content: SECURITIES AND EXCHANGE COMMISSION
  
                      WASHINGTON, D.C. 20549
  
  
  
                              FORM 8-K
  
  
  
               PURSUANT TO SECTION 13 OR 15(D) OF THE 
  
                  SECURITIES EXCHANGE ACT OF 1934
  
  
  
  
  
  
  
  Date of Report Date of earliest event report)    February 3, 1997
  
  
  
  
  
  Commission File Number                  0-12516
  
  
  
  
  
  Dynamic Healthcare Technologies, Inc.                           
                                                                 
  
  (Exact name of registrant as specified in its charter)
  
  
  
  
  
  Florida                          0-12516              59-3389871
    
  
  (State or other jurisdiction (Commission File Number)(IRS E.I.N.)
  
    of Incorporation)
  
  
  
  
  
  101 Southhall Lane, Suite 210  Maitland, Florida      32751     
                                                          
  
  (Address of principal executive offices)           (ZIP Code)
  
  
  
  
  
  (407) 875-9991                                                  
                                                                
  (Registrant's telephone, including area code)
  
  
  
  
  
  
  
  None                                                            
                                                                
  (Former name of former address, if changed from last report)
  
  
  
  
  
  
  
  This report consists of twenty (20) pages.
  
  
  <PAGE>
  
  
  
  
                              FORM 8-K
  
  
  
                  DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
  
                           DECEMBER 17, 1996
  
  
  
  Item 7.	Financial Statements and Exhibits
  
  
  
  		The following financial statements are being filed            
   pursuant to Item 7(a) and (b) of the Registrant's Form         
   8-K dated December 17, 1996.
  
  
  
  
  
  		(a) Financial Statements of Business Acquired
  
  
  
  		Index							Page Number
  
  
  
  		Independent Auditors' Report on the          3
  
            financial statements of Collaborative 
  
            Medical Systems, Inc. as of December 31,
  
            1994 and 1995, and for the years then ended.
  
  
  
  		Independent Accountant's Report on the       4
  
            Collaborative Medical Systems, Inc. 
  
            Statements of Operations, of Cash Flows 
  
            and of Changes in Stockholders' Equity 
  
            for the year ended December 31, 1993.
  
  
  
  		Balance sheets of Collaborative Medical      5
  
            Systems, Inc. as of December 31, 1994 and 
  
            1995, and September 30, 1996 (unaudited).			
  
  
  
  		Statements of Operations of Collaborative    6
  
            Medical Systems, Inc. for the years ended 
  
            December 31, 1993, 1994 and 1995, and for 
  
            the nine months ended September 30, 1995 
  
            (unaudited) and 1996 (unaudited).
  
  
  
  		Statements of Changes in Stockholders'       7
  
            Equity of Collaborative Medical		
  
  		Systems, Inc. for the years ended December 
  
            31, 1993, 1994 and 1995.
  
  
  
  		Statements of Cash Flows of Collaborative    8 
  
            Medical Systems, Inc. for the years ended 
  
            December 31, 1993, 1994 and 1995, and for 
  
            the nine months ended September 30, 1995 
  
            (unaudited) and 1996 (unaudited).
  
  
  
  		Notes to Financial Statements.			9
  
  2
  <PAGE>
  
  
  
  
                   Report of Independent Auditors
  
  
  
  
  
  
  
  Board of Directors and Stockholders
  
  Collaborative Medical Systems, Inc.
  
  
  
  
  
  
  
  We have audited the accompanying balance sheets of Collaborative
  Medical Systems, Inc. as of December 31, 1994 and 1995, and the
  related statements of operations, changes in stockholders'
  equity, and cash flows for the years then ended included in this
  Form 8-K.  These financial statements are the responsibility of
  the Company's management.  Our responsibility is to express an
  opinion on these 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 financial statements are free of material misstatement.  An
  audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the 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 financial statements referred to above
  present fairly, in all material respects, the financial position
  of Collaborative Medical Systems, Inc. as of December 31, 1994
  and 1995, and the results of its operations and its cash flows
  for the years then ended in conformity with generally accepted
  accounting principles.
  
  
  
  
  
  
                              								/S/ERNST & YOUNG LLP
  
  
  
  
  
  
  
  Boston, Massachusetts
  February 23, 1996
  
  
  
  
  
  3
  <PAGE>
  
  
  
                  Report of Independent Accountants
  
  
  
  
  
  
  
  Board of Directors and Stockholders
  
  Collaborative Medical Systems, Inc.
  
  
  In our opinion, the statements of operations, of cash flows and
  of changes in stockholders' equity for the year ended December
  31, 1993 (appearing on pages 6 through 8 in this Form 8-K)
  present fairly, in all materials respects, the results of
  operations and cash flows of Collaborative Medical Systems, Inc.
  for the year ended December 31, 1993, in conformity with
  generally accepted accounting principles.  These financial
  statements are the responsibility of the Company's management;
  our responsibility is to express an opinion on these financial
  statements based on our audit.  We conducted our audit of these
  statements in accordance with generally accepted auditing
  standards which require that we plan and perform the audit to
  obtain reasonable assurance about whether the financial
  statements are free of material misstatement.  An audit includes
  examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements, assessing the
  accounting principles used and significant estimates made by
  management, and evaluating the overall financial statement
  presentation.  We believe that our audit provides a reasonable
  basis for the opinion expressed above.  We have not audited the
  financial statements of Collaborative Medical Systems, Inc. for
  any period subsequent to December 31, 1993.
  
  
  
  
  
  
  
                                  						/S/PRICE WATERHOUSE LLP
                                        Boston, MA
                                       	March 17, 1994
  
  
  
  4
  
  <PAGE>
  
  
  <TABLE>
  
                 COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                            Balance Sheets
  
  
  <S>                          <C>             <C>                <C>
  										                                               
                                        December 31,	          September 30,
  Assets       	                  1994         	   1995        	    1996         
                                                                 (Unaudited) 
  
  Current assets: 
  
    Cash and
     cash equivalents         	 $562,014        $1,248,906         $640,496   
  
    Available-for-sale
    securities                   505,625          	  --               --       
   
    Accounts receivable,
     net of allowance for 
     doubtful accounts of
     $75,000 and $80,000 as
     of December 31, 1994
     and 1995, respectively,
     and $80,000 as of
     September 30, 1996 	      2,328,505         1,964,768        1,555,991  
  
    Costs and estimated
     earnings in excess of
     billings on uncompleted
     contracts               	   391,769          	194,925         138,534
  
    Prepaid expenses and
     other current assets        267,064          	232,877         223,824
  
    Receivable from
     stockholders                 	8,924            34,346           4,618   
  
  Total current assets         4,063,901         3,675,822       2,563,463
  
  Fixed assets, net              611,065          	633,232         829,557
  
  Computer software
   development costs,
   net of accumulated
   amortization of 
   $1,013,122 and 
   $1,176,022 as of
   December 31, 1994
   and 1995,
   respectively, and
   $1,244,509  as of
   September 30, 1996          	 270,100          	252,982     	   508,548   
  
  Restricted cash 	               60,000          	 60,000      	   60,000   
  
  Other assets 	                   1,025          	  1,525           1,525   
   
                            $  5,006,091       $ 4,623,561     $ 3,963,093
    
  Liabilities and stockholders' equity 	 	 	 
  
  Current liabilities: 	 	 	 
    
    Book overdraft 	            $ 90,233         $ 161,030       $ 100,363   
  
    Line of credit 	              70,000          	   --            88,000   
  
    Accounts payable             256,747          	223,852         256,183  
  
    Accrued expenses             322,433          	299,355         269,170  
  
    Billings in excess 
     of costs and estimated
     earnings on uncompleted
     contracts 	               1,395,864           620,826         561,251   
  
    Deferred revenue           1,448,407         2,135,318       1,813,411 
   
  Total current liabilities 	  3,583,684         3,440,381       3,088,378   
  
  Deferred revenue                92,794          	324,237         153,745   
  
  Deferred rent                   81,359          	 82,877     	    84,016
    
  Stockholders' equity: 	 	 	 
  
    Common stock, no
     par value; 12,500
     shares authorized,
     380.10 and 387.86
     shares issued and
     outstanding on
     December 31, 1994
     and 1995, respectively,
     and 380.10 shares
     issued and outstanding
     on September 30, 1996 	      81,482           118,930          97,859   
  
    Retained earnings          1,166,772           657,136         539,095
    
  Total stockholders' equity	  1,248,254           776,066         636,954   
  
   	                        $  5,006,091       $ 4,623,561     $ 3,963,093   
  
          
  
  See accompanying notes.
  
  </TABLE>
  
  5
  
  <PAGE>
  
  
  
  <TABLE>
  
                      COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                           Statements of Operations
  
  
                    				 Year Ended 	                      	 Nine Months Ended 
                   				 December 31,	                       		   September 30,
  
  
  <S>          <C>            <C>          <C>           <C>         <C>
  
  
                    1993            1994        1995          1995       1996
  					                                                  (Unaudited) (Unauditded)
  
  Operating Revenues:                         
  
   Computer
    system
    equipment
    sales and 
    support     $1,049,623     $  851,931   $  640,784    $  406,307  $ 293,621     
  
   Application
    software
    licenses     3,702,979      3,972,792    4,192,384     3,312,566  2,702,879     
  
   Software
    support 	    2,230,926      2,844,910    3,292,240     2,410,831  2,709,284     
  
   Services
   and other     1,061,850      1,241,946      811,059       651,038    693,471     
  
    Total
     operating
     revenues    8,045,378      8,911,579    8,936,467     6,780,742  6,399,255     
  
  
  Operating
  Expenses: 	 	 	 	 	 
  
   Cost of
    products
    sold 	         946,779      	 701,023      512,317       388,698    254,352    
  
   Client
    services
    expense      2,389,615      2,734,833    2,557,681     1,936,335  1,769,030    
  
   Software
    development
    costs        1,704,569      2,564,575    2,864,622     2,158,431  2,274,703    
  
   Sales
    and
    marketing
    costs     	  1,169,859      1,391,705    1,223,223       856,817    995,705  
   
   General and
    administrative
    expense  	   1,416,500      1,306,975    1,853,895     1,479,524  1,383,480    
  
    Total 
     operating
     expenses    7,627,322      8,699,111    9,011,738     6,819,805  6,677,270    
  
  	 	 	 	 	 
  
  Income (loss)
   from
   operations      418,056       	212,468      (75,271)      (39,063)  (278,015)
    
  
  				 	 
  Interest
   income 	         67,097         73,733      178,098       128,617    110,329  
   
  
  Interest
   expense 	       (13,460)        (3,481)        (236)         --        --   
       
  
  	 	 	 	 	 
  Net income
   (loss) 	     $  471,693     $  282,720   $  102,591     $  89,554  $(167,686) 
   
  
  
  See accompanying notes.
  
  </TABLE>
  
  6
  
  <PAGE>
  
  
  
  
  
  
  
  
  <TABLE>
  
  
                    COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                Statements of Changes in Stockholders' Equity
  
  
  <S>                      <C>           <C>          <C>         <C> 
      
  		                        Common Stock                      
  
                                                                  Total
  	                         Number of    Carrying     Retained    Shareholders'   
                            Shares       Value        Earnings    Equity 
  
  Balance at
  December 31, 1992 	       368.46       $ 48,169     $ 706,771   $ 754,940    
     
   Exercise of stock
    options                   3.88          7,550      	   --         7,550      
    
   Distribution to
    stockholders 	             --         	  --        (150,000)   (150,000)       
  
   Net income 	                --            --         471,693     471,693     
     
  
  				
  Balance at 
  December 31, 1993     	   372.34         55,719     1,028,464   1,084,183    
  
   Surrender of stock
    to the Company      	    (3.88)       	  -- 	         -- 	        -- 
  
   Exercise of stock
    options   	              11.64         25,763         --         25,763         
  
   Distribution to
    stockholders              --             --        (144,412)   (144,412)  
      
   Net income 	               --             --         282,720     282,720     
     
  
  
  Balance at 
   December 31, 1994    	   380.10         81,482     1,166,772   1,248,254    
     
   Surrender of stock
    to the Company      	    (3.88)       	  --      	    --     	    -- 
  
   Exercise of stock
    options                  11.64         37,448         --         37,448        
  
   Distribution to
    stockholders 	            --             --        (612,227)   (612,227)  
      
   Net income   	             --             --         102,591     102,591     
    
  
  Balance at 
  December 31, 1995    	   387.86       $ 118,930     $ 657,136   $ 776,066    
     
  
  
  See accompanying notes.
  
