content: SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC 20549
  
                                      FORM 10-Q
  
                  Quarterly Report Under Section 13 or 15(d) of the
                          Securities Exchange Act of 1934
  
      July 31, 1996                                             0-011228
  For the Quarter Ended                                 Commission File Number:
  
                            SYSTEMS ASSURANCE CORPORATION
               (Exact name of registrant as specified in its charter)
  
          DELAWARE                                         02-0337028
  (State or other jurisdiction                (I.R.S. Employer Identification No.)
  of incorporation or organization)
  
                    18 West King Street, Malvern, PA 19355 19355
                 (Address of principal executive offices) (zip code)
  
                                   (610) 647 -7840
                 Registrant's telephone number including area code:
  
  
  Indicate by check mark whether the Registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months (or for such shorter period that the Registrant was
  required to file such reports), and (2) has been subject to such filing
  requirements for the past 90 days.
  
                                 Yes [X]   No [ ]
  
  Indicate the number of shares outstanding of each of the issuer's classes of
  common stock, as of the latest possible date.
  
  Class                                          Outstanding at September 9, 1996
  Common Stock,                                           27,918,454
  par value $.01 per share
  
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                                   BALANCE SHEETS
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                July 31, 1996   October 31, 1995
  
                    ASSETS
  <S>                                                           <C>               <C>         
  Current assets:
           Cash                                                 $        842      $        382
           Income taxes refundable                                     1,442             1,442
                                                                ------------      ------------
  
                    Total current assets                               2,284             1,824
                                                                ------------      ------------
  
  Total Assets                                                  $      2,284      $      1,824
                                                                ============      ============
  
  
                    LIABILITIES AND CAPITAL DEFICIT
  
  Current liabilities:
           Notes payable                                        $     50,000      $         --
           Accounts payable and accrued expenses                       2,518            19,000
           Advances from shareholders                                     --            63,960
                                                                ------------      ------------
  
                    Total current liabilities                         52,518            82,960
                                                                ------------      ------------
  
  Capital deficit:
           Common stock, par value $.01 per share;
             authorized 30,000,000 shares; outstanding
             27,918,454 and 24,418,454 shares, respectively          279,185           244,185
           Additional paid-in capital                              9,802,200         9,786,233
           Deficit                                               (10,131,619)      (10,111,554)
                                                                ------------      ------------
  
                    Total capital deficit                            (50,234)          (81,136)
                                                                ------------      ------------
  
  Total liabilities and capital                                 $      2,284      $      1,824
                                                                ============      ============
  </TABLE>
  
      The accompanying notes are an integral part of the financial statements.
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                              STATEMENTS OF OPERATIONS
              Three and Nine-Month Periods Ended July 31, 1996 and 1995
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                          Three- Month                       Nine -Month
                                                      1996              1995            1996             1995
  <S>                                          <C>               <C>               <C>               <C>         
  Revenues                                     $         --      $         --      $         --      $         --
  General and administrative expenses                 1,240            57,991            19,044            57,991
  Interest expense                                      875                --             1,021                --
                                               ------------      ------------      ------------      ------------
  
  Income (loss) before provision for
    income taxes                                     (2,115)          (57,991)          (20,065)          (57,991)
  
  Provision (credit) for income taxes                    --            (1,445)               --            (1,445)
                                               ------------      ------------      ------------      ------------
  
  Net income (loss)                            $     (2,115)     $    (56,546)          (20,065)     $    (56,546)
                                               ============      ============      ============      ============
  Income (loss) per common share:
           Net income (loss) $                           --      $         --      $         --      $         --
                                               ============      ============      ============      ============
  
  Weighted average number of common shares       27,918,454        23,118,454        25,818,454        23,118,454
                                               ============      ============      ============      ============
  </TABLE>
  
      The accompanying notes are an integral part of the financial statements.
  
