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, 1999.

[ ]  Transition Report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 for the transition period from        to       .
                                            ------    ------

     Commission File No.:  0-22848


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



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


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



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



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

                        Yes   [X]                No     [ ]


As of  January  31,  2000  there  were  outstanding  22,669,986  shares  of  the
Registrant's Common Stock (no par value per share).


Transitional Small Business Disclosure Format

                        Yes   [ ]                No     [X]




                                        1

<PAGE>




                            U.S. WIRELESS DATA, INC.
                                TABLE OF CONTENTS


PART I    FINANCIAL INFORMATION                                             Page

Item 1.   Financial Statements (Unaudited)

          Balance Sheets --
               December 31, 1999, and June 30, 1999 .........................  3

          Statements of Operations --
               Three Months and Six Months Ended December 31, 1999 and 1998..  4

          Statements of Cash Flows --
               Six Months Ended December 31, 1999 and 1998...................  5

          Notes to Financial Statements ....................................6-11

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations............................................11-16

PART II   OTHER INFORMATION

Item 1.   Legal Proceedings.................................................. 16

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

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

Item 5.   Other Information.................................................. 18

Item 6.   Exhibits and Reports on Form 8-K................................... 19






                                        2

<PAGE>

PART I    FINANCIAL INFORMATION

ITEM 1.   Financial Statements
<TABLE>
<CAPTION>
                                      U.S. WIRELESS DATA, INC.
                                            BALANCE SHEET
                                             (Unaudited)

                                                                                   December 31, 1999    June 30, 1999
                                                                                   -----------------    -------------

ASSETS

<S>                                                                                 <C>              <C>
Current Assets:
     Cash .....................................................................     $    114 ,000     $    425,000
     Accounts receivable, net of allowance for doubtful accounts of
         $40,000 at December 31, 1999; $43,000 at June 30, 1999 ...............          111,000           178,000
     Inventory, net ...........................................................          146,000           215,000
     Other current assets .....................................................           58,000            14,000
     Escrow held for payment of professional fees .............................           45,000           112,000
                                                                                    ------------      ------------
         Total current assets .................................................          474,000           944,000
Processing units - deployed ...................................................           52,000           408,000
Property and equipment, net ...................................................          374,000           405,000
Other assets ..................................................................           65,000            14,000
                                                                                    ------------      ------------
Total assets ..................................................................     $    965,000      $  1,771,000
                                                                                    ============      ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable .........................................................     $  1,464,000      $  1,198,000
     Accrued liabilities ......................................................          776,000           413,000
     Borrowings, current portion ..............................................        2,662,000         2,272,000
     Other current liabilities ................................................          305,000           450,000
                                                                                    ------------      ------------
         Total current liabilities ............................................        5,207,000         4,333,000
Borrowings, long-term portion .................................................           25,000            25,000
                                                                                    ------------      ------------
Total liabilities .............................................................        5,232,000         4,358,000
                                                                                    ------------      ------------

Redeemable preferred stock:
     Series B 6% cumulative convertible redeemable preferred stock,
        $1.00 stated value, 5,000,000 shares authorized, 1,954,705 shares
         issued and outstanding.  Redeemable at approximately
         $2,520,000 at December 31, 1999  .....................................        2,520,000         1,587,000
                                                                                    ------------      ------------

Stockholders' deficit:
     Preferred stock, at $1.00 stated value, 15,000,000 authorized,
         752,000 Series A issued and outstanding at June 30, 1999 .............             --             752,000
     Common stock, at $1.00 stated value, 40,000,000 shares authorized;
         22,142,977 and 17,816,075 shares issued and outstanding at
         December 31, 1999 and June 30, 1999, respectively ....................       22,143,000        17,816,000
     Common stock to be distributed ...........................................          200,000           243,000
     Additional paid-in capital ...............................................       10,239,000        12,082,000
     Accumulated deficit ......................................................      (39,369,000)      (35,067,000)
                                                                                    ------------      ------------
         Total stockholders' deficit ..........................................       (6,787,000)       (4,174,000)
                                                                                    ------------      ------------
         Total liabilities and stockholders' deficit ..........................     $    965,000      $  1,771,000
                                                                                    ============      ============
</TABLE>


