of Paxxon Services, Inc. ("Paxxon Services") and certain assets of Mint
Energy  Corporation,  doing business as Nurse Connection ("Nurse Connection").

     In  April  1996,  the  Company  acquired  certain  assets of Ellis Health
Services,  Inc.  ("Ellis").    The  purchase  price  for  the Ellis assets was
$1,025,000.    The  purchase  price  was paid by issuing 256,250 shares of the
Company's  common  stock and guaranteeing that the former owner of Ellis would
receive  at  least  $1,025,000 in proceeds from the sale of the shares.  Ellis
had  been  an  affiliated  company of Paxxon Services, Inc., which the Company
acquired  in  September,  1994.

     In  July  1996,  the  Company acquired certain assets of STAT Health Care
Services,  Inc. ("STAT") for a purchase price of approximately $2,145,000. The
purchase  price  was  paid $1,550,000 in cash, approximately $468,500 worth of
common  stock of the Company and warrants to purchase 125,000 shares of common
stock  at  $1.88  per  share,  which  have  since  expired.

     In  January  1997,  the  Company  acquired  certain  assets  of  Colorado
Therapists  On Call, Inc. ("CTOC") and Professional Healthcare Providers, Inc.
("PHP"),  together doing business under the name TherAmerica  ("TherAmerica").
The  acquisition was effective January 1, 1997 and the Company paid $2,000,000
in  cash  and  assumed approximately $175,000 in liabilities for the assets of
TherAmerica,  with  the transaction being treated as a purchase for accounting
purposes.

     In  September  1997,  the Company sold its Denver home care and certified
medicare  provider  operations  for  $200,000  in  cash.

     In  October  1997,  the  Company  sold  the assets and business of Paxxon
Services,  one  of  its  New  York  operations.   At the same time the Company
entered into a definitive agreement to sell the other two New York operations,
Ellis  and STAT, for $2,080,000 in cash, subject to approval by New York State
licensing  authorities and other closing conditions, which can not be assured.
The  three  New  York operations provided approximately $10,262,000 in revenue
for  the  1997  fiscal  year.  The sale of these operations will substantially
reduce  the  Company's  revenues.

      In  January 1998, the Company acquired Cymedix Corporation, a California
corporation  ("Cymedix")  which was merged into the Company's own wholly-owned
subsidiary,  Cymedix Lynx Corporation, a Colorado corporation, and the Company
issued  or  committed  to  issue  6,980,000  shares of its Common Stock to the
shareholders  of  Cymedix  and  granted or committed to grant options covering
1,200,000 shares of the Company's Common Stock to employees of the subsidiary.
The  Company  has  agreed  to  file  a  registration  statement  with the U.S.
Securities  and Exchange Commission by April 20, 1998, to register such shares
to  permit  them  to  be  sold  into  the  public  market.

     The  Company  may  pursue  other possible acquisitions or dispositions as
opportunities  are  presented.   All such future transactions will be, and the
above  described current dispositions are, subject to definitive documentation
which will and do contain certain closing conditions, including  obtaining the
necessary  financing.   There can be no assurance that the necessary financing
will  be  obtained  or that other conditions to closing will be satisfied.  In
addition, there can be no assurance that the Company will consummate either of
the  currently  contracted  dispositions  discussed  above.  See "MANAGEMENT'S
DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION  -  Overview."

HEALTHCARE  SERVICES

Overview.   The Company provides medical supplemental staffing, principally to
--------
healthcare  institutions  in the form of either staffing done on a daily basis
or  through  travel  nurse  assignments  that  are generally thirteen weeks or
longer  in length.  Health care institutions use supplemental staffing for the
following  reasons:

  Local  and  regional  health  care  worker  shortages;
  Episodic  needs  for  specialty health care during specific disease
    epidemics;
  Increased  patient  acuity  mix  within  the  hospital  markets;
  Increases  in  labor  intensive  medical  care  technology;
  The  aging  of  the  population;
  Hospital trends to contain costs by cutting back staff positions to a
   minimal  level  and  supporting  periodic  increased  occupancy  rates with
   supplemental  staffing;
  Early  discharge  pressures  have  caused hospitals to provide more
   outpatient  and  home  health  care  programs;  and
  Numerous health care organizations have developed special or innovative
   arrangements  for  early  discharges, including both pre- and post-admission
   services.

     Proposals  to  reform  the United States healthcare system have been made
from  time to time over the last decade, and can be expected to be made in the
future.    Legislation  at  both  the  federal and state levels have increased
government  involvement  in  health care, lowered reimbursement rates, limited
capital  expenditures  and otherwise changed the operating environment for the
Company's customers.  Future legislation to enact current and future proposals
can  be  expected.   Healthcare facilities have reacted to these proposals and
legislation  and  the  uncertainty  surrounding  them by curtailing the use of
flexible  staff,  which adversely affects the Company's business.  The Company
cannot  predict  with  any  certainty  what  impact,  if  any,  proposals  for
healthcare  reforms  might  have  on  the  Company's  business. The healthcare
industry  is subject to changing political, economic and regulatory influences
that  may  affect  the  procurement  practices and operations of hospitals and
other healthcare facilities. In addition, major third party payers of hospital
services  (insurance  companies,  Medicare  and  Medicaid)  have significantly
revised  payment  procedures in an effort to contain health care costs.  These
developments  could  negatively  impact  the  Company's  operations.

Business Strategy  The Company's strategy is to provide comprehensive services
-----------------
to  patients  located  in  hospitals,  health  care  organizations, and homes.
Staffing  is  provided  in  homes,  school  settings,  hospitals,  clinics and
physician  offices  utilizing  a  supplemental  diversified mix of traditional
nursing  and  other  allied  health  care  professionals  such  as  physical,
occupational  and respiratory therapists, home health aides, and other nursing
professionals.

     The  services provided by the Company bridge the gap between hospital and
home.  Frequently,  the same professionals caring for patients in the hospital
setting  are  involved  in  the care at home.  Healthcare institutions request
that  the  Company  provide  the  same  trained professional for both home and
hospital  health  care.    This  request  has  driven  the  Company to provide
supplemental  staffing,  travel  nurse  and  home  health  care in each of the
geographical  markets  that  the  Company  operates.

     Other  key  elements  of  the  Company's  strategy  include:

  Improvement  of  customer  relationships;
  Continued  contracting  and  marketing  efforts;  and
  Expansion  services  in  response  to  customer  demand.

     The foregoing business strategies include forward-looking statements, the
realization  of  which  are  subject  to  risks  and uncertainties that may be
impacted  by  certain  important  factors  discussed  elsewhere  herein.   See
"MANAGEMENT'S  DISCUSSION  AND ANALYSIS OR PLAN OF OPERATION - Forward-Looking
Statements  and  Associated  Risks".

Customers.  The Company's customers include, but are not limited to, patients,
---------
hospitals,  physicians,  third  party payers, educational facilities and other
types  of  health  care  organizations.    Billing,  payment  arrangements and
staffing  agreements  with the Company's customers are stipulated by contracts
with  the  customer.   The contracts are not exclusive and do not obligate the
customer  to  utilize  a  certain amount of service for any specific period of
time.    Customers  often  use  several supplemental staffing agencies to meet
their  needs  and  the  Company  competes  with these agencies on the basis of
pricing,  availability  of  caregivers,  and  quality  of  service.

Services.    The  Company  offers  a  broad  range of professional and support
--------
services  to  meet medical and personal needs in the home or in health care or
------
educational  facilities.    The  following provides a brief description of the
services  customarily  provided  by  skilled  nursing  personnel  and  other
caregivers  placed  with  customers.

 Registered  Nurses  provide a broad range of nursing care services,
including  skilled  observation  and  assessment,  instruction  of  patients
regarding  medical  and  technical  procedures, direct hands-on treatment, and
communication  and  coordination with the attending physician or other service
agencies.

 Licensed Practical Nurses perform, under the supervision of a registered
nurse,  technical  nursing  procedures,  which  include  injections,  dressing
changes,  assistance  with  ambulation  and  catheter  care.

 Physical and Rehabilitation Therapists provide services related to the
reduction of pain and improved rehabilitation of joints and muscles, including
strengthening  and  range-of-motion  exercises, heat lamp therapy and massage.

 Occupational Therapists assist patients in restoring their ability to
perform  routine  activities  of  daily living by offering instruction in self
care, discussing techniques for coping with physical disability and suggesting
the  use  of assistant devices or home adaption to make living at home easier.

 Speech Therapists retrain patients who have swallowing difficulties or
speech, language or hearing problems to improve their physical capabilities or
communication  abilities.

 Respiratory  Therapists  specialize in the prevention, assessment, treatment,
management,  and  rehabilitation  of individuals with respiratory disorders or
cardiopulmonary  disease.

 Home Health and certified Nurse Aides, working under the supervision of
a  registered nurse, provide health-related services and personal care such as
assistance  with  ambulation, limited range-of-motion exercises and monitoring
of  vital  signs.

 Homemakers/Companions provide personal care and assistance with daily
living  activities,  including  bathing, dressing, grooming, meal preparation,
light  housekeeping  and  occasional  shopping  for  essential  items.

 Rehabilitation Consulting provides medical and vocational counseling,
consulting, training and expert testimony to businesses, employee-patients and
disabled  individuals  in  connection  with physical disability rehabilitation
programs  and  obligations  under  the  Americans  with  Disabilities  Act.

Recruiting.    The Company is active in recruiting skilled nursing and therapy
----------
personnel and other caregivers in order to assure availability of personnel as
customer  demand  warrants.  Location of assignment, compensation and benefits
are  generally  the  principal  factors  considered  by medical personnel when
determining  whether to contract with a particular flexible staffing business.
To  date,  the  Company's  operations  have not been adversely affected by the
shortage  of  nurses  in  certain  geographical  regions  or  specialties.

     The  Company's ability to deliver quality nursing and therapy services is
dependent  upon  the  Company's  ability  to recruit qualified personnel.  The
Company's  recruiting  efforts include advertising, attendance at national and
regional conventions, personal and professional referrals and participation by
the  Company's  officers in nursing and other trade associations.  The Company
has  recruited and continues to recruit medical personnel and has entered into
agreements  with other staffing agencies whereby the Company can use the other
agency's personnel under contract.  The Company has compiled a listing of over
1,500  qualified  nurses  and  medical personnel who are classified by skills,
experience  and  availability  for assignment.  These nurses and other medical
personnel  generally do not work exclusively for the Company.  The Company has
in  the  past  been  generally successful in meeting its staffing requirements
from  its  existing  pool  of  caregivers  and,  in  cases  where a particular
specialty  or  expertise  was  unavailable, the Company has been successful in
hiring  personnel  on  a  subcontract  basis  from  other  flexible  staffing
companies.

Marketing  and Sales.  The Company's clientele currently consists of hospitals
--------------------
and  other  healthcare  and educational facilities located in New York, Texas,
California  and  Colorado  and  its  travel  nursing  and  therapist clientele
consists  of hospitals and other healthcare facilities in seventeen states and
the District of Columbia.  The Company has secured non-exclusive agreements to
supply  supplemental  staff  to  these  healthcare  facilities for a period of
between  one  and  two years. The Company derives a significant portion of its
business  through  its marketing efforts and expects to continue its marketing
efforts to local and regional hospital chains as the expected consolidation in
the  health  care industry is anticipated to result in an increasing number of
regional  and  national  hospital  chains.

     The  Company  markets  its  supplemental  staffing  services  principally
through direct contact with hospitals, direct mail, attendance at national and
regional  conventions  and  seminars and telephone solicitations.  In order to
increase  its penetration in the supplemental staffing market, the Company has
also  initiated  a program to include rehabilitation, physical and respiratory
therapists  for  placement  in hospitals and other health care and educational
facilities.  Management  anticipates  the Company will continue to develop its
marketing  programs.

     The  Company's  marketing  and  sales  strategy  consists  of  working to
increase  its shift count and improve its gross margins with existing clients,
bidding  competitively  on  new  contracts  and  continuing  to  expand  its
opportunities  to  place  its  personnel  at  non-traditional facilities.  The
Company  intends  to utilize the existing infrastructure in each of its branch
offices  to  expand  its  service  offerings  in  each  branch  office.

Competition.    The  Company's  supplemental  staffing businesses compete with
-----------
other  medical recruitment and supplemental staffing organizations which offer
the  same  or  similar  services  provided  by  the  Company.    Many of these
competitors  have  greater financial and other resources than are available to
the  Company.    Competition  for  hospital  and  other health care clients is
generally  based  on  the  ability  to  provide  qualified nurses and  medical
personnel  on  a  timely basis in a cost-competitive manner.  The Company also
experiences  competition  in  recruiting  for  nursing staff and other medical
personnel.

     The  Company believes the key competitive factors in its industry include
service,  price  and its ability to deliver staff to the geographic area where
needed.    The  range of specialized services offered, together with the price
charged  for the services, are also competitive factors in attracting clients.

Regulation.  The healthcare system in the United States is highly regulated at
----------
the  federal,  state  and  local  level.    The  object  of such regulation is
generally  quality  and,  more  recently,  cost  control.    Most  individual
healthcare  providers  are  required  to be licensed at the state level by the
states  in  which  they provide services.  As mentioned earlier, over the last
decade,  several  programs  have  been  proposed  to  reform the United States
healthcare  system,  and  certain legislation enacted at the federal and state
levels.   This legislation has generally increased governmental involvement in
healthcare.    Other  than  as  described  below, the Company, as it currently
operates,  is not required to be licensed by any governmental agency.  Most of
the Company's customers are licensed and the impact of governmental regulation
on  these customers has in the past and may in the future adversely affect the
Company's  operations.   There can be no assurance the Company will be able to
operate  profitably  in  the  current  regulatory  environment.

     Certain of the Company's operations have received, accreditation from the
Joint  Commission  on  Accreditation  of Healthcare Organizations ("JCAHO") to
evidence  the  Company's commitment to high service standards in its Bronx and
Yonkers  offices,  which  are  currently expected to be sold during 1998.  See
"History  of  the  Company;  Pending  Dispositions."  Management believes such
certification  provides  a  marketing advantage to the Company's home care and
rehabilitation  services,  although  there  is no assurance such certification
will be received by all of its offices.  If the proposed sale of the Bronx and
Yonkers  offices  is  completed,  none  of  the  Company's  remaining  offices
currently  are  accredited  by  JCAHO  and  no such accreditation is required.

     Several  states  have  enacted  legislation  requiring  providers  of
supplemental staffing services to publicly post their billing rates.  At least
one  state has adopted legislation that provides for regulatory review of such
billing rates.  The adoption of similar legislation by other states could have
an  adverse  impact  on  the  supplemental  staffing  industry.

     The  Company  is  subject  to  various  city,  county  and state payroll,
occupational  and  professional  licensing  laws  that  apply  to  medical
professionals.    Many states have statutes requiring training, monitoring and
regulating  of  medical  professionals.    The  Company  complies  with  such
requirements  as  applicable  to its operations and such requirements have not
adversely  impacted  the  Company.

<PAGE>

MEDICAL  INFORMATION  SOFTWARE

     In  January  1998,  the  Company  acquired  a  developer  of  software
applications  for  medical  information management.  The acquired business had
been  organized  in November 1995.  The Company's first two software products,
Cymedix  Lynx  and Sherpa  Universal Data Interface (Sherpa ), have just begun
to  be  marketed  to  the  medical  community.    Cymedix  Lynx manages remote
information  distribution  in  the  healthcare industry and Sherpa   Universal
Interface  manages information integration.  These two products, together with
their  relational  database  technology,  will  provide  physicians  with  a
permanent,  ongoing  record  of  their  patients'  insurance,  managed  care
affiliation,  referral status, medical history and diagnosis.  Cymedix Lynx is
Internet  based,  but  completely  secure,  and provides doctors with forms to
order  medical  procedures,  make  referrals  and check insurance eligibility.

