SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                  FORM 10-QSB/A2

|X|      Quarterly Report under Section 13 or Section 15(d) of the Securities 
         Exchange Act of 1934 for the quarterly period ended September 30, 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 97608
                          ----------------------------
          (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  September  30,  1997  there  were  outstanding  9,192,270  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 --
                    September 30, 1997, and June 30, 1997...................3

             Statements of Operations --
                    Three Months Ended September 30, 1997 and 1996..........4

             Statements of Cash Flows --
                    Three Months Ended September 30, 1997 and 1996..........5

   
             Notes to Financial Statements (Restated).......................6-9


Item 2.      Management's Discussion and Analysis (Restated)...............10-13
    


PART II      OTHER INFORMATION

Item 1.      Material Developments in Connection with Legal Proceedings.....13

Item 2.      Changes in Securities..........................................13

Item 3.      Defaults Upon Senior Securities................................14

Item 5.      Other Information .............................................14

Item 6.      Exhibits and Reports on Form 8-K...............................14

   
RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION

This  amended  filing  contains  restated  financial   information  and  related
disclosures  for the quarter  ended  September 30, 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 the 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)



                                                                   September 30, 1997     June 30, 1997
                                                                (Restated - see Note 1)   -------------
                                                                -----------------------
<S>                                                                      <C>             <C>         
                                 ASSETS
Current Assets:
        Cash .........................................................   $     68,000    $      6,000
        Accounts receivable, net of allowance for ....................        220,000         131,000
            doubtful accounts of $16,000 in September 1997 and $16,000
            in June 1997
        Inventory, net
                                                                              224,000         209,000
        Other current assets .........................................      1,151,000         103,000
                                                                         ------------    ------------
                 Total current assets ................................      1,663,000         449,000

Property and equipment, net ..........................................         35,000          41,000
Other assets .........................................................         22,000          11,000
                                                                         ------------    ------------


Total assets .........................................................   $  1,720,000    $    501,000
                                                                         ============    ============


                  LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
        Accounts payable .............................................   $    453,000    $    354,000
        Accrued liabilities ..........................................        704,000         126,000
        Borrowings, current portion ..................................        804,000         738,000
                                                                         ------------    ------------
                Total current liabilities ............................      1,961,000       1,218,000


Borrowings, long-term portion Long Term Debt .........................         45,000          45,000
                                                                         ------------    ------------

Total Liabilities ....................................................      2,006,000       1,263,000
                                                                         ------------    ------------

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


Stockholders' Deficit:
        Common stock, no par value, 12,000,000 .......................      9,192,000       5,614,000
                shares authorized; 9,192,270 and 5,613,952 shares
                issued and outstanding at 9/31 and 6/30, respectively
        Additional paid-in capital ...................................      8,264,000      10,613,000
        Accumulated deficit ..........................................    (18,274,000)     16,961,000)
        Notes Receivable from Shareholder ............................        (28,000)        (28,000)
                                                                         ------------    ------------
                Total stockholders' deficit ..........................       (846,000)       (762,000)
                                                                         ------------    ------------

Total liabilities and stockholders' equity (deficit) .................   $  1,720,000    $    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
                                            September 30, 1997   September 30, 1996
                                           (Restated-see Note 1) ------------------
                                           ---------------------
<S>                                                    <C>              <C>    
Revenue ......................................         270,000          387,000
Cost of revenue ..............................         176,000          265,000
                                                   -----------      -----------

Gross profit .................................          94,000          122,000
                                                   -----------      -----------

Operating expenses:
    Selling, general and administrative ......       1,288,000          171,000
    Research and development .................          95,000          119,000
                                                   -----------      -----------
    Total operating expenses .................       1,383,000          290,000
                                                   -----------      -----------

Loss from operations .........................      (1,289,000)        (168,000)


Interest income ..............................            --              6,000
Interest expense .............................         (24,000)            --
                                                   -----------      -----------


Net loss .....................................     $(1,313,000)     $  (162,000)
                                                   ===========      ===========




Basic and diluted net loss  per share: .......     $      (.17)     $      (.03)
                                                   ===========      ===========

Weighted average common shares ...............       7,770,000        4,653,000
outstanding - 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)