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                            STATEMENTS OF CAPITAL DEFICIT
                     Twelve-month Period Ended October 31, 1995
                    and the Nine-Month Period Ended July 31, 1996
                                     (Unaudited)
  <TABLE>
  <CAPTION>
                                                                               Additional                              Total
                                             Number              Par            Paid-in                               Capital
                                           of Shares            Value           Capital            Deficit            Deficit
  <S>                                      <C>             <C>               <C>               <C>               <C>          
  Balance, October 31, 1994                23,118,454      $    231,185      $  9,798,983      $(10,077,753)     $    (47,585)
           Issuance of common shares        1,300,000            13,000           (12,750)                                250
           Net loss                                                                                 (33,801)          (33,801)
                   --- ----                ----------      ------------      ------------      ------------      ------------ 
  
  Balance, October 31, 1995                24,418,454           244,185         9,786,233       (10,111,554)          (81,136)
           Issuance of common shares        3,500,000            35,000            15,967                              50,967
           Net loss                                                                                 (20,065)          (20,065)
                   --- ----                ----------      ------------      ------------      ------------      ------------ 
  
  Balance, July 31, 1996                   27,918,454      $    279,185      $  9,802,200      $(10,131,619)     $    (50,234)
                                         ============      ============      ============      ============      ============
  
  </TABLE>
  
  
      The accompanying notes are an integral part of the financial statements.
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                              STATEMENTS OF CASH FLOWS
                   Nine-Month Periods Ended July 31, 1996 and 1995
                                     (Unaudited)
  <TABLE>
  <CAPTION>
  
                                                                    1996           1995
  <S>                                                             <C>           <C>      
  Cash flows from operating activities:
           Net income (loss)                                      $(20,065)     $(56,546)
  Adjustment for items not affecting cash flow:
           Increase in refundable income taxes                          --        (1,445)
           Change in accounts payable and
                             accrued expenses                      (16,482)        6,500
                                                                  --------      --------
  Net cash provided (used) by operating
    activities                                                     (36,547)      (51,491)
                                                                  --------      --------
  
  Cash flows from financing activities:
           Proceeds from issuance of note                           50,000            --
           Shareholder advances, net                               (12,993)       51,645
                                                                  --------      --------
  Net cash provided by financing activities                         37,007        51,645
                                                                  --------      --------
  
  Net increase (decrease) in cash                                 $    460           154
  Cash at beginning of period                                          382            --
                                                                  --------      --------
  
  Cash at end of period                                           $    842      $    154
                                                                  ========      ========
  
  Supplemental cash flow information:
           Issuance of stock to satisfy shareholder advances-
                    Common stock, at par value                    $ 35,000      $     --
                    Additional paid-in capital                      15,967            --
  
  </TABLE>
  
      The accompanying notes are an integral part of the financial statements.
  
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
  
  1.   Basis of Presentation
  
       The accompanying financial statements included herein have been prepared by
       the Company, without audit, pursuant to the rules and regulations of the
       Securities and Exchange Commission. Certain information normally included
       in footnote disclosures in financial statements prepared in accordance with
       generally accepted accounting principles has been condensed or omitted
       pursuant to such rules and regulations, although the Company believes that
       the disclosures are adequate to make the information presented not
       misleading. It is suggested that these condensed financial statements be
       read in conjunction with the financial statements and the notes thereto
       included in the Company's latest annual report on Form 10-K for the year
       ended October 31, 1995.
  
  2.   Net Income Per Share
  
       Net income per share of Common Stock is computed by dividing net income by
       the weighted average number of shares of Common Stock and Common Stock
       Equivalents, if dilutive, outstanding during the year.
  
  3.   Restatement - Correction of Errors
  
       Certain liabilities of the Company have been determined to have exceeded
       various applicable states statutes of limitations. These liabilities should
       have been written off by the Company in the years in which the statutes
       were determined to have expired. The Company has corrected this error and,
       accordingly, has restated its statements of capital deficit through October
       31, 1994 as noted in the Company's annual report on Form 10-K for the year
       ended October 31, 1995.
  
       Additionally, during 1991, a majority shareholder forgave certain
       indebtedness of the Company amounting to $825,242 which was previously
       reflected as extraordinary income in 1991. The financial statements have
       been adjusted to reflect this transaction as a contribution to capital.
  
  4.   Notes Payable
  
       The note payable in the amount of $50,000 is unsecured and bears interest
       at 7%. The note and all accrued interest is due and payable on the later of
       December 31, 1996 or the extended expiration of certain irrevocable proxies
       granted by certain shareholders to the issuer of the note.
  