Customers and Marketing. The marketing strategy for the LYNX products of the
-----------------------
Company's  subsidiary,  Cymedix  Lynx  Corporation, will focus on the direct
cost  savings  that  can be achieved by using the Internet as the platform for
medical  data  exchange  compared  to  the  current  manual and semi-automated
practices  of competitors, relying on a combination of mail, telephone, fax or
private  network  communications. The subsidiary will also emphasize the value
added  features  of  its LYNX software in making the flow of medical data more
efficient.

     Unlike its existing competitors that generally focus on software sales to
physicians,  the  Company's  subsidiary  will  market  LYNX  to  sponsoring
organizations  such  as  HMOs, hospital-based physicians networks and clinical
laboratories    that  can  offer the product to physicians without charge as a
cost  savings  connectivity solution for their routine transactions, including
medical  orders,  eligibility  checks,  authorization  of  care  and  doctor
referrals.  The subsidiary anticipates that its LYNX sponsors will charge fees
on  a  per transaction basis.  As a result, participants will only pay for the
product  when  it is used, and the Company's subsidiary will charge sponsors a
per  transaction  fee  based  on the type of transaction.  The twin drivers of
demand  for  the  LYNX products, a cost savings solution to an ongoing expense
and  the  low risk purchase decision inherent in this strategy are expected to
facilitate  early  adoption  of the LYNX products by sponsoring organizations.
As  part of its penetration pricing strategy, the Company plans to set fees at
a  30%  discount  to  current  alternatives  in  the  market  place.

     The  Company's subsidiary recently implemented distribution and licensing
arrangements  with  Global  Med  Technology, Inc.  As an established vendor of
drug  testing,  blood  bank  and  blood  donor  management software, Global is
expected  to provide Cymedix with access to its customer base for distribution
services  and  to  act  as  a  value  added  re-seller  under  the  licensing
arrangements,  with  potential royalties to the Company's subsidiary generated
from  the  sale of Global products incorporating the LYNX technology.  Because
this  arrangement  has  only  recently  been  entered into, the Company cannot
predict  at  this  time  the degree of the possible contributions Global could
make  to  Cymedix's  marketing  efforts.

Competition.  While  Cymedix  believes  it  is  the  first company to market a
-----------
product  for  clinical medical data exchange through Internet, competition can
be  expected  to  emerge  from  established  healthcare  information  vendors,
seeking  to  capitalize  on  Cymedix's  work  in  developing  and proving the
market.    The most likely competitors are companies with a focus on clinical
information  systems  and  enterprises with an Internet commerce or electronic
network  focus.    Many of these competitors will have access to substantially
greater  amounts  of capital resources than the Company has access to, for the
financing  of  technical,  manufacturing  and  marketing efforts.  Frequently,
these  competitors will have affiliations with major medical product companies
or  software developers, who will assist in the financing of such competitor's
product  development.    The  Company  will  seek to raise capital to develop
Cymedix products in a timely manner, however, so long as the operations of the
Company  remain  underfunded,  as they now are, the Company and its subsidiary
will  be  at  a  competitive  disadvantage.

Patents,  Trademarks  and  Licenses.    The Company's wholly-owned subsidiary,
-----------------------------------
Cymedix  Lynx,  has  filed  U.S.  patent  application,  Serial No. 08/950,328,
covering its Cymedix Lynx product, on October 14, 1997, and has made a related
filing  under  the  Patent Cooperation Treaty, Application No. PCT/US97/18675.
The  U.S.  application  is  currently  under  review  by  the  U.S. Patent and
Trademark  Office.    Whether  a  patent  will  be granted in response to such
application  or  the  scope of such patent can not be determined at this time.
This subsidiary has also filed applications with the U.S. Patent and Trademark
Office for trademark protection of certain "marks" used or to be used with its
software  products.  Regulatory  review  of such applications has not yet been
completed.    In addition, the subsidiary will file applications for copyright
registration with the U.S. Copyright Office of modular software components and
related  software  when it deems copyright protection is legally available and
in  the  best  interest of the Company.  No assurance can be given that any of
the  Company's  software  products  will  receive patent or other intellectual
property  protection.

Regulation.
----------
          The health care industry in the United States is subject to changing
political,  economic and regulatory influences that may affect the procurement
practices and operations of health care organizations. During the past several
years,  the  health  care  industry  has  been subject to increasing levels of
governmental  regulation  of,  among  other  things,  reimbursement  rates and
certain  capital  expenditures.  The Company cannot predict with any certainty
what  impact,  if  any, such increased regulation might have on its results of
operations,  financial condition or business.  In addition, Medicare has, from
time  to  time,  promulgated regulations concerning anti-fraud and (physician)
inducement  that  heretofore  have  not directly affected the marketing of the
Company's  software  and  similar products.  However, these regulations, which
are  usually  later  adopted by state-managed Medicaid plans have historically
created  uncertainty in the industry.  A current example is the Health insurance
Portability and Accountability Act of  1996  (HIPAA).  The Company is waiting
for the promulgation of the related regulations so that it may assess the
impact on its business.  It is unclear the effect, if any, these regulations
will have on the Company, its procuts or its clients.

          The  U.S. Food and Drug Administration (the "FDA") has promulgated a
draft  policy  for  the  regulation  of  certain computer software products as
medical  devices under the 1976 Medical Device Amendments to the Federal Food,
Drug and Cosmetic Act (the "FDC Act") and has recently indicated it may modify
such  draft  policy  or  create  a  new  policy.   To the extent that computer
software  is  a  medical  device  under  the policy, the manufacturers of such
products could be required, depending on the product, to (i) register and list
their  products  with the FDA, (ii) notify the FDA and demonstrate substantial
equivalence to other products on the market before marketing such products, or
(iii)  obtain  FDA  approval  by demonstrating safety and effectiveness before
marketing  a  product.  In addition, such products would be subject to the FDC
Acts  general  controls,  including  those  relating  to  good  manufacturing
practices  and  adverse  experience reporting.  Although it is not possible to
anticipate  the  final  form  of  the  FDA''  policy  with  regard to computer
software,  the  Company expects that, whether or not the draft is finalized or
changed,  the  FDA  is  likely  to  become  increasingly  active in regulating
computer  software  that is intended for use in health care settings.  The FDA
can  impose  extensive  requirements governing pre- and post-market conditions
such  as  device  investigation,  approval,  labeling  and  manufacturing.  In
addition,  the  FDA  can  impose  extensive requirements governing development
controls  and  quality  assurance  processes.   There can be no assurance that
actions  taken by the FDA to regulate computer software products will not have
a  material  adverse  effect on the Company's results of operations, financial
condition  or  business.



EMPLOYEES

Healthcare  Services.    Exclusive  of  medical  personnel, the Company has 53
--------------------
full-time  and 5 part-time administrative employees.  The number of caregivers
on  assignment  varies  from  day  to  day.    These  medical personnel do not
necessarily  work  full-time  shifts  and  may  not  work  exclusively for the
Company.    The  Company's  employees  are  not represented by a union and the
Company  considers  its  relations with its employees to be good.  The Company
currently  has  in  place  a  screening  process  for  all prospective medical
personnel.    The  Company  has  entered  into  agreements with other staffing
agencies  whereby  the  Company  may  place  medical personnel currently under
contract  with  other  staffing  agents.

Medical Information Software.  The Company's software subsidiary currently has
----------------------------
13  full-time  and  2  part-time  employees.

ITEM  2.        DESCRIPTION  OF  PROPERTY

     The  Company's  executive  offices  are  located  at Suite 400, 360 South
Garfield  Street,  Denver, Colorado.  A summary of the Company's facilities is
provided  below:

<TABLE>
<CAPTION>

                                     Square     Expiration       1997
                                    Footage        Date          Rent
                                 ------------  -------------   ----------
<S>                                    <C>          <C>          <C>

Houston,  Texas                      1,749          9/30/00      $ 15,000
San  Antonio,  Texas                 1,270          4/30/98        14,000
Denver,  Colorado                    6,113          9/30/00       101,000
Englewood,  Colorado                 2,269          4/30/98        41,000
Bronx,  New  York                    2,000          10/1/01        36,000
Ontario,  California                 1,513         12/31/98        25,000
Emeryville,  California                791          8/31/00        18,000
                                 -----------                   ------------

                                    15,705                       $250,000
                                                                ===========
</TABLE>

      The Company believes these facilities, which are used for administrative
offices,  will be suitable for the Company's needs for the foreseeable future.
The  Company  believes  that  all  of  its  properties are adequately insured.

<PAGE>


ITEM  3.        LEGAL  PROCEEDINGS

1.     In January 1997, the Company was named as a party in a lawsuit filed by
a  former  patient  in  San  Antonio,  Texas.  The  complaint  alleges  that a
respiratory therapist employed by a subsidiary of the Company was negligent in
his  duties  resulting  in  bodily injuries and mental anguish suffered by the
patient.    In a separate but related matter, the client/hospital at which the
alleged  incident  occurred has paid $100,000 to the plaintiff in exchange for
being  released  as  a  party to the lawsuit and has demanded that the Company
indemnify  the  hospital as the hospital alleges is stipulated in the contract
between  the Company and the hospital.  The Company believes that its employee
was  not negligent in his duties and that the Company has no liability in this
matter.    The Company intends to vigorously defend itself in this matter.  In
addition,  the  Company does not believe it has an obligation to indemnify its
client  hospital  under  its  contract  as  the Company was not a party to the
settlement.  The  Company  has  accrued $100,000 as a potential settlement and
litigation  expense.  The Company believes that it will not incur any material
losses  in  excess  of  accrued  amounts. The Company's professional liability
carrier has neither admitted nor denied coverage in this matter, reserving all
of  its  rights  under  the  policy,  but  it  has  made  an appearance in the
litigation  to  defend  the  matter.

2.          In  April  1997,  Ellis Home Care Services, Inc. ("EHCSI") filed a
complaint  in the United States District Court, Southern District of New York,
against  the  Company.    The  complaint alleges that the Company has breached
certain  obligations  it  undertook  in connection with the acquisition of the
Ellis  assets  by  the  Company.    EHCSI sought a judgment of $421,705, which
represents  the  difference between the asset purchase price of $1,060,063 and
the  total of (i) the aggregate sales proceeds EHCSI received from the sale of
all  of  its  shares of the Company's stock and (ii) a cash payment of $60,000
made  by  the  Company  to  EHCSI.  In addition to the amount of $421,705, the
complaint  seeks  interest  on  such amount at nine percent (9%) per annum and
attorney's fees.  On August 1, 1997 the Company agreed to a settlement of this
matter  and  agreed to pay EHCSI $435,397.30 plus interest at the rate of nine
percent  (9%)  per annum in an initial payment of $60,000 and monthly payments
of  $19,722  with the last payment due April 1, 1999.  On September 23, 1997 a
judgment  was  entered  against  the Company in this matter as a result of the
Company's failure to make the initial payment of $60,000, although all monthly
payments had been made.  The judgment was entered in the amount of $391,731.20
plus  interest  at  the  rate of nine percent (9%) until paid.  The Company is
continuing  to  negotiate this matter with EHCSI and to pay its agreed monthly
payments.   It has paid the delinquent $60,000 and EHCSI has made no effort to
date  to  execute  the  judgment  against  the  Company.


3.      During 1997, a subsidiary of the Company was named as defendant in two
suits  in  Harris  County,  Texas,  entitled  Verdell  Cooper v. National Care
Resources-Texas,  Inc.,  Harris District Court, 97-21951, and Vanessa Felix v.
National  Care  REsources-Texas,  Inc., Harris District Court, 97-50337.  Both
matters involve claims of racial discrimination arising out of the termination
of employment of the plaintiff by the subsidiary.  While no specific amount of
damages  has  been  claimed in either matter, plaintiffs both seek punitive or
exemplary damages as well as other reasonable damages.  The Company has denied
both  claims  and intends to vigorously defend both matters.  The Company does
not  believe  that  either  matter  will have a material adverse affect on the
financial  condition  of  the  Company.

4.       On or about November 7, 1997, an action was filed against the Company
in  the  Eastern  District  of New York under the caption New York Healthcare,
Inc.  v.  International  Nursing Services, Inc., et al., alleging, among other
things,  breach  of contract against the Company and seeking damages in excess
of $175,000 plus court costs and attorney fees.  The Company filed answers and
counterclaims  in  this action.  The Company intends to vigorously defend this
action  and  to  press  its  counterclaim.    The  Company does not expect any
possible  resolution of this matter to have a material effect on the Company's
financial  condition.

5.          On  March  19,  1998,  the Company announced that its wholly-owned
subsidiary  Cymedix  Lynx  Corporation  had submitted a formal demand to Andrx
Corporation  for  treble  damages in the amount of $396.6 million, suffered by
Cymedix  as  a direct and proximate result of the alleged activities of Andrx,
its  affiliate Cybear, Inc. and certain individuals.  The demand alleges theft
and  unlawful  appropriation  of Cymedix' computer medical software for remote
online  healthcare  providers  and  Cymedix'  internet  medical communications
technology,  commonly referred to as Lynx, for which a preliminary U.S. patent
was filed on October 15, 1996 and a final U.S. patent application was filed on
October  14,  1997.  Andrx reportedly responded by denying the allegations and
stating that it intends to vigorously defend any litigation that Cymedix might
file  in  this  matter.    It  also  stated  that it will be taking strong and
appropriate  counteraction  against  these  claims,  which  it  reportedly
characterized  as  "  libelous"  and with "no basis in substantial fact."  The
Company  cannot foresee how this matter will proceed, how long it will take to
resolve,  or what the ultimate impact of these matter will be on the financial
condition of the Company.  If litigation in this matter is commenced, it could
require  substantial  resources  from  the  Company  and  take  up substantial
management time for a period of several years.  No assurance can be given that
the  Company  would  receive an award adequate to compensate it for the use of
such  resources  and  time, or that the ultimate outcome might not be that the
Company  is  required  to  pay  damages  as  a  result  of  a  counterclaim.



<PAGE>

ITEM  4.        SUBMISSION  OF  MATTERS  TO    VOTE  OF  SECURITY  HOLDERS

     No  vote  of  security  holders  was solicited during the last quarter of
1997.    The  annual  meeting  of shareholders was held on January 30, 1998 in
Denver,  Colorado  (adjourned  as  to Proposal No. 4 below, until February 20,
1998)  for the purpose of electing a board of directors, authorizing a reverse
stock  split,  authorizing  a  name  change,  authorizing  a change in certain
shareholder  voting  requirements and approving the appointment of independent
auditors.  Proxies for the meeting were solicited pursuant to Section 14(a) of
the  Securities  Exchange  Act  of  1934  and  there  was  no  solicitation in
opposition  to  management's  solicitations.

     Voting  results  were  as  follows:

<TABLE>
<CAPTION>
            Shares Voted Shares Voted Shares Voted Shares Voted Shares Subject
                                                                   to Broker
                 For        Against     Withhold     Abstain       Non-Votes
            ------------ ------------ ------------ ------------ --------------
<S>              <C>         <C>          <C>          <C>             <C>

1. Election
   of
   directors
   John Yeros  8,973,171        -        325,059        -             -
   Tom  Oberle 8,975,044        -        323,186        -             -
   Charlie
    Powell     8,977,044        -        321,186        -             -

2. Approval
   of
   reverse
   split       8,422,460    727,039          -       148,731          -

3. Approval
   of
   name
   change      8,757,964    324,635          -       142,587      73,044

4. Approval
   of
   change
   in
   shareholder
   vote
   required   6,384,867    1,293,698          -      277,888   4,103,501

5. Approval
   of
   independent
   auditors  9,039,355       120,659          -      138,216         -
</TABLE>

     Shareholders  of  record  for  purposes  of  this  annual  meeting  were
determined  as  of  December  8,  1997  and total shares able to be voted were
12,768,272.    Therefore,  all  proposals  were  approved by the shareholders.
However,  the  Board of Directors of the Company determined that it was in the
best  interest  of  the Company to abandon Proposal No. 2, regarding a reverse
stock  split,  prior  to  its  effectiveness.