                                                               Three Months Ended
                                                    September 30, 1997     September 30,1996
                                                   (Restated - see Note 1) -----------------
                                                   -----------------------
<S>                                                       <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss .........................................   $(1,313,000)   $  (162,000)
     Depreciation and amortization ....................         5,000         20,000
     Non-cash consulting services .....................       855,000           --


   Changes in assets and liabilities:
          (Increase) decrease in:
               Accounts receivable ....................       (88,000)        96,000
               Inventory ..............................       (15,000)       (26,000)
               Other assets ...........................       (17,000)        29,000
          Increase (decrease) in:
               Accounts payable .......................        89,000        139,000
               Accrued liabilities ....................        27,000       (100,000)
                                                          -----------    -----------
               Net cash used in operating activities ..      (457,000)        (4,000)
                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Increase in other assets .........................       (11,000)          --
                                                          -----------    -----------
               Net cash used in investing activities ..       (11,000)          --
                                                          -----------    -----------



CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of stock ..................       514,000           --
     Repayments of notes payable ......................          --          (22,000)

     Proceeds from issuance of notes payable
                                                               16,000           --
                                                          -----------    -----------
              Net cash provided by financing activities       530,000        (22,000)
                                                          -----------    -----------


INCREASE (DECREASE) IN CASH ...........................        62,000        (26,000)


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


CASH, End of period ...................................   $    68,000    $    14,000
                                                          ===========    ===========

    
</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 September 30, 1997 and the
      accompanying  restated  statements  of  operations  and cash flows for the
      three months ended  September  30, 1997 have been  restated to reflect the
      proper treatment of the Liviakis Financial Communications,  Inc. financing
      and  consulting  transactions  as  stated  in Note 5. The  effect of these
      restatements is to increase selling,  general and administrative  expenses
      and  increase  reported  loss by  $507,000  for  the  three  months  ended
      September  30, 1997 ($0.07 for fully diluted  earnings per share),  reduce
      total assets by $61,000, increase total liabilities by $552,000,  increase
      redeemable   common   stock  and   warrants  by  $560,000   and   increase
      stockholders'  deficit by  $1,173,000.  These  restatements  do not affect
      previously reported net cash flows.

Note 2 -- ACCOUNTING PRINCIPLES
    
      The balance sheet as of September  30, 1997, as well as the  statements of
      operations and of cash flows for the three months ended September 30, 1997
      and  September  30,  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 September 30, 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  $18.3
      million  since  inception,  including a loss of $1.3  million in the first
      quarter of fiscal year 1998. In order 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,  is negotiating
      new  distribution   agreements  and  seeking  additional  debt  or  equity
      financing.
    

      Subsequent to June 30, 1997, the Company has  strengthened  the management
      team,  signed  several  significant  distribution  agreements,  which  are
      expected to build a recurring  revenue base,  started the expansion of the
      sales force and  expanded its contract  manufacturing  relationships.  The
      current sales volume is inadequate to fund the  infrastructure  growth and
      business transition.  As a result, and as part of its continuing effort to
      find working capital funding in order to continue operations,  the Company
      has entered  into certain  consulting  agreements  designed to  facilitate
      financing  relationships with third parties. 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  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
    
      Net loss per common  share is  computed  by  dividing  the net loss by the
      weighted  average  number of common shares  outstanding  at the end of the
      period.  Exercisable  stock  options and  warrants are not included in the
      calculation since their effect would be anti-dilutive.

   
Note 5 -- 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 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  $507,000 in consulting  expense
     during the quarter ended September 30, 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 what
     was issued in the subject  financing.  entrenet  located the  $500,000  LFC
     financing.  During  the first  quarter  of fiscal  1998,  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.
    
                                        7
<PAGE>
   
Note 6 -- LITIGATION
    
     In  September  of 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 of 1997, the Company  executed a two-year  agreement for consulting
     services. In addition to monthly cash compensation, the consultant received
     a $50,000  two-year  convertible note with 10% interest per annum. The note
     principal  balance of the note is convertible into Common Stock at $.40 per
     share.  A dispute  arose  between  the  consultant  and the Company and the
     consulting  agreement  was  terminated  at the  end  of  August  1997.  The
     consultant  and the Company are currently in discussion to determine if the
     matter can be resolved amicably.