  
  </TABLE>
  
  
  7
  
  <PAGE>
  
  
  
  
  <TABLE>
  
  
  
                       COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                            Statements of Cash Flows
  
  
                         Year ended December 31,           	Nine Months Ended
                                                              September 30, 
  <S>           <C>         <C>          <C>           <C>            <C>
  
  Operating          1993        1994        1995         1995             1996  
  activities                                          (Unaudited)     (Unaudited) 
  
  Net income
  (loss)         $ 471,693   $  282,720   $  102,591    $ 89,554       $(167,686) 
  
  
  Adjustments
   to reconcile
   net income
   to net cash
   provided by
   operating
   activities: 	 	 	  	 	 
  
   Depreciation   197,039     	235,389      286,755      200,049         222,141
  
   Amortization
    of computer
    software
    development
    costs 	       125,825      477,688      162,900      122,066          68,487  
  
   Write-off
    of computer
    software
    development
    costs 	        74,810    	      --        	 --            --          	  --    
     
   Gain on
    disposal
    of fixed
    assets 	       (2,803)    	     --          --            --              -- 
  
   Bonus to
    employees
    in the form
    of common
    stock           3,775     	 25,763      37,448         	 --              --    
     
   Changes in
    operating
    assets and
    liabilities: 	
  
    Accounts
     receivable,
     net         (113,415)  (1,064,124)   	363,737    1,065,035          408,777  
  
    Costs and 
     estimated
     earnings 
     in excess of
     billings on
     uncompleted
     contracts    (23,090)    (102,987)     196,844      61,244           56,391
  
    Prepaid 
     expenses 
     and other
     current 
     assets       (88,499)     (14,652)      34,187     87,177             9,053
  
    Receivable
     from 
     stock-
     holders     (130,000)     121,076     	(25,422)     8,924            29,728
  
    Other 
     assets        26,933       (1,025)        (500)    (1,809)               --
  
    Book 
     overdraft     29,169      (43,807)      70,797    (90,233)          (60,667)
  
    Accounts 
     payable      (37,349)      (9,005)     (32,895)  (205,607)           32,331
  
    Accrued 
     expenses      54,470      167,201      (23,078)    10,035           (30,185)
  
    Billings in
     excess of 
     costs and 
     estimated 
     earnings on 
     uncompleted 
     contracts    107,463     508,285      (775,038)  (656,456)          (59,575) 
  
    Deferred 
     revenue      389,659    	363,520       918,354    171,998         	(492,399)
  
    Deferred 
     rent 	            --       1,512        1 ,518      1,138             1,139
  
  Net cash 
  provided by
  operating
  activities    1,085,680     947,554     1,318,198    863,115            17,535  
  
  Investing 
   activities 	 	 	 	 	 
  
  Purchase of
   fixed 
   assets       (159,465)   (356,916)     (308,922)   (247,819)         (418,466)
  
  Computer 
   software 
   development
   costs 	      (448,486)    (94,358)    	(145,782)   (112,649)         (324,053)
  
  Sale 
   (purchase)
   of 
   available-
   for-sale
   securities      9,834    (505,625)       505,625    476,407              --
  
  
  Net cash
   provided by
   (used in) 
   investing
   activities   (598,117)   (956,899)        50,921    115,939          (742,519)
  
  Financing 
   activities
  
  Proceeds 
   from 
   (payments
   of) line 
   of credit         --       70,000        (70,000)   (70,000)           88,000
  
  Payments
   of long-
   term debt    (84,975)    (100,025)            --         --                --
  
  Proceeds
   from 
   long-term
   debt 	       125,000           --             --         --                --
  
  Proceeds
   from
   issuance
   (repurchase)
   of common
   stock          3,775           --             --         --           (21,071)
  
  Contributions
   from
   (distribution
   to) 
   stock-
   holders     (150,000)    (144,412)      (612,227)   (99,453)           49,645
  
  Net cash
   provided
   by (used
   in) 
   financing
   activities  (106,200)    (174,437)      (682,227)  (169,453)          116,574
  
  Net increase
   (decrease)
   in cash 
   and cash 
   equivalents  381,363     (183,782)      	686,892     809,601         (608,410)
  
  Cash and
   cash 
   equivalents
   at the
   beginning
   of period    364,433      745,796        562,014     562,014        1,248,906
  
  Cash and
   cash
   equivalents
   at the end
   of period  $ 745,796    $ 562,014     $1,248,906  $1,371,615         $640,496
  
    
  See accompanying notes.
  
  </TABLE>
  
  8
  
  <PAGE>
  
  
  
                    COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                      Notes to Financial Statements
  
                            December 31, 1995
     
  
  1.	Organization and Operations
  
  	Collaborative Medical Systems, Inc. (the Company) was          
   organized as a Massachusetts corporation on September 27,
   1978.  The Company designs, develops and markets information
   processing systems for the medical industry.  The systems
   include proprietary software that operates on a wide variety
   of industry standard computer platforms including personal
   computers, workstations, mini-computers, networks and
   servers.
  
  2.	Summary of Significant Accounting Policies
  
  	Cash and Cash Equivalents
  
  	The Company considers all highly liquid investment purchases
   with an original maturity of three months or less to be cash
   equivalents.  The Company invests in high-grade money market
   accounts, commercial paper and treasury bills.  Accordingly,
   the Company believes the investments are subject to minimal
   credit and market risk.
  
  	Available-for-Sale Securities
  
  	Effective January 1, 1994, the Company adopted the Statement
   of Financial Accounting Standards No. 115, "Accounting for
   Certain Investments in Debt and Equity Securities" (FAS
   115), to account for its securities.  FAS 115 established
   the accounting and reporting requirements for investments in
   debt securities.  All affected investment securities must be
   classified as either held-to-maturity, trading or
   available-for-sale.  Held-to-maturity securities are carried
   at amortized cost basis.  Trading securities are carried at
   fair value with unrealized holding gains and losses reported
   in the statement of operations.  Available-for-sale
   securities are carried at fair value with unrealized holding
   gains and losses reported as a component of stockholders'
   equity.  The adoption of FAS 115 had no material impact on
   the Company's financial position.
  
   At December 31, 1994, the Company's securities, with
   maturities within one year, were classified as
   available-for-sale securities and consisted of municipal
   bonds.  The cost of these securities was $505,625 at
   December 31, 1994 which approximated fair market value.
   Accordingly, there were no associated unrealized gains and
   losses.
  
   The Company did not hold any available-for-sale securities
   at December 31, 1995.
  
  	Fixed Assets
  
  	Fixed assets are stated at cost and are depreciated using
   accelerated methods over the useful lives of the related
   assets ranging from five to seven years.  Expenditures for
   repairs and maintenance are charged to expense as incurred.
  
  	Computer Software Development Costs
  
  	The Company's policy is to capitalize certain software
   development costs in accordance with Statement of Financial
   Accounting Standards No. 86.  Under the Statement, software
   development costs shall be capitalized at the lower of cost
   or net realizable value beginning upon the establishment of
   technological feasibility of the related products as defined
   in the statement.
  
  	Capitalized costs are amortized ratably over the estimated     
   useful life of the products, generally four years.
  
  	Deferred Rent
  
  	The Company's lease on the office facility included
   scheduled base rent increases over the term of the lease.
   The total amount of the base rent payments is being charged
   to expense on the straight-line method over the term of the
   lease.  The Company has recorded a deferred credit to
   reflect the excess of rent expense over the cash payments
   since inception of the lease.
  
  
  
  9
  
  <PAGE>
  
  
                 COLLABORATIVE MEDICAL SYSTEMS, INC.
  
              Notes to Financial Statements (continued)
  
  
  2.	Summary of Significant Accounting Policies (continued)
  
  	Revenue Recognition
  
  	Revenue from consulting, programming and software license
   contracts is recognized pursuant to the related agreements
   based on progress towards completion of the contract. Labor
   hours are used to measure such progress.  Payments received
   under these agreements prior to the completion of the
   related work are recorded as billings in excess of costs and
   estimated earnings on uncompleted contracts.
  
  	Maintenance fees are billed in advance.  Such revenue is
   recognized ratably over the term of the maintenance
   agreement and unearned fees are recorded as deferred
   revenue.
  
  	Use of Estimates
  
  	The preparation of financial statements in conformity with
   generally accepted accounting principles requires management
   to make estimates and assumptions that affect the reported
   amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the
   financial statements and the reported amounts of revenues
   and expenses during the reporting period.  Actual results
   could differ from these estimates.
  
  	Concentration of Credit Risk
  
  	Two customers accounted for approximately 25% and 31% of the
   Company's revenue during 1994 and 1995, respectively. In
   addition, these customers represented 8% and 14% of trade
   accounts receivable at December 31, 1994 and 1995,
   respectively.
  
  	Income Taxes
  
  	The Company provides for income taxes using the liability
   method as required by Statement of Financial Accounting
   Standards No. 109 (FAS 109), "Accounting for Income Taxes."
   Under FAS 109, tax provisions and credits are recorded at  
   statutory rates for taxable items included in the statement
   of operations regardless of the period for which such items
   are reported for tax purposes.  Deferred income taxes are
   recognized for temporary differences between financial
   statement and income tax bases of assets and liabilities
   which will be recognized for income tax return purposes in
   future years.  Deferred tax assets are reduced by a
   valuation allowance when the Company cannot make the
   determination that it is more likely than not that some
   portion or all of the related tax asset will be realized.
  
  	Reclassification
  
  	Certain amounts were reclassified in 1993 and 1994 to permit
   comparison with 1995.
  
  3.	Fixed Assets
  
  	Fixed assets consisted of the following at December 31:
  
  <TABLE>
  
  <S>                            <C>              <C>
  
  
  	                                    1994             1995         
   
  Office equipment and fixtures   $    514,323     $    559,385    
  Computer equipment                 1,149,363        1,411,504
  Leasehold improvement 	              101,474          103,193
                                     1,765,160        2,074,082
  Less accumulated depreciation      1,154,095        1,440,850 
                                  $    611,065     $    633,232
  
  
  
  </TABLE>
           
  
  
  
  10
  
  
  <PAGE>
  
  
  
                      COLLABORATIVE MEDICAL SYSTEMS, INC. 
  
  
  
                   Notes to Financial Statements (continued)
  
  4.	Line of Credit
  
  	The Company has a working capital line of credit under which
   it can borrow up to the lesser of $850,000 or 70% of
   eligible accounts receivable with interest payable monthly
   at the bank's prime rate plus .75% (9.25% at December 31,
   1995).  The principal balance is payable on demand and is
   secured by all of the Company's assets.  In connection with
   the line of credit, the Company is required to comply with
   certain covenants, the most restrictive of which require the
   Company to maintain minimum amounts of profitability,
   working capital and tangible net worth.  The Company was in
   compliance with all covenants at December 31, 1994, and at
   December 31, 1995.
  
  	Availability under the line of credit was reduced by
   borrowings of $70,000 during the year ended December 31,
   1994.  The Company had no borrowings against the line of
   credit at December 31, 1995.
  
  5.	Income Taxes
  
  	No provision for federal income tax is required since the
   Company has elected, with consent of its stockholders, to be
   treated as an S Corporation under the provision of the
   Internal Revenue Code.  Under Subchapter S, the stockholders
   include their respective share of Company income in their
   individual income tax returns for federal and certain state
   purposes.  For the years ended December 31, 1993, 1994 and
   1995, the provision for state income taxes was fully offset
   with the utilization of current and carryforward state tax
   credits.
  
  	The Company's principal temporary differences result
   primarily from differences between the carrying  amounts of
   assets and liabilities related to software contracts for
   financial reporting purposes and the amounts used for income
   tax purposes.  These amounts were not material for the years
   ended December 31, 1993, 1994, nor 1995.
  
   The Company had state research and development tax credit
   carryforwards which may be used to reduced future state
   income tax liability.  These credits total approximately
   $23,000, $62,000 and $94,000 at December 31, 1993, 1994, and
   1995 respectively.  The state research and development tax
   credit carryforwards expire in 2009.
  
