SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                  FORM 10-QSB/A3

|X|      Quarterly Report under Section 13 or Section 15(d) of the Securities
         Exchange Act of 1934 for the quarterly period ended December 31, 1997
                                                             -----------------

|_|      Transition Report under Section 13 or 15(d) of the Securities Exchange 
         Act of 1934 for the transition period from ______ to ______.


         Commission File No.:  0-22848


                            U.S. Wireless Data, Inc.
             (Exact name of registrant as specified in its charter)


                   Colorado                             84-1178691
           ----------------------            ---------------------------------
          (State of incorporation)           (IRS Employer Identification No.)


   
                          2200 Powell Street, Suite 800
                          Emeryville, California 94608
                          ----------------------------
    
          (Address of principal executive offices, including zip code)



                                 (510) 596-2025
               ---------------------------------------------------
              (Registrant's Telephone Number, including area code)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past ninety days.

                                Yes _X_    No ___


As of  December  31,  1997  there  were  outstanding  9,221,420  shares  of  the
Registrant's Common Stock (no par value per share).


Transitional Small Business Disclosure Format

                                Yes ___   No _X_

<PAGE>
                            U.S. WIRELESS DATA, INC.
                                TABLE OF CONTENTS
   
PART I      FINANCIAL INFORMATION                                           Page
                                                                            ----
Item 1.     Financial Statements (Unaudited and Restated)
    

            Balance Sheets --
               December 31, 1997, and June 30, 1997............................3

            Statements of Operations --
               Three Months and Six Months Ended December 31, 1997 and 1996....4

            Statements of Cash Flows --
               Six Months Ended December 31, 1997 and 1996.....................5
   
            Notes to Financial Statements (Restated)........................6-10


Item 2.     Management's Discussion and Analysis (Restated)................11-15
    



PART II     OTHER INFORMATION

Item 1.     Material Developments in Connection with Legal Proceedings........15

Item 2.     Changes in Securities.............................................16

Item 3.     Defaults Upon Senior Securities...................................17

Item 5.     Other Information ................................................17

Item 6.     Exhibits and Reports on Form 8-K...............................17-18

   
RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION

This  amended  filing  contains  restated  financial   information  and  related
disclosures  for the three and six months ended December 31, 1997 (See Note 1 to
Financial  Statements).  Quarterly financial  statement  information and related
disclosures included in this amended filing reflect, where appropriate,  changes
as a result of the restatement. This information is consistent with the contents
of the  Company's  Annual  Report on Form  10-KSB for fiscal year ended June 30,
1998 which was filed with the SEC on December 17, 1998 (See "Note 15.  Unaudited
Restated Quarterly Financial Information," in the 10-KSB).
    
<PAGE>
<TABLE>
<CAPTION>
   
                            U.S. WIRELESS DATA, INC.
                                  BALANCE SHEET
                            (Unaudited and Restated)


                                                                      December 31, 1997   June 30, 1997
                                                                (Restated - see Note 1)   -------------
<S>                                                                       <C>             <C>         
                                  ASSETS

Current Assets:
        Cash ..........................................................   $  1,523,000    $      6,000
        Accounts receivable, net of allowance for .....................        134,000         131,000
            doubtful accounts of $16,000 in December 1997; $16,000 in
            June 1997
        Inventory, net ................................................        635,000         209,000
        Other current assets ..........................................        786,000         103,000
                                                                          ------------    ------------
                 Total current assets .................................      3,078,000         449,000

Property and equipment, net ...........................................        142,000          41,000
Other assets ..........................................................        434,000          11,000


Total assets ..........................................................   $  3,654,000    $    501,000
                                                                          ============    ============


                  LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
        Accounts payable ..............................................   $    761,000    $    354,000
        Accrued liabilities ...........................................      2,091,000         126,000
        Borrowings, curent portion ....................................        809,000         738,000
                                                                          ------------    ------------
                Total current liabilities .............................      3,661,000       1,218,000
                                                                          ------------    ------------

Borrowings, long-term portion .........................................      2,708,000          45,000
                                                                          ------------    ------------

Total Liabilities .....................................................      6,369,000       1,263,000
                                                                          ------------    ------------

Redeemable common stock and warrants ..................................        560,000            --
                                                                          ------------    ------------

Stockholders' Deficit:
        Common stock, no par value, 12,000,000 ........................      9,221,000       5,614,000
                shares authorized; 9,221,420 and 5,613,952 shares
                 issued and outstanding at 12/31 and 6/30, respectively
        Additional paid-in capital ....................................      8,900,000      10,613,000
        Accumulated deficit ...........................................    (21,396,000)    (16,961,000)
        Notes Receivable from Shareholder .............................           --           (28,000)
                                                                          ------------    ------------
                Total stockholders' deficit ...........................     (3,275,000)       (762,000)
                                                                          ------------    ------------


Total liabilities and stockholders' deficit ...........................   $  3,654,000    $    501,000
                                                                          ============    ============
    
</TABLE>
       Accompanying Notes are an integral part of the Financial Statements

                                       3
<PAGE>
<TABLE>
<CAPTION>
   
                           U.S. WIRELESS DATA, INC.
                            STATEMENTS OF OPERATIONS
                            (Unaudited and Restated)


                                                    Three Months Ended            Six Months Ended
                                                 12/31/97        12/31/96      12/31/97       12/31/96
                                               (Restated - see Note 1)         (Restated - see Note 1)
                                               -----------------------          ----------------------
<S>                                            <C>            <C>            <C>            <C>        
Revenue ....................................   $   116,000    $   416,000    $   386,000    $   803,000
Cost of revenue ............................        61,000        222,000        237,000        487,000
                                               -----------    -----------    -----------    -----------

Gross profit ...............................        55,000        194,000        149,000        316,000
                                               -----------    -----------    -----------    -----------

Operating expenses:
    Selling, general and administrative ....     2,853,000        170,000      4,141,000        340,000
    Research and development ...............        78,000         95,000        173,000        214,000
                                               -----------    -----------    -----------    -----------
    Total operating expense ................     2,931,000        265,000      4,314,000        554,000
                                               -----------    -----------    -----------    -----------

Loss from operations .......................    (2,876,000)       (71,000)    (4,165,000)      (238,000)

Interest income
                                                      --                0           --                0
Interest expense ...........................      (244,000)             0       (268,000)             0
Other income                                        (1,000)         2,000         (1,000)         8,000
                                               -----------    -----------    -----------    -----------


Net loss ...................................   $(3,121,000)   $   (69,000)   $(4,434,000)   $  (230,000)
                                               ===========    ===========    ===========    ===========



Basic and diluted net loss  per share: .....   $      (.34)   $      (.01)   $      (.52)   $      (.05)
                                               ===========    ===========    ===========    ===========


Weighted average common shares outstanding -     9,209,000      4,738,000      8,490,000      4,732,000
basic and diluted ..........................   ===========    ===========    ===========    ===========
    
</TABLE>
       Accompanying Notes are an integral part of the Financial Statements


