SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

|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 450
                          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)

            Balance Sheet --
                   December 31, 1997, 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...................................6-9

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



PART II     OTHER INFORMATION

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

Item 2.     Securities Changes...............................................14

Item 3.     Defaults Upon Senior Securities..................................15

Item 5.     Other Information ...............................................15

Item 6.     Exhibits and Reports on Form 8-K.................................16


<PAGE>
<TABLE>
<CAPTION>
                            U.S. WIRELESS DATA, INC.
                                  BALANCE SHEET
                                   (Unaudited)

                                                        December 31, 1997   June 30,1997
                                                        -----------------   ------------
                              ASSETS

<S>                                                       <C>             <C>    
Current Assets:     
        Cash                                              $  1,522,944    $      6,083
        Accounts receivable, net of allowance for       
         doubtful accounts of $15,979 Dec.; 15,903 June        123,369         120,531
        Sales-type lease receivables ..................         10,933          11,023
        Inventory, net ................................        634,938         208,867
        Other current assets ..........................         59,430         102,836
                                                          ------------   -------------

                 Total current assets .................      2,351,614         449,340

Property and equipment, net ...........................        142,333          40,445
Other assets ..........................................        434,030          11,495
                                                          ------------   -------------



Total assets ..........................................   $  2,927,977    $    501,280
                                                          ============    ============   

        LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
        Accounts payable ..............................   $    759,744    $    354,213
        Accrued liabilities ...........................        149,894         125,587
        Notes payable .................................        808,649         737,866
                                                          ------------    ------------
                Total current liabilities .............      1,718,287       1,217,666
                                                          ------------    ------------

Long Term Debt ........................................      2,707,941          45,000

Total Liabilities .....................................      4,426,228       1,262,666


Stockholders' Equity (Deficit):
        Common stock, no par value, 12,000,000 ........      9,221,420       5,613,952
                shares authorized; 9,221,420
                shares issued and outstanding
        Common stock subscribed .......................              0               0
        Additional paid-in capital ....................      8,214,994      10,613,465
        Accumulated deficit ...........................    (18,934,665)    (16,960,853)

        Notes Receivable from Shareholder .............           --           (27,950)
                                                          ------------    ------------
                Total stockholders' equity (deficit)...     (1,498,251)       (761,386)


Total liabilities and stockholders' equity (deficit)...   $  2,927,977    $     501,280
                                                          ============    =============
</TABLE>

                             See Accompanying Notes

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

                                                   Three Months Ended             Six Months Ended
                                                 12/31/97       12/31/96       12/31/97       12/31/96
                                                 --------       --------       --------       --------
<S>                                           <C>            <C>            <C>           <C>        
Revenue ...................................   $    96,385    $   415,695    $   353,857   $    802,913
Cost of goods sold ........................        52,774        221,848        226,569        487,297
                                              -----------    -----------    -----------    -----------

Gross margin (deficit) ....................        43,611        193,847        127,288        315,616
                                              -----------    -----------    -----------    -----------

Operating Expenses:
    Selling, general and administrative ...     1,161,774        169,619      1,692,629        340,406
    Research and development ..............        77,700         95,019        173,014        213,488
                                              -----------    -----------    -----------    -----------
    Total Operating Expense                     1,239,474        264,638      1,865,643        553,894
                                              -----------    -----------    -----------    -----------

Loss from operations ......................    (1,195,863)       (70,791)    (1,738,355)      (238,278)

Interest income                                     1,677              0          1,677              0
Interest expense                                 (243,782)             0       (267,682)             0
Other income                                       18,246          1,921         30,548          7,888

Net loss ..................................   $(1,419,722)   $   (68,870)   $(1,973,812)   $  (230,390)
                                              ===========    ===========    ===========    ===========


Basic / Diluted Earnings (loss) per share:   $      (.15)   $      (.01)   $      (.23)   $      (.05)

Weighted average common shares outstanding      9,209,152      4,738,458      8,489,500      4,732,261
                                              ===========    ===========    ===========    ===========
</TABLE>


                             See Accompanying Notes

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

                                                                          Six Months Ended
                                                                       12/31/97      12/31/96
                                                                       --------      --------
<S>                                                                 <C>            <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss ...................................................   $(1,973,812)   $  (230,390)
     Depreciation and amortization ..............................        10,348         39,051
     Non-cash consulting services ...............................       181,805
     Non-cash interest expense - debt ...........................       225,358

   Changes in assets and liabilities:
          (Increase) decrease in:
               Accounts receivable ..............................        (2,839)       119,057
               Inventory ........................................      (426,071)        46,866
               Other current assets .............................       (47,979)        33,088
          Increase (decrease) in:
               Accounts payable .................................       395,531         90,301
               Accrued liabilities ..............................        24,308       (114,241)
                                                                    -----------    -----------
               Net cash used in operating activities ............    (1,613,351)       (16,268)

CASH FLOWS FROM INVESTING ACTIVITIES:
     (Purchase) of Property, plant, and equipment ...............      (112,236)
     (Increase) in other assets .................................       (84,626)           500
                                                                    -----------    -----------
               Net cash used in investing activities ............      (196,862)           500


CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of stock ............................       556,250         43,396
     Note receivable ............................................        27,950        (27,950)
     Net Proceeds from issuance of debt..........................     2,742,874        (21,600)
                                                                    -----------    -----------

              Net cash provided by financing activities .........     3,327,074         (6,154)


INCREASE (DECREASE) IN CASH .....................................     1,516,861        (21,922)


CASH, Beginning of period
                                                                          6,083         40,350
                                                                    -----------    -----------


CASH, End of period .............................................   $ 1,522,944    $    18,428
                                                                    ===========    ===========
</TABLE>

                             See Accompanying Notes

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

Note 1 -- 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 2 -- FINANCIAL CONDITION AND LIQUIDITY

     The Company has  incurred an  accumulated  deficit of  approximately  $18.9
     million  since  inception,  including a loss of $554  thousand in the first
     quarter and $1,420  thousand 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  consolidated  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.