<PAGE>
                                    PART II

ITEM  5.          MARKET  FOR  COMMON  EQUITY AND RELATED STOCKHOLDER  MATTERS

     The Company's common stock is traded on the NASDAQ Small-Cap Market under
the  symbol  "NURS."    The  following  table  shows  high  and  low bid price
information  for  each  quarter  in the last two calendar years as reported by
NASDAQ.  Such quotations reflect inter-dealer prices, without retail mark-ups,
markdowns  or  commissions,  and  may  not  necessarily  represent  actual
transactions.    On  March  24,  1998, the last sales price was reported to be
$0.34.

<TABLE>
<CAPTION>

                                    Common  Stock  Bid Price
                                    ---------------------
                                       High          Low
<S>                                    <C>           <C>
1996  Fiscal  Year
    First  Quarter                   $7.94          $3.00
    Second  Quarter                   3.69           1.88
    Third  Quarter                    3.15           1.69
    Fourth  Quarter                   2.63           1.00


1997  Fiscal  Year
    First  Quarter                   $1.50          $0.63
    Second  Quarter                    .69            .19
    Third  Quarter                     .19            .13
    Fourth  Quarter                    .38            .13
</TABLE>

The Company has been notified by NASDAQ that it does not meet the new NASDAQ
minimum bid requirement ($1.00).  The Company has until May 28, 1998 to comply
with this requirement.  The Company intends to take action to comply with the
requirements, which may include a reverse split of the Company's outstanding
common stock.  There can be no assurance that the Company's common stock
will remain listed on the NASDAQ small cap market.

     There  were  approximately 400 holders of record (and approximately 2,200
beneficial  owners)  of  the Company's common stock as of March 24, 1998.  The
number  of  record  holders  includes  shareholders who may hold stock for the
benefit  of  others.  The Company had 20,343,787 shares of common stock
outstanding.  See Note 9 to the Company's consolidated financial statements.

     The  Company  does not expect to pay any dividends on its common stock in
the  foreseeable future.  Management currently intends to retain all available
funds for the development of its business and for use as working capital.  The
payment  of  dividends  on  the common stock is subject to the Company's prior
payment  of  all  accrued  and  unpaid  dividends  on  any  preferred  stock
outstanding.

     During  the  last  quarter of 1997, the following securities were sold by
the  Company  without registration with the Securities and Exchange Commission
pursuant  to  the  exemption  noted:

<TABLE>
<CAPTION>

Securities           Number  of                                 Exemption
  Sold        Date     Shares    Consideration    Purchasers     Claimed
---------- --------- ----------  -------------    ----------     -------
<S>            <C>      <C>            <C>           <C>           <C>

Common                            Conversion of     Private     Section 3(a)(9)
 Stock       Oct 97    99,055      Preferred         Investors

Common                            Conversion of     Private     Section 3(a)(9)
 Stock       Dec 97   599,544      Preferred         Investors

</TABLE>

ITEM  6.          MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OR PLAN OF OPERATION

OVERVIEW
     The  Company's revenues are provided primarily from supplemental staffing
of  therapy  and  nursing  professionals.  The Company plans for some internal
growth,  in the next twelve months, to be achieved through diversification and
expansion  of  services  at  existing  locations.  If projections are met, the
staffing  portion  of  the  business should provide adequate cash flow to fund
operations  in  the  next  twelve  months.

     In  January  1998, the Company aquired Cymedix Corporation, a development
stage medical software company.  (See "DESCRIPTION OF BUSINESS")  Cymedix will
require  adequate  funding  in  order  to  succeed  in bringing its product to
market.    The  Company intends to fund Cymedix principally with proceeds from
the  sale  of its New York offices.  See "DESCRIPTION OF BUSINESS - History of
the  Company;  Pending  Dispositions".

FORWARD-LOOKING  STATEMENTS  AND  ASSOCIATED  RISKS

     This  filing  contains  certain  forward-looking  statements  within  the
meaning  of  Section  27A of the Securities Act of 1933 and Section 21E of the
Securities  Exchange  Act  of  1934  and  the  Company  intends  that  such
forward-looking  statements  be  subject  to the safe harbors created thereby.
These  forward-looking  statements  include  the  plans  and objectives of the
management  for  future operations, including plans and objectives relating to
services  offered  by  and  future  economic  performance  of  the  Company.

Healthcare  Services  Operations.    The  forward-looking  statements included
--------------------------------
herein  are  based  on current expectations that involve a number of risks and
uncertainties.  These forward-looking statements are based on assumptions that
the  Company  will  continue  to  be  able  to provide on a cost effective and
competitive basis quality home health care and interim staffing services, that
the regulatory environment governing the Company's industry will not change in
ways  that  are materially adverse to the Company and its operations, that the
Company  will be able to continue to fund operations, that the Company will be
able  to  raise  additional  equity  or  debt  capital  if  required  to  fund
operations,  that  the  Company will be able to achieve operating efficiencies
resulting  in  cost  reductions,  that a sufficient supply of qualified health
care  personnel  will be available to the Company for deployment in the health
care industry on a competitive and cost effective basis and that there will be
no  material adverse change in the demand for the Company's services or in the
Company's  operations  or  business.  Additional risks and uncertainties  that
the  Company faces include the current uncertainty in the health care industry
and  government  health  care  reform  proposals considered from time to time,
which  has  already  and  may  in  the  future adversely affect the regulatory
environment  in  which the Company operates and the reimbursement rate payable
under  government  programs,  resulting  in  decreased revenues from home care
services;  the Company's dependence on customer relationships, which makes the
Company  vulnerable  to  consolidation in the health care industry, changes in
customer  personnel  and other factors that may impact customer relationships;
the  Company's  ability  to  obtain  needed licenses, permits and governmental
approvals;  the  Company's  ability  to  compete  in  the  highly  competitive
supplemental  staffing  services  market; hospital budgetary cycles, increased
competition  for  qualified  medical personnel, patient admission fluctuations
and  seasonality;  the  adoption by hospitals and third party payers of new or
revised  reimbursement policies; and uninsured risks associated with providing
home  care  and supplemental staffing services, which the Company will attempt
to  minimize,  but  which  can  not  be  entirely  eliminated.

Medical  Information Software Operations.  The Company, through its subsidiary
----------------------------------------
Cymedix  Lynx Corporation has only recently begun its medical software line of
business  through  the  acquisition  of  a  development  stage medial software
business.    The  uncertainties  and  risks  that  accompany  forward-looking
statements  are enhanced by the Company's lack of experience in this business.
The  Company  has  no  experience in marketing of software products, providing
software  support  services,  evaluating  demand  for  products,  financing  a
software business and dealing with government regulation of software products.
As  a  developer  of  information  systems,  the  Company  will be required to
anticipate  and  adapt  to  evolving  industry standards and new technological
developments.  The market for the Company's software products is characterized
by  continued  and  rapid technological advances in both hardware and software
development,  requiring  ongoing expenditures for research and development and
the timely introduction of new products and enhancements to existing products.
The  establishment  of  standards  is  largely  a function of user acceptance.
Therefore,  such  standards  are  subject  to  change.    The Company's future
success,  if  at all, will depend in part upon its ability to enhance existing
products,  to  respond effectively to technology changes, and to introduce new
products  and  technologies  to  meet the evolving needs of its clients in the
health  care  information  systems  market.  The Company is currently devoting
significant  resources  toward  the  development of products.  There can be no
assurance that the Company will successfully complete the development of these
products  in a timely fashion or that the Company's current or future products
will  satisfy  the  needs  of  the  health  care  information  systems market.
Further,  there can be no assurance that products or technologies developed by
others  will not adversely affect the Company's competitive position or render
its  products  or  technologies  noncompetitive  or  obsolete.

     Certain  of  the  Company's  products provide applications that relate to
patient  medical  histories and treatment plans.  Any failure by the Company's
products  to  provide  accurate, secure and timely information could result in
product  liability  claims  against  the  Company  by  its  clients  or  their
affiliates  or  patients.  The Company maintains insurance that it believes is
adequate to protect against claims associated with the use of it products, but
there  can  be no assurance that its insurance coverage would adequately cover
any  claim  asserted  against the Company.  A successful claim brought against
the  Company in excess of its insurance coverage could have a material adverse
effect  on  the  Company's  results  of  operations,  financial  condition  or
business.    Even unsuccessful claims could result in the expenditure of funds
in  litigation,  as  well  as  diversion  of  management  time  and resources.

     The  success  of  the Company is dependent to a significant degree on its
key  management,  sales  and  marketing, and technical personnel.  The Company
believes  that  its  success  will  also  depend  upon its ability to attract,
motivate  and  retain  highly  skilled,  managerial,  sales and marketing, and
technical  personnel,  including  software  programmers and systems architects
skilled  in  the  computer  languages in which the Company's products operate.
Competition  for  such  personnel  in  the  software  and information services
industries is intense.  The loss of key personnel, or the inability to hire or
retain  qualified  personnel,  could  have  a  material  adverse effect on the
Company's  results  of  operations,  financial  condition  or  business.

     The  health  care  industry  in  the United States is subject to changing
political,  economic and regulatory influences that may affect the procurement
practices and operations of health care organizations. During the past several
years,  the  health  care  industry  has  been subject to increasing levels of
governmental  regulation  of,  among  other  things,  reimbursement  rates and
certain  capital  expenditures.  The Company cannot predict with any certainty
what  impact,  if  any, such increased regulation might have on its results of
operations,  financial condition or business.  In addition, Medicare has, from
time  to  time,  promulgated regulations concerning anti-fraud and (physician)
inducement  that  heretofore  have  not directly affected the marketing of the
Company's  software  and  similar products.  However, these regulations, which
are  usually  later  adopted  by  state-managed  Medicaid  plans, have created
uncertainty  in the industry.  A current example is HIPAA.  The Company is
waiting for the promulgation of the related regulations so that it may assess
the impact on its business.  It is unclear the effect, if any, these regulations
will  have  on  the  Company,  its  products  or  its  clients.

     The U.S. Food and Drug Administration (the "FDA") has promulgated a draft
policy  for  the  regulation  of certain computer software products as medical
devices under the 1976 Medical Device Amendments to the Federal Food, Drug and
Cosmetic  Act  (the  "FDC  Act") and has recently indicated it may modify such
draft  policy or create a new policy.  To the extent that computer software is
a medical device under the policy, the manufacturers or such products could be
required,  depending  on  the product, to (i) register and list their products
with FDA, (ii) notify the FDA and demonstrate substantial equivalence to other
products  on  the  market  before marketing such products, or (iii) obtain FDA
approval by demonstrating safety and effectiveness before marketing a product.
In  addition, such products would be subject to the FDC Acts general controls,
including  those  relating  to  good  manufacturing  practices  and  adverse
experience  reporting.    Although  it is not possible to anticipate the final
form of the FDA' policy with regard to computer software, the Company expects
that,  whether  or not the draft is finalized or changed, the FDA is likely to
become  increasingly  active  in regulating computer software that is intended
for  use  in  health care settings.  The FDA can impose extensive requirements
governing  pre-  and  post-market  conditions  such  as  device investigation,
approval,  labeling  and  manufacturing.    In  addition,  the  FDA can impose
extensive  requirements  governing  development controls and quality assurance
processes.    There  can  be  no  assurance  that  actions taken by the FDA to
regulate computer software products will not have a material adverse effect on
the  Company's  results  of  operations,  financial  condition  or  business.

     Company  Specific  Factors.    Important  factors  to  be  considered  in
     ---------------------------
connection  with  forward-looking  statements include, without limitation, (a)
the  fact  that  the Company reported net losses in the last several years and
had  an accumulated deficit and a working capital deficit at the end of fiscal
1997;  (b) the Company's auditors have included a "going concern" exception in
their report on the  Company's financial statements; (c) the Company's lack of
working  capital  may  require  the Company to raise additional equity or debt
financing  in  order to fund operations and the Company may be unable to raise
such  debt  or  equity  financing;  (d)  the Company depends on key-management
personnel,  especially  John  P.  Yeros  to manage and direct the business and
operations  of  the  Company  and  its healthcare services and Keith Berman to
manage  the  development  and  marketing  of the Company's medical information
software;  and  (e)  various  other  factors  may cause actual results to vary
materially  from  the  results  contemplated in any forward-looking statements
included  in  this  filing.    No  assurances  can be given that the foregoing
factors  will  not  result in a material adverse effect on the Company and its
operations.

     Any  of  these  important  factors  discussed  above or elsewhere in this
filing could cause the Company's revenues or net income, or growth in revenues
or  net  income, to differ materially from prior results.  In addition, growth
in  absolute  amounts  of  selling, general and administrative expenses or the
occurrence  of  extraordinary  events  could  cause  actual  results  to  vary
materially  from  the  results contemplated by the forward-looking statements.
Budgeting  and  other management decisions are subjective in many respects and
thus  susceptible  to  interpretations  and periodic revisions based on actual
experience  and  business  developments,  the  impact  of  which may cause the
Company  to  alter its marketing, capital expenditures or other budgets, which
may,  in  turn,  affect  the  Company's  results  of  operation.

      Assumptions relating to the foregoing involve judgments with respect to,
among  other  things,  future economic, competitive and market conditions, and
future business decisions, all of which are difficult or impossible to predict
accurately  and many of which are beyond the control of the Company.  Although
the Company believes the assumptions underlying the forward-looking statements
are  reasonable, any of the assumptions could prove inaccurate, and therefore,
there can be no assurance that the results contemplated in the forward-looking
statements  will be realized.  In addition, the business and operations of the
Company,  because  of  the  industries  in  which operates and its underfunded
operations,  are  subject  to substantial risks which increase the uncertainty
inherent  in  such  forward-looking  statements.

     In light of the significant uncertainties inherent in the forward-looking
information  included  herein, the inclusion of such information should not be
regarded  as  a  representation  by  the  Company or any other person that the
objectives  or  plans  of  the  Company  will  be  achieved.

GOING  CONCERN  ISSUES

     The  Company has suffered recurring losses for the past several years and
incurred  net  losses  for the year ended December 29, 1996 of $1,207,000, and
for  the  year  ended December 28, 1997 of $515,000.  In addition, the Company
had  a  working  capital  deficit  of  $329,000  and  accumulated  deficit  of
$8,114,000  at  December  28,  1997.    These  factors,  among others, raise a
substantial  doubt  about  the  ability  of the Company to continue as a going
concern, which has been noted in the audit report of the Company's independent
auditors.    The  accompanying  financial  statements  do  not  include  any
adjustments  relating  to  the  recoverability  and  classification  of  asset
carrying  amounts  or the amount and classification  of liabilities that might
result  should  the  Company  be  unable  to  continue  as  a  going  concern.



RESULTS  OF  OPERATIONS

Comparison  of  Years  Ended  December  28,  1997  and  December  29,  1996
---------------------------------------------------------------------------


     Total  net  revenues increased approximately 75% from $14,259,000 for the
year  ended  December 29, 1996 (the "1996 Fiscal Year") to $24,875,000 for the
year  ended  December  28,  1997  (the  "1997 Fiscal Year").  The increase was
mainly  attributable to the acquisitions of TherAmerica, STAT, and Ellis.  The
TherAmerica, STAT and Ellis acquisitions were accounted for under the purchase
method  of  accounting.    Accordingly,  revenues  from these acquisitions are
included in the consolidated financial statements of the Company from the date
of  the  acquisitions, January 1997 for TherAmerica, April 1996 for Ellis, and
July 1996 for STAT.  Revenues from these entities included in the statement of
operations  for  the  1997  Fiscal  Year  were  $8,387,000  for  TherAmerica,
$5,072,000  for  STAT, and $2,018,000 for Ellis.  Revenues from these entities
included  in  the  statement  of  operations  for  the  1996  Fiscal Year were
$2,395,000  for  STAT  and $1,185,000 for Ellis.  In the fourth quarter of the
1996 fiscal year the company started a travel nursing division.  Revenues from
the  travel  nursing division included in the statements of operations for the
1997  and  1996  Fiscal Years were $1,349,000 and $24,000 respectively.  These
increases  were offset by revenue losses in the Paxxon branch and the sales of
the  Paxxon  and  homecare  divisions.