                                       4
<PAGE>
<TABLE>
<CAPTION>
   
                            U.S. WIRELESS DATA, INC.
                            STATEMENTS OF CASH FLOWS
                            (Unaudited and Restated)

                                                                  Six Months Ended
                                                      December 31,1997   December 31, 1996
                                                 (Restated - see Note 1) -----------------
                                                 -----------------------

<S>                                                       <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES: 
     Net loss .........................................   $(4,434,000)   $  (230,000)
     Depreciation and amortization ....................        11,000         39,000
     Non-cash consulting services .....................     1,454,000           --
     Non-cash compensation - stock option .............     1,188,000           --
     Non-cash interest expense - debt .................       225,000           --

   Changes in assets and liabilities:
          (Increase) decrease in:
               Accounts receivable ....................        (3,000)       119,000
               Inventory ..............................      (426,000)        47,000
               Other current assets ...................       (48,000)        33,000
          Increase (decrease) in:
               Accounts payable .......................       396,000         90,000
               Accrued liabilities ....................        24,000       (114,000)
                                                          -----------    -----------
               Net cash used in operating activities ..    (1,613,000)       (16,000)
                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of Property, plant, and equipment .......      (112,000)          --
     Increase in other assets .........................       (85,000)         1,000
                                                          -----------    -----------
               Net cash used in investing activities ..      (197,000)         1,000
                                                          -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of stock ..................       556,000         43,000
     Note receivable ..................................        28,000        (28,000)
     Repayments of notes payable ......................          --          (21,000)
     Proceeds from issuance of debt ...................     2,743,000           --
                                                          -----------    -----------
              Net cash provided by financing activities     3,327,000         (6,000)
                                                          -----------    -----------


INCREASE (DECREASE) IN CASH ...........................     1,517,000        (22,000)


CASH, Beginning of period .............................         6,000         40,000
                                                          -----------    -----------


CASH, End of period ...................................   $ 1,523,000    $    18,000
                                                          ===========    ===========
    
</TABLE>
       Accompanying Notes are an integral part of the Financial Statements

                                       5
<PAGE>
   
                            U.S. WIRELESS DATA, INC.
                          NOTES TO FINANCIAL STATEMENTS
                            (Unaudited and Restated)


Note 1 -- RESTATEMENT

      The  accompanying  restated  balance sheet as of December 31, 1997 and the
      accompanying  restated  statement of  operations  for the three months and
      six-months  ended  December  31,  1997 have been  restated  to reflect the
      proper treatment of the Liviakis Financial Communications,  Inc. financing
      and  consulting  transactions  as stated in Note 6 and the  granting  of a
      variable  option as stated in Note 7. The effect of these  restatements is
      to increase  selling,  general  and  administrative  expense and  increase
      reported loss by $ 1,364,000 and  $1,871,000  for the three months and six
      months ended December 31, 1997 ($0.15 and $0.22 for fully diluted earnings
      per share)  respectively,  reduce total assets by $35,000,  increase total
      liabilities by $1,943,000,  increase  redeemable common stock and warrants
      by  $560,000  and  increase  stockholders'  deficit by  $2,537,000.  These
      restatements do not affect previously reported net cash flows.


Note 2 -- ACCOUNTING PRINCIPLES
    

      The balance  sheet as of December 31, 1997,  as well as the  statements of
      operations  for the three  and six  months  ended  December  31,  1997 and
      December  31, 1996,  and  statement of cash flows for the six months ended
      December 31, 1997 and December 31, 1996 have been  prepared by the Company
      without  an  audit.  In  the  opinion  of  management,   all  adjustments,
      consisting  only of normal  recurring  adjustments  necessary  to  present
      fairly the financial  position,  results of operations,  and cash flows at
      December 31, 1997 and for all periods presented, have been made.

      Certain  information  and footnote  disclosures  normally  included in the
      financial  statements  prepared  in  accordance  with  generally  accepted
      accounting principles have been condensed or omitted. It is suggested that
      these  financial  statements  be read in  conjunction  with the  financial
      statements  and notes thereto  included in the  Company's  Form 10-KSB for
      fiscal  year end June 30,  1997.  The  results of  operations  for interim
      periods presented are not necessarily  indicative of the operating results
      for the full year.


   
Note 3 -- FINANCIAL CONDITION AND LIQUIDITY (Restated)

      The Company has incurred an  accumulated  deficit of  approximately  $21.4
      million  since  inception,  including a loss of $1.3  million in the first
      quarter and $3.1  million in the second  quarter of fiscal  year 1998.  In
      order  to  attempt  to  continue  as a  going  concern,  the  Company  has
      transitioned  to a  recurring  revenue  focus,  is working on  programs to
      increase  revenue  levels and  product  margins,  and is  negotiating  new
      distribution  agreements.  In December  1997, the Company closed a private
      placement offering of $3,060,000 of Convertible  Subordinated  Debentures.
      After  associated  fees and repayment of bridge loans incurred  during the
      quarter,  the  Company  retained  approximately  $2,200,000  to  apply  to
      immediate working capital needs and the national launch of its proprietary
      wireless  transaction  processing  solution.  The current  sales volume is
      inadequate to fund the infrastructure growth and business transition. As a
      result, the Company anticipates the continued roll out of the GTE Wireless
      joint  marketing  and  operating  agreement  and  potential   distribution
      programs  with other  cellular  carriers will require  additional  debt or
      equity financing in the immediate future.

      The  accompanying  financial  statements  do not include  any  adjustments
      relating to the  recoverability  and classification of recorded assets and
      liabilities  that  might be  necessary  should  the  Company  be unable to
      continue as a going concern.
    
                                       6
<PAGE>
   
Note 4 -- NET LOSS PER SHARE
    
     Effective  during the quarter ended December 31, 1997,  earnings (loss) per
     common share (EPS) is computed  using  Statement  of  Financial  Accounting
     Standard (SFAS) No. 128,  "Earnings per Share".  SFAS No. 128,  establishes
     standards for the computation, presentation, and disclosure of earnings per
     share. Basic and diluted net loss per common share are computed by dividing
     the net loss by the weighted average number of common shares outstanding at
     the end of the period.  Diluted EPS excludes  exercisable stock options and
     warrants from the  calculation  since their effect would be  anti-dilutive.
     All prior periods have been restated to conform with SFAS No.128.
   
Note 5 -- FINANCING

     As the Company  entered the first quarter of fiscal 1998, it faced the need
     for  increased  liquidity to meet its  obligations  and fund a  significant
     rollout of the CDPD  TRANZ  Enabler  product.  In August  1997,  through an
     introduction by the entrenet Group, LLC. ("entrenet"), the Company sold 3.5
     million  unregistered  shares of common  stock and 1.6 million  warrants to
     purchase  common  stock at an  exercise  price of  $0.01  per  share to two
     officers of Liviakis Financial Communications, Inc. ("LFC") for $500,000 in
     cash. The warrants are exercisable  from January 15, 1998 through August 4,
     2002.  The  securities  sold  to  the  two  officers  of LFC  carry  future
     registration rights, including a one-time demand registration, with fees to
     be paid by the Company (see also Note 6, below).