  <PAGE>
  
                            SYSTEMS ASSURANCE CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
  
  5.   Shareholder Advances
  
       On April 1, 1996, the Board of Directors of Systems Assurance Corporation
       authorized the issuance of 3,500,000 shares of common stock to AAH
       Development Company, Inc. (a related entity of certain shareholders of the
       Company) in exchange for all shareholder advances existing as of March 31,
       1996 in excess of $40,000.
  
  <PAGE>
  
  
  Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS
  
  Results of Operations
  
  During the nine months ended July 31, 1996 the Company had no principal business
  activity. The company had no revenues and had operating expenses totaled
  $20,065. The Company is presently seeking investment opportunities but has not
  yet entered into any substantive negotiations other than as described under
  Financial Condition and Liquidity.
  
  Financial Condition and Liquidity
  
  The Company has suffered recurring losses, has no current expectations of
  revenue and has a capital deficit. The Company has entered into certain
  agreements with an investment firm to actively seek an investment opportunity
  acceptable to the Company. In connection with those agreements, the investment
  firm has received irrevocable proxies from certain of the Company's shareholders
  to vote their shares in connection with any recapitalization of the Company's
  common stock, election of members of the Board of Directors and any proposed
  merger candidate that meets certain minimum requirements. The irrevocable
  proxies expire on September 1, 1996 but may be extended at the option of the
  investment firm. As an incentive to enter into the above agreements, the
  investment firm has lent the Company $50,000 evidenced by a Promissory Note due
  and payable (including interest at the rate of 7%, per annum) on the later of
  December 31, 1996 or the extended expiration of the irrevocable proxies. The
  investment firm has additionally agreed to assume responsibility for certain
  operating costs which may be incurred.
  
  General
  
  The Company has completed its review of the legal status of previously reported
  liabilities. The purpose of the review was to determine whether any or all of
  the liabilities are no longer enforceable under the statutes of the particular
  states involved. See Note 3 to the accompanying financial statements for a
  discussion of the results of that review. The Annual Report on Form 10-K for the
  year ended October 31, 1995 was filed with the appropriate restatements of
  previously reported liabilities and was audited by independent certified public
  accountants whose opinion is included therein and which opinion covers the
  financial statements as of and for the years ended October 31, 1995 and 1994.
  
  
  <PAGE>
  
                             PART II - OTHER INFORMATION
  
  
  Item 1. LEGAL PROCEEDINGS
  
  The Company is the defendant in an action brought in Massachusetts Superior
  Court, County of Suffolk, by McDevitt Recruitment Advertisement, Inc. The
  complaint was served in December 1986 and alleges a breach of an oral warranty
  of fitness for a particular purpose of a computer system sold to plaintiff in
  1982, which allegedly never performed properly. Plaintiff seeks damages of
  $30,000. The Company believes that it is not liable for any damages; however, in
  order to save the cost of potential litigation, has offered a settlement in the
  amount of $1,000 to attorneys for the plaintiff which it believes is sufficient
  to settle this case. At this date, the attorneys have not been able to locate
  plaintiff.
  
  The Company, in conjunction with its research regarding the various statutes of
  limitations, also pursued the current status of any legal proceedings previously
  reported as having been brought against the Company. The Company has determined
  that, except for the matter discussed above, it is not probable that any of the
  previously reported legal proceedings will have a materially adverse effect on
  the Company.
  
  Item 6 - Exhibits and Reports on Form 8-K
  
       None 
  
  
  <PAGE>
  
                                     SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                          SYSTEMS ASSURANCE CORPORATION
                                                           (Registrant)
  
  
  Date: September 13, 1996            By:  /s/ William E. Chipman, Sr.
                                               WILLIAM E. CHIPMAN, SR.,
                                               PRESIDENT AND CHAIRMAN
  