  6.	Defined Contribution Plan
  
   In 1985, the Company adopted a defined contribution plan
   (the Plan), which meets the requirements of Section 401K of
   the Internal Revenue Code.  All full-time employees who are
   at least 21 years of age are eligible to participate in the
   Plan .  The Plan allows employees to contribute up to 20% of
   their salaries and the Company matches 30% of employees
   contributions up to 6% of employees' contributions or a
   maximum of $750 annually, whichever is higher.
   Additionally, the Company may make an annual profit sharing
   contribution to this plan at the discretion of the Board of
   Directors.  No such discretionary contribution was made in
   1993, 1994, or 1995.  The Company made total contributions
   of $60,164, $65,564, and $70,590 for the years ended
   December 31, 1993, 1994, and 1995, respectively.
  
  7.	Common Stock
  
  	Stock Option  and Bonus Plan
  
  	In December 1992, the Company adopted the Stock Option and
   Bonus Plan (the Option Plan).  The Option Plan provides for
   the granting of stock options to specified key employees of
   the Company.  The Option Plan allows for a maximum of 34.92
   shares of common stock to be issued by December 31, 1995.
   At December 31, 1995, there were no shares available for
   future grant.
  
  	Options are exercisable during specific option periods at a
   price equal to the book value per share as of the close of
   fiscal year preceding the particular  option period.
   Management believes the book value per share approximates
   fair value.  Once an option is granted, all shares under
   such option period must be exercised during that year.  The
   difference between the book value and the exercise price at
   the exercise date is charged to expense in that period.
  
  	During 1993, options for 3.88 shares were granted and
   exercised at a price of $1.946 per share.  As allowed under
   the terms of the Option Plan, the option holders elected to
   receive 1.94 shares as a bonus and the remaining 1.94 shares
   were purchased.
  
  
  
  
  11
  
  <PAGE>
  
  
                 COLLABORATIVE MEDICAL SYSTEMS, INC. 
  
              Notes to Financial Statements (continued)
  
  
  7.	Common Stock (continued)
  
  	Stock Option and Bonus Plan (continued)
  
   During 1994, options for 11.64 shares were granted and
   exercised at a price of $2,213 per share.  As  allowed under
   the terms of the Option Plan, the option holders elected to
   received 11.64 shares as a bonus.
  
   During 1995, options for 3.88 shares were surrendered to the
   Company and 11.64 shares were subsequently granted and
   exercised at a price of $3, 217 per share.  As allowed under
   the terms of the Option Plan, the option holders elected to
   receive 3.88 shares as a bonus.
  
  	Stockholder Agreement
  
  	The Company and its stockholders are  parties to a stock
   purchase agreement.  The terms of the agreement require the
   Company to purchase the stockholders' shares of the Company
   in the event of death or termination of the stockholder.
  
  	The purchase price per share is the net book value per
   share, as defined by the agreement.
  
   To facilitate this repurchase, the Company has purchased
   insurance policies on the lives of the major stockholders.
   In the event of  the death of the stockholder, the lesser of
   the proceeds from the insurance policy or the repurchase
   price will be paid at the closing date, as defined in the
   agreement.  In any event, not less than 10% of the
   repurchase price will be paid at closing.  The balance, if
   any, of the repurchase price will be paid within four years
   of the closing in quarterly installments of principal, plus
   interest at prime rate plus 2%.
  
  8.	Distribution to Stockholders
  
   The Company made payments to stockholders amounting to
   $150,000, $144,412 and $612,227  in 1993, 1994 and 1995,
   respectively, which were made to cover personal income tax
   liabilities of the stockholders relating to their share of
   the Company's profits. 
  
  9.	Commitments
  
  	Operating Leases
  
   The Company leases its operating facility and certain office
   equipment under noncancelable operating leases.  Future
   minimum commitments under these noncancelable leases are
   approximately as follows:
  
  
  
           Year Ending December 31,
  
  <TABLE>
                  <C>                   <C> 
  
                   1996                  $   533,000
  
                   1997 	                    513,000   
  
                   1998 	                    505,000   
  
                   1999 	                    463,000   
  
  	                                       $2,014,000   
  
  </TABLE>
  
  	Rent expense amounted to $535,200, $528,546 and $528,546 in
   1993, 1994 and 1995, respectively.
  
  	Letter of Credit
  
  	At December 31, 1994 and 1995, the Company has an
   outstanding letter of credit in the amount of $60,000
   securing future health benefits.  This letter of credit is
   secured by a certificate of deposit which is included in
   restricted cash at December 31, 1994 and 1995.
  
  
  
  
  
  12
  
  
  <PAGE>
   
  
  
                     COLLABORATIVE MEDICAL SYSTEMS, INC.
   
              Notes to Unaudited Condensed Financial Statements
  
               Nine Months Ended September 30, 1995 and 1996
  
  
  1.	Unaudited Financial Statements
  
   The accompanying unaudited Condensed Balance Sheet as of
   September 30, 1996, and Condensed Statements of Operations
   for the nine month periods ended September 30, 1995 and
   1996, have been prepared by management in conformity with
   generally accepted accounting principles for interim
   financial statements in accordance with Regulation S-X.
   Accordingly, they do not include all the disclosures
   required by generally accepted accounting principles for
   complete financial statements.  All adjustments and accruals
   considered necessary for fair presentation of financial
   information have been included in the opinion of management.
   All adjustments made were of a normal recurring nature.
   Operating results for the nine month periods ended September
   30, 1996, are not necessarily indicative of the operating
   results which may be expected for the year December 31,
   1996.
  
  2. 	Subsequent Events
  
   On December 17, 1996, the Company was merged into
   Collaborative Medical Systems Corporation a wholly owned
   subsidiary of Dynamic Healthcare Technologies, Inc.
   ("Dynamic"). The shareholders of the Company received
   $8,500,000, plus 1,000,000 common shares of Dynamic, and up
   to 600,000 contingently issuable common shares of Dynamic
   evidenced by 6,000 shares of non-voting, Convertible Series
   CM Preferred Stock of Dynamic, in exchange for all of the
   outstanding shares of the Company's common stock.
  
  
  
  
  13
  
  
  <PAGE>
  
  
  
                                    FORM 8-K
  
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
  
                                DECEMBER 17, 1996
  
  
  (b) 	Pro Forma Financial Information
  
   On May 1, 1996, as previously reported on Form 8-K, pursuant
   to the terms of a Merger Agreement by and among Dimensional
   Medicine, Inc. (LOTC:DIMM) of Minnetonka, Minnesota ("DMI"),
   National Computer Systems, Inc. (the principal shareholder
   of DMI), DMI Acquisition Corp. (a wholly owned subsidiary of
   the Registrant, hereafter "DMIAC"), and the Registrant, DMI
   was merged with and into DMIAC.  The acquisition was
   accounted for as a purchase transaction for an aggregate
   purchase price including assumed indebtedness of $3,673,000.
  
   On December 17, 1996 pursuant to the terms of a Merger
   Agreement by and among Collaborative Medical Systems, Inc.
   of Waltham, Massachusetts ("CoMed"), Collaborative Medical
   Systems Corporation (a wholly owned subsidiary of the
   Registrant, hereafter "Newco"), and the Registrant, CoMed
   was merged with and into Newco.  Under the terms of the
   Merger Agreement the Registrant paid $8,500,000 cash, issued
   1,000,000 shares of restricted common stock, and 6,000
   shares of Series CM Non-Voting, Convertible Preferred Stock
   ("Series CM Preferred Stock") to the shareholders of CoMed.
   The Series CM Preferred Stock shall be automatically
   convertible into shares of the Registrant's common stock at
   the close of business on August 29, 1997 ("Contingent
   Shares"), pursuant to a formula based upon the average
   closing bid and ask price of the Registrant's common stock
   as quoted on the National Market for the five (5) trading
   day period ending August 29, 1997 (the "CSAVG"). If the
   CSAVG is greater than or equal to $8.00, an aggregate of 100
   shares of the Registrant's common will be issued as
   Contingent Shares:  if the CSAVG is less than or equal to
   $5.00, then an aggregate of 600,000 shares of the
   Registrant's common stock will be issued as Contingent
   Shares:  and if the CSAVG is greater than $5.00 but less
   than $8.00, then the number of shares of the Registrant's
   common stock to be issued as Contingent Shares will be
   pro-rated accordingly.  Funds for the transactions came from
   the Registrant's cash resources.  Terms of the Merger
   Agreement were based upon arms length negotiations.
  
   Both Newco, and DMIAC were formed through the issuance of
   100 common shares $.01 par value of each entity to the
   Registrant for $100.  On September 25, 1996, DMIAC was
   merged with and into Dynamic Healthcare Technologies, Inc.
  
       Pro Forma Condensed Combined Balance Sheet
  
   The following unaudited pro forma condensed combined balance
   sheet as of September 30, 1996 has been prepared based upon
   certain pro forma adjustments to the September 30, 1996
   balance sheet of Dynamic Healthcare Technologies, Inc. (the
   "Company"), as described below, including giving effect to
   the merger of CoMed into Newco as if the transaction had
   occurred on September 30, 1996.  The pro forma condensed
   combined balance sheet should be read in conjunction with
   the notes thereto and the historical financial statements of
   the Company previously filed on Form 10-Q for the period
   ending September 30, 1996, and of CoMed included elsewhere
   in this Form 8-K.
  
  
  
  14
  
  
  <PAGE>
  
  <TABLE>
  
  
  <S>        <C>        <C>         <C>      <C>       <C>         <C>        <C>
  
  
               Company   Pro Forma  Company   CoMed      CoMed                 Combined
                 As        Stock      Pro       As      Purchase               Pro
              Reported     Issue     Forma   Reported  Adjustments  Reference  Forma
              Sept. 30  Adjustments  Sept. 30 Sept. 30,                        Sept. 30,
                1996     	  (1) 	     1996     1996 	    	                     1996
  
  
  
  Assets 							 
  
  Current 
  assets: 							
  
   Cash
   and
   equivalents
         $   546,102 $17,159,287 $17,705,389 $640,496	($9,326,414)(2) $9,019,471  
  
   Accounts
   receivable,
   net    	2,769,644               2,769,644 $1,555,991                 4,325,635 
  
   Unbilled receivables 	1,041,180  	 	1,041,180 
  
  138,534  	 	 	1,179,714  
  
    Lease receivables - current 	185,447  	 	185,447 
  
  0  	 	 	185,447  
  
    Other 	          392,343  	 	          392,343  	       
  228,442  	 	 	         620,785  
  
  Total current assets 	4,934,716  	 	22,094,003 
  
  2,563,463  	 	 	15,331,052  
  
  	 	 	 	 	 	 	 
  
  Fixed assets, net 	1,620,827  	 	1,620,827  	829,557
  
   	 	2,450,384  
  
  Capitalized software, net 	4,044,350  	 	4,044,350 
  
  508,548  	(138,548) 	(4) 	4,414,350  
  
  Goodwill, net 	757,339  	 	757,339  	0  	1,770,000 
  
  (4) 	2,527,339  
  
  Lease receivables - non         current 	 212,855  	
  
   212,855  	 0  	  	 	 212,855  
  
  Deferred stock issuance        costs 	 714,846  	 (714,846) 	 0 
  	 0  	 	 	 0  
  
  Other 	            25,253  	 	            25,253  	        
  61,525  	      185,000  	(4) 	         271,778  
  
  	$12,310,186  	  	$28,754,627  	$3,963,093  	 	
  
  $25,207,758 
  
  Liabilities & Equity 	 	 	 	 	 	 	 
  
  Current liabilities: 	 	 	 	 	 	 	 
  
    Accounts payable &              accrued expenses 	 $2,767,178 
  	 (38,481) 	 $2,728,697  	 $625,716  	 184,361  	 (2) 	
  $3,538,774  
  
    Preferred stock dividends      payable 	 166,100 
  
    	 166,100  	 0  	 	 	 166,100  
  
    Deferred revenue 	1,916,680  	 	1,916,680 
  
  1,813,411  	 	 	3,730,091  
  
    Advanced billings 	128,763  	 	128,763  	561,251 
  
   	 	690,014  
  
    Other 	          210,857  	 	          210,857  	        
  88,000  	 	 	         298,857  
  
  Total current liabilities 	5,189,578  	 	5,151,097 
  
  3,088,378  	 	 	8,423,836  
  
  	 	 	 	 	 	 	 
  
  Bank note payable 	2,743,882  	(2,743,882) 	0  	0  	
  
   	0  
  
  Subordinated notes payable    - related parties 	 1,000,000  	
  (1,000,000) 	 0  	 0  	 	 	 0  
  
  Other liabilities 	          182,885  	 	          182,885  	   
       237,761  	 	 	         420,646  
  
   	9,116,345  	 	5,333,982  	3,326,139  	 	
  
  8,844,482  
  
  Stockholders' equity: 	 	 	 	 	 	 	 
  
    Series CM preferred stock 	0  	 	0  	0  	60  	(3)
  
  60  
  
    Common stock 	114,048  	38,925  	152,973  	97,859 
  
  (87,859) 	(3) 	162,973  
  
    Additional paid-in capital 	12,795,239 
  
  20,187,879  	32,983,118  	0  	7,990,440  	(3)
  
  40,973,558  
  
    Retained earnings/(deficit) 	      (9,715,446) 	 	   
  (9,715,446) 	          539,095  	(15,596,964) 	(5) 	  
  (24,773,315) 
  
  Total shareholders' equity 	       3,193,841  	 	    23,420,645 
  	          636,954  	 	 	    16,363,276  
  
   	$12,310,186  	 	$28,754,627  	$3,963,093  	 	
  
  $25,207,758  
  
  
  See accompanying notes.
  