     In accordance  with its agreement  with  entrenet,  the Company has granted
     entrenet the right to receive 280,000  unregistered shares of the Company's
     Common Stock as an 8% finder's  fee for the direct  source  financing.  The
     stock is to be issued to entrenet  following  shareholder  approval  for an
     increase in authorized  Common Stock,  which  occurred on February 6, 1998.
     The agreement provides entrenet with "piggyback registration rights".

     On December  10, 1997 the Company  closed a private  placement  offering of
     $3,060,000 principal amount of 8% Adjustable Rate Convertible  Subordinated
     Debentures.  After  associated  fees and repayment of bridge loans incurred
     during the quarter, the Company retained approximately  $2,200,000 to apply
     to  immediate  working  capital  needs  and  the  national  launch  of  its
     proprietary  wireless  transaction  processing  solution.  The  convertible
     features of the debenture include an "in-the-money" convertible option that
     allows the holder to obtain  shares of common  stock at a discount  of fair
     market value. The value of the in-the-money provision has been allocated to
     stockholder  equity.  The  difference  between the realized  value and face
     value of the debt will be recognized as non-cash  interest  expense between
     the date of issue and date of conversion  into preferred  stock,  which was
     effected as of  February 9, 1998.  See "Note 10 -  Subsequent  Events".  In
     December,  this non-cash interest charge was approximately $225,000. As the
     result of the  approval by  shareholders  on February 6, 1998,  the Company
     authorized  4,000,000  shares of Series "A" Preferred  stock. The debenture
     automatically  converts  into no par value Series A Cumulative  Convertible
     Redeemable Preferred Stock (the "Preferred Stock"),  with a stated value of
     $1.00 per share.  The preferred stock gives the holder the right to convert
     principal into shares of Common Stock in the future at 80% of market price,
     but not lower  than $4 per share for the first 270 days and no higher  than
     $6 per share. The security carries an 8% coupon, which drops to a 4% coupon
     once  the  underlying  shares  of  common  stock  are  registered  with the
     Securities and Exchange Commission. The Company is required to register the
     shares of the common stock  underlying the securities sold in the offering,
     plus the shares of common stock  issuable as interest on the Debentures and
     dividends on the Series A Preferred  Stock. A more detailed  explanation of
     the private  placement  offering is provided by Form 8-K Reporting an Event
     of November 14, 1997, filed on December 17, 1997.


Note 6 -- -RELATED PARTIES (Restated)

     Transactions  with  Liviakis  Financial  Communications,  Inc.  ("LFC") and
     Affiliates of LFC

     In July of 1997,  the Company  entered  into a  Consulting  Agreement  with
     Liviakis  Financial  Communications,  Inc.  ("LFC")  pursuant  to which LFC
     provides the Company with financial and business  consulting and public and
     investor  relations  services.   The  Company  was  obligated  to  pay  LFC
     consulting fees of $10,000 in cash

                                       7
<PAGE>
     and  300,000  shares of its  Common  Stock  over the  one-year  term of the
     Consulting  Agreement.  Pursuant to the Consulting  Agreement,  the Company
     must also pay LFC cash equal to 2.5% of the gross proceeds  received in any
     direct  financing  located for the Company by LFC. In  connection  with the
     closing of the sale of $3,060,000 of 8% Convertible Debentures, the Company
     paid LFC $76,500 in December 1997.

     The  Company  also sold a total of  3,500,000  shares  of Common  Stock and
     warrants to purchase up to an additional  1,600,000  shares of Common Stock
     exercisable  at $.01 per share to two LFC  affiliates  in  August  1997 for
     $500,000 in cash.  Pursuant to this  transaction,  LFC and these affiliates
     became  significant  shareholders  of the Company.  The Common Stock issued
     (and issuable pursuant to the Consulting Agreement and upon exercise of the
     warrants) to LFC and its affiliates  carries certain  registration  rights.
     The  warrants  provide  that if for any reason the  Company  does not issue
     shares upon  exercise,  the Company is required to repurchase  the warrants
     for the  difference  between the $.01 exercise  price and the  then-current
     market  price of the Common  Stock.  Pursuant  to the  agreements,  the LFC
     affiliates were granted the right to appoint certain officers and directors
     of the Company.

     Since  the  LFC  related  financing  transaction  and  the  LFC  Consulting
     Agreement were entered into by the Company at approximately  the same time,
     the  Company  has  treated  these   transactions  as  one  transaction  for
     accounting purposes.  Based on the fair market value of the Common Stock as
     determined by an independent  valuation,  the initial  3,500,000  shares of
     Common Stock and warrants  for  1,600,000  shares of Common Stock issued in
     the  transactions,   net  of  cash  proceeds   received,   were  valued  at
     approximately  $1,285,000 and recorded as prepaid consulting services.  The
     consulting services are amortized on a straight-line basis over the term of
     the Consulting  Agreement  commencing with the July 25, 1997 effective date
     of the agreement. The warrants are classified as redeemable securities as a
     result of the repurchase  provisions  described  above.  The 300,000 shares
     which are  issuable  over the term of the contract are being valued as such
     shares  vest,  and  resulted in an  additional  $ 176,000  and  $683,000 in
     consulting  expenses  during the  three-month  and six-month  periods ended
     December 31, 1997.


     Between  October 14 and  November 30, 1997,  the Company  received  several
     bridge  loans from LFC in the total  amount of  $475,000.  The  Company was
     obligated to pay LFC interest on the amount  borrowed at the rate of 9% per
     annum. The Company paid LFC the amount due on these loans, with interest at
     the  stated  rate,  from the  proceeds  of the  sale of the 8%  Convertible
     Debentures sold on December 10, 1997.

     Transactions with entrenet Group, LLC

     In June 1997, the Company entered into a consulting agreement with entrenet
     Group, LLC ("entrenet"), for purposes of assisting the Company in strategic
     planning,  the creation of a detailed  business and  marketing  plan and in
     locating financing sources. For its services, the Company issued a $150,000
     convertible  promissory note to entrenet,  with interest payable at 10% per
     annum, due in full on or before June 2, 1998. In addition,  the Company was
     obligated to pay entrenet a finder's fee of 8% for any direct  financing it
     located for the Company,  payable in Company securities  identical to those
     issued  in  the  subject  financing.  entrenet  located  the  $500,000  LFC
     financing.   The  Company  and  entrenet  were  in  discussions   over  the
     interpretation of the provisions  specifying the  consideration  payable to
     entrenet as its finder's  fee for locating  LFC. The matter was resolved in
     November  1997,  whereby  the Company  agreed to issue  entrenet a total of
     300,000  shares of its Common  Stock for the  promissory  note and  280,000
     shares of Common  Stock as payment of the finder's  fee.  Those shares were
     issued in April 1998 and  included  in the  Registration  Statement,  which
     became effective August 7, 1998.