  
  Date: September 13, 1996            By:  /s/ Thomas R. Petree
                                               THOMAS R. PETREE, TREASURER
                                               AND DIRECTOR
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 18295}]
metadata_filer: {"company-data": {"conformed-name": "SYSTEMS ASSURANCE CORP /DE/", "cik": "0000705581", "assigned-sic": "9995", "irs-number": "020337028", "state-of-incorporation": "DE", "fiscal-year-end": "1031"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-11228", "film-number": "96629291"}, "business-address": {"street1": "18 WEST KING STREET", "city": "MALVERN", "state": "PA", "zip": "19355", "phone": "2158852150"}, "mail-address": {"street1": "18 WEST KING STREET", "city": "MALVERN", "state": "PA", "zip": "19355"}, "former-company": [{"former-conformed-name": "UNIDATA SYSTEMS INC", "date-changed": "19840323"}, {"former-conformed-name": "EZ DATA SYSTEMS INC", "date-changed": "19821103"}]}
text: SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC 20549
  
                                      FORM 10-Q
  
                  Quarterly Report Under Section 13 or 15(d) of the
                          Securities Exchange Act of 1934
  
      July 31, 1996                                             0-011228
  For the Quarter Ended                                 Commission File Number:
  
                            SYSTEMS ASSURANCE CORPORATION
               (Exact name of registrant as specified in its charter)
  
          DELAWARE                                         02-0337028
  (State or other jurisdiction                (I.R.S. Employer Identification No.)
  of incorporation or organization)
  
                    18 West King Street, Malvern, PA 19355 19355
                 (Address of principal executive offices) (zip code)
  
                                   (610) 647 -7840
                 Registrant's telephone number including area code:
  
  Indicate by check mark whether the Registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the preceding 12 months (or for such shorter period that the Registrant was
  required to file such reports), and (2) has been subject to such filing
  requirements for the past 90 days.
  
                                 Yes [X]   No [ ]
  
  Indicate the number of shares outstanding of each of the issuer's classes of
  common stock, as of the latest possible date.
  
  Class                                          Outstanding at September 9, 1996
  Common Stock,                                           27,918,454
  par value $.01 per share
  SYSTEMS ASSURANCE CORPORATION
                                   BALANCE SHEETS
                                     (Unaudited)
  July 31, 1996   October 31, 1995
  
                    ASSETS
  Current assets:
           Cash                                                 $        842      $        382
           Income taxes refundable                                     1,442             1,442
                                                                ------------      ------------
  
                    Total current assets                               2,284             1,824
                                                                ------------      ------------
  
  Total Assets                                                  $      2,284      $      1,824
                                                                ============      ============
  
                    LIABILITIES AND CAPITAL DEFICIT
  
  Current liabilities:
           Notes payable                                        $     50,000      $         --
           Accounts payable and accrued expenses                       2,518            19,000
           Advances from shareholders                                     --            63,960
                                                                ------------      ------------
  
                    Total current liabilities                         52,518            82,960
                                                                ------------      ------------
  
  Capital deficit:
           Common stock, par value $.01 per share;
             authorized 30,000,000 shares; outstanding
             27,918,454 and 24,418,454 shares, respectively          279,185           244,185
           Additional paid-in capital                              9,802,200         9,786,233
           Deficit                                               (10,131,619)      (10,111,554)
                                                                ------------      ------------
  
                    Total capital deficit                            (50,234)          (81,136)
                                                                ------------      ------------
  
  Total liabilities and capital                                 $      2,284      $      1,824
                                                                ============      ============
  The accompanying notes are an integral part of the financial statements.
  SYSTEMS ASSURANCE CORPORATION
                              STATEMENTS OF OPERATIONS
              Three and Nine-Month Periods Ended July 31, 1996 and 1995
                                     (Unaudited)
  Three- Month                       Nine -Month
                                                      1996              1995            1996             1995
  Revenues                                     $         --      $         --      $         --      $         --
  General and administrative expenses                 1,240            57,991            19,044            57,991
  Interest expense                                      875                --             1,021                --
                                               ------------      ------------      ------------      ------------
  
  Income (loss) before provision for
    income taxes                                     (2,115)          (57,991)          (20,065)          (57,991)
  
  Provision (credit) for income taxes                    --            (1,445)               --            (1,445)
                                               ------------      ------------      ------------      ------------
  
  Net income (loss)                            $     (2,115)     $    (56,546)          (20,065)     $    (56,546)
                                               ============      ============      ============      ============
  Income (loss) per common share:
           Net income (loss) $                           --      $         --      $         --      $         --
                                               ============      ============      ============      ============
  