  </TABLE>
  
  
  15
  
  <PAGE>
  
  
  Notes To Unaudited Pro Forma Condensed Combined Balance Sheet
  
  The unaudited pro forma condensed combined balance sheet gives
  effect to the following pro forma adjustments:
  
  (1)	On October 2, 1996 the Company received proceeds of 
      $20,941,650 from the issuance of 3,892,500 shares of common
      stock at 	$5.75 per share net of underwriting concessions of
      $1,440,225.  Pursuant to the terms of the offering a portion of
      the proceeds were immediately used to repay the subordinated
      notes payable of $1,000,000, the bank note payable of
      $2,743,882, and accrued interest on October 2, 1996 attributable
      to the notes payable of $38,481.  The Pro Forma Stock Issue
      Adjustments gives effect to the October 2, 1996 issuance of
      common stock, the receipt and immediate application of the
      proceeds as more fully described above, and the realization of
      the deferred stock issuance costs of $714,846, as if these
      transactions had occurred on September 30, 1996.
  
  (2)	Reflects the payment of $8,500,000 to the shareholders of
      CoMed plus $826,414 of costs directly related to the acquisition
      of CoMed, and estimated accruals of $184,361 as of September
      31,1996.
  
  (3) 	Reflects the issuance of 6,000 shares of the Company's
       Series CM Non-voting Convertible Preferred Stock, par value
       $.01, 1,000,000 shares of the Company's Common Stock, par value
       $.01, for a total consideration of $8,000,500, and the
       elimination of the previously outstanding common stock of CoMed.
  
  (4)	Reflects basis adjustments to the carrying value of
      capitalized software, goodwill and other intangibles created by
      the acquisition.
  
  (5)	Reflects the elimination of the previous retained earnings
      of CoMed, and the write off of in process research and
      development of $15,057,569 related to the acquisition of CoMed.
  
  
  
  
  16
  
  <PAGE>
  
  
  
  
                   Pro Forma Condensed Consolidated Statements of Operation
  
  The following unaudited pro forma condensed consolidated
  statements of operations have been prepared based upon certain
  pro forma adjustments to the historical financial statements of
  Dynamic Healthcare Technologies, Inc., of DMI and of CoMed
  included elsewhere in this Form 8-K.
  
  The historical information for the year ended December 31, 1995
  combines operating information for Dynamic Healthcare
  Technologies, Inc. previously reported on Form 10-K for its year
  ending December 31, 1995, with operating information of DMI for
  the first nine months of December 31, 1995 (of its fiscal year
  ended March 31, 1996), previously reported on its Form 10-QSB
  for the nine months ended December 31, 1995, and the fourth
  quarter of its fiscal year ended March 31, 1995, previously
  reported on its Form 10-KSB for the year ended March 31, 1995,
  and with the operating information of CoMed for its year ended
  December 31, 1995 included elsewhere in this Form 8-K.  The
  historical consolidated operating information for the nine
  months ended September 30, 1996 combines the first three
  quarters of audited consolidated information of Dynamic
  Healthcare Technologies, Inc. the fourth quarter of DMI's fiscal
  year ended March 31, 1996 previously reported on its Form 10-KSB
  for the year ended March 31, 1996, DMI's unaudited operations
  from April 1, 1996 until May 1, 1996 (the acquisition date), and
  CoMed's operations for the nine months ended September 30, 1996
  included elsewhere in this Form 8-K.
  
  
  The pro forma condensed consolidated statements of operations
  for the year ended December 31, 1995 and for the nine months
  ended September 30, 1996 give effect to the acquisitions of DMI
  and CoMed as if the transaction had occurred on January 1, 1995.
  The material nonrecurring write off of in process research and
  development of $15,057,569 related to the CoMed acquisition is
  not considered in the pro forma condensed consolidated
  statements of operation.
  
  
                                     Year Ended December 31, 1995
  
  <TABLE>
   <S>       <C>           <C>       <C>        <C>          <C>        <C>
  
  
                 	Company    	DMI     	CoMed     
                     As       As         As        ProForma 
                  Reported  Reported  Reference  Adjustments  Reference  Pro Forma
  
  Operating
   revenues: 						
  
   Computer 
    system
    equipment
    sales   	  $1,101,017	$1,518,397 $  640,784  $                    $3,260,198 
  
   Application
    software
    licenses   	2,428,928  2,048,080 	4,192,384                       	8,669,392  
  
   Software
    support    	3,731,149 	1,166,292  3,292,240                   	 	 	8,189,681  
  
   Services
    & other     1,625,242    530,451    811,059  	              	 	    2,966,752  
  
    Total
     operating
     revenue    8,886,336  5,263,220  8,936,467         0         	 	 23,086,023  
  
   Operating 
    expenses: 	 	 	 	 	 	 
  
    Cost of
     products
     sold        	880,639  1,005,926    512,317  	 	                  	2,398,882  
  
    Client
     services
     expenses  	2,824,987 	1,609,263  2,557,681     (83,000)	   (2)   	6,908,931  
  
    Software
     development
     cost      	1,642,825 	1,254,533  2,864,622       	(900)	 (2)&(3) 	5,761,080  
  
     Sales &
      marketing	1,931,178   	773,259 	1,223,223     (26,000)   	(2)   	3,901,660  
  
     General &
      admin.
      expense   1,768,005    636,169  1,853,895     211,857  	(2)&(6)  4,469,926  
  
      Total
       operating
       expenses 9,047,634  5,279,150  9,011,738     101,957      	 	  23,440,479  
  
     Income 
      (loss)
      from
      operations (161,298)   (15,930)  (75,271)   	(101,957)         	 	(354,456) 
  
     Other
      income
      (expense)  (351,325) 	(163,693)  177,862       88,000    	 (4)    (249,156) 
  
     Income
      (loss)
      before
      taxes     	(512,623) 	(179,623)  102,591     	(13,957)         	 	(603,612) 
  
     Provision
      for income
      taxes             0    180,969         0     (180,969)    	(5)           0  
  
     Net 
      earnings
      (loss)  	$ (512,623) 	$  1,346 	$102,591 	  $(194,926)    	(8) 	$ (603,612) 
  
     Net 
      earnings
      (loss)
      available
      for common
      share-
      holders $ (537,467)                                             	$(628,456)
  
      Net 
       earnings
       (loss)
       per
       common
       share 	$    (.08)                             	 	 	 	 	         $    (.08) 
  
     Weighted
      average
      number
      of common
      and common     
      equivalent
      shares
      out-
      standing  6,443,294        0 	   1,000,000 	 	              (7)  $7,443,294 
  
  
  See accompanying notes.
  
  </TABLE>
  
  17
  
  <PAGE>
  
  
  
  <TABLE>
                                   Nine Months Ended September 30, 1996                                        
    
   <S>         <C>          <C>        <C>       <C>          <C>        <C>
  
                	Company     	DMI        CoMed
                    As         As          As       Pro Forma
                 Reported    Reported   Reported  Adjustments  Reference  Pro Forma 
  
  Operating
   revenues:                		(9) 				
  
   Computer
    system
    equipment
    sales       $2,466,560  $ 445,017  $ 293,621 	$                  	$3,205,198  
  
    Application
     software
     licenses   	2,614,183    162,454  2,702,879  	(128,610) 	        	5,350,906  
  
    Software 
     support    	3,672,690 	  433,444  2,709,284                  	 	 	6,815,418  
  
    Services
     & other     1,784,471     92,845    693,471                	 	    2,570,787  
  
      Total
       operating
       revenue  10,537,904  1,133,759  6,399,255   (128,610) 	(1)  	  17,942,309  
  
  	 	 	 	 	 	 
  
  Operating expenses: 	 	 	 	 	 	 
  
    Cost of
     products
     sold       	2,131,265   378,387     254,352                      	2,764,004
  
    Client
     services
     expenses   	3,509,642	  580,582   1,769,030  	(41,000) 	(2)      	5,818,254  
  
    Software
     development
     cost       	1,484,858  	373,550   2,274,703   	(5,987) 	(2) & (3)	4,127,124  
  
    Sales &
     marketing 	 2,431,916  	213,225  	  995,705   (15,000) 	(2)      	3,625,846  
  
    General &
     admin.
     expense     1,536,856   565,995   1,383,480   168,143  	(2) & (6) 3,654,474  
  
      Total
       operating
       expenses 11,094,537 2,111,740   6,677,270   106,156     	 	    19,989,702 
  
  	 	 	 	 	 	 
  
  Operating
   income (loss) 	(556,633) (977,981)   (278,015) 	(234,766) 	       	(2,047,393) 
  
  Other income
   (expense)      (209,182)  (33,556)    110,329     44,000  	(4)        (88,409) 
  
  Income
   (loss)
   before
   taxes         	(765,815)	(1,011,535) (167,686) 	(190,766) 	       	(2,135,802) 
  
  Provision
   for income
   taxes                 0     293,884         0   (293,884) 	(5)              0  
  
  Net earnings
   (loss) 	    $  (765,815)	$  (717,651) $(167,686)	$(484,650)	(8) 	  $(2,135,802) 
  
  
  
  Net earnings
   (loss)
   available
   for common
   share-
   holders    $(1,016,853)                                           $(2,386,840) 
  
  Net earnings
   (loss) per
   common
   share 	    $      (.15) 	                           	 	 	      	  $      (.31) 
  
  Weighted
   average
   number of
   common and
   common     
   equivalent
   shares
   outstanding  6,709,498 	       0 	        1,000,000 	 	  (7) 	      7,709,498 
  
  
  
  See accompanying notes.
  
  </TABLE>
  
  
  
  18
  
  <PAGE>
  
  
  
  
  
  Notes to Unaudited Pro Forma Condensed Consolidated Statements
  of Operations
  
  The pro forma condensed consolidated statements of operations
  give effect to the following pro forma adjustments:
  
  (1)	Reflects an adjustment to conform the revenue recognition
      principles of DMI to those of the Company.
  
  (2)	Reflects the decrease in depreciation expense resulting from
      the change in the depreciable basis of the assets of DMI and
      CoMed 	assumed acquired on January 1, 1995, for the year ended
      December 31, 1995 of $(111,000) and $(106,000), respectively,
      and for	the nine months ended September 30, 1996 of $(37,000)
      and $(86,000), respectively.
  
  (3)	Reflects the increase (decrease) in the amortization of
      software development costs resulting from the change in the
      amortizable 	basis of DMI and CoMed acquired on January 1, 1995,
      for the year ended December 31, 1995 of $153,000 and $(88,900),
    		respectively, and for the nine months ended September 30, 1996
      of $51,000 and $(12,987), respectively.
  
  (4)	Reflects the elimination of interest expense from interest
      bearing debt of DMI extinguished by the assumed purchase of DMI,
      net	of the elimination of interest earned on cash equivalents
      used by the assumed purchase.
  
  (5)	Reflects the elimination of the income tax benefit
      previously recognized by DMI through a tax sharing agreement
      with DMI's previous majority owner.
  
  (6)	Reflects the increased expense of $254,857 and $191,143,
      resulting principally from the amortization of goodwill acquired
      by the	assumed purchase of CoMed on January 1, 1995, for the
      year ended December 31, 1995 and the nine months ended September
    		30, 1996, respectively.
  