Note 7 -- RECENT ACCOUNTING PRONOUNCEMENTS
    
     In February 1997, the Financial  Accounting  Standards  Board (FASB) issued
     Statement of Financial  Accounting  Standard (SFAS) No. 128,  "Earnings per
     Share".  SFAS No. 128, which is effective for periods ending after December
     15, 1997, requires changes in the computation, presentation, and disclosure
     of earnings  per share.  All prior  period  earnings per share data must be
     restated to conform to the  provisions  of SFAS No. 128.  The Company  will
     adopt SFAS No. 128 during the fourth  quarter of fiscal 1998,  but does not
     expect  the new  accounting  standard  to  have a  material  impact  on the
     Company's reported loss per share.

     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.

                                       8
<PAGE>
     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 8 -- SUBSEQUENT EVENTS
    
     Subsequent to September  1997,  the Company  received two bridge loans from
     the principals of Liviakis Financial Communications Inc. totaling $275,000,
     pending  completion of more  permanent  financing.  Following a significant
     funding,  the company will repay the bridge loans along with interest of 9%
     percent per annum.

     Subsequent to September 1997, the Company has been working on structuring a
     private  offering of securities  targeted to raise between $2 to $4 million
     through the sale of convertible debt from "accredited investors" as defined
     in  Rule  501  of  Regulation  D  under  the  Securities  Act of  1933.  In
     conjunction  with this  financing,  the Company  intends to submit proposed
     amendments to its Articles of  Incorporation  at the upcoming  shareholders
     meeting to  authorize  the  creation of  Preferred  Stock and  increase the
     number of authorized  shares of Common Stock available to the Company.  The
     Company  also  anticipates  that it will be required to register  shares of
     common stock underlying the securities sold in the offering.  No assurances
     can be  given  that the  Company  will be  successful  in  completing  this
     financing.

                                       9
<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 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 and 5 of the Notes to the Financial Statements.
    
     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.  The Company's first product,  known as the
     POS-50(R),  is the world's first integrated  wireless credit card and check
     authorization terminal using cellular communication  technology.  With over
     4,000 POS-50(R) terminals in the marketplace,  the Company is recognized as
     the leader in providing  wireless  terminal  transaction  equipment for the
     mobile  marketplace.  The POS-50  product  accounted  for most of the sales
     recorded in the first quarter ended September 30, 1997.

     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. CDPD is a high-speed digital packet data,
     internet  protocol  (IP) based  technology  that  operates in parallel with
     current  cellular voice  networks.  It is designed for high speed encrypted
     data  transmission over the air-link and will not interfere with or degrade
     cellular  voice  traffic.   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  can  have
     significant  performance  and  communication  cost advantages when compared
     with the  traditional  dial-up  terminals  currently being sold in the U.S.
     market  today.  The  result is that the  Company  now  offers  two new CDPD
     products that reduce the current  authorization  time from approximately 15
     seconds to 3 to 5 seconds.

     The most  significant  USWD  product is the  TRANZ*  Enabler  which  allows
     current VeriFone Tranz(R) 330 or Tranz(R) 380 users to immediately  convert
     their terminals and printers from a land-line  telephone  dial-up mode to a
     high-speed  wireless mode of  operation.  By effecting  this  technological
     upgrade,  the cost of dedicated  telephone  lines is  eliminated as are the
     delays  created  by  busy  telephony   networks   during  peak  periods  of
     authorization activity.  Furthermore,  the efficiencies created by adopting
     the CDPD technology and USWD's alliance with a major transaction  processor
     enabled  U.S.  Wireless  Data to develop a pricing  schedule  which  lowers
     transaction and/or discounts rates that most retailers are currently paying
     to handle credit and debit card transactions. The TRANZ Enabler is directed
     at the existing U.S.  installed base of more than 3.5 million TRANZ 330 and
     TRANZ 380 terminals. *TRANZ is a registered trademark of Verifone, Inc.

     The  second  CDPD  product  created  by  the  Company  is  the  POS-500,  a
     self-contained  card  terminal and printer that  provides the same mobility
     features of the  POS-50(R)  product and also  incorporates  the  processing
     benefits of the TRANZ  Enabler.  The unit is geared for the user who either
     does  not  have  a  dial-up  terminal/printer  in  place  or  requires  the
     advantages of the CDPD technology in a mobile application.