  Weighted average number of common shares       27,918,454        23,118,454        25,818,454        23,118,454
                                               ============      ============      ============      ============
  The accompanying notes are an integral part of the financial statements.
  SYSTEMS ASSURANCE CORPORATION
                            STATEMENTS OF CAPITAL DEFICIT
                     Twelve-month Period Ended October 31, 1995
                    and the Nine-Month Period Ended July 31, 1996
                                     (Unaudited)
  Additional                              Total
                                             Number              Par            Paid-in                               Capital
                                           of Shares            Value           Capital            Deficit            Deficit
  Balance, October 31, 1994                23,118,454      $    231,185      $  9,798,983      $(10,077,753)     $    (47,585)
           Issuance of common shares        1,300,000            13,000           (12,750)                                250
           Net loss                                                                                 (33,801)          (33,801)
                   --- ----                ----------      ------------      ------------      ------------      ------------ 
  
  Balance, October 31, 1995                24,418,454           244,185         9,786,233       (10,111,554)          (81,136)
           Issuance of common shares        3,500,000            35,000            15,967                              50,967
           Net loss                                                                                 (20,065)          (20,065)
                   --- ----                ----------      ------------      ------------      ------------      ------------ 
  
  Balance, July 31, 1996                   27,918,454      $    279,185      $  9,802,200      $(10,131,619)     $    (50,234)
                                         ============      ============      ============      ============      ============
  The accompanying notes are an integral part of the financial statements.
  SYSTEMS ASSURANCE CORPORATION
                              STATEMENTS OF CASH FLOWS
                   Nine-Month Periods Ended July 31, 1996 and 1995
                                     (Unaudited)
  1996           1995
  Cash flows from operating activities:
           Net income (loss)                                      $(20,065)     $(56,546)
  Adjustment for items not affecting cash flow:
           Increase in refundable income taxes                          --        (1,445)
           Change in accounts payable and
                             accrued expenses                      (16,482)        6,500
                                                                  --------      --------
  Net cash provided (used) by operating
    activities                                                     (36,547)      (51,491)
                                                                  --------      --------
  
  Cash flows from financing activities:
           Proceeds from issuance of note                           50,000            --
           Shareholder advances, net                               (12,993)       51,645
                                                                  --------      --------
  Net cash provided by financing activities                         37,007        51,645
                                                                  --------      --------
  
  Net increase (decrease) in cash                                 $    460           154
  Cash at beginning of period                                          382            --
                                                                  --------      --------
  
  Cash at end of period                                           $    842      $    154
                                                                  ========      ========
  
  Supplemental cash flow information:
           Issuance of stock to satisfy shareholder advances-
                    Common stock, at par value                    $ 35,000      $     --
                    Additional paid-in capital                      15,967            --
  The accompanying notes are an integral part of the financial statements.
  SYSTEMS ASSURANCE CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
  
  1.   Basis of Presentation
  
       The accompanying financial statements included herein have been prepared by
       the Company, without audit, pursuant to the rules and regulations of the
       Securities and Exchange Commission. Certain information normally included
       in footnote disclosures in financial statements prepared in accordance with
       generally accepted accounting principles has been condensed or omitted
       pursuant to such rules and regulations, although the Company believes that
       the disclosures are adequate to make the information presented not
       misleading. It is suggested that these condensed financial statements be
       read in conjunction with the financial statements and the notes thereto
       included in the Company's latest annual report on Form 10-K for the year
       ended October 31, 1995.
  
  2.   Net Income Per Share
  
       Net income per share of Common Stock is computed by dividing net income by
       the weighted average number of shares of Common Stock and Common Stock
       Equivalents, if dilutive, outstanding during the year.
  
  3.   Restatement - Correction of Errors
  
       Certain liabilities of the Company have been determined to have exceeded
       various applicable states statutes of limitations. These liabilities should
       have been written off by the Company in the years in which the statutes
       were determined to have expired. The Company has corrected this error and,
       accordingly, has restated its statements of capital deficit through October
       31, 1994 as noted in the Company's annual report on Form 10-K for the year
       ended October 31, 1995.
  
       Additionally, during 1991, a majority shareholder forgave certain
       indebtedness of the Company amounting to $825,242 which was previously
       reflected as extraordinary income in 1991. The financial statements have
       been adjusted to reflect this transaction as a contribution to capital.
  