  (7)	Reflects the additional 1,000,000 shares of common stock
      issued in connection with the acquisition of CoMed. No shares
      were	issued in connection with the acquisition of DMI.
  
  (8)	The pro forma net earnings (loss) does not reflect the write
      off of in process research and development of $15,057,869
      acquired	in the CoMed merger.
  
  (9)	Reflects DMI's results for the period from January 1, 1996
      through May 1, 1996 (the acquisition date), only.  Results of
  	  	operations subsequent to acquisition are included in the
      operating results of the Company as reported.
  
  
  
  19
  
  
  <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 hereunto duly authorized.
  
  
  
  
                                 					DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                 					(Registrant)
  
  
  
  
  
  
  Date:  February 3, 1997            	/S/MITCHEL J. LASKEY                    
                                      Mitchel J. Laskey
                                 					President, CEO
  
  
  
  
  
  
  Date:  February 3, 1997            	/S/PAUL S. GLOVER                       
                                      Paul S. Glover
                                 					Vice President of Finance, CFO
  
  
  
  
  
  
  
  20
  
  <PAGE>
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 52544}]
metadata_filer: {"company-data": {"conformed-name": "DYNAMIC HEALTHCARE TECHNOLOGIES INC", "cik": "0000720481", "assigned-sic": "7373", "irs-number": "470643468", "state-of-incorporation": "NE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12039", "film-number": "97521536"}, "business-address": {"street1": "101 SOUTHHALL LANE SUITE 210", "city": "MAITLAND", "state": "FL", "zip": "32751", "phone": "4078759991"}, "mail-address": {"street1": "101 SOUTHHALL LANE", "street2": "SUITE 210", "city": "MAITLAND", "state": "FL", "zip": "32751"}, "former-company": {"former-conformed-name": "TERRANO CORP", "date-changed": "19920703"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                      WASHINGTON, D.C. 20549
  
                              FORM 8-K
  
               PURSUANT TO SECTION 13 OR 15(D) OF THE 
  
                  SECURITIES EXCHANGE ACT OF 1934
  
  Date of Report Date of earliest event report)    February 3, 1997
  
  Commission File Number                  0-12516
  
  Dynamic Healthcare Technologies, Inc.                           
                                                                 
  
  (Exact name of registrant as specified in its charter)
  
  Florida                          0-12516              59-3389871
    
  
  (State or other jurisdiction (Commission File Number)(IRS E.I.N.)
  
    of Incorporation)
  
  101 Southhall Lane, Suite 210  Maitland, Florida      32751     
                                                          
  
  (Address of principal executive offices)           (ZIP Code)
  
  (407) 875-9991                                                  
                                                                
  (Registrant's telephone, including area code)
  
  None                                                            
                                                                
  (Former name of former address, if changed from last report)
  
  This report consists of twenty (20) pages.
  FORM 8-K
  
                  DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
  
                           DECEMBER 17, 1996
  
  Item 7.	Financial Statements and Exhibits
  
  		The following financial statements are being filed            
   pursuant to Item 7(a) and (b) of the Registrant's Form         
   8-K dated December 17, 1996.
  
  		(a) Financial Statements of Business Acquired
  
  		Index							Page Number
  
  		Independent Auditors' Report on the          3
  
            financial statements of Collaborative 
  
            Medical Systems, Inc. as of December 31,
  
            1994 and 1995, and for the years then ended.
  
  		Independent Accountant's Report on the       4
  
            Collaborative Medical Systems, Inc. 
  
            Statements of Operations, of Cash Flows 
  
            and of Changes in Stockholders' Equity 
  
            for the year ended December 31, 1993.
  
  		Balance sheets of Collaborative Medical      5
  
            Systems, Inc. as of December 31, 1994 and 
  
            1995, and September 30, 1996 (unaudited).			
  
  		Statements of Operations of Collaborative    6
  
            Medical Systems, Inc. for the years ended 
  
            December 31, 1993, 1994 and 1995, and for 
  
            the nine months ended September 30, 1995 
  
            (unaudited) and 1996 (unaudited).
  
  		Statements of Changes in Stockholders'       7
  
            Equity of Collaborative Medical		
  
  		Systems, Inc. for the years ended December 
  
            31, 1993, 1994 and 1995.
  
  		Statements of Cash Flows of Collaborative    8 
  
            Medical Systems, Inc. for the years ended 
  
            December 31, 1993, 1994 and 1995, and for 
  
            the nine months ended September 30, 1995 
  
            (unaudited) and 1996 (unaudited).
  
  		Notes to Financial Statements.			9
  
  2
  Report of Independent Auditors
  
  Board of Directors and Stockholders
  
  Collaborative Medical Systems, Inc.
  
  We have audited the accompanying balance sheets of Collaborative
  Medical Systems, Inc. as of December 31, 1994 and 1995, and the
  related statements of operations, changes in stockholders'
  equity, and cash flows for the years then ended included in this
  Form 8-K.  These financial statements are the responsibility of
  the Company's management.  Our responsibility is to express an
  opinion on these 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 financial statements are free of material misstatement.  An
  audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the 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 financial statements referred to above
  present fairly, in all material respects, the financial position
  of Collaborative Medical Systems, Inc. as of December 31, 1994
  and 1995, and the results of its operations and its cash flows
  for the years then ended in conformity with generally accepted
  accounting principles.
  
                              								/S/ERNST & YOUNG LLP
  
  Boston, Massachusetts
  February 23, 1996
  
  3
  Report of Independent Accountants
  
  Board of Directors and Stockholders
  
  Collaborative Medical Systems, Inc.
  
  In our opinion, the statements of operations, of cash flows and
  of changes in stockholders' equity for the year ended December
  31, 1993 (appearing on pages 6 through 8 in this Form 8-K)
  present fairly, in all materials respects, the results of
  operations and cash flows of Collaborative Medical Systems, Inc.
  for the year ended December 31, 1993, in conformity with
  generally accepted accounting principles.  These financial
  statements are the responsibility of the Company's management;
  our responsibility is to express an opinion on these financial
  statements based on our audit.  We conducted our audit of these
  statements in accordance with generally accepted auditing
  standards which require that we plan and perform the audit to
  obtain reasonable assurance about whether the financial
  statements are free of material misstatement.  An audit includes
  examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements, assessing the
  accounting principles used and significant estimates made by
  management, and evaluating the overall financial statement
  presentation.  We believe that our audit provides a reasonable
  basis for the opinion expressed above.  We have not audited the
  financial statements of Collaborative Medical Systems, Inc. for
  any period subsequent to December 31, 1993.
  
                                  						/S/PRICE WATERHOUSE LLP
                                        Boston, MA
                                       	March 17, 1994
  
  4
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                            Balance Sheets
  December 31,	          September 30,
  Assets       	                  1994         	   1995        	    1996         
                                                                 (Unaudited) 
  
  Current assets: 
  
    Cash and
     cash equivalents         	 $562,014        $1,248,906         $640,496   
  
    Available-for-sale
    securities                   505,625          	  --               --       
   
    Accounts receivable,
     net of allowance for 
     doubtful accounts of
     $75,000 and $80,000 as
     of December 31, 1994
     and 1995, respectively,
     and $80,000 as of
     September 30, 1996 	      2,328,505         1,964,768        1,555,991  
  
    Costs and estimated
     earnings in excess of
     billings on uncompleted
     contracts               	   391,769          	194,925         138,534
  
    Prepaid expenses and
     other current assets        267,064          	232,877         223,824
  
    Receivable from
     stockholders                 	8,924            34,346           4,618   
  
  Total current assets         4,063,901         3,675,822       2,563,463
  
  Fixed assets, net              611,065          	633,232         829,557
  
  Computer software
   development costs,
   net of accumulated
   amortization of 
   $1,013,122 and 
   $1,176,022 as of
   December 31, 1994
   and 1995,
   respectively, and
   $1,244,509  as of
   September 30, 1996          	 270,100          	252,982     	   508,548   
  
  Restricted cash 	               60,000          	 60,000      	   60,000   
  
  Other assets 	                   1,025          	  1,525           1,525   
   
                            $  5,006,091       $ 4,623,561     $ 3,963,093
    
  Liabilities and stockholders' equity 	 	 	 
  
  Current liabilities: 	 	 	 
    
    Book overdraft 	            $ 90,233         $ 161,030       $ 100,363   
  
    Line of credit 	              70,000          	   --            88,000   
  
    Accounts payable             256,747          	223,852         256,183  
  
    Accrued expenses             322,433          	299,355         269,170  
  
    Billings in excess 
     of costs and estimated
     earnings on uncompleted
     contracts 	               1,395,864           620,826         561,251   
  
    Deferred revenue           1,448,407         2,135,318       1,813,411 
   
  Total current liabilities 	  3,583,684         3,440,381       3,088,378   
  
  Deferred revenue                92,794          	324,237         153,745   
  
  Deferred rent                   81,359          	 82,877     	    84,016
    
  Stockholders' equity: 	 	 	 
  
    Common stock, no
     par value; 12,500
     shares authorized,
     380.10 and 387.86
     shares issued and
     outstanding on
     December 31, 1994
     and 1995, respectively,
     and 380.10 shares
     issued and outstanding
     on September 30, 1996 	      81,482           118,930          97,859   
  
    Retained earnings          1,166,772           657,136         539,095
    
  Total stockholders' equity	  1,248,254           776,066         636,954   
  
   	                        $  5,006,091       $ 4,623,561     $ 3,963,093   
  
          
  
  See accompanying notes.
  5
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                           Statements of Operations
  
                    				 Year Ended 	                      	 Nine Months Ended 
                   				 December 31,	                       		   September 30,
  1993            1994        1995          1995       1996
  					                                                  (Unaudited) (Unauditded)
  
  Operating Revenues:                         
  
   Computer
    system
    equipment
    sales and 
    support     $1,049,623     $  851,931   $  640,784    $  406,307  $ 293,621     
  
   Application
    software
    licenses     3,702,979      3,972,792    4,192,384     3,312,566  2,702,879     
  
   Software
    support 	    2,230,926      2,844,910    3,292,240     2,410,831  2,709,284     
  
   Services
   and other     1,061,850      1,241,946      811,059       651,038    693,471     
  
    Total
     operating
     revenues    8,045,378      8,911,579    8,936,467     6,780,742  6,399,255     
  
  Operating
  Expenses: 	 	 	 	 	 
  
   Cost of
    products
    sold 	         946,779      	 701,023      512,317       388,698    254,352    
  
   Client
    services
    expense      2,389,615      2,734,833    2,557,681     1,936,335  1,769,030    
  
   Software
    development
    costs        1,704,569      2,564,575    2,864,622     2,158,431  2,274,703    
  
   Sales
    and
    marketing
    costs     	  1,169,859      1,391,705    1,223,223       856,817    995,705  
   
   General and
    administrative
    expense  	   1,416,500      1,306,975    1,853,895     1,479,524  1,383,480    
  
    Total 
     operating
     expenses    7,627,322      8,699,111    9,011,738     6,819,805  6,677,270    
  
  	 	 	 	 	 
  
  Income (loss)
   from
   operations      418,056       	212,468      (75,271)      (39,063)  (278,015)
    
  
  				 	 
  Interest
   income 	         67,097         73,733      178,098       128,617    110,329  
   
  
  Interest
   expense 	       (13,460)        (3,481)        (236)         --        --   
       
  
  	 	 	 	 	 
  Net income
   (loss) 	     $  471,693     $  282,720   $  102,591     $  89,554  $(167,686) 
   
  
  See accompanying notes.
  6
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                Statements of Changes in Stockholders' Equity
  Common Stock                      
  
                                                                  Total
  	                         Number of    Carrying     Retained    Shareholders'   
                            Shares       Value        Earnings    Equity 
  
  Balance at
  December 31, 1992 	       368.46       $ 48,169     $ 706,771   $ 754,940    
     
   Exercise of stock
    options                   3.88          7,550      	   --         7,550      
    
   Distribution to
    stockholders 	             --         	  --        (150,000)   (150,000)       
  
   Net income 	                --            --         471,693     471,693     
     
  
  				
  Balance at 
  December 31, 1993     	   372.34         55,719     1,028,464   1,084,183    
  
   Surrender of stock
    to the Company      	    (3.88)       	  -- 	         -- 	        -- 
  