     In mid fiscal year 1997, the Company made a fundamental  decision to change
     the manner in which it generates revenue. If successfully implemented, this
     significant  decision  transforms  the Company  from being a "box maker" in
     which it earned one time wholesale margins from the sale of its products to
     earning
                                       10
<PAGE>
     recurring  revenue  by  providing  wireless  credit  card  and  debit  card
     processing  services  to retail  merchants.  In  January  1997 the  Company
     executed a Member Service Provider ("MSP")  agreement with NOVA Information
     Systems  ("NOVA"),   the  nation's  7th  largest  credit  card  transaction
     processor. As a registered MSP of NOVA, the Company can enroll merchants to
     process  their  credit and debit  card  transactions  with  NOVA.  This MSP
     agreement allows U.S.  Wireless Data to earn revenue on each card swipe and
     every dollar processed by merchants enrolled by the Company.

     Another key element of USWD's  strategic  direction  is the close  alliance
     with large communications carriers such as GTE Mobilnet. In addition to the
     CDPD service  agreement signed in fiscal 97, GTE Wireless and U.S. Wireless
     Data,  Inc.,  in August 1997,  announced a joint  marketing  and  operating
     agreement  to  distribute  USWD's  proprietary  TRANZ  Enabler  credit card
     processing system using GTE's CDPD network. Both companies are engaged in a
     nation wide deployment,  which will extend TRANZ Enabler sales to merchants
     through over 450 GTE sales representatives.  The agreement contains certain
     operational and financial  performance  criteria,  directly  related to the
     joint marketing program,  which must be met by the Company.  The Company is
     building a sales and support  organization to provide local support for the
     GTE sales  representatives.  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  plans to execute  similar  joint
     marketing  agreements  with the other CDPD service  providers with which it
     currently has cellular service resale agreements.
   
     In July 1997, the Company retained Liviakis Financial Communications,  Inc.
     to advise and assist the Company in matters concerning  investor relations,
     corporate finance and strategic  management  planning.  Remuneration to LFC
     under  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 the 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 LFC in
     August 1997. 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 5 - RELATED
     PARTIES"  in  Notes  to  Financial  Statements  for a  description  of  the
     accounting treatment for these transactions.
    
     In September  1997, the Company  signed an agreement  with Unicard  Systems
     Inc. to develop  terminal  application  software that will perform both the
     Unicard  enrollment  process  as  well  as  deliver  wireless  credit  card
     transaction  processing.  Unicard Systems will become a registered agent of
     U.S.  Wireless  Data and has placed an initial  order for 400 TRANZ Enabler
     units.  Unicard  Systems is a Dallas  based  service  provider  to over 500
     restaurants and nightclubs in Texas.

     In October 1997,  the Company  signed an exclusive  agreement  with GoldCan
     Recycling,  Inc. for wireless  monitoring of its state of the art automated
     aluminum redemption centers.  This is the first application of USWD's TRANZ
     Enabler technology  outside the credit  card/point-of-sale  industry.  USWD
     will receive a monthly  equipment  and wireless  service fee on every TRANZ
     Enabler placed by GoldCan.  GoldCan  anticipates placing in excess of 3,000
     units over the next three years.

     Between  October and November 1997,  the Company  received two bridge loans
     from  Liviakis   Financial   Communications,   Inc.  for  $275,000  pending
     completion of more permanent financing.  Following a funding of at least $1
     million, the Company will repay the bridge loan along with interest of nine
     percent.

     In early August 1997, the Company  announced the  appointment of Evon Kelly
     to the  position  of  Chief  Executive  Officer.  At this  same  time,  Rod
     Stambaugh  assumed the position of President.  Also in August,  the Company
     hired Clyde Casciato,  Vice President Sales; Tom Cote, Vice President Major
     Accounts; and in September hired Robert Robichaud, Chief Financial Officer.
     In  September  1997,  the  Company  executed  a lease for  office  space in
     Emeryville,  California.  The lease provides for approximately 4,500 square
     feet at an initial rate of $9,942 per month  commencing  October 1997,  and
     containing an initial term of 5 years.  The monthly rent will progress to a
     rate of $11,640 in year five.

                                       11
<PAGE>
       Net Sales
   
       Net sales of $270,000 for the first quarter of fiscal 1998 decreased from
       net sales of $387,000  generated during the first fiscal quarter of 1997.
       Unit  sales  decreased  in part  because of a  decrease  in direct  sales
       headcount  during the  balance of fiscal 97 as the company  continued  to
       face significant financial pressure. In addition, efforts were focused on
       completing  the  development  of a  business  plan,  which will shift the
       company  from a per-unit  sales  approach to a recurring  revenue  model.
       Efforts  were  also  focused  on  completing  negotiations  with  GTE and
       establishing a new management  team to execute the new business plan. The
       POS-50  product  accounted  for most of the sales  recorded  in the first
       quarter ended September 30, 1997.
    