Note 7 - VARIABLE OPTION

     In August 1997, the Company granted an option to purchase 600,000 shares of
     common stock to its Chief Executive  Officer,  and in November 1997, agreed
     to pay to the officer  any  additional  income  taxes which the officer may
     incur as a result  of the  option  being a  non-qualified  stock  option as
     compared to an incentive  stock option.  Due to this  agreement,  the stock
     options,  which the Company had previously  accounted for based on the fair
     value as of the grant date,  are being  accounted  for as variable  options
     resulting in an additional  $1,188,000 of non-cash  compensation expense in
     the second  quarter  of fiscal  1998.  The  Company's  previously  reported
     balance  sheet and statement of  operations  are being  restated to reflect
     this additional expense.

                                       8
<PAGE>
Note 8 -- LITIGATION
    

     In September 1996, the Company agreed to terms to settle  securities  fraud
     litigation,  pending  since  1994,  which was  brought in  relation  to the
     Company's initial public offering of December 1993. The parties'  agreement
     (the "Settlement  Agreement") was filed in the United States District Court
     for the District of Colorado on January 15, 1997 in  consolidated  Case N0.
     94-Z-2258,  Appel,  et al. v. Caldwell,  et al. By its order  approving the
     settlement, the court certified a plaintiff's settlement class and provided
     the mechanism for payment of claims. The Company contributed directly or by
     indemnification  a  total  of  $10,000  to the  total  settlement  fund  of
     $2,150,000.  The remaining  portion of the  settlement  was  contributed by
     certain   underwriters  of  the  Company's   initial  public  offering  and
     securities counsel. No objections to the Settlement Agreement were made. No
     potential class member opted out of the settlement and all are bound by the
     release  granted  the  Company.  All claims  against  the  Company in those
     consolidated cases were dismissed by final federal court order on September
     4, 1997. No appeal was filed.  Similar state court claims were dismissed by
     Colorado district court order dated October 9, 1997.

     To resolve  cross-claims  asserted by underwriters in the litigation,  U.S.
     Wireless Data, Inc. agreed to transfer to RAS Securities Corporation,  H.J.
     Meyers & Co.,  Inc.,  Sands & Co. Ltd.  and R.J.  Steichen & Co. a total of
     600,000 U.S.  Wireless Data,  Inc. common shares upon the effective date of
     the Settlement Agreement,  which was April 25, 1997. The Company has agreed
     to  register  such  shares  upon  demand  not sooner  than April 26,  1998.
     Further,  on  September  17, 1997 the Company  agreed to entry of a consent
     judgment  against it and in favor of Don Walford,  the sole  shareholder of
     underwriter  Walford  Securities,  Inc., in the amount of $60,000,  payable
     over a three-year  period.  The total charge  recognized during fiscal 1997
     consists  of the  following:  $93,600  for the value of the  common  shares
     issued  based upon the fair market value of the  Company's  common stock on
     the date the commitment of such shares was made; $10,000 for actual cash to
     be paid by the Company  pursuant to the settlement with  stockholders;  and
     $60,000 for the note payable executed with Don Walford as discussed above.

     In July 1997,  the Company  executed a two-year  agreement  for  consulting
     services to be provided by Mr. Gary  Woolley.  In addition to monthly  cash
     compensation, Mr. Woolley received a $50,000 two-year convertible note with
     10% interest per annum.  The principal  balance of the note was convertible
     into Common Stock at $.40 per share.  A dispute arose  between Mr.  Woolley
     and the Company and the consulting  agreement was terminated by the Company
     at the  end of  August  1997.  Mr.  Woolley  and  the  Company  executed  a
     settlement  agreement  in January  1998,  and the  Company  has accrued the
     related  consulting  charges of $45,833 to operating  expense in the second
     quarter.  The restructured  note will convert into 75,000 restricted shares
     of Common Stock at Mr.  Woolley's  election on or before April 1, 1998. Mr.
     Woolley  advised the Company of his  election to convert the note to Common
     Stock in January, 1998.

     The Company has been engaged in  negotiations  with  purchasers of $135,000
     (out of a total of $185,000) of convertible demand notes, which the Company
     issued from April through June 1997. The notes became convertible to Common
     Stock at $.35 per share (as to $85,000 of the notes) and $.50 per share (as
     to $100,000 of the notes) on November 1, 1997. The essence of the claims of
     the  complaining  noteholders  is that the  Company,  through  its  agents,
     "promised"  that the Common Stock issuable upon conversion of the notes was
     to be "freely  tradeable." The  documentation  evidencing the notes did not
     bear any  language  indicating  the  nature  of the  shares  issuable  upon
     conversion.  The Company denies that "freely  tradeable" stock was promised
     to the  noteholders  by any person  authorized  by the Company to make such
     promises.  The  noteholders  allege  damages  which they base upon a market
     price for the  Common  Stock in the $8.00  range as of the  November 1 time
     period. The noteholders have threatened suit against the Company if they do
     not receive a substantial  increase in the number of shares to be issued by
     the Company upon conversion of the notes, along with other concessions from
     the  Company.  No  assurance  can be given that the matter can be  resolved
     without litigation. The cost of litigation and any potential judgment could
     have a material adverse financial impact to the Company.

                                       9
<PAGE>
   
Note 9 -- RECENT ACCOUNTING PRONOUNCEMENTS
    
       In June 1997,  the FASB  issued SFAS No.  130,  "Reporting  Comprehensive
       Income". SFAS No. 130, which is effective for all periods beginning after
       December 15, 1997,  establishes  standards for  reporting and  displaying
       comprehensive income and its components with the same prominence as other
       financial  statements.  All prior  periods must be restated to conform to
       the  provisions  of SFAS No.  130.  The  Company  will adopt SFAS No. 130
       during  the first  quarter  of fiscal  1999,  but does not expect the new
       accounting  standard to have a material impact on the Company's  reported
       financial results.

       In June 1997, the FASB issued SFAS No. 131,  "Disclosures  about Segments
       of an  Enterprise  and  Related  Information."  SFAS  No.  131,  which is
       effective for fiscal years beginning after December 15, 1997, establishes
       new disclosure  requirements for operating segments,  including products,
       services,  geographic areas, and major customers.  The Company will adopt
       SFAS No. 131 for the 1999 fiscal  year.  The Company  does not expect the
       new  accounting  standard  to have a  material  impact  on the  Company's
       reported financial results.

   
Note 10 -- SUBSEQUENT EVENTS
    
       On February 6, 1998, the Company held its annual shareholder meeting. All
       proposals submitted to shareholders,  as described in the Proxy Statement
       for the meeting,  were  passed.  Article 4 of the  Company's  Articles of
       Incorporation  was amended to increase the number of shares of authorized
       common stock from 12,000,000 to 40,000,000. Also, 15,000,000 shares of no
       par value preferred  stock were  authorized with 4,000,000  designated as
       Series  A  Preferred   Stock,  as  described  in  the  Proxy   Statement.
       Shareholders also approved  amendments to the Company's 1992 stock option
       plan to increase the number of underlying shares for which options may be
       granted under the plan from 880,000 to 2,680,000  shares, as described in
       the Proxy Statement.