   Exercise of stock
    options   	              11.64         25,763         --         25,763         
  
   Distribution to
    stockholders              --             --        (144,412)   (144,412)  
      
   Net income 	               --             --         282,720     282,720     
     
  
  Balance at 
   December 31, 1994    	   380.10         81,482     1,166,772   1,248,254    
     
   Surrender of stock
    to the Company      	    (3.88)       	  --      	    --     	    -- 
  
   Exercise of stock
    options                  11.64         37,448         --         37,448        
  
   Distribution to
    stockholders 	            --             --        (612,227)   (612,227)  
      
   Net income   	             --             --         102,591     102,591     
    
  
  Balance at 
  December 31, 1995    	   387.86       $ 118,930     $ 657,136   $ 776,066    
     
  
  See accompanying notes.
  7
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                            Statements of Cash Flows
  
                         Year ended December 31,           	Nine Months Ended
                                                              September 30,
  Operating          1993        1994        1995         1995             1996  
  activities                                          (Unaudited)     (Unaudited) 
  
  Net income
  (loss)         $ 471,693   $  282,720   $  102,591    $ 89,554       $(167,686) 
  
  Adjustments
   to reconcile
   net income
   to net cash
   provided by
   operating
   activities: 	 	 	  	 	 
  
   Depreciation   197,039     	235,389      286,755      200,049         222,141
  
   Amortization
    of computer
    software
    development
    costs 	       125,825      477,688      162,900      122,066          68,487  
  
   Write-off
    of computer
    software
    development
    costs 	        74,810    	      --        	 --            --          	  --    
     
   Gain on
    disposal
    of fixed
    assets 	       (2,803)    	     --          --            --              -- 
  
   Bonus to
    employees
    in the form
    of common
    stock           3,775     	 25,763      37,448         	 --              --    
     
   Changes in
    operating
    assets and
    liabilities: 	
  
    Accounts
     receivable,
     net         (113,415)  (1,064,124)   	363,737    1,065,035          408,777  
  
    Costs and 
     estimated
     earnings 
     in excess of
     billings on
     uncompleted
     contracts    (23,090)    (102,987)     196,844      61,244           56,391
  
    Prepaid 
     expenses 
     and other
     current 
     assets       (88,499)     (14,652)      34,187     87,177             9,053
  
    Receivable
     from 
     stock-
     holders     (130,000)     121,076     	(25,422)     8,924            29,728
  
    Other 
     assets        26,933       (1,025)        (500)    (1,809)               --
  
    Book 
     overdraft     29,169      (43,807)      70,797    (90,233)          (60,667)
  
    Accounts 
     payable      (37,349)      (9,005)     (32,895)  (205,607)           32,331
  
    Accrued 
     expenses      54,470      167,201      (23,078)    10,035           (30,185)
  
    Billings in
     excess of 
     costs and 
     estimated 
     earnings on 
     uncompleted 
     contracts    107,463     508,285      (775,038)  (656,456)          (59,575) 
  
    Deferred 
     revenue      389,659    	363,520       918,354    171,998         	(492,399)
  
    Deferred 
     rent 	            --       1,512        1 ,518      1,138             1,139
  
  Net cash 
  provided by
  operating
  activities    1,085,680     947,554     1,318,198    863,115            17,535  
  
  Investing 
   activities 	 	 	 	 	 
  
  Purchase of
   fixed 
   assets       (159,465)   (356,916)     (308,922)   (247,819)         (418,466)
  
  Computer 
   software 
   development
   costs 	      (448,486)    (94,358)    	(145,782)   (112,649)         (324,053)
  
  Sale 
   (purchase)
   of 
   available-
   for-sale
   securities      9,834    (505,625)       505,625    476,407              --
  
  Net cash
   provided by
   (used in) 
   investing
   activities   (598,117)   (956,899)        50,921    115,939          (742,519)
  
  Financing 
   activities
  
  Proceeds 
   from 
   (payments
   of) line 
   of credit         --       70,000        (70,000)   (70,000)           88,000
  
  Payments
   of long-
   term debt    (84,975)    (100,025)            --         --                --
  
  Proceeds
   from 
   long-term
   debt 	       125,000           --             --         --                --
  
  Proceeds
   from
   issuance
   (repurchase)
   of common
   stock          3,775           --             --         --           (21,071)
  
  Contributions
   from
   (distribution
   to) 
   stock-
   holders     (150,000)    (144,412)      (612,227)   (99,453)           49,645
  
  Net cash
   provided
   by (used
   in) 
   financing
   activities  (106,200)    (174,437)      (682,227)  (169,453)          116,574
  
  Net increase
   (decrease)
   in cash 
   and cash 
   equivalents  381,363     (183,782)      	686,892     809,601         (608,410)
  
  Cash and
   cash 
   equivalents
   at the
   beginning
   of period    364,433      745,796        562,014     562,014        1,248,906
  
  Cash and
   cash
   equivalents
   at the end
   of period  $ 745,796    $ 562,014     $1,248,906  $1,371,615         $640,496
  
    
  See accompanying notes.
  8
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
                      Notes to Financial Statements
  
                            December 31, 1995
     
  
  1.	Organization and Operations
  
  	Collaborative Medical Systems, Inc. (the Company) was          
   organized as a Massachusetts corporation on September 27,
   1978.  The Company designs, develops and markets information
   processing systems for the medical industry.  The systems
   include proprietary software that operates on a wide variety
   of industry standard computer platforms including personal
   computers, workstations, mini-computers, networks and
   servers.
  
  2.	Summary of Significant Accounting Policies
  
  	Cash and Cash Equivalents
  
  	The Company considers all highly liquid investment purchases
   with an original maturity of three months or less to be cash
   equivalents.  The Company invests in high-grade money market
   accounts, commercial paper and treasury bills.  Accordingly,
   the Company believes the investments are subject to minimal
   credit and market risk.
  
  	Available-for-Sale Securities
  
  	Effective January 1, 1994, the Company adopted the Statement
   of Financial Accounting Standards No. 115, "Accounting for
   Certain Investments in Debt and Equity Securities" (FAS
   115), to account for its securities.  FAS 115 established
   the accounting and reporting requirements for investments in
   debt securities.  All affected investment securities must be
   classified as either held-to-maturity, trading or
   available-for-sale.  Held-to-maturity securities are carried
   at amortized cost basis.  Trading securities are carried at
   fair value with unrealized holding gains and losses reported
   in the statement of operations.  Available-for-sale
   securities are carried at fair value with unrealized holding
   gains and losses reported as a component of stockholders'
   equity.  The adoption of FAS 115 had no material impact on
   the Company's financial position.
  
   At December 31, 1994, the Company's securities, with
   maturities within one year, were classified as
   available-for-sale securities and consisted of municipal
   bonds.  The cost of these securities was $505,625 at
   December 31, 1994 which approximated fair market value.
   Accordingly, there were no associated unrealized gains and
   losses.
  
   The Company did not hold any available-for-sale securities
   at December 31, 1995.
  
  	Fixed Assets
  
  	Fixed assets are stated at cost and are depreciated using
   accelerated methods over the useful lives of the related
   assets ranging from five to seven years.  Expenditures for
   repairs and maintenance are charged to expense as incurred.
  
  	Computer Software Development Costs
  
  	The Company's policy is to capitalize certain software
   development costs in accordance with Statement of Financial
   Accounting Standards No. 86.  Under the Statement, software
   development costs shall be capitalized at the lower of cost
   or net realizable value beginning upon the establishment of
   technological feasibility of the related products as defined
   in the statement.
  
  	Capitalized costs are amortized ratably over the estimated     
   useful life of the products, generally four years.
  
  	Deferred Rent
  
  	The Company's lease on the office facility included
   scheduled base rent increases over the term of the lease.
   The total amount of the base rent payments is being charged
   to expense on the straight-line method over the term of the
   lease.  The Company has recorded a deferred credit to
   reflect the excess of rent expense over the cash payments
   since inception of the lease.
  
  9
  COLLABORATIVE MEDICAL SYSTEMS, INC.
  
              Notes to Financial Statements (continued)
  
  2.	Summary of Significant Accounting Policies (continued)
  
  	Revenue Recognition
  
  	Revenue from consulting, programming and software license
   contracts is recognized pursuant to the related agreements
   based on progress towards completion of the contract. Labor
   hours are used to measure such progress.  Payments received
   under these agreements prior to the completion of the
   related work are recorded as billings in excess of costs and
   estimated earnings on uncompleted contracts.
  
  	Maintenance fees are billed in advance.  Such revenue is
   recognized ratably over the term of the maintenance
   agreement and unearned fees are recorded as deferred
   revenue.
  
  	Use of Estimates
  
  	The preparation of financial statements in conformity with
   generally accepted accounting principles requires management
   to make estimates and assumptions that affect the reported
   amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the
   financial statements and the reported amounts of revenues
   and expenses during the reporting period.  Actual results
   could differ from these estimates.
  
  	Concentration of Credit Risk
  
  	Two customers accounted for approximately 25% and 31% of the
   Company's revenue during 1994 and 1995, respectively. In
   addition, these customers represented 8% and 14% of trade
   accounts receivable at December 31, 1994 and 1995,
   respectively.
  
  	Income Taxes
  
  	The Company provides for income taxes using the liability
   method as required by Statement of Financial Accounting
   Standards No. 109 (FAS 109), "Accounting for Income Taxes."
   Under FAS 109, tax provisions and credits are recorded at  
   statutory rates for taxable items included in the statement
   of operations regardless of the period for which such items
   are reported for tax purposes.  Deferred income taxes are
   recognized for temporary differences between financial
   statement and income tax bases of assets and liabilities
   which will be recognized for income tax return purposes in
   future years.  Deferred tax assets are reduced by a
   valuation allowance when the Company cannot make the
   determination that it is more likely than not that some
   portion or all of the related tax asset will be realized.
  
  	Reclassification
  
  	Certain amounts were reclassified in 1993 and 1994 to permit
   comparison with 1995.
  
  3.	Fixed Assets
  
  	Fixed assets consisted of the following at December 31:
  1994             1995         
   
  Office equipment and fixtures   $    514,323     $    559,385    
  Computer equipment                 1,149,363        1,411,504
  Leasehold improvement 	              101,474          103,193
                                     1,765,160        2,074,082
  Less accumulated depreciation      1,154,095        1,440,850 
                                  $    611,065     $    633,232
  10
  COLLABORATIVE MEDICAL SYSTEMS, INC. 
  
                   Notes to Financial Statements (continued)
  
  4.	Line of Credit
  
  	The Company has a working capital line of credit under which
   it can borrow up to the lesser of $850,000 or 70% of
   eligible accounts receivable with interest payable monthly
   at the bank's prime rate plus .75% (9.25% at December 31,
   1995).  The principal balance is payable on demand and is
   secured by all of the Company's assets.  In connection with
   the line of credit, the Company is required to comply with
   certain covenants, the most restrictive of which require the
   Company to maintain minimum amounts of profitability,
   working capital and tangible net worth.  The Company was in
   compliance with all covenants at December 31, 1994, and at
   December 31, 1995.
  
  	Availability under the line of credit was reduced by
   borrowings of $70,000 during the year ended December 31,
   1994.  The Company had no borrowings against the line of
   credit at December 31, 1995.
  
  5.	Income Taxes
  
  	No provision for federal income tax is required since the
   Company has elected, with consent of its stockholders, to be
   treated as an S Corporation under the provision of the
   Internal Revenue Code.  Under Subchapter S, the stockholders
   include their respective share of Company income in their
   individual income tax returns for federal and certain state
   purposes.  For the years ended December 31, 1993, 1994 and
   1995, the provision for state income taxes was fully offset
   with the utilization of current and carryforward state tax
   credits.
  
  	The Company's principal temporary differences result
   primarily from differences between the carrying  amounts of
   assets and liabilities related to software contracts for
   financial reporting purposes and the amounts used for income
   tax purposes.  These amounts were not material for the years
   ended December 31, 1993, 1994, nor 1995.
  
   The Company had state research and development tax credit
   carryforwards which may be used to reduced future state
   income tax liability.  These credits total approximately
   $23,000, $62,000 and $94,000 at December 31, 1993, 1994, and
   1995 respectively.  The state research and development tax
   credit carryforwards expire in 2009.
  