In  October 1997, the Company sold the assets and business of Paxxon Services,
one  of its New York operations.  At the same time, the Company entered into a
definitive  agreement  to  sell  the  other two New York operations, Ellis and
STAT,  for $2,080,000 in cash, subject to approval by New York State licensing
authorities and other closing conditions, which can not be assured.  The three
New York operations provided approximately $10,262,000 in revenue for the 1997
fiscal  year.    The  sale  of  these operations will substantially reduce the
Company's  revenues.

     The  Company's  total  gross margin remained flat at 24% for the 1997 and
1996  Fiscal  Years.

     See Footnote 2 of the consolidated financial statements for the unaudited
results  of  operations  of the Company after giving effect to the TherAmerica
and  Cymedix  acquisitions as if they had been acquired as of January 1, 1996.

     Selling,  general,  and  administrative  expenses increased approximately
$1,587,000 or 39% from $4,083,000 in the 1996 Fiscal Year to $5,670,000 in the
1997 Fiscal Year.  As a percent of sales, selling, general, and administrative
expenses decreased from 29% of sales in the 1996 Fiscal Year to 23% of sale in
the  1997  Fiscal  Year.  The decrease in selling, general, and administrative
expenses, as a percent of sales, is due to economies of scale and reduction of
corporate  and  branch  managerial  and  administrative  staff.

     Income(Loss)  from  operations  increased  $1,265,000  from  a  loss from
operations  of ($655,000) in the 1996 Fiscal Year to income from operations of
$610,000  in  the  1997  Fiscal  Year.   The increase reflects gain on sale of
divisions of $422,000 (see Note 4 to the Consolidated Financial Statements) in
the 1997 Fiscal Year and the reduction of selling, general, and administrative
expenses,  as  a  percent  of  sales,  discussed  in  the  above  paragraph.

     Interest  expense increased 104% from $552,000 in the 1996 Fiscal Year to
$1,125,000  in the 1997 Fiscal Year.  The increase relates accrued interest on
late payroll taxes, interest paid on a bridge loan, and an increase in funding
costs  on the additional accounts receivable due to the TherAmerica, STAT, and
Ellis  acquisitions.  See  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OR PLAN OF
OPERATION  --  Liquidity  of  Capital  Resources" and Notes 3, 6, and 9 to the
Consolidated  Financial  Statements.

     Net  loss  decreased  from  ($1,207,000)  in  the  1996  Fiscal  Year  to
($515,000)  in  the  1997  Fiscal  Year.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Company's  current  liabilities  at  December  28,  1997  aggregated
approximately  $5,636,000  and  current assets at December 28, 1997 aggregated
approximately  $5,307,000.

<PAGE>

In  order  for  the  Company  to  meet its cash requirements in the next year,
management  anticipates the need to raise additional debt or equity capital or
sell assets.  Management believes that the Company will generate positive cash
from its staffing operations, once certain non-recurring operating liabilities
incurred  in  the  past  have  been  paid off. (See Note 3 to the Consolidated
Financial  Statements)    However,  the  Company  will  require the raising of
additional  debt  or equity capital or asset sales to adequately fund Cymedix.

     On  October  19,  1997  the Company sold certain assets of one of its New
York  operations  for $1,275,000 in cash and a note for $193,000.  At the same
time the Company entered into a definitive agreement to sell the other two New
York  operations  for $2,080,000 in cash subject to approval by New York State
licensing  authorities  and  other  closing  conditions.    (See Note 4 to the
Consolidated Financial Statements.)  The $1,275,000 was used to meet a portion
of  the  Company's  current obligations.  If the transactions under definitive
agreement close on a timely basis, funds should be available to meet a portion
of the Company's current obligations and adequately fund Cymedix.  There is no
assurance, however, that these transactions will close on a timely basis or at
all.    The  cash  consideration  is  anticipated  to  be adequate to meet the
Company's  needs if Cymedix achieves its sales and operating projections.  See
"Forward-Looking  Statements  and  Associated  Risks  -  Medical  Information
Software  Operations"  above.    The  three  New  York  operations  provided
approximately  $10,262,000  in  revenue for the 1997 fiscal year.  The sale of
these  operations  will  substantially  reduce  the  Company's  revenues.  The
Company  believes  its  ability to generate cash flow, combined with the asset
sale  mentioned  above  and  additional financing, if necessary, will generate
sufficient  cash  to  support  its  operations  for  the  next  twelve months.

  The  Company has historically released certain of its checks in anticipation
of  receiving  cash  proceeds  from its line of credit agreement.  The Company
does  not  have  an  arrangement  with  its banks to cover checks presented in
excess of its collected cash balance; however, this situation has not occurred
as  the  Company releases its checks as close as possible to its funding date.

YEAR  2000  DISCLOSURE
----------------------

  The  Company  uses  current  versions  of  widely  used,  publicly available
software  for  its  accounting  and  other  data processing requirements.  The
providers  of the software utilized by the Company have stated that there will
be  no  failures  in  the programs used by the Company resulting from the year
2000.   Cymedix Lynx was designed to be year 2000 compliant.  The Company does
not  feel  it  will  incur any significant costs in excess of normal operating
expenses  relating  to  the  year  2000.


ITEM  7.          FINANCIAL  STATEMENTS

     Attached  hereto  and  filed  as  a  part  of  this  Form  10-KSB are the
Consolidated  Financial  Statements  of  the  Company.


ITEM  8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

     None


<PAGE>
                                   PART III
                                   --------
ITEM  9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
           COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

ITEM  10.  EXECUTIVE  COMPENSATION

ITEM  11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required by the above four Items is omitted because the
Company  intends  to  file  a  proxy statement with the Commission pursuant to
Regulation  14A  not later than 120 days after the close of the fiscal year in
accordance  with  General  Instruction  E(3)  to Form 10-KSB.  The information
called  for  by  these  Items is incorporated herein by reference to the proxy
statement.

ITEM  13.          EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (a)         Exhibits required by Item 601 of Regulation S-B.  The Company
                 -----------------------------------------------
will  furnish to its shareholders of record as of the record date for its 1998
Annual  Meeting of Stockholders, a copy of any    of the exhibits listed below
upon  payment of $.25 per page to cover the costs of the Company of furnishing
the  exhibits.

Exhibit  No.          Description
-----------           -----------

3.1.1                 Articles of incorporation of the Company as filed on
                      April 22, 1988  with  the  Secretary  of State of the
                      State of Colorado, incorporated by reference to Exhibit
                      3.1.1 to the Registration Statement on Form SB-2(Reg. No.
                      33-81582-D),  filed  with  the  SEC  in  July  14,1994
                      (the "1994 Registration Statement").

3.1.2                 Articles of Amendment to Articles of Incorporation of the
                      Company  as  filed on May 24, 1988 with the Secretary of
                      State of the State of Colorado,  incorporated by
                      reference to Exhibit 3.1.2 to the 1994 Registration
                      Statement.

3.1.3                 Articles of Amendment to Articles of Incorporation of the
                      Company as filed on February 16, 1990 with the Secretary
                      of State of the State of  Colorado,  incorporated  by
                      reference  to  Exhibit  3.1.3  to  the  1994
                      Registration  Statement.

3.1.4                 Articles of Amendment to Articles of Incorporation of the
                      Company  as  filed on August 12, 1994 with the Secretary
                      of State of the State of  Colorado, incorporated by
                      reference to Exhibit 3.1.4 to Amendment No. 1 to
                      the  1994  Registration  Statement,  filed  with  the
                      SEC on August 15, 1994.

3.1.5                 Articles of Amendment to Articles of Incorporation of the
                      Company  as  filed  on  September  12, 1994 with the
                      Secretary of State of the State of Colorado, incorporated
                      by reference to Exhibit 3.1.5 to Amendment No. 3  to  the
                      1994  Registration  Statement, filed with the SEC on
                      September 12, 1994.


3.1.6                 Certificate of Designation of 1996 Convertible Preferred
                      Stock, incorporated  by  reference  to  Exhibit  3.1  to
                      Amendment  No.  1  to  the Registration Statement of the
                      Company on Form S-3,  filed with the SEC October 10, 1996.

3.1.7                 Articles to Amendment to Articles of Incorporation filed
                      with the  Secretary  of  State  of  the  State  of
                      Colorado  on  October  9, 1996, incorporated by reference
                      to  Exhibit  3.2  to  Amendment  No.  1  to  the
                      Registration  Statement  of  the  Company  on  Form  S-3
                      filed with the SEC on October  10,  1996.

3.1.8                 Articles of Amendment containing Articles of
                      Designation  of  1997  Convertible  Preferred
                      Stock, incorporated by reference to Exhibit 3.1.8 to the
                      Company's  Form  10-KSB  filed
                      with  the  SEC  on  March  31,  1997

3.1.9                 Articles of Amendment to Articles of Incorporation of the
                      Company as filed  on  November  14,  1997  with  the
                      Secretary  of State of the State of  Colorado.*

3.1.10                Articles of Amendment to Articles of Incorporation of
                      the  Company  as  filed  on  February
                      17,  1998  with  the  Secretary of State of the State of
                      Colorado.*

3.1.11                Articles of Amendment to Articles of Incorporation of
                      the  Company  as  filed  on  March 7,  1998  with  the
                      Secretary of State of the State of Colorado.*

3.2.1                 Amended and Restated By-Laws of the Company, incorporated
                      by reference  to  Exhibit  3.2.2 to Amendment No. 1 to
                      the Registration Statement filed  with  the  SEC  on
                      August  15,  1994.

4.1                   Form of specimen certificate for common stock of the
                      Company.*

4.2.1                 Form of specimen certificate for 1994 Warrants of the
                      Company,  incorporated  by reference to Exhibit No. 4.1.3
                      to Amendment No. 1 to the 1994  Registration  Statement,
                      filed  with  the  SEC  on  August  15,  1994.

4.2.2                 Form of Warrant Agreement by and between the Company
                      and  American  Securities
                      Transfer, Inc., incorporated by reference to Exhibit No.
                      4.1.4  to  Amendment  No.  2
                      to  the 1994 Registration Statement, filed with the SEC
                      on  September  1,  1994.

4.3                   Form of Representative's Warrants issued by the Company
                      to the underwriters'  representative  in  connection
                      with  the Company's 1994 public offering,  incorporated
                      by reference to Exhibit No. 4.2 to Amendment No. 3 to
                      the  1994  Registration  Statement, filed with the SEC on
                      September 12, 1994 .

4.4                   Form of 1996 Unit Warrant, incorporated by reference to
                      Exhibit 4.1  to  Amendment  No. 1 to the Registration
                      Statement of the Company on Form
                      S-3  filed  with  the  SEC  on  October  10,  1996.

4.5                   Warrant issued January 28, 1997 to Millenco, L.P,
                      incorporated  by  reference  to  Exhibit
                      4.9  to  the Company's  Form 10-KSB filed  with the SEC
                      on  March  31,  1997

4.6                   Form of 1997 Unit Warrant, incorporated by reference
                      to  Exhibit  4.11  to  the  Company's
                      Form  10-KSB  filed    with  the SEC on March 31, 1997.

10.1                  Employment Agreement, dated January 7, 1997, by and
                      between  John  Yeros  and  the
                      Company,  incorporated by reference to Exhibit 10.22 to
                      the  Company's
                      Form  10-KSB  filed    with  the SEC on March 31, 1997.

10.2.1                Incentive Stock Option Plan, adopted May 5, 1988,
                      authorizing 100,000 shares of common stock for issuance
                      pursuant to the Plan, incorporated
                      by  reference  to  Exhibit  No.  10.2.1  of  the  1994
                      Registration Statement.

10.2.2                Omnibus Stock Option Plan, adopted effective January 1,
                      1994, authorizing  500,000 shares of common stock for
                      issuance pursuant to the Plan, incorporated  by  reference
                      to  Exhibit  No.  10.2.2 of the 1994 Registration
                      Statement.

10.2.3                1996 Stock Incentive Plan, adopted by the Company's Board
                      of Directors  on  November 27, 1996, authorizing 3,000,000
                      shares of common stock for  issuance  pursuant  to  the
                      Plan.*

10.3.1                Office Lease, dated February 20, 1991 by and between POCOL
                      Investments,  a Delaware partnership, as landlord, and
                      the Company, as tenant, incorporated  by  reference  to
                      Exhibit  10.3.1  to  the  1994  Registration Statement.

10.3.2                First Amendment to office Lease, dated September 21, 1992
                      by and  between  POCOL  Investments, a Delaware
                      partnership, at landlord, and the Company,  as  tenant,
                      incorporated by reference to Exhibit 10.3.2 to the 1994
                      Registration  Statement.

10.3.3                Second Amendment to Office Lease, dated August 9, 1993 by
                      and between  POCOL  Investments,  a  Delaware
                      partnership,  as  landlord, and the Company,  as  tenant,
                      incorporated by reference to Exhibit 10.3.3 to the 1994
                      Registration  Statement.

10.4                  Asset Purchase and Sale Agreement, dated May 2, 1994 and
                      as amended  June  1,  1994, by and between the Company
                      and Paxxon Services, Inc., incorporated  by  reference to
                      Exhibit 2.2 to the 1994 Registration Statement.

10.5                  Asset Purchase and Sale Agreement dated April 15, 1994
                      and as amended  June 1, 1994, by and between the Company
                      and Mint Energy Corporation, d/b/a  the  Nurse
                      Connection, incorporated by reference to Exhibit 2.4 to
                      the 1994  Registration  Statement.

10.6                  Asset Purchase Agreement among the Company, JJ Care
                      Rexources, Inc. and  STAT  Health Care Services, Inc.,
                      dated January 10, 1996, incorporated by
                      reference  to  Exhibit 10.18 to Form 8-K of the Company,
                      filed with the SEC on January  11,  1996.

10.7                  Asset Purchase and Sale Agreement, dated as of April 17,
                      1996, by and between  Ellis  Home  Care    Services,
                      Inc., JJ Care Resources, Inc. and the Company,
                      incorporated  by  reference  to  Exhibit  No.10.1 to Form
                      8-K of the Company,  filed  with  the  SEC on April 1996

10.8                  First Amendment to Purchase Agreement, dated as of
                      July 17, 1996, between  the  Company,  JJ Care Resources,
                      Inc. and STAT Health Care Services,
                      Inc.,  incorporated  by reference to Exhibit 10.19 to
                      Form 8-K of the Company, filed  with  the  SEC  on
                      August  1,  1996

10.9                  Form of Registration Rights/Purchase Agreement relating
                      to 1996 Unit Offering, incorporated by reference to
                      Exhibit 10.1 to Amendment No. 1 to the  Registration
                      Statement of the Company on  Form S-3, filed with the
                      SEC on October  10,  1996.

10.10                 Asset Purchase Agreement, dated as of January 31, 1997 by
                      and among  Colorado  Therapists  on Call, Inc.,
                      Professional HealthCare Providers, Inc.,  CoreStaff,
                      Inc.  and the Company, incorporated by reference to
                      Exhibit 2.1  to  the  Form  8-K  of  the  Company  filed
                      on  February  14,  1997.