                                       10
<PAGE>
   
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Restated)


FORWARD-LOOKING STATEMENTS
--------------------------

     The  Company  may,  in  discussions  of its future  plans,  objectives  and
     expected  performance  in periodic  reports  filed by the Company  with the
     Securities and Exchange Commission (or documents  incorporated by reference
     therein) and in written and oral presentations made by the Company, include
     projections  or other  forward-looking  statements  within  the  meaning of
     Section 27A of the  Securities Act of 1933 or Section 21E of the Securities
     Exchange Act of 1934,  as amended.  Such  projections  and  forward-looking
     statements  are  based  on  assumptions  which  the  Company  believes  are
     reasonable,  but are by their nature  inherently  uncertain.  In all cases,
     results could differ materially from those projected. Some of the important
     factors that could cause actual results to differ from any such projections
     or  other  forward-looking  statements  are  detailed  below,  and in other
     reports  filed by the Company  under the  Securities  Exchange Act of 1934,
     including  the  Company's  Annual Report on Form 10-KSB for the fiscal year
     ended June 30, 1997.

     Amounts in this  discussion and analysis have been restated as disclosed in
     Notes 1, 3, 6 and 7 of the Note to the Financial Statements.
    

     History of Losses and Potential Fluctuations in Operating Results:  Through
     the end of second  quarter of fiscal year ending June 30, 1998, the Company
     had experienced  significant  operating  losses.  In addition,  because the
     Company generally ships its products on the basis of credit card processing
     applications or purchase orders,  increments to recurring revenue and other
     component  sales in any quarter are highly  dependent on orders  shipped in
     that quarter and,  accordingly,  may fluctuate  materially  from quarter to
     quarter.  The Company's operating expense levels are based on the Company's
     internal  forecasts  for  future  demand and not on firm  customer  orders.
     Failure by the Company to achieve these internal  forecasts could result in
     expense levels that are inconsistent  with actual  revenues.  The Company's
     results  may also be  affected  by  fluctuating  demand  for the  Company's
     products  and by  increases in the costs of  components  acquired  from the
     Company's vendors.

     Distribution  Program:  The  roll-out  of the GTE  distribution  program is
     expected to have a material impact on the Company's  future revenue stream.
     While the Company anticipates it will execute distribution  agreements with
     other  significant  partners,  the loss of, or  substantial  diminution  of
     purchases from the Company through any of these  distributors  could have a
     material adverse effect on the Company.

     The  Company's  Dependence  on a Single Type of Product  and  Technological
     Change:  All of the Company's revenues are derived from sales of its credit
     card transaction or CDPD enabling products. Demand for these products could
     be affected by numerous factors outside the Company's  control,  including,
     among  others,   market  acceptance  by  prospective   customers,   or  the
     introduction  of new or  superior  competing  technologies.  The  Company's
     success  will  depend  in  part  on  its  ability  to  respond  quickly  to
     technological  changes  through  the  development  and  improvement  of its
     products.

     Competition  by Existing  Competitors  and  Potential New Entrants Into the
     Market: The Company has identified several potential competitors attempting
     to develop CDPD based terminals and solutions. In addition,  companies with
     substantially greater financial,  technical,  marketing,  manufacturing and
     human  resources,  as well as name  recognition,  than the Company may also
     enter the market.

     Requirement  for Additional  Capital:  At present,  the  development of the
     Company's   infrastructure   and  expansion  of  the  sales  and  marketing
     organization  requires  additional  financing.  Proceeds  from the recently
     completed  private  placement  offering  have provided the Company with the
     ability  to  launch  the GTE  joint  marketing  and  distribution  program,
     however,  execution of the  Company's  business plan is dependent on a more
     significant debt or equity  financing event. The Company  continues to work
     both  directly and through its  consultants  to secure  additional  debt or
     equity  financing which is required to fund operations  while a significant
     recurring  revenue  stream is built.  While  management is confident it can
     accomplish  this  objective,  there is no  guarantee  that this  additional
     funding will occur in the required  time frame.  The failure of the Company
     to obtain additional  financing could have a material adverse impact on the
     Company, including its ability to continue as a going concern.

                                       11
<PAGE>
     CDPD Resale Agreements Containing Minimum Purchase Obligations: The Company
     has to date entered into three CDPD service resale agreements, two of which
     contain minimum  obligations  which can be  characterized  as "take or pay"
     provisions.  The agreements  with GTE Mobilnet and AT&T Wireless Data, Inc.
     contain  such  provisions.  The Company is obligated to pay for the minimum
     amount of service stated in the agreements even if it fails to place enough
     service with merchants to meet the minimums.  The failure of the Company to
     meet these service minimums could have an adverse financial impact upon the
     Company.

     Status of Federal  Corporate  Tax  Filings:  The Company has not  completed
     federal  income tax  filings  for fiscal  years 1996 and 1997.  While it is
     unlikely  that the Company will owe any taxes due to the  sustained  losses
     during  the  periods,  the  Company  may be subject  to  penalties  for the
     delinquency. The Company intends to take the steps required to complete the
     tax filings as soon as practicable.


RESULTS OF OPERATIONS
---------------------

     U.S.  Wireless  Data,  Inc.,  a Colorado  corporation,  (the  "Company"  or
     "USWD"),  was  organized  on July 30,  1991 for the  purpose of  designing,
     manufacturing and marketing a line of wireless and portable credit card and
     check authorization terminals. Over the past two and a half years, USWD has
     focused its product  development  effort on incorporating  Cellular Digital
     Packet Data (CDPD)  technology  into its product line.  Because of the high
     speed  nature of CDPD  technology,  and the  ability  to bypass  the public
     switched telephone network,  the Company's new line of CDPD-based terminals
     have  significant   performance  and  communication  cost  advantages  when
     compared with the traditional dial-up terminals currently being sold in the
     U.S.  market today. In mid fiscal year 1997, the Company made a fundamental
     decision  to  change  the  manner  in  which  it  generates   revenue.   If
     successfully implemented, this will transform the Company from being a "box
     maker" in which it earned one time  wholesale  margins from the sale of its
     products to earning recurring revenue by providing wireless credit card and
     debit card processing services to retail merchants.

     A key element of USWD's strategic direction is to establish close alliances
     with large communications  carriers through joint distribution programs. In
     August  1997,  USWD  and  GTE  Mobilnet  announced  a joint  marketing  and
     operating  agreement to distribute USWD's  proprietary TRANZ Enabler credit
     card  processing  system using GTE's CDPD network.  The agreement  contains
     certain operational and financial performance criteria which must be met by
     the  Company.  During  the second  fiscal  quarter,  USWD made  significant
     investments  to execute a  nationwide  deployment,  which will extend TRANZ
     Enabler sales to merchants  through GTE's national sales force. The Company
     has added  significant  sales and support  personnel and  infrastructure to
     provide  local  support  for the GTE  sales  representatives.  The  initial
     placements  of the TRANZ  Enabler  units have not  developed  as rapidly as
     anticipated,  however,  recent  actions by GTE are  expected  to  favorably
     impact the program (see Net Sales).  By leveraging the sales  organizations
     of the major CDPD providers, the Company has the potential to quickly reach
     a large number of  merchants.  The Company has CDPD air time  agreements in
     place with AT&T and Bell Atlantic and has selectively added sales personnel
     in these markets to begin deployment of TRANZ Enabler units.
   