       Accompanying notes are an integral part of the financial statements



                                        3

<PAGE>


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



                                                                  For the three months ended               For the six months ended
                                                                           December 31,                         December 31,
                                                                  --------------------------               ------------------------
                                                                    1999               1998               1999               1998
                                                                    ----               ----               ----               ----
                                                                                   As Restated                         As Restated
                                                                                   -----------                         -----------
<S>                                                           <C>                <C>                <C>                <C>
Net revenues:
    Product sales ......................................      $     61,000       $    343,000       $    160,000       $    509,000
    Services ...........................................            63,000            177,000            108,000            372,000
                                                              ------------       ------------       ------------       ------------
                                                                   124,000            520,000            268,000            881,000
                                                              ------------       ------------       ------------       ------------
Cost of revenues:
    Product sales ......................................            48,000            252,000            135,000            170,000
    Services ...........................................            57,000            172,000            144,000            331,000
                                                              ------------       ------------       ------------       ------------
                                                                   105,000            424,000            279,000            501,000
                                                              ------------       ------------       ------------       ------------
Gross profit (loss) ....................................            19,000             96,000            (11,000)           380,000
                                                              ------------       ------------       ------------       ------------

Operating expenses:
    Selling, general and administrative ................           945,000            950,000          2,063,000          3,426,000
    Research and development ...........................           277,000            178,000            468,000            258,000
                                                              ------------       ------------       ------------       ------------
       Total operating expenses ........................         1,222,000          1,128,000          2,531,000          3,684,000
                                                              ------------       ------------       ------------       ------------

Loss from operations ...................................        (1,203,000)        (1,032,000)        (2,542,000)        (3,304,000)

Interest expense .......................................          (711,000)          (382,000)          (932,000)          (639,000)
Other income ...........................................              --                2,000            128,000              8,000
                                                              ------------       ------------       ------------       ------------

Net loss ...............................................        (1,914,000)        (1,412,000)        (3,346,000)        (3,935,000)
                                                              ------------       ------------       ------------       ------------

Preferred stock dividends ..............................          (135,000)          (378,000)          (985,000)          (546,000)
                                                              ------------       ------------       ------------       ------------

Net loss available to common stockholders ..............      $ (2,049,000)      $ (1,790,000)      $ (4,331,000)      $ (4,481,000)
                                                              ============       ============       ============       ============

Basic and diluted net loss per share, (after
   provision for preferred stock dividends) ............      $      (0.10)      $      (0.13)      $      (0.22)      $      (0.34)
                                                              ============       ============       ============       ============

Weighted average common shares
outstanding - basic/diluted ............................        20,828,000         13,582,000         19,860,000         13,037,000
                                                              ============       ============       ============       ============
</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)

                                                                                       For the six months ended December 31,
                                                                                       ------------------------------------
                                                                                          1999                   1998
                                                                                          ----                   ----
                                                                                                             As Restated
                                                                                                             -----------
<S>                                                                                  <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss ...................................................................     $(3,346,000)           $(3,935,000)
    Adjustments to reconcile net loss to net cash used in
     operating activities:
        Depreciation and amortization ..........................................          74,000                121,000
        Non-cash consulting services and other .................................         352,000              1,480,000
        Non-cash compensation expense-variable stock option ....................            --                 (645,000)
        Gain on sale of merchant portfolio .....................................        (124,000)                  --
        Non-cash interest expense ..............................................         516,000                244,000
        Changes in current assets and liabilities:
           Accounts receivable .................................................          67,000               (142,000)
           Inventory ...........................................................          66,000                170,000
           Other current assets ................................................          59,000                (42,000)
           Accounts payable ....................................................         262,000               (307,000)
           Accrued liabilities .................................................         613,000               150 ,000
                                                                                     -----------            -----------
           Net cash used in operating activities ...............................      (1,461,000)            (2,906,000)
                                                                                     -----------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchase of property, plant, and equipment .............................         (42,000)               (45,000)
        Proceeds from sale of merchant portfolio ...............................         450,000                   --
        Processing units - deployed ............................................            --                  (81,000)
        (Increase)decrease in other assets .....................................         (51,000)                10,000
                                                                                     -----------            -----------
           Net cash provided by (used in) investing activities .................         357,000               (116,000)
                                                                                     -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from issuance of common stock .................................         630,000                 26,000
        Principal payment on borrowings ........................................         (32,000)              (317,000)
        Net proceeds from issuance of debt .....................................         195,000              1,850,000
        Net proceeds from issuance of convertible debenture ....................            --                2,532,000
        Redemption of Series A preferred stock .................................            --               (1,000,000)
                                                                                     -----------            -----------
           Net cash provided by financing activities ...........................         793,000              3,091,000
                                                                                     -----------            -----------

Net (decrease) increase in cash ................................................        (311,000)                69,000

Cash at beginning of period ....................................................         425,000                  4,000
                                                                                     -----------            -----------