  4.   Notes Payable
  
       The note payable in the amount of $50,000 is unsecured and bears interest
       at 7%. The note and all accrued interest is due and payable on the later of
       December 31, 1996 or the extended expiration of certain irrevocable proxies
       granted by certain shareholders to the issuer of the note.
  SYSTEMS ASSURANCE CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
  
  5.   Shareholder Advances
  
       On April 1, 1996, the Board of Directors of Systems Assurance Corporation
       authorized the issuance of 3,500,000 shares of common stock to AAH
       Development Company, Inc. (a related entity of certain shareholders of the
       Company) in exchange for all shareholder advances existing as of March 31,
       1996 in excess of $40,000.
  Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS
  
  Results of Operations
  
  During the nine months ended July 31, 1996 the Company had no principal business
  activity. The company had no revenues and had operating expenses totaled
  $20,065. The Company is presently seeking investment opportunities but has not
  yet entered into any substantive negotiations other than as described under
  Financial Condition and Liquidity.
  
  Financial Condition and Liquidity
  
  The Company has suffered recurring losses, has no current expectations of
  revenue and has a capital deficit. The Company has entered into certain
  agreements with an investment firm to actively seek an investment opportunity
  acceptable to the Company. In connection with those agreements, the investment
  firm has received irrevocable proxies from certain of the Company's shareholders
  to vote their shares in connection with any recapitalization of the Company's
  common stock, election of members of the Board of Directors and any proposed
  merger candidate that meets certain minimum requirements. The irrevocable
  proxies expire on September 1, 1996 but may be extended at the option of the
  investment firm. As an incentive to enter into the above agreements, the
  investment firm has lent the Company $50,000 evidenced by a Promissory Note due
  and payable (including interest at the rate of 7%, per annum) on the later of
  December 31, 1996 or the extended expiration of the irrevocable proxies. The
  investment firm has additionally agreed to assume responsibility for certain
  operating costs which may be incurred.
  
  General
  
  The Company has completed its review of the legal status of previously reported
  liabilities. The purpose of the review was to determine whether any or all of
  the liabilities are no longer enforceable under the statutes of the particular
  states involved. See Note 3 to the accompanying financial statements for a
  discussion of the results of that review. The Annual Report on Form 10-K for the
  year ended October 31, 1995 was filed with the appropriate restatements of
  previously reported liabilities and was audited by independent certified public
  accountants whose opinion is included therein and which opinion covers the
  financial statements as of and for the years ended October 31, 1995 and 1994.
  PART II - OTHER INFORMATION
  
  Item 1. LEGAL PROCEEDINGS
  
  The Company is the defendant in an action brought in Massachusetts Superior
  Court, County of Suffolk, by McDevitt Recruitment Advertisement, Inc. The
  complaint was served in December 1986 and alleges a breach of an oral warranty
  of fitness for a particular purpose of a computer system sold to plaintiff in
  1982, which allegedly never performed properly. Plaintiff seeks damages of
  $30,000. The Company believes that it is not liable for any damages; however, in
  order to save the cost of potential litigation, has offered a settlement in the
  amount of $1,000 to attorneys for the plaintiff which it believes is sufficient
  to settle this case. At this date, the attorneys have not been able to locate
  plaintiff.
  
  The Company, in conjunction with its research regarding the various statutes of
  limitations, also pursued the current status of any legal proceedings previously
  reported as having been brought against the Company. The Company has determined
  that, except for the matter discussed above, it is not probable that any of the
  previously reported legal proceedings will have a materially adverse effect on
  the Company.
  
  Item 6 - Exhibits and Reports on Form 8-K
  
       None
  SIGNATURES
  
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                                          SYSTEMS ASSURANCE CORPORATION
                                                           (Registrant)
  
  Date: September 13, 1996            By:  /s/ William E. Chipman, Sr.
                                               WILLIAM E. CHIPMAN, SR.,
                                               PRESIDENT AND CHAIRMAN
  
  Date: September 13, 1996            By:  /s/ Thomas R. Petree
                                               THOMAS R. PETREE, TREASURER
                                               AND DIRECTOR