  6.	Defined Contribution Plan
  
   In 1985, the Company adopted a defined contribution plan
   (the Plan), which meets the requirements of Section 401K of
   the Internal Revenue Code.  All full-time employees who are
   at least 21 years of age are eligible to participate in the
   Plan .  The Plan allows employees to contribute up to 20% of
   their salaries and the Company matches 30% of employees
   contributions up to 6% of employees' contributions or a
   maximum of $750 annually, whichever is higher.
   Additionally, the Company may make an annual profit sharing
   contribution to this plan at the discretion of the Board of
   Directors.  No such discretionary contribution was made in
   1993, 1994, or 1995.  The Company made total contributions
   of $60,164, $65,564, and $70,590 for the years ended
   December 31, 1993, 1994, and 1995, respectively.
  
  7.	Common Stock
  
  	Stock Option  and Bonus Plan
  
  	In December 1992, the Company adopted the Stock Option and
   Bonus Plan (the Option Plan).  The Option Plan provides for
   the granting of stock options to specified key employees of
   the Company.  The Option Plan allows for a maximum of 34.92
   shares of common stock to be issued by December 31, 1995.
   At December 31, 1995, there were no shares available for
   future grant.
  
  	Options are exercisable during specific option periods at a
   price equal to the book value per share as of the close of
   fiscal year preceding the particular  option period.
   Management believes the book value per share approximates
   fair value.  Once an option is granted, all shares under
   such option period must be exercised during that year.  The
   difference between the book value and the exercise price at
   the exercise date is charged to expense in that period.
  
  	During 1993, options for 3.88 shares were granted and
   exercised at a price of $1.946 per share.  As allowed under
   the terms of the Option Plan, the option holders elected to
   receive 1.94 shares as a bonus and the remaining 1.94 shares
   were purchased.
  
  11
  COLLABORATIVE MEDICAL SYSTEMS, INC. 
  
              Notes to Financial Statements (continued)
  
  7.	Common Stock (continued)
  
  	Stock Option and Bonus Plan (continued)
  
   During 1994, options for 11.64 shares were granted and
   exercised at a price of $2,213 per share.  As  allowed under
   the terms of the Option Plan, the option holders elected to
   received 11.64 shares as a bonus.
  
   During 1995, options for 3.88 shares were surrendered to the
   Company and 11.64 shares were subsequently granted and
   exercised at a price of $3, 217 per share.  As allowed under
   the terms of the Option Plan, the option holders elected to
   receive 3.88 shares as a bonus.
  
  	Stockholder Agreement
  
  	The Company and its stockholders are  parties to a stock
   purchase agreement.  The terms of the agreement require the
   Company to purchase the stockholders' shares of the Company
   in the event of death or termination of the stockholder.
  
  	The purchase price per share is the net book value per
   share, as defined by the agreement.
  
   To facilitate this repurchase, the Company has purchased
   insurance policies on the lives of the major stockholders.
   In the event of  the death of the stockholder, the lesser of
   the proceeds from the insurance policy or the repurchase
   price will be paid at the closing date, as defined in the
   agreement.  In any event, not less than 10% of the
   repurchase price will be paid at closing.  The balance, if
   any, of the repurchase price will be paid within four years
   of the closing in quarterly installments of principal, plus
   interest at prime rate plus 2%.
  
  8.	Distribution to Stockholders
  
   The Company made payments to stockholders amounting to
   $150,000, $144,412 and $612,227  in 1993, 1994 and 1995,
   respectively, which were made to cover personal income tax
   liabilities of the stockholders relating to their share of
   the Company's profits. 
  
  9.	Commitments
  
  	Operating Leases
  
   The Company leases its operating facility and certain office
   equipment under noncancelable operating leases.  Future
   minimum commitments under these noncancelable leases are
   approximately as follows:
  
           Year Ending December 31,
  1996                  $   533,000
  
                   1997 	                    513,000   
  
                   1998 	                    505,000   
  
                   1999 	                    463,000   
  
  	                                       $2,014,000
  Rent expense amounted to $535,200, $528,546 and $528,546 in
   1993, 1994 and 1995, respectively.
  
  	Letter of Credit
  
  	At December 31, 1994 and 1995, the Company has an
   outstanding letter of credit in the amount of $60,000
   securing future health benefits.  This letter of credit is
   secured by a certificate of deposit which is included in
   restricted cash at December 31, 1994 and 1995.
  
  12
  COLLABORATIVE MEDICAL SYSTEMS, INC.
   
              Notes to Unaudited Condensed Financial Statements
  
               Nine Months Ended September 30, 1995 and 1996
  
  1.	Unaudited Financial Statements
  
   The accompanying unaudited Condensed Balance Sheet as of
   September 30, 1996, and Condensed Statements of Operations
   for the nine month periods ended September 30, 1995 and
   1996, have been prepared by management in conformity with
   generally accepted accounting principles for interim
   financial statements in accordance with Regulation S-X.
   Accordingly, they do not include all the disclosures
   required by generally accepted accounting principles for
   complete financial statements.  All adjustments and accruals
   considered necessary for fair presentation of financial
   information have been included in the opinion of management.
   All adjustments made were of a normal recurring nature.
   Operating results for the nine month periods ended September
   30, 1996, are not necessarily indicative of the operating
   results which may be expected for the year December 31,
   1996.
  
  2. 	Subsequent Events
  
   On December 17, 1996, the Company was merged into
   Collaborative Medical Systems Corporation a wholly owned
   subsidiary of Dynamic Healthcare Technologies, Inc.
   ("Dynamic"). The shareholders of the Company received
   $8,500,000, plus 1,000,000 common shares of Dynamic, and up
   to 600,000 contingently issuable common shares of Dynamic
   evidenced by 6,000 shares of non-voting, Convertible Series
   CM Preferred Stock of Dynamic, in exchange for all of the
   outstanding shares of the Company's common stock.
  
  13
  FORM 8-K
  
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
  
                                DECEMBER 17, 1996
  
  (b) 	Pro Forma Financial Information
  
   On May 1, 1996, as previously reported on Form 8-K, pursuant
   to the terms of a Merger Agreement by and among Dimensional
   Medicine, Inc. (LOTC:DIMM) of Minnetonka, Minnesota ("DMI"),
   National Computer Systems, Inc. (the principal shareholder
   of DMI), DMI Acquisition Corp. (a wholly owned subsidiary of
   the Registrant, hereafter "DMIAC"), and the Registrant, DMI
   was merged with and into DMIAC.  The acquisition was
   accounted for as a purchase transaction for an aggregate
   purchase price including assumed indebtedness of $3,673,000.
  
   On December 17, 1996 pursuant to the terms of a Merger
   Agreement by and among Collaborative Medical Systems, Inc.
   of Waltham, Massachusetts ("CoMed"), Collaborative Medical
   Systems Corporation (a wholly owned subsidiary of the
   Registrant, hereafter "Newco"), and the Registrant, CoMed
   was merged with and into Newco.  Under the terms of the
   Merger Agreement the Registrant paid $8,500,000 cash, issued
   1,000,000 shares of restricted common stock, and 6,000
   shares of Series CM Non-Voting, Convertible Preferred Stock
   ("Series CM Preferred Stock") to the shareholders of CoMed.
   The Series CM Preferred Stock shall be automatically
   convertible into shares of the Registrant's common stock at
   the close of business on August 29, 1997 ("Contingent
   Shares"), pursuant to a formula based upon the average
   closing bid and ask price of the Registrant's common stock
   as quoted on the National Market for the five (5) trading
   day period ending August 29, 1997 (the "CSAVG"). If the
   CSAVG is greater than or equal to $8.00, an aggregate of 100
   shares of the Registrant's common will be issued as
   Contingent Shares:  if the CSAVG is less than or equal to
   $5.00, then an aggregate of 600,000 shares of the
   Registrant's common stock will be issued as Contingent
   Shares:  and if the CSAVG is greater than $5.00 but less
   than $8.00, then the number of shares of the Registrant's
   common stock to be issued as Contingent Shares will be
   pro-rated accordingly.  Funds for the transactions came from
   the Registrant's cash resources.  Terms of the Merger
   Agreement were based upon arms length negotiations.
  
   Both Newco, and DMIAC were formed through the issuance of
   100 common shares $.01 par value of each entity to the
   Registrant for $100.  On September 25, 1996, DMIAC was
   merged with and into Dynamic Healthcare Technologies, Inc.
  
       Pro Forma Condensed Combined Balance Sheet
  
   The following unaudited pro forma condensed combined balance
   sheet as of September 30, 1996 has been prepared based upon
   certain pro forma adjustments to the September 30, 1996
   balance sheet of Dynamic Healthcare Technologies, Inc. (the
   "Company"), as described below, including giving effect to
   the merger of CoMed into Newco as if the transaction had
   occurred on September 30, 1996.  The pro forma condensed
   combined balance sheet should be read in conjunction with
   the notes thereto and the historical financial statements of
   the Company previously filed on Form 10-Q for the period
   ending September 30, 1996, and of CoMed included elsewhere
   in this Form 8-K.
  
  14
  Company   Pro Forma  Company   CoMed      CoMed                 Combined
                 As        Stock      Pro       As      Purchase               Pro
              Reported     Issue     Forma   Reported  Adjustments  Reference  Forma
              Sept. 30  Adjustments  Sept. 30 Sept. 30,                        Sept. 30,
                1996     	  (1) 	     1996     1996 	    	                     1996
  
  Assets 							 
  
  Current 
  assets: 							
  
   Cash
   and
   equivalents
         $   546,102 $17,159,287 $17,705,389 $640,496	($9,326,414)(2) $9,019,471  
  
   Accounts
   receivable,
   net    	2,769,644               2,769,644 $1,555,991                 4,325,635 
  
   Unbilled receivables 	1,041,180  	 	1,041,180 
  
  138,534  	 	 	1,179,714  
  
    Lease receivables - current 	185,447  	 	185,447 
  
  0  	 	 	185,447  
  
    Other 	          392,343  	 	          392,343  	       
  228,442  	 	 	         620,785  
  
  Total current assets 	4,934,716  	 	22,094,003 
  
  2,563,463  	 	 	15,331,052  
  
  	 	 	 	 	 	 	 
  
  Fixed assets, net 	1,620,827  	 	1,620,827  	829,557
  
   	 	2,450,384  
  
  Capitalized software, net 	4,044,350  	 	4,044,350 
  
  508,548  	(138,548) 	(4) 	4,414,350  
  
  Goodwill, net 	757,339  	 	757,339  	0  	1,770,000 
  
  (4) 	2,527,339  
  
  Lease receivables - non         current 	 212,855  	
  
   212,855  	 0  	  	 	 212,855  
  
  Deferred stock issuance        costs 	 714,846  	 (714,846) 	 0 
  	 0  	 	 	 0  
  
  Other 	            25,253  	 	            25,253  	        
  61,525  	      185,000  	(4) 	         271,778  
  
  	$12,310,186  	  	$28,754,627  	$3,963,093  	 	
  
  $25,207,758 
  
  Liabilities & Equity 	 	 	 	 	 	 	 
  
  Current liabilities: 	 	 	 	 	 	 	 
  
    Accounts payable &              accrued expenses 	 $2,767,178 
  	 (38,481) 	 $2,728,697  	 $625,716  	 184,361  	 (2) 	
  $3,538,774  
  
    Preferred stock dividends      payable 	 166,100 
  
    	 166,100  	 0  	 	 	 166,100  
  
    Deferred revenue 	1,916,680  	 	1,916,680 
  
  1,813,411  	 	 	3,730,091  
  
    Advanced billings 	128,763  	 	128,763  	561,251 
  
   	 	690,014  
  
    Other 	          210,857  	 	          210,857  	        
  88,000  	 	 	         298,857  
  
  Total current liabilities 	5,189,578  	 	5,151,097 
  
  3,088,378  	 	 	8,423,836  
  
  	 	 	 	 	 	 	 
  
  Bank note payable 	2,743,882  	(2,743,882) 	0  	0  	
  
   	0  
  
  Subordinated notes payable    - related parties 	 1,000,000  	
  (1,000,000) 	 0  	 0  	 	 	 0  
  
  Other liabilities 	          182,885  	 	          182,885  	   
       237,761  	 	 	         420,646  
  
   	9,116,345  	 	5,333,982  	3,326,139  	 	
  
  8,844,482  
  
  Stockholders' equity: 	 	 	 	 	 	 	 
  
    Series CM preferred stock 	0  	 	0  	0  	60  	(3)
  
  60  
  
    Common stock 	114,048  	38,925  	152,973  	97,859 
  
  (87,859) 	(3) 	162,973  
  
    Additional paid-in capital 	12,795,239 
  
  20,187,879  	32,983,118  	0  	7,990,440  	(3)
  
  40,973,558  
  
    Retained earnings/(deficit) 	      (9,715,446) 	 	   
  (9,715,446) 	          539,095  	(15,596,964) 	(5) 	  
  (24,773,315) 
  
  Total shareholders' equity 	       3,193,841  	 	    23,420,645 
  	          636,954  	 	 	    16,363,276  
  
   	$12,310,186  	 	$28,754,627  	$3,963,093  	 	
  
  $25,207,758  
  
  See accompanying notes.
  15
  Notes To Unaudited Pro Forma Condensed Combined Balance Sheet
  
  The unaudited pro forma condensed combined balance sheet gives
  effect to the following pro forma adjustments:
  
  (1)	On October 2, 1996 the Company received proceeds of 
      $20,941,650 from the issuance of 3,892,500 shares of common
      stock at 	$5.75 per share net of underwriting concessions of
      $1,440,225.  Pursuant to the terms of the offering a portion of
      the proceeds were immediately used to repay the subordinated
      notes payable of $1,000,000, the bank note payable of
      $2,743,882, and accrued interest on October 2, 1996 attributable
      to the notes payable of $38,481.  The Pro Forma Stock Issue
      Adjustments gives effect to the October 2, 1996 issuance of
      common stock, the receipt and immediate application of the
      proceeds as more fully described above, and the realization of
      the deferred stock issuance costs of $714,846, as if these
      transactions had occurred on September 30, 1996.
  