Cash at end of period ..........................................................     $   114,000            $    73,000
                                                                                     ===========            ===========

Supplemental disclosure of non-cash financing and investing activities:
     1.  Conversion of $450,000 notes payable to 727,273 shares of common stock
     2.  Conversion of $200,000 6% convertible debenture into 313,419 shares of common stock.
     3.  Accretion on mandatory redeemable preferred stock of $933,000 including $59,000 accrued dividends.
     4.  Conversion of 751,610 shares of Series A preferred stock and accrued dividends to 1,177,113 shares of common stock.
     5.  Issuance of 443,077 shares of common stock to Liviakis Financial Communications.
</TABLE>

      Accompanying notes are an integral part of the financial statements

                                        5

<PAGE>

                            U.S. WIRELESS DATA, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1 - BASIS OF PRESENTATION

     The accompanying financial statements included herein have been prepared by
U.S. Wireless Data, Inc. (The "Company" or "USWD"),  without audit,  pursuant to
the rules and  regulations of the Securities  and Exchange  Commission.  Certain
amounts in the financial  statements of the prior period have been restated from
the  originally  reported Form 10-QSB of the prior period.  A Form 8-K was filed
incorporating this restatement.  The financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-QSB and Rule 310 of Regulation
S-B.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.

     The  results  of  operations  of any  interim  period  are not  necessarily
indicative of the results of operations to be expected for the fiscal year.  For
further  information,   refer  to  the  financial  statements  and  accompanying
footnotes  included  in the  Company's  Form  10-KSB for the year ended June 30,
1999.


Note 2 - THE COMPANY

     U.S.  Wireless Data, Inc. was incorporated in the state of Colorado on July
30, 1991.  The Company is in the business of providing  products and services to
enable  the  use  of  wireless  technology  for  electronic  payment  and  other
transactions.    USWD    is   a    terminal-neutral,    transport-neutral    and
processor-neutral  enabler of wireless  transaction  processing services through
the creation of what USWD calls Wireless  Express  Payment  ServiceSM  ("WEPS").
WEPS is a comprehensive and integrated suite of wireless  transport services and
network  technology  designed  to  deliver  payment  transactions  securely  and
efficiently between a merchant's location and a payment processor.


Note 3 - INVENTORY
                                                   December 31,
                                                       1999      June 30, 1999
                                                   -----------   -------------
     Inventory consists of:
          Raw material                             $  139,000    $   144,000

          Finished goods                              278,000        331,000
          Lower of cost or market reserve            (271,000)      (260,000)
                                                   ----------    -----------
                                                   $  146,000    $   215,000
                                                   ==========    ===========

     The  Company  has  established  a reserve  against  finished  goods and raw
materials to reflect the estimated net  realizable  value of the inventory as of
December 31, 1999 and June 30, 1999.


Note 4 - FINANCIAL CONDITION AND LIQUIDITY

     The Company continues to have  difficulties due to its financial  condition
and  lack  of  liquidity.   The  Company  has  incurred  recurring  losses  from
operations,  has an  accumulated  deficit of  approximately  $39 million,  a net
capital  deficiency of $6,787,000 and negative  working capital of $4,733,000 at
December  31,  1999,  and has  limited  financial  resources.  The  Company  had
defaulted on certain obligations  related to filing of a registration  statement


                                        6

<PAGE>



on its 6% Convertible  Subordinated Debentures ("6% Debentures"),  as of January
18, 1999,  which caused the debt to become due on demand  although  this default
was waived by the 6%  Debenture  holders as of May 6,  1999.  As of October  10,
1999,  a  registration  statement  covering  the  common  stock  underlying  the
Company's Series B Preferred Stock ("Series B Preferred  Stock"),  6% Debentures
and other  unregistered  securities  had not been  declared  effective,  thereby
entitling  holders of the Series B  Preferred  Stock to redeem  their  shares at
$1.25 per share plus accrued penalties and dividends  (approximately  $2,700,000
as of  December  31,  1999),  and  holders  of the 6%  Debentures  to redeem the
$1,800,000  face  amount at 120% of the face value  (increased  to 125% based on
pending  redemption  proposal  submitted  to the  holders  at 125% of face) plus
accrued  penalties  and interest  (approximately  $2,520,000  as of December 31,
1999). The accrued  interest and penalties are recorded in accrued  liabilities.
If the  holders of the Series B  Preferred  Stock  and/or the  holders of the 6%
Debentures demand to redeem their securities, the Company would not currently be
able to fund such redemption.