     In July 1997, the Company retained Liviakis Financial Communications,  Inc.
     (LFC) to advise  and assist the  Company  in  matters  concerning  investor
     relations,   corporate   finance   and   strategic   management   planning.
     Remuneration  to LFC under the for the  Consulting  Agreement,  which has a
     term of one  year,  includes  $10,000  in cash over a one year  period  and
     300,000  shares of  unregistered  stock  with  150,000  shares of the stock
     issuable at November 15, 1997 and 150,000 additional shares issuable over a
     10-month period  thereafter.  The Company  completed a private placement of
     restricted  securities  pursuant to Regulation D of the  Securities  Act of
     1933 with two officers of Liviakis. The Company raised $500,000 in cash for
     3.5 million  shares of common  stock and 1.6  million  warrants to purchase
     common stock for $.01 per share,  exercisable from January 15, 1998 through
     August 4, 2002. The securities carry future registration rights,  including
     a one-time demand  registration,  with fees to be paid by the Company.  See
     "Note  6 -  RELATED  PARTIES"  in  Notes  to  Financial  Statements  for  a
     description of the accounting treatment for these transactions.
    
     In October 1997,  the Company  signed an exclusive  agreement  with GoldCan
     Recycling,  Inc. for wireless monitoring of its state-of-the-art  automated
     aluminum can redemption  centers.  This is the first  application of USWD's
     TRANZ Enabler  technology outside the credit  card/point-of-sale  industry.
     USWD will receive  monthly  equipment  and  wireless  service fees on every
     TRANZ Enabler placed by GoldCan.  GoldCan  anticipates placing in excess of
     3,000 units over the next three years.

                                       12
<PAGE>
     Between  October and December 1997, the Company  received bridge loans from
     Liviakis Financial Communications,  Inc. for $475,000 pending completion of
     the private placement offering. Following the funding in mid-December,  the
     notes were  immediately  repaid by the Company  along with interest of nine
     percent per annum.
   
     On December  10, 1997 the Company  closed a private  placement  offering of
     $3,060,000 principal amount of 8% Adjustable Rate Convertible  Subordinated
     Debentures.  After  associated  fees and repayment of bridge loans incurred
     during the quarter, the Company retained approximately  $2,200,000 to apply
     to  immediate  working  capital  needs  and  the  national  launch  of  its
     proprietary  wireless  transaction   processing  solution.  See  Note  6  -
     Financing in Notes to Financial Statements.

     During the  second  quarter,  the  Company  granted  an option to  purchase
     600,000  shares  of  common  stock  to  its  Chief  Executive  Officer  and
     subsequently agreed to pay to the officer any additional income taxes which
     the officer may incur as a result of the option being a non-qualified stock
     option as compared to an incentive stock option. Due to this agreement, the
     Company incurred an additional  $1,188,000 of non-cash compensation expense
     in the  second  quarter  1998.  See "Note 7.  Variable  Option" in Notes to
     Financial  Statements  for a description  of the  accounting  treatment for
     these transactions.

     During the second  quarter,  the Company  completed  the  relocation of its
     customer   support,   administrative   and  accounting   functions  to  the
     Emeryville, California headquarters. The lease on the Wheat Ridge, Colorado
     office has terminated.  Engineering  functions will remain at the Company's
     Palmer Lake, Colorado facility.
    
     The Company has not completed a  comprehensive  review of the impact of the
     Year  2000  issue  on the  Company's  business.  This  issue  concerns  the
     potential problems and liabilities faced by all users and persons dependent
     on  computers  that  might  result  from  software  or  system  failure  or
     malfunctions  if the  systems  fail to properly  recognize  the date change
     between  1999 and  2000.  The  engineering  staff  has  made a  preliminary
     assessment of USWD products and is not aware of any material complications.
     Over the next two quarters, the Company will confirm the impact, if any, on
     products it  distributes  and complete an  assessment  of external  factors
     including  key  vendors  and  licensed   software  for  internal   business
     applications.


     Net Sales

   
     Net sales of $116,000 for the second  quarter of fiscal 1998  decreased 72%
     from net sales of $416,000  generated  during the second fiscal  quarter of
     1997.  For the six month period,  net sales  decreased 52% from $803,000 to
     $386,000.  Unit sales  decreased  due to the shift  from a  per-unit  sales
     approach to a recurring  revenue  model.  During the quarter,  efforts were
     focused on establishing a new sales management team and aggressively hiring
     and training sales  personnel to support the nationwide GTE joint marketing
     and  distribution  agreement.  Training  of  the  corresponding  GTE  sales
     representatives  by USWD sales personnel was completed on a very aggressive
     schedule early in the quarter.  Product  placements of the TRANZ Enabler to
     merchants  through  the new  distribution  program  have not  developed  as
     rapidly as anticipated,  consequently  revenue has been minimal at the same
     time that high expenses have been  incurred.  The Company  expects that the
     transition  from a "voice" to "data"  sales  orientation  for the GTE sales
     personnel will be aided by several new operational  initiatives implemented
     in February 1998 by GTE Mobilnet, and that this will have a positive impact
     on product placement and revenue to the Company.
    
     Sales revenue was also impacted by a shortage of POS-50 units.  The Company
     deferred a new inventory build pending  completion of the private placement
     financing.  The  Company  has an order  backlog  for  these  units  and has
     initiated a new production run for 250 units. The POS-50 units and the sale
     of POS peripherals  accompanying  TRANZ Enabler  deployments  accounted for
     most of the sales recorded in the second quarter ended December 31, 1997.

                                       13
<PAGE>
     Gross Margin
   
     Gross margins in the second fiscal quarter of 1998 were $55,000 compared to
     $194,000 for the same period in fiscal 1997. As a percent of revenue, gross
     margin  in the  second  quarter  was at the same  level as the  prior  year
     despite a higher mix of point of sale terminal and printer  component sales
     which often accompany TRANZ Enabler deployments.  For the six month period,
     gross margin  decreased  from $316,000 in the prior year to $149,000 in the
     current year, as a result of decreased POS-50 sales.