  (2)	Reflects the payment of $8,500,000 to the shareholders of
      CoMed plus $826,414 of costs directly related to the acquisition
      of CoMed, and estimated accruals of $184,361 as of September
      31,1996.
  
  (3) 	Reflects the issuance of 6,000 shares of the Company's
       Series CM Non-voting Convertible Preferred Stock, par value
       $.01, 1,000,000 shares of the Company's Common Stock, par value
       $.01, for a total consideration of $8,000,500, and the
       elimination of the previously outstanding common stock of CoMed.
  
  (4)	Reflects basis adjustments to the carrying value of
      capitalized software, goodwill and other intangibles created by
      the acquisition.
  
  (5)	Reflects the elimination of the previous retained earnings
      of CoMed, and the write off of in process research and
      development of $15,057,569 related to the acquisition of CoMed.
  
  16
  Pro Forma Condensed Consolidated Statements of Operation
  
  The following unaudited pro forma condensed consolidated
  statements of operations have been prepared based upon certain
  pro forma adjustments to the historical financial statements of
  Dynamic Healthcare Technologies, Inc., of DMI and of CoMed
  included elsewhere in this Form 8-K.
  
  The historical information for the year ended December 31, 1995
  combines operating information for Dynamic Healthcare
  Technologies, Inc. previously reported on Form 10-K for its year
  ending December 31, 1995, with operating information of DMI for
  the first nine months of December 31, 1995 (of its fiscal year
  ended March 31, 1996), previously reported on its Form 10-QSB
  for the nine months ended December 31, 1995, and the fourth
  quarter of its fiscal year ended March 31, 1995, previously
  reported on its Form 10-KSB for the year ended March 31, 1995,
  and with the operating information of CoMed for its year ended
  December 31, 1995 included elsewhere in this Form 8-K.  The
  historical consolidated operating information for the nine
  months ended September 30, 1996 combines the first three
  quarters of audited consolidated information of Dynamic
  Healthcare Technologies, Inc. the fourth quarter of DMI's fiscal
  year ended March 31, 1996 previously reported on its Form 10-KSB
  for the year ended March 31, 1996, DMI's unaudited operations
  from April 1, 1996 until May 1, 1996 (the acquisition date), and
  CoMed's operations for the nine months ended September 30, 1996
  included elsewhere in this Form 8-K.
  
  The pro forma condensed consolidated statements of operations
  for the year ended December 31, 1995 and for the nine months
  ended September 30, 1996 give effect to the acquisitions of DMI
  and CoMed as if the transaction had occurred on January 1, 1995.
  The material nonrecurring write off of in process research and
  development of $15,057,569 related to the CoMed acquisition is
  not considered in the pro forma condensed consolidated
  statements of operation.
  
                                     Year Ended December 31, 1995
  Company    	DMI     	CoMed     
                     As       As         As        ProForma 
                  Reported  Reported  Reference  Adjustments  Reference  Pro Forma
  
  Operating
   revenues: 						
  
   Computer 
    system
    equipment
    sales   	  $1,101,017	$1,518,397 $  640,784  $                    $3,260,198 
  
   Application
    software
    licenses   	2,428,928  2,048,080 	4,192,384                       	8,669,392  
  
   Software
    support    	3,731,149 	1,166,292  3,292,240                   	 	 	8,189,681  
  
   Services
    & other     1,625,242    530,451    811,059  	              	 	    2,966,752  
  
    Total
     operating
     revenue    8,886,336  5,263,220  8,936,467         0         	 	 23,086,023  
  
   Operating 
    expenses: 	 	 	 	 	 	 
  
    Cost of
     products
     sold        	880,639  1,005,926    512,317  	 	                  	2,398,882  
  
    Client
     services
     expenses  	2,824,987 	1,609,263  2,557,681     (83,000)	   (2)   	6,908,931  
  
    Software
     development
     cost      	1,642,825 	1,254,533  2,864,622       	(900)	 (2)&(3) 	5,761,080  
  
     Sales &
      marketing	1,931,178   	773,259 	1,223,223     (26,000)   	(2)   	3,901,660  
  
     General &
      admin.
      expense   1,768,005    636,169  1,853,895     211,857  	(2)&(6)  4,469,926  
  
      Total
       operating
       expenses 9,047,634  5,279,150  9,011,738     101,957      	 	  23,440,479  
  
     Income 
      (loss)
      from
      operations (161,298)   (15,930)  (75,271)   	(101,957)         	 	(354,456) 
  
     Other
      income
      (expense)  (351,325) 	(163,693)  177,862       88,000    	 (4)    (249,156) 
  
     Income
      (loss)
      before
      taxes     	(512,623) 	(179,623)  102,591     	(13,957)         	 	(603,612) 
  
     Provision
      for income
      taxes             0    180,969         0     (180,969)    	(5)           0  
  
     Net 
      earnings
      (loss)  	$ (512,623) 	$  1,346 	$102,591 	  $(194,926)    	(8) 	$ (603,612) 
  
     Net 
      earnings
      (loss)
      available
      for common
      share-
      holders $ (537,467)                                             	$(628,456)
  
      Net 
       earnings
       (loss)
       per
       common
       share 	$    (.08)                             	 	 	 	 	         $    (.08) 
  
     Weighted
      average
      number
      of common
      and common     
      equivalent
      shares
      out-
      standing  6,443,294        0 	   1,000,000 	 	              (7)  $7,443,294 
  
  See accompanying notes.
  17
  Nine Months Ended September 30, 1996
  Company     	DMI        CoMed
                    As         As          As       Pro Forma
                 Reported    Reported   Reported  Adjustments  Reference  Pro Forma 
  
  Operating
   revenues:                		(9) 				
  
   Computer
    system
    equipment
    sales       $2,466,560  $ 445,017  $ 293,621 	$                  	$3,205,198  
  
    Application
     software
     licenses   	2,614,183    162,454  2,702,879  	(128,610) 	        	5,350,906  
  
    Software 
     support    	3,672,690 	  433,444  2,709,284                  	 	 	6,815,418  
  
    Services
     & other     1,784,471     92,845    693,471                	 	    2,570,787  
  
      Total
       operating
       revenue  10,537,904  1,133,759  6,399,255   (128,610) 	(1)  	  17,942,309  
  
  	 	 	 	 	 	 
  
  Operating expenses: 	 	 	 	 	 	 
  
    Cost of
     products
     sold       	2,131,265   378,387     254,352                      	2,764,004
  
    Client
     services
     expenses   	3,509,642	  580,582   1,769,030  	(41,000) 	(2)      	5,818,254  
  
    Software
     development
     cost       	1,484,858  	373,550   2,274,703   	(5,987) 	(2) & (3)	4,127,124  
  
    Sales &
     marketing 	 2,431,916  	213,225  	  995,705   (15,000) 	(2)      	3,625,846  
  
    General &
     admin.
     expense     1,536,856   565,995   1,383,480   168,143  	(2) & (6) 3,654,474  
  
      Total
       operating
       expenses 11,094,537 2,111,740   6,677,270   106,156     	 	    19,989,702 
  
  	 	 	 	 	 	 
  
  Operating
   income (loss) 	(556,633) (977,981)   (278,015) 	(234,766) 	       	(2,047,393) 
  
  Other income
   (expense)      (209,182)  (33,556)    110,329     44,000  	(4)        (88,409) 
  
  Income
   (loss)
   before
   taxes         	(765,815)	(1,011,535) (167,686) 	(190,766) 	       	(2,135,802) 
  
  Provision
   for income
   taxes                 0     293,884         0   (293,884) 	(5)              0  
  
  Net earnings
   (loss) 	    $  (765,815)	$  (717,651) $(167,686)	$(484,650)	(8) 	  $(2,135,802) 
  
  Net earnings
   (loss)
   available
   for common
   share-
   holders    $(1,016,853)                                           $(2,386,840) 
  
  Net earnings
   (loss) per
   common
   share 	    $      (.15) 	                           	 	 	      	  $      (.31) 
  
  Weighted
   average
   number of
   common and
   common     
   equivalent
   shares
   outstanding  6,709,498 	       0 	        1,000,000 	 	  (7) 	      7,709,498 
  
  See accompanying notes.
  18
  Notes to Unaudited Pro Forma Condensed Consolidated Statements
  of Operations
  
  The pro forma condensed consolidated statements of operations
  give effect to the following pro forma adjustments:
  
  (1)	Reflects an adjustment to conform the revenue recognition
      principles of DMI to those of the Company.
  
  (2)	Reflects the decrease in depreciation expense resulting from
      the change in the depreciable basis of the assets of DMI and
      CoMed 	assumed acquired on January 1, 1995, for the year ended
      December 31, 1995 of $(111,000) and $(106,000), respectively,
      and for	the nine months ended September 30, 1996 of $(37,000)
      and $(86,000), respectively.
  
  (3)	Reflects the increase (decrease) in the amortization of
      software development costs resulting from the change in the
      amortizable 	basis of DMI and CoMed acquired on January 1, 1995,
      for the year ended December 31, 1995 of $153,000 and $(88,900),
    		respectively, and for the nine months ended September 30, 1996
      of $51,000 and $(12,987), respectively.
  
  (4)	Reflects the elimination of interest expense from interest
      bearing debt of DMI extinguished by the assumed purchase of DMI,
      net	of the elimination of interest earned on cash equivalents
      used by the assumed purchase.
  
  (5)	Reflects the elimination of the income tax benefit
      previously recognized by DMI through a tax sharing agreement
      with DMI's previous majority owner.
  
  (6)	Reflects the increased expense of $254,857 and $191,143,
      resulting principally from the amortization of goodwill acquired
      by the	assumed purchase of CoMed on January 1, 1995, for the
      year ended December 31, 1995 and the nine months ended September
    		30, 1996, respectively.
  
  (7)	Reflects the additional 1,000,000 shares of common stock
      issued in connection with the acquisition of CoMed. No shares
      were	issued in connection with the acquisition of DMI.
  
  (8)	The pro forma net earnings (loss) does not reflect the write
      off of in process research and development of $15,057,869
      acquired	in the CoMed merger.
  
  (9)	Reflects DMI's results for the period from January 1, 1996
      through May 1, 1996 (the acquisition date), only.  Results of
  	  	operations subsequent to acquisition are included in the
      operating results of the Company as reported.
  
  19
  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 hereunto duly authorized.
  
                                 					DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                 					(Registrant)
  
  Date:  February 3, 1997            	/S/MITCHEL J. LASKEY                    
                                      Mitchel J. Laskey
                                 					President, CEO
  
  Date:  February 3, 1997            	/S/PAUL S. GLOVER                       
                                      Paul S. Glover
                                 					Vice President of Finance, CFO
  
  20