     In December 1999, the Company  entered into an agreement with an investment
banking  firm  in  connection  with a  proposed  equity  private  placement.  In
connection  with  the  engagement  of the  firm,  the  Company  entered  into an
agreement with an entity  affiliated with the firm under which it agreed to lend
the  Company up to  $1,000,000,  subject to certain  conditions.  As part of the
agreement, Dean M. Leavitt, the Company's Chief Executive Officer, will lend the
Company  up to  $100,000.  In  connection  with  the  commitments  to lend up to
$1,100,000,  the Company issued the lenders warrants to purchase an aggregate of
15,000,000  shares of common stock at an exercise price of $0.01 per share.  The
notes  issued  in  this  financing   contain   negative   covenants,   including
restrictions  on  issuing  additional  securities.   See  Note  6  -  Financing,
Borrowings and Stockholders' Deficit.

     During the implementation of its new business plan as described in Item 2 -
Management Discussion and Analysis,  the Company expects expenses to continue to
exceed  revenues.  The  implementation  of USWD's  business plan is dependent on
obtaining a significant  debt or equity financing in the immediate  future.  The
inability  of the  Company  to secure  such  financing  in the near  term  would
adversely  impact the  Company's  financial  position,  including its ability to
continue as a going concern.


Note 5 - NET LOSS PER SHARE


     Earnings  (loss) per common  share (EPS) is  computed  using  Statement  of
Financial  Accounting  Standards (SFAS) No. 128,  "Earnings per Share." SFAS No.
128 establishes standards for the computation,  presentation,  and disclosure of
earnings  per share.  Basic per share  amounts are  computed by dividing the net
loss available to common  stockholders by the weighted  average number of common
shares outstanding  during the year.  Diluted per share amounts  incorporate the
incremental  shares  issuable upon the assumed  exercise of the Company's  stock
options and warrants and assumed  conversion of convertible  securities.  During
fiscal  1999 and 2000  such  incremental  amounts  have been  excluded  from the
calculation  since their  effect  would be  anti-dilutive.  Such stock  options,
warrants and  conversions  could  potentially  dilute  earnings per share in the
future.


Note 6 - FINANCINGS, BORROWINGS AND STOCKHOLDERS' DEFICIT

     To fund operations  during the first six months of fiscal 2000, the Company
raised $930,000 in a private  offering of common stock and common stock purchase
warrants. The Company issued 976,020 shares of common stock and 195,294 warrants
and has 526,894  shares of common  stock and 105,378  warrants  issuable for the
investments  made during the period.  The warrants are  exercisable at $1.50 per
share through July 6, 2004.




                                        7

<PAGE>



     On August 2, 1999, the Company entered into an exclusive financial advisory
agreement with an investment banking firm to assist the Company with a financing
on a  "best-efforts"  basis.  This  agreement was terminated in December 1999 in
conjunction  with a new financing  effort described below. The Company agreed to
pay out-of-pocket expenses incurred by the firm.

     In the fourth  quarter of fiscal 1999,  USWD entered into an agreement with
the purchasers of the Series B Preferred  Stock and holders of the 6% Debentures
to  file a  registration  statement  with  the SEC  covering  the  common  stock
underlying the Series B Preferred  Stock, a common stock purchase warrant issued
at the same time as the Series B Preferred  Stock,  the 6%  Debentures,  and the
common stock purchase warrants issued to the 6% Debenture holders in July, 1998,
within 30 days of May 6, 1999,  to be  effective  within 90 days of May 6, 1999.
This date was  subsequently  extended to May 11,  1999.  USWD filed the required
registration statement on June 30, 1999. The Company thereby became subject to a
late filing penalty of $74,000 (following waiver of the "late filing" penalty by
the holder of 1,500,000  shares of Series B Preferred  Stock).  The registration
statement did not become effective by August 10, 1999, and the Company therefore
become  subject to an initial  "late  effectiveness"  penalty of 3% of the total
original  purchase price of $1,800,000 of 6% Debentures and 1,954,705  shares of
Series B Preferred Stock ($1,954,705  purchase price), which were outstanding as
of August 10, 1999.  Additional late effectiveness  penalties accrue monthly (or
for any portion of any month) that the registration  statement is not effective,
in amounts equal to 2% of the original purchase price of the outstanding  Series
B Preferred Stock and 3% of the face amount of the outstanding 6% Debentures. In
the quarter  ended  September  30, 1999,  $188,000 of penalties was accrued as a
charge to  interest  expense  and  $225,000  was  accrued in the  quarter  ended
December  31,  1999.  Offering  costs,  and  valuation  of related  warrants and
incentive  shares,  were recorded against the aggregate  preference value of the
preferred stock and will be accreted up to the full redemption value by the date
of  mandatory  redemption.  Accretion  and accrued  dividends  for the first and
second fiscal quarters was $807,000 and $126,000, respectively.