10.11                 Form of Registration Rights/Purchase agreement relating to
                      1997  unit  offering, incorporated  by  reference  to
                      Exhibit  10.21  to the Company's  Form  10-KSB  filed
                      with  the  SEC on March 31, 1997

10.12                 Loan and Security Agreement, dated May 28, 1997, by and
                      between National  Care  Resources  -  New York, Inc.,
                      National Care Resources - Texas, Inc.,  JJ Care Resources,
                      Inc.,  National  Care Resources - Colorado, Inc.,
                      TherAmerica,  Inc.  and International Nursing Services,
                      Inc. and HCFP Funding, Inc.,  incorporated  by  reference
                      to Exhibit 10.23 in the Company's Form 10-QSB  for  the
                      Quarterly  Period  ended  June  29,  1997.

10.13                 Agreement of Purchase and Sale (Assets), dated as of
                      September  1,  1997,  by  and  between  National Care
                      Resources, Inc. and Life Source  Service,  Inc.,
                      incorporated  by  reference  to  Exhibit  2.1  in the
                      Company's Form 10-QSB for the Quarterly Period ended
                      September 28, 1997, filed with  the  SEC  on  November
                      14,  1997.

10.14                 Purchase and Sale Agreement, between International Nursing
                      Services,  Inc.,  National  Care  Resources  - New York,
                      Inc., National Health Enterprises  -  NV, Inc., and
                      National Health Enterprises, Inc., dated October
                      19,  1997,  incorporated by reference to Exhibit 99.1
                      to the Company's Current Report  on  Form  8-K  filed
                      with  the  SEC  on  November  26,  1997.

10.15                 Agreement and Plan of Merger, dated as of November 17,
                      1997, among  International  Nursing  Services,  Inc.,
                      Cymedix  Lynx Corporation and
                      Cymedix Corporation, incorporated by reference to Exhibit
                      2.1 to the Company's Current  Report  on  Form  8-K
                      filed  with  the  SEC  on  December  24, 1997.

10.16                 Amendment No. 1 to Agreement and Plan of Merger, dated as
                      of December  10,  1997,  among International Nursing
                      Services, Inc., Cymedix Lynx Corporation  and Cymedix
                      Corporation, incorporated by reference to Exhibit 2.2
                      to the Company's Current Report on Form 8-K filed with
                      the SEC on December 24, 1997.

10.17                 Stipulation of Settlement between Ellis Home Care
                      Services,  Inc.  and  the  Company,
                      incorporated  by  reference  to  Exhibit  10.1  to  the
                      Company's  Form  10-QSB  for  the
                      Quarterly  Period  ended September 28, 1997, filed with
                      the  SEC  on  November  14,  1997.

10.18                 Judgment against the Company in favor of Ellis Home Care
                      Services,  Inc.,  incorporated
                      by reference to Exhibit 99 to the Company's Form 10-QSB
                      for  the  Quarterly  Period  ended  September  28, 1997,
                      filed with the SEC on November  14,  1997.


10.19                 Settlement and Release Agreement, dated November 22, 1996,
                      among  Cymedix  Corporation,  Keith Berman, Global Med
                      Technologies, Inc., and Mick  Ruxin.*

10.20                 Loan and Security Agreement, dated February 26, 1996,
                      between MedSoft  OnLine,  Inc.  and  Global  Med
                      Technologies,  Inc.*

10.21                 Loan and Security Agreement, dated May 28, 1997, by and
                      between National  Care  Resources  -  New York, Inc.,
                      National Care Resources - Texas,
                      Inc.,  JJ  Care  Resources,  Inc.,  National  Care
                      Resources -  Colorado, Inc. TherAmerica,  Inc.  and
                      International Nursing Services, Inc. and HCFP Funding,
                      Inc., incorporated by reference to Exhibit 10.23 to the
                      Company's Form 10-QSB, filed  with  the  SEC  on  August
                      13,  1997.

21.                   Subsidiaries  of  the  Company.*

23.                   Consent of Ehrhardt Keefe Steiner & Hottman PC,
                      independent certified public accountants for the
                      Company.*

27.                   Financial Data Schedule, incorporated by reference to
                      exhibit 27.2  to  the Company's Current Report on Form
                      8-K filed with the SEC on March 23,  1998.


*Filed  herewith








(b)     Reports on Form 8-K.  The Company filed two reports on Form 8-K during
        -------------------
        the  last  quarter  of  1997  as  follows:

1.      Report dated November 14, 1997, reporting under Item No. 2 the sale of
the  Company's  Paxxon Services office and operations in Yonkers, New York, as
filed  with  the  SEC  on  November  26,  1997.

2.  Report dated December 10, 1997, reporting under Item No. 2 the approval by
shareholders  of  Cymedix Corporation of the merger of that corporation into a
subsidiary  of  the  Company,  as  filed  with  the  SEC on December 24, 1997.


<PAGE>

                                   SIGNATURES


     In  accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934,  the  Registrant  caused  this  report  to  be  signed  on behalf by the
undersigned,  thereunto  duly  authorized  on  March  __,  1998.

INTERNATIONAL  NURSING  SERVICES,    INC.



                         By:          /s/  John  P.  Yeros
                                      --------------------
                              John  P.  Yeros,
Chairman  of  the  Board  and  Chief  Executive  Officer


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

     Signature                              Title                    Date
     ---------                              -----                    ----


/s/  John  P.  Yeros                Chairman of the Board and   March 30, 1998
--------------------                Chief Executive Officer
    John  P.  Yeros                 (Principal Executive and
                                    Financial Officer)


/s/  Barry  J.  McDonald            Chief Operating Officer     March 30, 1998
------------------------            and Secretary
     Barry  J.  McDonald


/s/  David  Kinsella                Controller (Chief           March 30, 1998
--------------------                Accounting Officer)
     David  Kinsella


/s/  Thomas  J.  Oberle             Director                    March 30, 1998
-----------------------
Thomas  J.  Oberle


/s/  Charles  Powell                Director                    March 30, 1998
--------------------
    Charles  Powell


                             MEDIX RESOURCES, INC.
                               AND SUBSIDIARIES

                             FINANCIAL STATEMENTS
                              DECEMBER 28, 1997





                   MEDIX RESOURCES, INC. AND SUBSIDIARIES






                               TABLE OF CONTENTS
                               -----------------



          Page
          ----

Independent  Auditors'  Report                         F-1

Financial  Statements

     Consolidated  Balance  Sheet                      F-3

     Consolidated  Statements  of  Operations          F-4

     Consolidated  Statement  of  Changes  in
      Stockholders'  Equity                            F-5

     Consolidated  Statements  of  Cash  Flows         F-6

Notes  to  Financial  Statements                       F-8









                         INDEPENDENT AUDITORS' REPORT






To  the  Board  of  Directors  and  Stockholders
Medix  Resources,  Inc.  (formerly  International
 Nursing  Services,  Inc.)
Denver,  Colorado


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Medix
Resources,  Inc.  (formerly  International  Nursing  Services,  Inc.)  and
Subsidiaries, as of December 28, 1997, and the related consolidated statements
of  operations  and  changes  in  stockholders' equity, and cash flows for the
years  ended  December  28,  1997  and  December 29, 1996.  These consolidated
financial  statements  are  the  responsibility  of  the  management  of Medix
Resources, Inc. and Subsidiaries.  Our responsibility is to express an opinion
on  these  consolidated  financial  statements  based  on  our  audits.

We  conducted  our  audits  in  accordance  with  generally  accepted auditing
standards.    Those  standards  require  that we plan and perform the audit to
obtain  reasonable  assurance  about  whether  the  consolidated  financial
statements are free of material misstatement.  An audit includes examining, on
a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in  the
consolidated  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  audits  provide  a  reasonable  basis  for  our  opinion.

In  our  opinion,  the  consolidated  financial  statements  referred to above
present  fairly, in all material respects, the consolidated financial position
of  Medix  Resources,  Inc. and Subsidiaries, as of December 28, 1997, and the
results  of their operations and their cash flows for the years ended December
28,  1997  and  December  29,  1996  in  conformity  with  generally  accepted
accounting  principles.

<PAGE>
To  the  Board  of  Directors  and  Stockholders
Medix  Resources,  Inc.  (formerly  International
 Nursing  Services,  Inc.)
Page  Two


The accompanying consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern.  As further discussed in
Note  1  to  the  consolidated  financial statements, the Company has incurred
operating  losses  for  the  past  several  years and has a deficit in working
capital  which  raises  substantial  doubt  about its ability to continue as a
going  concern.  Current management's plans in regards to this matter are also
discussed in Note 1.  The consolidated financial statements do not include any
adjustments  that  might  result  from  this  uncertainty.

As  disclosed  in Note 1 to the consolidated financial statements, the Company
changed  its  method  of  computing  earnings  per  share.



  /s/ Ehrhardt Keefe Steiner & Hottman PC
     Ehrhardt  Keefe  Steiner  &  Hottman  PC

March  18,  1998
Denver,  Colorado





                    MEDIX RESOURCES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEET
                               DECEMBER 28, 1997


                                    ASSETS
<TABLE>
<CAPTION>
<S>                                                       <C>

Current  assets
 Cash                                               $    158,000
 Accounts  receivable, net of allowance of $384,000    4,559,000
 Notes  receivable                                       491,000
 Prepaid  expenses  and  other                            99,000
                                                        --------
   Total  current  assets                              5,307,000


Property  and  equipment,  net                           302,000

Other  assets
 Intangible  assets,  net                              4,491,000
 Other                                                    40,000
                                                        --------

Total                                                $10,140,000
                                                      ==========

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current  liabilities
 Current  portion  of  long-term  debt               $    35,000
 Current  portion  of  capital  lease  obligation         25,000
 Line-of-credit                                        3,543,000
 Accounts  payable                                       649,000
 Accrued  expenses                                     1,384,000
                                                     -----------
   Total  current  liabilities                         5,636,000
                                                     -----------

Commitments  and  contingency

Stockholders'  equity
 Preferred  stock,  10%  cumulative
  convertible,  $1  par  value  488  shares
  authorized,  155  issued,  26.25
  outstanding, liquidation preference $301,481               -
 1997  convertible  preferred stock, $1 par
  value 300 shares authorized 167.15
  shares  issued,  100.5  outstanding,
  liquidation  preference  $805,000                          -
 Common  stock,  $.001  par  value,  25,000,000
   shares authorized, 12,843,567
   issued  and  outstanding                              13,000
 Dividends  payable  with  common  stock                 39,000
 Additional  paid-in  capital                        12,191,000
 Accumulated  deficit                                (7,739,000)
                                                   ------------
   Total  stockholders'  equity                       4,504,000
                                                    -----------

Total                                               $10,140,000
                                                     ==========
</TABLE>


                         See notes to consolidated financial statements.
<PAGE>

                    MEDIX RESOURCES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                              For the Year Ended          For the Year Ended
                                 December 28,                December 29,
                                    1997                         1996
                              ------------------           ------------------
<S>                                <C>                          <C>

Revenues                         $24,875,000                    $14,259,000

Direct  costs  of  services       19,017,000                     10,831,000
                                ------------                   ------------

Gross  margin                      5,858,000                      3,428,000

Selling,  general,  and
   administrative  expenses        5,670,000                      4,083,000

Gain  on  sale  of
  divisions  (Note  4)               422,000                           -
                                ------------                   ------------

Income (loss) from operations        610,000                      (655,000)

Interest  expense                  1,125,000                       552,000
                                 -----------                      ---------

Net  loss                      $    (515,000)                 $ (1,207,000)
                                =============                  ============

Basic  loss  per  common
   share  (Note  11)           $        (.15)                 $       (.57)
                                ============                   ===========

Weighted  average  common
   shares  outstanding             9,848,824                     4,517,111
                                ============                   ===========
</TABLE>
                       See notes to consolidated financial statements.

                    MEDIX RESOURCES, INC. AND SUBSIDIARIES


           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THE YEARS ENDING DECEMBER 28, 1997 AND DECEMBER 29, 1996



<TABLE>
<CAPTION>
                                 Common Stock            Preferred Stock
                           Number of                  Number of
                            Shares          Amount      Shares         Amount
                         -----------      ---------  -------------   ----------
<S>                          <C>             <C>           <C>          <C>

Balance-December 31,
  1995                    2,894,773        $  3,000      469,452       $  -

Automatic  conversion
  of  preferred  stock    1,173,631           1,000     (469,452)         -

Acquisition  of
 assets  (Ellis)            256,250           1,000          -            -

Guaranteed value of
 common stock issued in
 Ellis acquisition              -                -           -            -

Conversion  of  notes
 payable to common stock    41,903               -           -            -

1996  preferred  stock
 issuance before of
 imputed discount
 (Note 11)                      -                -        244.00          -

Imputed  dividend on 1996
 preferred stock (Note 11)      -                -            -           -

Common  stock  options
  issued  in  connection
  with finder on preferred
  stock                         -                -            -           -

Acquisitions  of  assets
  (STAT)                   220,133               -            -           -

Conversion  of preferred
 stock and accrued
 dividends of $26,000      923,111            1,000       (88.50)         -

Common  stock  options
 issued for services            -                 -           -           -

Exercise  of  warrants     178,491                -           -           -

Offering  costs  related
  to  1996  stock  issued       -                 -           -           -

Net  loss                       -                 -           -           -

Dividends                       -                 -           -           -
                         -----------          --------     --------    -------

Balance December 29,
  1996                    5,688,292            6,000        155.50        -

1997  preferred  stock
 issuance,  before
 imputed discount
 (Note 11)                     -                  -            -           -

Imputed  dividend on
 1997 preferred stock
 (Note 11)                     -                  -            -           -

Exercise of 1996 unit
  options                      -                  -         20.00          -

Offering  costs  on  1997
  preferred stock              -                  -            -           -

Imputed  value of issuance
 of warrants in connection
 with debt issued              -                  -            -           -

Imputed  dividend  on  1997
 preferred stock as a
 result of warrant repricings
 (Note  11)                    -                  -            -           -

Conversion  of  preferred
  stock  and  accrued
  dividends  of  $71,000   7,042,256           7,000       (149.25)        -

Common  stock issued for
 satisfaction of debt        100,000               -           -           -

Common  stock  issued
 for  services                13,019               -           -           -

Net  loss                       -                  -           -           -

Dividends  declared             -                  -           -           -
                           -----------        ---------   ---------    --------

Balance  at
 December  28,  1997      12,843,567         $  13,000       26.25    $     -
                         ===========          =========      ======    ========

</TABLE>


Consolidated Statement of Changes in Stockholders' Equity Continued below

<TABLE>
<CAPTION>

                                                                   Dividend
                                                                    Payable
                              Preferred Stock 1997                   With
                            Number of                     Paid-in    Common
                              Shares         Amount       Capital     Stock
                           -----------     ----------    --------- -----------
<S>                          <C>              <C>           <C>         <C>


Balance - December 31,
 1997                           -           $       -   $ 6,349,000 $ 441,000

Automatic conversion
 of preferred stock             -                   -       440,000  (441,000)

Acqusition of
 assets (Ellis)                 -                   -     1,058,000        -

Guaranteed value of
 common stock issued
 in Ellis acquisition           -                   -      (560,000)       -

Conversion of notes payable
 to common stock                -                   -       151,000        -

1996 preferred stock
 issuance before of
 imputed discount (Note 11)     -                   -     2,440,000        -

Imputed dividend on
 1996 preferred stock
 (Note 11)                      -                   -           -          -

Common stock options
 issued in connection
 with finder on
 preferred stock                -                   -       125,000        -

Acquisitions of assets
 (STAT)                         -                   -       467,000        -

Conversion of preferred
 stock and accrued
 dividends of $26,000           -                   -        25,000   (26,000)

Common stock options
 issued for services            -                   -        48,000        -

Exercise of warrants            -                   -       255,000        -

Offering costs related
 to 1996 stock issued           -                   -      (507,000)       -

Net loss                        -                   -           -          -

Dividends                       -                   -       (92,000)   92,000
                          -------------      ----------  -----------  --------