Note 3 -- 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. 6
<PAGE>
Note 4 -- 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 7, 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  compensation  for 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  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,
     which was  effected  as of  February  9,  1998.  See  "Note 9 -  Subsequent
     Events".  In December,  this  non-cash  interest  charge was  approximately
     $225,000.  As a result of the approval by shareholders on February 6, 1998,
     the Company authorized  4,000,000 shares of Series "A" Preferred stock. The
     debentures  automatically  convert  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 5 -- LIVIAKIS FINANCIAL COMMUNICATIONS INC. ("LFC") - CONSULTING

     In August 1997,  the Company  retained LFC to advise and assist the Company
     in matters concerning investor relations and corporate finance covering the
     period from July 31, 1997 through July 31, 1998. As compensation  for these
     services, the Company will issue a total of 300,000 unregistered restricted
     shares of its Common  Stock and  $10,000 in cash as  consulting  fees.  The
     issuance of the shares of Common  Stock will occur at various  times during
     the consulting  agreement,  commencing  November 15, 1997.  Pursuant to the
     consulting  agreement,  the  Company  will also pay LFC a cash fee equal to
     2.5% of the  gross  proceeds  received  as a  finder's  fee for any  direct
     financing   located  for  the   Company.   The  shares  will  also  contain
     registration rights as described in Note 4, above.


Note 6 -- 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.  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.



Note 7 - STOCK WARRANTS

     As a result of the  issuance of  securities  to LFC as described in Note 4,
     above,  an  adjustment to the exercise  terms of the Common Stock  purchase
     warrants  issued  to the  underwriters  in  connection  with the  Company's
     December 1993 initial public offering was required.  Those warrants,  which
     were initially  exercisable to purchase 165,000 shares at $12.33 per share,
     are now exercisable to purchase 285,621 shares at $7.12 per share.


Note 8 -- 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 9 -- 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.

                                       9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


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 12E of the Securities
     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.

     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.

     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 GTC Mobilact 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 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.

     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  4  -
     Financing in Notes to Financial Statements.

     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 Wheatridge, 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 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 $96,385 for the second  quarter of fiscal 1998  decreased  77%
     from net sales of $415,695  generated  during the second fiscal  quarter of
     1997.  For the six month period,  net sales  decreased 56% from $802,913 to
     $353,857.  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.


     Gross Margin

     Gross margins in the second fiscal quarter of 1998 were $43,611 compared to
     $193,847 for the same period in fiscal 1997. As a percent of revenue, gross
     margins in the second quarter  decreased by  approximately  1.4% due to the
     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 $315,616 in the prior year to $127,288 in the current
     year, as a result of decreased POS-50 sales.


     Operating Expenses

     Selling,  general and administrative expense increased from $169,619 in the
     second fiscal quarter of 1997 to $1,161,774 in the second fiscal quarter of
     1998. For the six month period, selling, general and administrative expense
     increased  from  $340,406  in the prior year to  $1,692,269  in the current
     year.  This increase in both the three and six month  periods  reflects 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
     consulting fees related to business  development of approximately  $100,000
     are reflected in the quarterly  result and include the  termination  of the
     entrenet and Woolley consulting  agreements.  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 $95,019 in the second
     fiscal quarter of 1997 to $77,700 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  $18.9 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 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  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 unit. The
     Company  expects  this  arrangement  to be completed  during this  quarter;
     however,  no  assurance  can be given that 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.  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  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 SECURTIES

     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 9 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.

     Unregistered  Common  Shares were sold or issued  during the quarter  ended
     December 31, 1997, as follows:

      o  October 30, 1997     John Liviakis   2,625,000 Shares of Common Stock
         October 30, 1997     Bob Prag          875,000 Shares of Common Stock

          The Company issued 3.5 million  unregistered shares of common stock to
          the two  above-named  officers of Liviakis  Financial  Communications,
          Inc.  ("LFC"),  pursuant  to  the  details  of  a  purchase  agreement
          discussed in Note 4 - Liviakis Financial Communications Financing (see
          Note 4 above).  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 taken 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.

     See Also Note 4 - Financing in Notes to Financial Statements



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.



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 9 - 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
               27 - Financial Data Schedule

            For a complete list of the Exhibits, the reader should refer to the
            Company's Annual Report on Form 10-KSB.


         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.


 




                                       16
<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 20, 1998                           By: \s\ Evon Kelly
         ---------------------------                    ------------------------
                                                        Chief Executive Officer


         February 20, 1998                           By: \s\ Robert E. Robichaud
         ---------------------------                    ------------------------
                                                        Chief Financial Officer


                                       17