     Operating Expenses

     Selling,  general and administrative expense increased from $170,000 in the
     second fiscal quarter of 1997 to $2,853,000 in the second fiscal quarter of
     1998. For the six month period, selling, general and administrative expense
     increased  from  $340,000  in the prior year to  $4,141,000  in the current
     year. A significant portion of the increase in both the three and six month
     periods  resulted  from  the  aggressive  addition  of  sales  and  support
     personnel  and   infrastructure  to  provide  local  support  for  the  GTE
     nationwide deployment. Headcount increased from approximately 18 at the end
     of the first quarter to approximately 50 employees as of December 31, 1997.
     Expenditures include increased compensation expense for new sales and sales
     management  personnel,  selective  additions  to the  management  team  and
     increased  travel and  communication  expense  related to the new marketing
     program.  Non-cash  compensation  expense  related  to  the  granting  of a
     variable  option in the second quarter was  approximately  $1,188,000  (See
     Note 7 to the financial  statements).  Non-cash  consulting fees related to
     business development of approximately $599,000 and $1,454,000 are reflected
     in the second quarter and six month results,  respectively, and include the
     termination of the entrenet and Woolley consulting  agreements entered into
     during  fiscal  year  1997,  and  amortization  of the  Liviakis  Financial
     Communications   consulting   services   (see  Note  6  to  the   financial
     statements).  The Company  continues to hire sales and support personnel to
     support the new marketing  programs.  At least in the near term,  operating
     expense will continue to increase ahead of revenue.

     Research  and  development  expenses  decreased  from $95,000 in the second
     fiscal quarter of 1997 to $78,000 in the first fiscal quarter of 1998. This
     decrease  was  due to  one  vacancy  in  the  department,  which  has  been
     subsequently filled.
    

     Interest Expense

     Interest expense includes a $225,000 non-cash charge to interest expense in
     the  second  quarter  related to the  private  placement.  The  convertible
     features of the debenture include an "in-the-money" convertible option that
     allows the  holder to obtain  shares of common  stock at a discount  off of
     fair  market  value.  The  value  of the  in-the-money  provision  has been
     allocated to stockholder  equity. The difference between the realized value
     and face value of the debt will be recognized as non-cash  interest expense
     between the date of issue and date of conversion into preferred stock.


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
----------------------------------------------------
   
     The Company continues to have significant  concerns regarding its financial
     condition and  liquidity.  While the Company is optimistic  with its medium
     and long term  opportunities,  it is constrained by its immediate financial
     condition  and  requirement  for  increased  liquidity.   The  Company  has
     accumulated a deficit of approximately  $21.4 million since inception.  The
     Company's CDPD based  products,  the GTE joint  marketing and  distribution
     agreement,  pending  distribution  agreements and transition to a recurring
     revenue focus present an opportunity  for significant  revenue  growth,  an
     eventual  return to  profitability,  and the  generation of a positive cash
     flow from  operations.  At present,  however,  development of the Company's
     infrastructure  and  expansion  of the  sales  and  marketing  organization
     requires additional financing. Proceeds from the recently completed private
     placement offering have provided the Company with the ability to launch the
     GTE joint marketing and  distribution  program,  however,  execution of the
     Company's  business plan is dependent on a more  significant debt or equity
     financing  event.  The Company  continues to work both directly and through
     its  consultants to secure  additional  debt or equity  financing  which is
     required to fund operations while a significant recurring revenue stream is
     built.  While  management is confident it can  accomplish  this  objective,
     there is no guarantee that this additional  funding will be accomplished or
     that it will occur in the required time frame. In

                                       14
<PAGE>
     addition,  the  Company  has  agreed  that it will not sell any new  equity
     securities  without the consent of the purchasers of the debentures for the
     150-day  period  following the December 10, 1997 closing of that  offering.
     The inability of the Company to secure additional financing could adversely
     impact the Company's financial position,  including its ability to continue
     as a going concern.
    
     The Company has been in discussion with GTE Leasing Corporation regarding a
     program to fund the  manufacture  of TRANZ Enabler units which are deployed
     through the joint USWD and GTE Mobilnet marketing agreement.  The agreement
     will provide GTE with a security  interest in the units while the repayment
     of the financing will be made from the recurring  revenue  generated by the
     units.  The Company  expects this  arrangement to be completed  during this
     quarter;  however, no assurance can be given this will occur. Financing the
     TRANZ Enabler units is a required  element of the Company's  business model
     and  the  Company  will  seek  similar  financing  arrangements  for  units
     distributed  through  other  marketing  channels.  The  inability  to  fund
     inventory needs from outside  sources could have a material  adverse impact
     on the Company.


Part II


     ITEM 1 -- LEGAL PROCEEDINGS

     In September 1996, the Company agreed to terms to settle  securities  fraud
     litigation,  pending  since  1994,  which was  brought in  relation  to the
     Company's initial public offering of December 1993. The parties'  agreement
     (the "Settlement  Agreement") was filed in the United States District Court
     for the District of Colorado on January 15, 1997 in  consolidated  Case N0.
     94-Z-2258,  Appel,  et al. v. Caldwell,  et al. By its order  approving the
     settlement,  the court certified plaintiffs'  settlement class and provided
     the mechanism for payment of claims. The Company contributed $10,000 to the
     total  settlement  fund  of  $2,150,000.   The  remaining  portion  of  the
     settlement was contributed by certain underwriters of the Company's initial
     public  offering and  securities  counsel.  No objections to the Settlement
     Agreement were made. No potential  class member opted out of the settlement
     and all are bound by the release  granted the Company.  All claims  against
     the Company in those  consolidated  cases were  dismissed by final  federal
     court order on September 4, 1997. No appeal was filed.  Similar state court
     claims were  dismissed by Colorado  district  court order dated  October 9,
     1997.

     To resolve  cross-claims  asserted by underwriters in the litigation,  U.S.
     Wireless Data, Inc. agreed to transfer to RAS Securities Corporation,  H.J.
     Meyers & Co,  Inc.,  Sands & Co.  Ltd.  and R.J.  Steichen & Co. a total of
     600,000 U.S.  Wireless Data,  Inc. common shares upon the effective date of
     the Settlement Agreement,  which was April 25, 1997. The Company has agreed
     to  register  such  shares  upon demand of 25% of the holders of the shares
     after April 26, 1998.  Further, on September 17, 1997 the Company agreed to
     entry of a consent  judgment  against it and in favor of Don  Walford,  the
     sole shareholder of underwriter Walford Securities,  Inc., in the amount of
     $60,000, payable over a three-year period.

     In July 1997,  the Company  executed a two-year  agreement  for  consulting
     services to be provided by Mr. Gary Woolley  effective as of April 1, 1997.
     In addition to monthly cash  compensation,  Mr. Woolley  received a $50,000
     two-year  convertible  note  with  10%  interest  per  annum.  The note was
     convertible  into Common Stock at $.40 per share.  A dispute  arose between
     Mr. Woolley and the Company and the consulting  agreement was terminated by
     the Company at the end of August 1997. Mr. Woolley and the Company executed
     a  settlement  agreement in January  1998,  and the Company has accrued the
     remaining   related   consulting   charges  in  the  second  quarter.   The
     restructured  note  provides for  conversion  of all principal and interest
     into  75,000  restricted  shares of Common  Stock upon the  election of Mr.
     Woolley which was made as of January 26, 1998.