Balance - December 29,
 1996                           -                   -     10,199,000   66,000

1997 preferred stock
 issuance, before
 imputed discount
 (Note 11)                    167.15                -      1,672,000      -

Imputed dividend on 1997
 preferred stock
 (Note 11)                       -                  -           -         -

Exercise of 1996 unit
 options                         -                  -        200,000      -

Offering costs on 1997
 preferred stock                 -                  -       (152,000)     -

Imputed value of issuance
 of warrants in
 connection with debt
 issued                          -                   -       134,000      -

Imputed dividend on 1997
 preferred stock as
 a result of warrant
 repricings (Note 11)            -                   -           -        -

Conversion of preferred
 stock and accrued
 dividends of $71,000          (66.65)               -       64,000    (71,000)

Common stock issued
 for satisfaction of debt        -                   -      100,000        -

Common stock issued
 for services                    -                   -       18,000        -

Net loss                         -                   -          -          -

Dividends declared               -                   -      (44,000)       -
                         -------------        ----------  ---------   --------

Balance - December 28,
 1997                          100.50          $     -  $12,191,000  $  39,000
                          ============        ========== ==========   =========
</TABLE>

Consolidated Statement of Changes in Stockholders' Equity continue below


<TABLE>
<CAPTION>
                                         Accumulated
                                           Deficit           Total
                                         -----------      -----------
<S>                                        <C>                <C>

Balance, December 31, 1995              $(6,017,000)       $  776,000

Automatic conversion of preferred
 stock                                         -                 -

Acquisition of assets (Ellis)                  -            1,059,000

Guaranteed value of common stock
 issued in Ellis acquisition                   -             (560,000)

Conversion of notes payable to
 common stock                                  -              151,000

1996 preferred stock issuance
 before of imputed discount (Note 11)          -            2,440,000

Imputed dividend on 1996 preferred
 stock (Note 11)                               -                 -

Common stock options issued in
 connection with finder on preferred
 stock                                         -               125,000

Acquisitions of (STAT)                         -               467,000

Conversion of preferred stock and
 accrued dividends of $26,000                  -                  -

Common stock options issued for
 services                                      -                48,000

Exercise of warrants                           -               255,000

Offering costs related to 1996
 stock issued                                  -              (507,000)

Net loss                                  (1,207,000)       (1,207,000)

Dividends                                      -                  -
                                          -----------       -----------

Balance - December 29, 1996               (7,224,000)        3,047,000

1997 preferred stock issuance,
 before imputed discount
 (Note 11)                                      -            1,672,000

Imputed dividend on 1997 preferred
 stock (Note 11)                                -                 -

Exercise of 1996 unit options                   -              200,000

Offering costs on 1997 preferred
 stock                                          -              (152,000)

Imputed value of issuance of
 warrants in connection with
 debt issued                                    -               134,000

Imputed dividend on 1997 preferred
 stock as a result of warrant
 repricings (Note 11)                           -                  -

Conversion of preferred stock and
 accrued dividends of $71,000                   -                  -

Common stock issued for satisfaction
 of debt                                        -               100,000

Common stock issued for services                -                18,000

Net loss                                        -              (515,000)

Dividends declared                         (515,000)               -
                                         ------------          ---------

Balance - December 28, 1997             $(7,739,000)        $ 4,504,000
                                        ============        ===========
</TABLE>

                See notes to consolidated financial statements.



                    MEDIX RESOURCES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                      For the Year Ended   For the Year Ended
                                         December 28,        December 29,
                                             1997                1996
                                      ------------------   -----------------
<S>                                        <C>                 <C>

Cash  flows  from  operating  activities
 Net  loss                                $    (515,000)       $(1,207,000)
                                           -------------        -----------
 Adjustments to reconcile net loss to
  net cash provided by (used in)
  operating activities  -
   Depreciation  and  amortization              606,000            371,000
   Common  stock  issued  for  services          18,000             48,000
   Impairment  of  goodwill                     349,000                -
   Basis  in  assets  of  divisions  sold       770,000                -
   Imputed  interest  expense  on
    convertible  debt                           134,000                -
   Change  in  assets  and  liabilities  -
     Accounts  receivable,  net                 (57,000)        (1,960,000)
     Prepaid  expenses  and  other             (108,000)           (33,000)
     Checks written in excess of bank balance   (65,000)          (179,000)
     Accounts  payable and accrued expenses    (279,000)           591,000
                                                ---------       --------
                                              1,368,000         (1,162,000)
                                               ----------     ------------
       Net cash provided by (used in)
         operating activities                   853,000         (2,369,000)
                                               ----------     -------------

Cash  flows  from  investing  activities
 Business  acquisitions                      (2,000,000)        (1,623,000)
 Purchase  of  property  and  equipment         (21,000)          (112,000)
 Proceeds  from  the  sale  of  fixed  assets    57,000                -
 Issuance  of  notes  receivable               (491,000)               -
                                            ------------       -----------
       Net cash (used in)
        investing  activities                (2,455,000)       (1,735,000)
                                           ------------        -----------

Cash  flows  from  financing  activities
 Proceeds  from  issuance  of debt and
   notes payable                              1,000,000              -
 Advances  under  financing  agreement       23,589,000        11,618,000
 Payments  under  financing  agreement      (23,364,000)       (9,478,000)
 Principal  payments  on  debt
   and  notes  payable                       (1,185,000)         (588,000)
 Issuance  of  preferred  and  common
   stock,  net  of  offering  costs           1,720,000         2,593,000
 Dividends  paid                                   -              (60,000)
                                            ------------     -------------
       Net  cash  provided  by
       financing  activities                  1,760,000         4,085,000
                                            -----------      -------------

Net  increase  (decrease)  in  cash             158,000          (19,000)

Cash,  beginning  of  period                        -             19,000
                                             ----------      ------------

Cash,  end  of  period                     $    158,000     $          -
                                           ============      =============

                     See notes to consolidated financial statements.
</TABLE>


Supplemental  disclosure  of  cash  flow  information:
     Cash  paid  during  the  year  for interest was $972,000 and $655,000 for
December  28,  1997  and  December  29,  1996,  respectively.

Non-cash  investing  and  financing  activities:
     Dividends  declared  payable in common stock were $39,000 and $66,000 for
December  28,  1997  and  December  29,  1996,  respectively.
     The  Company  issued 100,000 shares of common stock valued at $100,000 in
1997  for  the  satisfaction  of  debt.
     The  Company  issued  13,019 shares of common stock valued at $18,000 for
services  provided  by  non-employees.
     Acquisition  of  equipment  under  capital  leases  was  $56,000 in 1996.

     During  1996,  $400,000  of  receivables and $10,000 of fixed assets were
acquired  in  business  combination  through the issuance of 476,383 shares of
common  stock  with an equivalent value of $1,526,000.  The excess of purchase
price  over  the  identifiable  assets  of  $1,116,000  has  been allocated to
goodwill.

     During  1996,  all  shares  of  the  12%  preferred  stock outstanding at
December 31, 1995 were automatically converted into 1,173,631 shares of common
stock.

     In  conjunction  with the automatic conversion of the 12% preferred stock
accrued  dividends  outstanding  of  $441,000  were  recaptured.

     In  1996,  89  shares  of the 10% convertible preferred stock issued plus
$26,000  of  accrued  dividends  were  converted  into 923,111 share of common
stock.

     During  1996, $151,000 in notes payable were converted into 41,903 shares
of  common  stock  to cover the guaranteed value of certain shares issued in a
business  acquisition  during  the  year.

     During  1996,  the Company recorded a liability of approximately $500,000
to  cover  the  guaranteed  value  of  certain  shares  issued  in  a business
acquisition  during  the  year.

     Options  with  an  imputed value of $125,000 were issued as a finders fee
for  preferred  stock  placements  in  1996.


NOTE  1  -  ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES
----------------------------------------------------------------

Organization
------------

Medix  Resources,  Inc.  (formerly  International  Nursing Services, Inc.) and
subsidiaries  (the  Company)  provide  temporary  nurses  (registered  and/or
licensed),  therapists,  nurse  assistants,  and  other  caregivers to nursing
homes,  other  long-term  health-care  facilities,  hospitals,  and  private
residences.

The  Company  changed its name to Medix Resources, Inc. subsequent to December
28, 1997 to more accurately reflect the types of services it will be providing
in  the  future  (Note  2).

Principles  of  Consolidation
-----------------------------

The  accompanying  consolidated  financial  statements include the accounts of
Medix  Resources,  Inc.  and  its  wholly-owned  subsidiaries,  National  Care
Resources  - Colorado, Inc. National Care Resources - New York, Inc., National
Care  Resources  -  Texas, Inc., JJ Care Resources, Inc. and TherAmerica, Inc.
All  intercompany  transactions  have  been  eliminated.

Use  of  Estimates
------------------

The  preparation of financial statements in conformity with generally accepted
accounting  principles  requires  management to make estimates and assumptions
that  effect the reported amounts of assets and liabilities and disclosures 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.

Concentration  of  Credit  Risk
-------------------------------

The  Company maintains cash in depository accounts which, at times, may exceed
FDIC insurance limits.  At December 28, 1997 balances in excess of FDIC limits
were  approximately  $244,000.

Financial  instruments which potentially subject the Company to concentrations
of  credit  risk consist primarily of accounts receivable.  The Company grants
credit  to health-care facilities primarily in California, Colorado, New York,
and  Texas;  however,  travel  nurses are made available throughout the United
States.    The  Company periodically performs credit analysis and monitors the
financial  condition  of  its  clients  in  order  to  minimize  credit  risk.

Financial  Instruments
----------------------

The  carrying  value  of the Company's accounts and notes receivable, accounts
payable  and  accrued  expenses  approximate  their  fair  values  due  to the
short-term  nature  of  the  financial  instruments.

Due  to current interest rates available to the Company for debt being similar
to  rates  on  the  Company's remaining maturities, the fair value of existing
debt  approximates  its  carrying  value.

<PAGE>


NOTE  1  -  ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)
-----------------------------------------------------------------------------

Revenue  Recognition
--------------------

Revenue is recognized when services are rendered at the net realizable amounts
expected  to be received from payers, patients and others.  Amounts reimbursed
by  certain  payers  of  healthcare  services  are  subject to examination and
adjustment.  These adjustments are accrued throughout the year and adjusted in
future periods as the final settlements are determined.  At December 28, 1997,
the  Company  has  recorded a liability of $232,000 for the amount due for the
difference  between  actual  costs and costs to be reimbursed.  This liability
was  recorded  as  a  reduction  in  revenue.

Income  Taxes
-------------

The  Company  recognizes  deferred  tax  liabilities  and  assets based on the
differences between the tax basis of assets and liabilities and their reported
amounts  in the financial statements that will result in taxable or deductible
amounts in future years.  The Company's temporary differences result primarily
from  the  cash to accrual transition adjustment due to a required change from
the  cash  to  accrual  basis  and  depreciation  and  amortization.

Property  and  Equipment
------------------------

Property  and  equipment are stated at cost.  Depreciation is calculated using
the straight-line method over the estimated useful lives of the related assets
which  range  from  five  to  seven  years.

Intangible  Assets
------------------

Intangible  assets  are  stated  at cost, and consist of goodwill, non-compete
agreements  and  acquisition  costs.   Goodwill and non-compete agreements are
amortized  using  the  straight-line  method  over  fifteen  and  three years,
respectively.

Acquisition  costs  represents costs incurred in connection with the Company's
proposed  acquisitions.    Acquisition  costs will be included in the purchase
price  of  the  acquisitions  if  successful, or expensed in operations if the
acquisitions  are  unsuccessful.

The  Company  reviews  its long-lived assets for impairment whenever events or
changes  in  circumstances  indicate that the carrying amount of the asset may
not be recovered.  The Company looks primarily to the undiscounted future cash
flows  of  its  acquisition  in  its assessment of whether or not goodwill and
other  intangibles  have  been  impaired.    At December 28, 1997, the Company
determined  an  impairment  of  goodwill  was  appropriate  as a result of the
transaction  described  in  Note  4.

<PAGE>


NOTE  1  -  ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)
-----------------------------------------------------------------------------

Reclassifications
-----------------

Certain  amounts  in  the  1996  consolidated  financial  statements have been
reclassified  to  conform  to  the  1997  presentation.

Advertising  Costs
------------------

The  Company expenses advertising costs as incurred.  Advertising expenses for
the  years  ended  December  28,  1997 and December 29, 1996 were $181,000 and
$42,000,  respectively.

Basic  Loss  Per  Share
-----------------------

During the year ended December 31, 1997, the Company adopted the provisions of
Statement  of Financial Accounting Standard No. 128, "Earnings Per Share" (FAS
128).    FAS  128  established  new definitions for calculating and disclosing
basic  and diluted earnings per share.  Basic loss per share is based upon the
weighted  average number of shares outstanding.  All dilutive potential common
shares have an antidilutive effect on diluted net loss per share and therefore
have been excluded in determining net loss per share.  The Company's basic and
diluted  loss  per  share  are  equivalent and accordingly only basic loss per
share  has  been  presented.

Continued  Existence
--------------------

The  Company  has  suffered  recurring  losses  for the past several years and
incurred  a  net  loss  for  the year ended December 28, 1997 of $515,000.  In
addition,  the  Company  had  a  working  capital  deficit of $329,000.  These
factors,  among  others,  raise  substantial  doubt  about  the ability of the
Company  to  continue  as  a  going  concern.

Management's  plans  in  regard  to these matters include pursuing a number of
alternatives  for  additional  financing  which  may  include  a public and/or
private  offering  of  the  Company's  securities.    The Company is currently
holding discussions with investment bankers and financial institutions related
to  an offering of securities and new debt financing.  No agreements have been
reached  to  date.  Additionally, subsequent to year end (Note 2), the Company
merged  with  Cymedix Corporation, which has developed software for the secure
exchange  of medical data on the Internet.  There can be no assurance that the
Cymedix  Corporation  merger  will  produce  positive  cash flows, or that the
Company  will  be  able  to  obtain  any  additional future financing on terms
acceptable  to  the  Company.

The  accompanying  consolidated  financial  statements  do  not  include  any
adjustments  relating  to  the  recoverability  and  classification  of  asset
carrying amounts or the amount and classification of liabilities that might be
necessary  should  the  Company  be  unable  to  continue  as a going concern.

<PAGE>


NOTE  2  -  ACQUISITIONS
------------------------

TherAmerica,  Inc.
------------------

In January 1997, the Company acquired certain assets of Colorado Therapists On
Call,  Inc.  ("CTOC")  and  Professional  Healthcare  Providers, Inc. ("PHP"),
together  doing  business under the name Theramerica, Inc. (Theramerica).  The
Company paid $2,000,000 cash and assumed approximately $175,000 of liabilities
for  the  acquisition  which  was  effective  January  1,  1997.   The Company
accounted  for  the  transaction  as  a  purchase.

The  purchase  price  was  allocated  to  the  assets based upon the following
estimated  fair  values  at  the  acquisition  date:

<TABLE>
<CAPTION>
<S>                                 <C>
 Net  tangible  assets            $    160,000
 Non  compete                           50,000
 Excess  of  cost  over  net
   assets  acquired  (goodwill)      1,965,000
                                    ----------

                                   $ 2,175,000
                                    ==========
</TABLE>

Cymedix  Corporation
--------------------

In  January  1998,  the  Company consummated a merger with Cymedix Corporation
(Cymedix).    In  conjunction  with the merger the Company acquired all of the
issued  and  outstanding  common shares of Cymedix for $2,345,000.  To finance
the acquisition, the Company issued 6,980,000 shares of common stock valued at
$1,418,000  assumed  liabilities  of  $604,000 and paid $323,000 in cash.  The
merger  has  been  accounted  for  as a purchase.  The purchase price has been
allocated  as  follows:

<TABLE>
<CAPTION>
<S>                                 <C>
 Cash                           $    5,000
 Property  and  equipment           21,000
 Excess  of  cost  over  net
   assets  acquired  (goodwill)  2,319,000
                                ----------

                               $ 2,345,000
                                ==========
</TABLE>

The following table reflects the unaudited historical and pro forma results of
the  Company's  1997  and  1998  acquisitions.