       Gross Margin
   
       Gross margins in the first fiscal  quarter of 1998 were $94,000  compared
       to $122,000 for the same period in fiscal 1997.  As a percent of revenue,
       gross margins  increased by  approximately  3.3%,  despite the sale of of
       $83,000  of  TRANZ  Enabler  sales  demo  units  at cost  for the new GTE
       marketing  rollout.  The  increase was due  primarily  to more  favorable
       margins on the POS-50(R) product as a result of reduced product cost.
    

       Operating Expenses

   
       Selling, and general and administrative  expenses increased from $171,000
       in the first  fiscal  quarter of 1997 to  $1,288,000  in the first fiscal
       quarter of 1998.  Approximately $855,000 of the increase was attributable
       to  primarily  non-cash  consulting  charges  for  financial   consulting
       services and  development of the Company's new business plan. The balance
       of the  increase  was  due to  increased  compensation  expense  for  new
       additions to the management team and increased  travel and  communication
       expense related to the new marketing  program.  The Company  continues to
       add sales and support personnel to support the new marketing programs. In
       the near term,  operating  expense  will  continue to  increase  ahead of
       revenue.

       Research and  development  expenses  decreased from $119,000 in the first
       fiscal  quarter of 1996 to $95,000 in the first  fiscal  quarter of 1998.
       This  decrease was due to reduced  occupancy  and  allocation of overhead
       spending expense.
    

       Other Income/(Expense)
   
       Other income/(expense)  decreased from $6,000 in the third fiscal quarter
       of 1997 to ($24,000) in the first fiscal  quarter of 1998.  This decrease
       was due  primarily  to an increase in interest  expense  related to notes
       payable.
    

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  $18.3  million
       since inception and currently has a negative  working  capital  position.
       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,  the development of the
       Company's  infrastructure  and  expansion  of  the  sales  and  marketing
       organization  requires  additional   financing.   Implementation  of  the
       Company's  business  plan is  dependent  on the  infusion  of new debt or
       equity financing.  As of the date of this report,  the Company is seeking
       to raise  between $2 to $4 million.  The Company is working both directly
       and through its consultants to secure additional debt or equity financing
       which is expected  to fund the  Company's  growth.  While  management  is
       confident it can accomplish  this  objective,  there is no guarantee that
       this additional funding will occur in the required time frame.
    
                                       12
<PAGE>
Part II

     ITEM 1 -- LEGAL PROCEEDINGS

     In  September  of 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 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  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.

     In July of 1997, the Company  executed a two-year  agreement for consulting
     services to be provided by Mr.  Gary  Wooley.  In addition to monthly  cash
     compensation,  Mr. Wooley received a $50,000 two-year convertible note with
     10% interest per annum.  The note is convertible  into Common Stock at $.40
     per share.  A dispute  arose  between  Mr.  Wooley and the  Company and the
     consulting  agreement was  terminated at the end of August 1997. Mr. Wooley
     and the Company are  currently in discussion to determine if the matter can
     be resolved amicably.


ITEM 2 - CHANGES IN SECURITIES

       Recent Sales of Unregistered Securities:
       ----------------------------------------

       July 2, 1997: $16,825 promissory note was issued for cash of $16,000; the
       note was converted into a convertible Demand Note (see April - June, 1997
       transactions described above) on or about July 30, 1997;

       August 6, 1997:  2,625,000  shares of Common Stock,  and 1,200,000 common
       stock  purchase  warrants  exercisable at $.01 per share from January 15,
       1998 until August 4, 2002, to John M. Liviakis for $375,000 in cash;

       August 6,1997:  875,000 shares of Common Stock,  and 400,000 Common Stock
       purchase  warrants  exercisable  at $.01 per share from  January 15, 1998
       until August 4, 2002, to Robert B. Prag for $125,000 in cash;

       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 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.
                                       13
<PAGE>
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.  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  principal  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.




ITEM 5 -- OTHER INFORMATION

         See Note 8 - 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

              27 Financial Data Schedule


                                   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