     The Company has been engaged in  negotiations  with  purchasers of $135,000
     (out of a total of $185,000) of convertible demand notes, which the Company
     issued from April through June 1997. The notes became convertible to Common
     Stock at $.35 per share (as to $85,000 of the notes) and $.50 per share (as
     to $100,000 of the notes) on November 1, 1997. The essence of the claims of
     the  complaining  noteholders  is that the  Company,  through  its  agents,
     "promised"  that the Common Stock issuable upon conversion of the notes was
     to be "freely  tradeable." The  documentation  evidencing the notes did not
     bear any  language  

                                       15
<PAGE>
     indicating the nature of the shares issuable upon  conversion.  The Company
     denies that "freely tradeable" stock was promised to the noteholders by any
     person  authorized by the Company to make such a promise.  The  noteholders
     allege an  unspecified  amount of damages based upon a market price for the
     Common  Stock in the $8.00  range as of the  November  1 time  period.  The
     noteholders have threatened suit against the Company if they do not receive
     a substantial  increase in the number of shares to be issued by the Company
     upon  conversion of the notes and other  concessions  from the Company.  No
     assurance can be given that the matter can be resolved without  litigation.
     The cost of  litigation  and any potential  judgment  could have a material
     adverse financial impact on the Company.



ITEM 2 - CHANGES IN SECURITIES

   
       On December  10, 1997,  the Company  issued a total of  $3,060,000  of 8%
       Convertible Subordinated Debentures. The terms of the Debentures provided
       that they would convert into one share of Series A Cumulative Convertible
       Redeemable  Preferred Stock for each dollar of Debentures at such time as
       the  Company's  shareholders  approved  an  amendment  to  the  Company's
       Articles of Incorporation  authorizing  preferred stock. This occurred at
       the Company's Annual Meeting of Shareholders,  which was held on February
       6, 1998.  See Note 10 to the  Footnotes  to the  Financial  Statements  -
       "Subsequent Events". The terms of the Series A Preferred Stock, which was
       legally  established  on February  9, 1998,  contain  certain  rights and
       preferences that are superior to those of the Company's Common Stock. The
       Debentures and the Series A Preferred Stock to be issued on conversion of
       the  Debentures  were, or will be, issued as  unregistered  securities in
       reliance on the registration  exemptions contained in Section 4(2) of the
       Securities  Act of  1933,  as  amended,  and  Rule  506 of  Regulation  D
       promulgated  thereunder.  A detailed  description  of the offering of the
       Debentures,  including  the terms  thereof  and of the Series A Preferred
       Stock to be issued upon  conversion of the debentures is contained in the
       Company's  Form 8-K  Reporting an Event of November 14, 1997,  filed with
       the SEC on December  17,  1997,  and in the  Company's  Definitive  Proxy
       Statement for its Annual Meeting of Shareholders held February 6, 1998.
    
       November  15, 1997 - December  31,1997:  180,000  shares of Common  Stock
       under a consulting agreement with Liviakis Financial Communications, Inc.
       ("LFC");  165,000 shares were issuable as of November 15, 1997 and 15,000
       shares  were  issuable as of December  15,  1997.  75% of the shares were
       issuable to LFC and 25% of the shares were issuable to Robert B. Prag, an
       executive  officer  of LFC.  The  Company  relied  upon the  registration
       exemption  contained  in Section 4(2) of the  Securities  Act of 1933 for
       these transactions.  None of the transactions involved a public offering.
       Representations  were received from the  purchasers of the  securities to
       the effect that the purchasers  were taking for investment  purposes only
       and not with a view to distribution; "restricted securities" legends were
       or  will  be  imprinted  on all  stock  certificates;  and  stop-transfer
       instructions  were lodged  with the  Company's  transfer  agent as to all
       shares of common stock issued in the transactions.



ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

       The  Company  is  indebted  to  Omron  Systems,   Inc.  under  a  Secured
       Installment  Note  dated  March 27,  1995,  for the  principal  amount of
       $387,866  and  interest  thereon.  The  terms of such note  required  the
       Company to make  payments of principal and interest each month from April
       1995 through  December  1995,  at which time the note became due in full.
       The Company made one principal  payment,  and monthly  interest  payments
       through  October 1996, in accordance  with the terms of the note, but has
       made no other payments under this note and for that reason is in default.
       The  Company  continues  to  discuss  options  with Omron  regarding  the
       possible restructuring or mutually agreeable settlement of this note.

                                       16
<PAGE>
ITEM 5 -- OTHER INFORMATION

         In February, The Company filed an application with NASDAQ for inclusion
         of its Common Stock to be re-listed  and traded on the NASDAQ Small Cap
         stock  market.  While  re-listing  would give the common stock  greater
         visibility  and  prominence  in the  financial  community,  there is no
         assurance that the application will be granted at this time.

         The Company has  initiated  efforts to develop a hand-held  credit card
         processing   unit  which  will  utilize  the  Company's  CDPD  wireless
         technology. It is anticipated that initial units could be available for
         deployment by the end of the third fiscal quarter.

   
         See Also Note 10 - Subsequent Events in Notes to Financial Statements.
    

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

         a) Exhibits required by Item 601 of Regulation S-B

               3.1       Articles of Incorporation, as amended (1)
               4.1       $150,000 Convertible Subordinated Promissory Note
                         dated June 3, 1997, issued to entrenet Group, LLC. (2)
               4.2       1992 Stock Option Plan, as amended  (3)
               4.3       Designation of Series A Preferred Stock
                         (Included  in Exhibit 3.1 - Articles of
                         Incorporation, as amended)
              10.1       Office Lease with Spieker Properties, L.P.
                         dated September 12, 1997 (2)
              10.2       Release and Settlement Agreement with entrenet Group,
                         LLC effective as of November 1, 1997 (2)
                27       Financial Data Schedule


      (1)      Incorporated  by  reference  from  the  like-numbered  and  named
               Exhibit  filed  with  the  Company's  Quarterly  Report  on  Form
               10-QSB for the quarter ended December 31, 1997,  filed  with  the
               SEC on February 23, 1998.

      (2)      Incorporated  by  reference  from  the  like-numbered  and  named
               Exhibit  filed  with  the  Company's  Quarterly  Report  on  Form
               10-QSB/A for the quarter ended December 31, 1997,  filed with the
               SEC on March 18, 1998.


      (3)      Incorporated by reference from the Company's  Revised  Definitive
               Proxy  Statement  for the 1997  Annual  Meeting of  Shareholders,
               filed with the SEC on January 14,  1998,  in which the Exhibit is
               included as Exhibit C.

       b)      Reports on Form 8-K

               On December  17,  1997,  the  Company  filed a report on Form 8-K
               reporting  an event of November 14,  1997.  The report  contained
               disclosures under Item 5 - Other Events,  relating to the closing
               of the  Company's  Debenture  offering on December 10, 1997,  and
               claims by certain holders of convertible notes.

                                       17
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                      U.S. WIRELESS DATA, INC.
                                      Registrant

   

Date:    February  25, 1999              By: \s\ Roger L. Peirce     
         ------------------                  --------------------------
                                             Chief Executive Officer


         February  25, 1999              By: \s\ Robert E. Robichaud  
         ------------------                  --------------------------
                                             Chief Financial Officer