<PAGE>


NOTE  2  -  ACQUISITIONS  (CONTINUED)
-------------------------------------

<TABLE>
<CAPTION>
                                  (Unaudited)

                             Medix                               Combined
                        Historical(1)  Cymedix   Adjustments(2)    Totals
                        -------------  --------  --------------- -----------
<S>                          <C>         <C>           <C>          <C>

YEAR ENDED DECEMBER 28, 1997

Revenues                 $24,875,000   $      -    $     -       $24,875,000
                          ==========    ========    =========     ==========

Net  (loss)              $  (515,000)  $ (922,000) $ (156,000)   $(1,593,000)

Preferred  stock
  dividends                 (972,000)     (29,000)     29,000       (972,000)
                          ----------       --------   -------     ----------

Net  (loss)  applicable
  to  common
  shareholders           $(1,487,000)  $ (951,000)  $(127,000)   $(2,565,000)
                          ==========    =========    ========     ==========

Basic  net  (loss)
 per  common  share      $     (0.09)  $    (0.05)  $   (.01)    $      (.15)
                          ==========    =========    ========     ==========

Weighted  average
 shares  outstanding      16,828,824                              16,824,824
                        ============                               ==========
</TABLE>

<TABLE>
<CAPTION>
                                  (Unaudited)
YEAR ENDED DECEMBER 29, 1996
                      Medix                                            Combined
                   Historical(1) Theramerica  Cymedix  Adjustments(3)   Totals
                   ------------- -----------  -------- -------------  ---------
<S>                    <C>          <C>         <C>        <C>           <C>

Revenues             $14,259,000  $ 8,378,000  $     -   $     -    $22,637,000
                   =============  ============ =========  ========   ==========
Net  (loss)          $(1,207,000) $   (62,000) $(817,000)$ 91,000   $(1,995,000)

Preferred  stock
  dividends           (1,388,000)         -           -        -     (1,388,000)
                    ------------   ----------  ---------  -------  -------------

Net  (loss)
 applicable  to
 common
 shareholders       $(2,595,000)  $  (62,000)  $ (817,000)$ 91,000  $(3,383,000)
                     ==========    ==========   =========  =======   ===========

Basic  net  (loss)
 per common share   $     (.23)   $       -    $    (.07) $    .01  $    (.29)
                     ==========    ==========   =========  ========  =========

Weighted  average
  shares
  outstanding       11,497,111                                       11,497,111
                   ===========                                     ============
</TABLE>

(1)         Includes the results of operations for Theramerica from January 1,
1997,  and  reflects  the  issuance  of 6,980,000 common shares related to the
acquisition  on  weighted  average  shares  outstanding.
(2)       Adjustments relate to the amortization of goodwill, and dividends on
convertible  preferred  stock  converted  into common stock in the merger have
been  eliminated.
(3)     Adjustments relate to amortization of goodwill and interest expense on
acquisition  debt which would have been required had the Company completed the
acquisition  at  the  beginning  of the period, and the elimination of certain
corporate  expenses  which  would  not  have  been  incurred.


<PAGE>


NOTE  3  -  BALANCE  SHEET  DISCLOSURES
---------------------------------------

Property  and  equipment  consists  of  the  following:

<TABLE>
<CAPTION>
<S>                                     <C>
 Furniture  and  fixtures            $    90,000
 Computer  hardware  and  software       536,000
                                       ---------
                                         626,000
 Less  accumulated  depreciation        (324,000)
                                      ----------

                                    $    302,000
                                     ============
</TABLE>

Depreciation  expense  was  $121,000 and $105,000 for the years ended December
28,  1997  and  December  29,  1996,  respectively.

Intangible  assets  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                              <C>
 Goodwill                     $5,948,000
 Non-compete  agreements         150,000
 Acquisition  costs               11,000
                                --------
                               6,109,000
 Less  accumulated
   amortization  and
   impairment                 (1,618,000)
                            ------------

                             $ 4,491,000
                              ==========
</TABLE>

Amortization  expense  was  $485,000 and $266,000 for the years ended December
28,  1997  and  December  29, 1996, respectively.  As discussed in Note 4, the
Company  entered into an agreement to sell two entities at a price which would
have  resulted  in  on  a  loss  of  approximately $349,000.  Accordingly, the
Company  impaired the related carrying value of goodwill on these two entities
by  approximately  $347,000  in  1997.

Accrued  liabilities  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                                                <C>
Amount  due  under  Ellis  acquisition            $ 296,000
Amounts  due  Medicare                              232,000
Accrued  payroll  taxes  and  penalties             483,000
Other                                               373,000
                                                  ---------

                                                $ 1,384,000
                                                  =========
</TABLE>


At  various  times during the year the Company was delinquent with payroll tax
deposits.    At December 28, 1997, $215,000 was accrued for estimated interest
and  penalties.


<PAGE>
------


NOTE  4  -  SALE  OF  OPERATING  DIVISIONS
------------------------------------------

In  February  of  1997  the Company sold its Medicare division for $200,000 in
cash  which  resulted in a gain of $190,000.  The purchasor did not assume any
prior  liabilities  associated  with operations prior to the acquisition.  The
Company  believes  it has adequate reserves for any final adjustment which may
occur.

During  the 4th quarter of 1997, the Company entered into an agreement to sell
three  entities it acquired in the past four years.  Ellis Home Care Services,
Inc. (Ellis), Stat Health Care Services, Inc. (Stat) and Paxxon Services, Inc.
(Paxxon).    The  sales  prices  are  $500,000, $1,580,000, and $1,468,000 for
Ellis,  Stat  and  Paxxon,  respectively.  The Company consummated the sale of
Paxxon  in  the  4th  quarter  of 1997 for approximately $1,275,000 cash and a
$193,000  note  receivable  (Note 5).  The Ellis and STAT sales are contingent
upon  regulatory approval of the buyer which is anticipated to be completed in
late  1998.    The  Paxxon sale resulted in a gain of $581,000 while Ellis and
STAT  resulted  in  a  loss of $349,000.  The Company impaired goodwill on the
Ellis  and  STAT  divisions by $349,000 as a result of entering into the sales
contracts.    These sales relate only to the business and not to the assets of
these  entities  which  the  Company  will  retain  and  liquidate.

In  February of 1998, the Company sold the balance of the trade receivables of
Paxxon  to the purchasor at a discount of $35,000 which has been netted in the
gain  on  sale  of  Paxxon.

The  sale  of these divisions will result in a significant loss in revenues on
an  ongoing  basis.


NOTE  5  -  NOTES  RECEIVABLE
-----------------------------
<TABLE>
<CAPTION>

                                                   December  31,
                                           --------------------------
                                               1997            1996
                                           ----------       ---------
<S>                                           <C>            <C>

As part of consideration for the sale of
 Paxxon (Note 4), the Company received
 a  note  receivable  in the amount of
 $192,795 that accrues interest at 5.75%.
 Two  principal  and  accrued interest
 payments of $100,000 each are due in May
 1998  and November 1998.  Payment on the
 note is collateralized by a pledge of
 a  subordinate  interest  in  the
 debtors  accounts  receivable.                $193,000     $        -



The  Company  advanced  $298,000 to
 Cymedix which accrued interest at 11%
 with principal  and  accrued interest
 due  December  31,  1998.    The note
 is collateralized  by  a  subordinated
 security  interest  in all of the debtors
 assets.    The Company advanced an
 additional $25,000 to Cymedix subsequent
 to year  end.    These  were  included
 as  part  of the purchase price (Note 2).      298,000             -
                                             ------------     ------------

                                             $  491,000       $     -
                                             ============     ============
</TABLE>

<PAGE>


NOTE  6  -  LINE-OF-CREDIT
--------------------------

The  Company  has entered into an agreement with a financial institution for a
revolving  line-of-credit with a maximum principal balance of $5,000,000 which
is  limited  by  a  borrowing  base  calculation of  80% of qualified accounts
receivable.    Interest  accrues  on  the outstanding balance at 2% above bank
prime  (10.5% at December 28, 1997).  Additionally, the Company is required to
pay  the lender a loan management fee on a monthly basis equal to 0.35% of the
average  outstanding  principal  balance of the preceding month.  Interest and
fees  paid  to this financial institution for the year ended December 28, 1997
approximated  $650,000.    The outstanding principal balance including accrued
interest  and fees was $3,543,000 at December 28, 1997.  The agreement expires
May  2000 and can be terminated by the lender without notice or by the Company
with  a  thirty  day notice to the lender and payment of defined early payment
penalties.    The  loan  is  collateralized by substantially all the Company's
assets.


NOTE  7  -  CAPITAL  LEASES
---------------------------

The  Company leases a portion of their computer equipment under various leases
all  that  have  a  36  month term and contain a bargain purchase option.  The
future  minimum  lease  payment  as  of  December  28,  1997  are  as follows:

<TABLE>
<CAPTION>
<S>                                               <C>

 1998                                        $    27,000
                                              -----------
 Future  minimum  lease  payments                 27,000
 Less  interest                                   (2,000)
                                              ----------
 Present  value  of  capital  leases              25,000
 Less  current  portion                          (25,000)
                                              ---------

 Long-term  portion                           $       -
                                              ===========
</TABLE>

Cost of the leased equipment was $77,000 with related accumulated depreciation
of  $36,000  at  December  28,  1997.


NOTE  8  -  COMMITMENTS  AND  CONTINGENCIES
-------------------------------------------

Operating  Leases
-----------------

The  Company  leases  office  facilities  and  equipment  under non-cancelable
operating  leases.    One  of the office leases is personally guaranteed by an
officer, director, and stockholder.  Rent expense for the years ended December
28,  1997  and  December  29,  1996  was $289,000 and $188,000,  respectively.

<PAGE>


NOTE  8  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)
--------------------------------------------------------

Future minimum lease payments under these leases are approximately as follows:

<TABLE>
<CAPTION>

 Fiscal  Year  Ended  December                Amount
 -----------------------------          ------------
<S>                                          <C>
 1998                                   $    259,000
 1999                                        206,000
 2000                                        155,000
 2001                                         34,000
                                             --------

                                        $    654,000
                                         ============
</TABLE>

Litigation
----------

In  1997,  a  former  patient  filed  a complaint in Texas against the Company
alleging that an employee/therapist of the Company was negligent.  The Company
believes that there was no wrong doing and intends to defend itself vigorously
against  the  charges.   The client/hospital where the employee was working at
the time of the alleged incident paid the plaintiff $100,000 in settlement and
release  from  further  claims.  The client/hospital has now demanded that the
Company indemnify them for the $100,000 as the client/hospital alleges this is
stipulated  in  a  contract  between the Company and the client/hospital.  The
Company does not believe that it has a contractual obligation to indemnify the
client/hospital  in  this  situation  and intends to vigorously defend against
this  demand.    In addition, the Company maintains an insurance policy with a
limit  of $1,000,000 which may satisfy some or all of the damages in the event
of  an  unfavorable  outcome.  The Company believes that it will not incur any
material  losses  in  excess  of  accrued  amounts  or  insured  limits.

During  the fourth quarter of 1997, an action was filed against the Company in
the  Eastern  District of New York under the caption New York Healthcare, Inc.
v. International Nursing Services, Inc., et al., alleging, among other things,
breach  of  contract  against  the  Company  and  seeking damages in excess of
$175,000  plus  court  costs and attorney fees.  The Company filed answers and
counterclaims  in  this action.  The Company intends to vigorously defend this
action  and  to  press  its  counterclaim.    The  Company does not expect any
possible  resolution of this matter to have a material effect on the Company's
financial  condition.

The Company is also subject to certain other litigation with former employees.
Management  believes  that  it will not incur any material losses in excess of
accrued  amounts.

<PAGE>


NOTE  8  -  COMMITMENTS  AND  CONTINGENCIES  (CONTINUED)
--------------------------------------------------------

Ellis  Guarantee
----------------

The Company purchased Ellis Health Services, Inc. by issuing 256,250 shares of
the  Company's  common  stock  and guaranteeing that the former owner of Ellis
would  realize  at  least  $4.25  per  share upon the sale of the first 12,000
shares  each month and 4.00 per share thereafter.  The Company agreed to issue
additional  shares  or stock to make up any shortfall and the Chairman and CEO
of  the  Company  pledged  100,000  of  his personal shares as collateral.  At
December  29, 1996, the former owner of Ellis had a shortfall of approximately
$500,000  from  the  sales of stock to that date.  In January 1997, the former
owner  of  Ellis  exercised  his  right  to  take  the security pledged by the
Chairman  and  CEO  of  the  Company.    The Board of Directors of the Company
approved  the  issuance to the Chairman and CEO 100,000 shares of common stock
and  options  to purchase 250,000 shares of common stock at $1.00 per share to
compensate  the  Chairman  and  CEO  for the loss of his personal shares.  The
$1.00 per share represented the fair market value of the shares at the date of
the grant.  In March 1997, the former owner of Ellis presented a demand letter
to  the  Company  requesting  immediate payment of the remaining short fall of
approximately  $400,000.    In  August  of  1997,  the Company entered into an
agreement  with  the former owner of Ellis agreeing to payments resulting in a
liability  of  $295,000  at  December  28,  1997.


NOTE  9  -  STOCKHOLDERS'  EQUITY
---------------------------------

1996  Private  Placement
------------------------

In  July  and September 1996, the Company completed a private placement of 244
units, each unit consisting of a share of convertible preferred stock, $10,000
per  unit,  $1 par value ("1996 Preferred Stock"), a warrant to purchase 8,000
shares  of  the  Company's common stock at $2.50 per share and a unit purchase
option  to  purchase  an additional unit at $10,000 per unit.  The convertible
preferred  stock  carries  a  10% dividend and is convertible at the lesser of
$1.25  or  75%  of  the average sales price for the five trading days prior to
conversion.    The  private  placement raised gross proceeds to the Company of
approximately  $2,440,000.  The Company has filed a registration statement which
became effective in October of 1996, registering 8,293,133 shares of common
stock.  The registered common stock is primarily designated for the conversion
of the related preferred stock and exercise of the associated warrants.  The
registered common stock is primarily designated for the conversion of the
related preferred stock.

Approximately  $1,550,000  of  the  proceeds  raised was used to fund the cash
purchase  portion of STAT.  A shareholder who participated in the placement of
the  private  placement was paid a commission of $117,000 in 1996 and issued a
warrant  to  purchase  100,000 shares of common stock at $2.00 per share.  The
warrant  price  was  subsequently  reduced to $1.00 per share in January 1997.

<PAGE>


NOTE  9  -  STOCKHOLDERS'  EQUITY  (CONTINUED)
----------------------------------------------

1996  Private  Placement  (continued)
-------------------------------------

During  1996,  88.5  units  (with accrued dividends) were converted to 923,111
shares  of  common  stock.    In addition, a Unit holder who held 17 units was
allowed  to  reduce  their purchase price on their warrants to $1.00 per share
from  $2.50  per share, resulting in gross proceeds to the Company of $136,000
in  November  1996.    In 1997 a Unit Holder who held 20 Units exercised their
Unit  purchase  option resulting in gross proceeds to the Company of $200,000.
The Unit holder immediately converted the preferred to common resulting in the
issuance  of  257,028  shares  of  common  stock  in  January  1997.

During 1997, 129.25 units (with accrued dividends) were converted to 3,133,361
shares  of common stock.  Subsequent to year end, an additional 8.0 units have
been  converted  resulting  in the issuance of an additional 489,315 shares of
common  stock  in  1998.

1997  Private  Placement
------------------------

In  January  and  February  1997, the Company completed a private placement of
167.15  Units,  each  unit  consisting  of  one share of convertible preferred
stock,  $10,000  per unit, $1 par value, "1997 Preferred Stock", and a warrant
to purchase 10,000 shares of common stock at $1.00 per share.  The convertible
preferred stock carries no dividend if the underlying common stock is included
in  an  effective  registration  statement  within  90 days of the date of the
agreement.    After  90  days, if the underlying shares are not included in an
effective registration statement, the dividend rate becomes 18%.  In addition,
the  preferred  stock  contains a redemption feature whereby if the underlying
common  stock  which  the  preferred  shares  are  convertible  into  is  not
effectively registered by the second anniversary date of each respective unit,
the  holder  at  their option may redeem the preferred shares for $10,000 back
plus  all  accrued  unpaid  dividends.    The Company raised gross proceeds of
$1,672,000  from this private placement.  Commissions of $100,000 were paid to
individuals who assisted in the private placement who are also shareholders of
the  Company.    The Company received net proceeds of approximately $1,520,000
from  the sale of the 1997 preferred stock.  Substantially all of the proceeds
were  used  to  purchase  TherAmerica  (Note  2).  The Company has filed a
registration statement which became effective in April of 1997, registering
6,732,311 shares of common stock.  The registered common stock is primarily
designated for the conversion of the related preferred stock and exercise of
the associated warrants.

During  1997,  66.65 units were converted to 3,651,867 shares of common stock.
Subsequent to year end, an additional 1.0 unit has been converted resulting in
the  issuance  of  an  additional  53,981  shares  of  common  stock  in 1998.

<PAGE>


NOTE  9  -  STOCKHOLDERS'  EQUITY  (CONTINUED)
----------------------------------------------

Warrants
--------

On  January  28,  1997,  the Company issued a convertible note for proceeds of
$1,000,000 from a shareholder of the Company.  Interest accrued on the note at
12.5% and the note matured on January 27, 1998.  The proceeds of the note were
used  to  fund  the  acquisition  costs  related to TherAmerica (Note 2).  The
Company  also  issued  a warrant to purchase 200,000 shares of common stock at
$1.1875  per  share  until  July 31, 1999 to the convertible note holder.  The
Company  recorded an imputed discount on the convertible debenture of $134,000
using  the  Black-Scholes  option pricing model related to the issuance of the
warrant  to purchase 200,000 shares of common stock at $1.1875 per share.  The
Company  amortized  the imputed discount over the expected term of the related
debt.    On  May 28, 1997, the Company paid $500,000 of principal plus accrued
interest  to the noteholder, and the exercise price of the warrant was reduced
to  $0.27  from  $1.19.    The  reduction of the exercise price resulted in no
material  change to the imputed discount due to a decrease in the market value
of the Company's stock.  During the forth quarter of 1997 the Company paid the
remaining  $500,000 plus accrued interest from proceeds received on the Paxxon
Sale  (Note  4).

Stock  Options
--------------

In  May  1988, the Company adopted an incentive stock option plan (ISO), which
provides  for  the  grant of options representing up to 100,000  shares of the
Company's common stock to officers and employees of the Company upon terms and
conditions  determined  by  the Board of Directors.  Options granted under the
plan  are  generally  exercisable immediately and expire up to ten years after
the  date  of grant.  Options are granted at a price equal to the market value
at  the  date of grants, or in the case of a stockholder who owns greater than
10%  of  the outstanding stock of the Company, the options are granted at 110%
of  the  fair  market  value.

In  1994,  the  Board of Directors established, the Omnibus Stock Plan of 1994
(1994  Plan)  and  reserved  500,000  shares of the Company's common stock for
grant  under  terms  which  could extend through January 2004. All options and
warrants issued under this plan are non-qualified.  Grants under the 1994 Plan
may  be  to employees, non-employee directors, and selected consultants to the
Company, and may take the form of non-qualified options, not lower than 50% of
fair market value.  To date, the Company has not issued any options below fair
market  value  at  the  date  of  grant.

In  1996,  the  Board of Directors established the 1996 Stock Option Plan (the
"1996  Plan")  with  terms similar to the 1994 Plan.  During 1996, the Company
issued  300,000  options  to  purchase  the  Company's  common  stock at $1.88
expiring  in  2006.   The Board of Directors of the Company reserved 3,000,000
shares  of  common  stock  for  issuance  under  the  1996  Plan.

<PAGE>


NOTE  9  -  STOCKHOLDERS'  EQUITY  (CONTINUED)
----------------------------------------------

Stock  Options  (continued)
---------------------------

Also during 1996, the Company canceled and reissued certain options to certain
officers  and directors of the Company.  Options to purchase 224,187 shares of
common  stock at exercise prices ranging from $1.20 to $2.75 which were issued
to  certain officers and directors under the 1994 Plan were canceled.  Options
to  purchase  239,437  shares  of common stock at $1.88 (which represented the
fair  market  value  of  the common stock at the time of grant) were issued as
replacement  for  the  canceled  options.   The additional 15,250 options were
issued  to replace the loss in value for those option holders who held options
at  exercise  prices  which  were  less  than  $1.88.

The Company also granted 443,748 options to purchase common stock at $1.00 per
share  under  the  "1996  Plan", 133,609 of which were granted to officers and
directors.

The  following  is  a  summary  of  options and warrants granted, all of which
expire  at  various  times  through  2007.

<TABLE>
<CAPTION>


                          Number of Options
                         --------------------
                                                Exercise               Exercise
                                                Price Per  Number of   Price Per
                         Plan       Non-Plan      Share     Warrants     Shares
                         -------  -----------  -----------  --------  ----------
<S>                       <C>         <C>          <C>         <C>       <C>
Outstanding
 December 31, 1995  1,121,375    15,500     $0.63-$6.00 1,514,604 $1.75-$5.00

Option/warrants
 granted              539,437        -      $1.88       2,217,000 $1.00-$2.50
Unit options
 granted(1)               -          -           -      1,952,000      -
Cancellations        (317,687)   (8,000)    $0.63-$6.00  (358,941)$1.00-$4.00
                    ---------  ---------    ----------- ---------- ----------

Outstanding
 December 29, 1996  1,343,125     7,500     $.63-$6.00  5,324,663 $1.00-$5.00

Options/warrants
 granted            3,019,155(2)     -      $0.25-$1.00 2,279,126(3) $0.15-$2.50
Unit  options
 canceled                 -          -                (1,792,000)(3) $2.50
Cancellations      (1,920,935)(2)    -      $0.63-$3.25 (1,011,376)  $0.27-$2.50
                   ----------   ---------   -----------  ----------  ----------

Outstanding
 December 28, 1997  2,441,345     7,500     $0.25-$6.00  4,800,413   $0.15-$5.00
</TABLE>

<PAGE>

NOTE  9  -  STOCKHOLDERS'  EQUITY  (CONTINUED)
----------------------------------------------

(1)     Represents option to purchase an additional unit identical to the Unit
issued in the July/September private placement.  Each $10,000 unit consists of
one  share of convertible preferred (convertible at the lesser of $1.25 or 75%
of  the  closing  price  on  the  five trading days prior to conversion) and a
warrant  to purchase 8,000 shares of common stock at $2.50 per share for three
years.

(2)          Includes  1,223,326 options that were canceled and reissued at an
exercise  price of $0.25 to $1.00 to officers, directors, and employees of the
Company.    The  options were originally exerciseable between $0.63 and $3.25.
Net  new  issues  were  1,794,729  and  net  canceled  were  696,509.

(3)          Includes  287,626  warrants that were canceled and reissued at an
exercise  price  of  $0.25  to  an  officer of the Company.  The warrants were
originally  exerciseable  at $1.75.  Also includes the cancelation of 204 Unit
Options  in  exchange  for the cancellation and reissue of the related warrant
with an exercise price of $0.63.  The warrants were previously exerciseable at
$2.50.    Millenco  note  warrants  were  issued on January 28, 1997 at $1.19,
Millenco  also  exercised  20 unit options on 1996 preferred stock.  On August
15,  1997  the  warrants  were  canceled  and reissued at an exercise price of
$0.63.    The  warrants were originally exerciseable at $1.25.  Net new issues
were  1,871,500  and  net  canceled  were  163,750.

     The  weighted  average exercise price of options and warrants outstanding
at  December  28,  1997  is  $1.82.

The  Company  has  adopted  the  disclosure-only  provisions  of  Statement of
Financial  Accounting  Standards  No.  123,  "Accounting  for  Stock-Based
Compensation."   Accordingly, no compensation cost has been recognized for the
stock  option  plans.    Had compensation cost for the Corporation's two stock
option  plans  been  determined  based on the fair value at the grant date for
awards  consistent  with the provisions of SFAS No. 123, the Corporation's net
loss  and  loss  per  share would have been increased to the pro forma amounts
indicated  below:

<TABLE>
<CAPTION>

                                                 1997                    1996
                                               ----------             ----------
<S>                                             <C>                     <C>
Net  loss  -  as  reported                 $    (515,000)           $(1,207,000)
Net  loss  -  pro  forma                      (1,963,000)            (2,141,000)
Basic  loss  per  share  -  as  reported            (.15)                  (.57)
Basic  loss  per  share  -  pro  forma              (.30)                  (.78)
</TABLE>

The  fair  value  of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model  with the following weighted-average
assumptions  used for grants in 1997 and 1996, respectively: dividend yield of
0%;  expected  volatility of 128% and 93%, respectively; discount rate of 5.5%
and  11.5%,  respectively;  and  expected  lives  of  10  years.

<PAGE>


NOTE  9  -  STOCKHOLDERS'  EQUITY  (CONTINUED)
----------------------------------------------

Warrants  (continued)
---------------------

Dividends
---------

In 1995, the Board of Directors declared a stock dividend on the 12% preferred
stock  to be paid in common stock.  Under the terms of the preferred stock, if
the  Company does not have $750,000 cash or cash equivalents then the dividend
may be paid by issuing common stock at the rate of $1.80 per share annualized.
The  Company  accrued dividends at the $1.80 level for 1995 as the Company did
not  have  $750,000  in  cash  and  cash  equivalents.    The dividends on the
preferred  stock  for  the year ended December 31, 1995 were $876,000 of which
$435,000  was paid in common stock of the Company.  The remaining dividends of
$441,000 were accrued at year end and recorded as a dividend payable in common
stock.

During  January 1996, the outstanding 12% preferred stock at December 31, 1995
was  automatically  converted into common stock.  All unpaid dividends on that
preferred  stock  were  void  and no longer payable.  Since the dividends were
previously  reflected in the statement of operations as a component of the net
loss  applicable to common stockholders, the recovery of the accrued dividends
has  been  reflected  as  a  credit  in determining the net loss applicable to
common stockholders in 1996 on the statement of operations in the accompanying
financial  statements.

The  Company  has  imputed dividends on the 1997 and 1996 preferred stock as a
result  of  in  the  money  conversion  features  (Note  11).

Stock  Payoff  of  Note  Payable
--------------------------------

In  February 1996, the Company paid off a note payable consisting of principal
of $25,000 and accrued interest payable of approximately $23,000 with issuance
of  13,700 shares of common stock.  The common stock was valued at $3.50 which
represented  the  fair  market  value  of  the common stock at the time of the
payoff.

Settlement  of  Stock  for  Services
------------------------------------

In  September  1996,  the  Company  settled a dispute with a former investment
banker  who  claimed that the Company owed the investment banker approximately
$53,000.    The Company settled the dispute by issuing 20,133 shares of common
stock.

<PAGE>
------


NOTE  10  -  INCOME  TAXES
--------------------------

The  temporary differences between the tax basis of assets and their financial
reporting  amounts that give rise to a deferred tax asset are primarily due to
a  cash  to accrual transition adjustment due to the Company being required to
adopt  the  accrual  basis  for  income  tax  filing  purposes.

The  components  of  deferred  tax  assets (liabilities) in the balance sheet,
which  are  fully  limited  by  a  valuation  allowance,  are  as  follows:

<TABLE>
<CAPTION>
<S>                                           <C>
 Accounting  method  differences            $    244,000
 Net  operating  loss  carryforward            2,006,000
                                             -----------
                                               2,250,000
 Less  valuation  allowance                   (2,250,000)
                                             ------------

 Net  deferred  tax  asset                   $        -
                                             =============
</TABLE>

The  Company  has incurred net losses for federal tax reporting purposes since
inception  of  approximately  $5,900,000.  The  tax  net  operating loss (NOL)
carryforwards  expire  in  years  2003    through  2012.    The utilization of
$4,718,000  of  the NOL carryforward is limited to $469,000 on an annual basis
due  to  an effective change in control which occurred as a result of the 1996
private  placement.   Due to the existence of net operating losses incurred by
the  Company  which  raise  substantial  doubt  about the Company's ability to
continue  as a going concern, the Company has concluded it is more likely than
not  that  it  will  not  realize  its  deferred tax asset and accordingly has
established  a  valuation  allowance  of  $2,250,000.


NOTE  11  -  LOSS  PER  COMMON  SHARE
-------------------------------------

In  accordance  with  the  SEC's  position on preferred stock with convertible
features  that  are  in  the  money  at  the time of issuance, the Company has
imputed  a value associated with such conversion features and has recorded the
value as a discount on the preferred stock.  The Company amortizes the imputed
discount on the preferred stock over the period from issuance of the preferred
stock to the earliest period at which the preferred stock becomes convertible.
As  the  Company's  1997  and  1996  preferred stock issuances are immediately
convertible,  the  Company  has  amortized  the  entire  imputed discount as a
component  of  dividends  on preferred stock.  The Company recorded additional
dividends  to  preferred stockholders of approximately $553,000 and $1,737,000
for the years ended December 29, 1997 and 1996, respectively, which represents
an  imputed increase to the dividend yield and not a contractual obligation on
the  part  of  the  Company  to  pay  such  imputed  dividends.

The  Company has also imputed additional dividends on the 1997 preferred stock
of $375,000 as a result of the repricing of the exercise price associated with
the  related warrants issued.  The Company repriced the warrant exercise price
as  an  inducement  for holders not to convert their 1997 preferred stock into
shares  of  common  stock.

<PAGE>


NOTE  11  -  LOSS  PER  COMMON  SHARE  (CONTINUED)
--------------------------------------------------

<TABLE>
<CAPTION>

                                                        December  31,
                                                -------------------------
                                                  1997              1996
                                                ---------         --------
<S>                                                <C>               <C>
Net  loss                                    $    515,000        $1,207,000
Preferred  stock  dividends  based
 on stated rate                                    44,000            92,000
Preferred  stock  dividends  based
 on  imputed  discount  at  issuance              553,000         1,737,000
Preferred  stock  dividends  imputed
 associated with related warrant repricing        375,000                -
Preferred stock dividends recaptured (Note 9)        -             (441,000)
                                              -----------        ----------

Net loss applicable to common stockholders   $  1,487,000      $  2,595,000
                                             ============      ============

Basic  loss  per  common  share              $      (.15)      $       (.57)
                                                =========      =============

Weighted  average  shares  outstanding         9,848,824          4,517,111
                                             ===========       ==========
</TABLE>

NOTE  12  -  RETIREMENT  SAVINGS  PLAN
--------------------------------------

Effective  March  25,  1997,  the  Company  adopted  a  defined  contribution
retirement  savings  plan  which covers all employees age 21 or older with one
thousand  hours  of  annual  service.   Matching contributions are made by the
Company  at  $0.25  for  each  $1  that  the  employee contributes up to 8% of
compensation.    Company  contributions  vest  as  follows:

<TABLE>
<CAPTION>

 Years  of  Service                  Vested
 ------------------          --------------
<S>                                <C>
            1                      10%
            2                      20%
            3                      30%
            4                      40%
            5                      60%
            6                      80%
            7                     100%
</TABLE>

Contributions  for  the  year  ended  December  28,  1997  were  $35,000.