     In December 1999, the Company  entered into an agreement with an investment
banking  firm  in  connection  with a  proposed  equity  private  placement.  In
connection  with  the  engagement  of the  firm,  the  Company  entered  into an
agreement with an entity  affiliated with the firm under which it agreed to lend
the Company up to $1,000,000, subject to certain conditions, including that Dean
M. Leavitt,  the Company's  Chief  Executive  Officer,  make and honor a similar
commitment to lend the Company up to $100,000.  The notes accrue 8% interest per
annum, are  collateralized by substantially all of the Company's assets, and are
due the  earlier  of the date of a change  in  control  of the  Company,  or the
Company concludes a debt or equity financing of at least $5 million, or December
30, 2000. In  connection  with the  commitments  to lend up to  $1,100,000,  the
Company  issued the lenders  warrants  (the  "Bridge  Warrants")  to purchase an
aggregate of 15,000,000 shares of common stock at an exercise price of $0.01 per
share.  The  warrants  expire on December  30,  2006.  The Company does not have
enough  unreserved  shares to cover the issuance of the common stock  underlying
the  warrants.  The warrants  may be  exercised at any time,  subject to certain
conditions, including the approval by the Company's shareholders of an amendment
to the Articles of Incorporation to increase the number of authorized  shares of
common stock.  The Company entered into Economic  Participation  Agreements with
the  lenders  which are  intended  to  provide  the  lenders  with the  economic
equivalent  of ownership of common stock in the event the Company is not able to
amend its  Articles.  In addition,  the Company is  obligated to pay  liquidated


                                        8
<PAGE>


damages if the  Company is unable to provide  the  necessary  amount of reserved
shares of common stock to honor  exercise  following  120 days of the  agreement
date.  As of  December  31,  1999,  the  Company  borrowed  $195,000 of the loan
commitment.  The Company established the value of the Bridge Warrants based upon
an  assessment of the market rate of interest for debt  securities  with similar
attributes but without the stock purchase  warrants  feature.  In December 1999,
the Company  recorded a discount on the note via a charge of $34,000 against the
face value of the note for a proportionate amount of the warrant valuation.  The
Company will  accrete the  carrying  value of the note to its full face value by
the time of  repayment.  Details of the  transaction  were reported on a Current
Report on Form 8-K reporting an event of December 23, 1999, filed on January 12,
2000. See also Note 10 - Subsequent Events.


Note 7 - SALE OF CREDIT CARD PORTFOLIO

     On July 7, 1999,  USWD sold a portion of its merchant credit card portfolio
to PMT  Services  Inc.,  a wholly  owned  subsidiary  of Nova  Corporation.  The
transaction  resulted in a cash payment to USWD of $450,000.  The sale  included
approximately  450  installed  USWD owned TRANZ  Enabler  point-of-sale  devices
deployed  with a portion of the  respective  merchants.  A gain of $124,000  was
recorded on the sale as other income.


Note 8 - RELATED PARTY TRANSACTIONS

     On July 1, 1999,  USWD entered into an agreement  with  Liviakis  Financial
Communications,  Inc.  (LFC),  to provide the Company with public  relations and
investor  relations  services through March 15, 2000. The Company issued 690,000
restricted  shares of common stock to LFC for its services under this agreement.
LFC is entitled to receive a 2.5% cash finder's fee for financing located by LFC
and a 2% finder's fee based on the "total  consideration  provided"  through any
acquisition  located by LFC. The Company recorded a charge to consulting expense
of $352,000 for the valuation of the shares. LFC has agreed not to sell any USWD
common stock during the term of the consulting services agreement.

     In December 1999, the Company  issued 443,077  restricted  shares of common
stock to John M. Liviakis, the principal owner of LFC, and a significant Company
shareholder,  to replace shares  transferred to a finder in conjunction with the
May 1999 Series B Preferred Stock financing.

     In December 1999, Dean M. Leavitt,  the Company's Chief Executive  Officer,
agreed to lend the Company up to $100,000,  as part of the $1,100,000  financing
described in Note 6, above.  In  conjunction  therewith,  the Company issued Mr.
Leavitt a total of 1,363,636 Common Stock purchase warrants  exercisable at $.01
per share until December 30, 2006. The Company also agreed to reprice 2,687,5000
of the Common Stock purchase  warrants  issued to Mr. Leavitt in May, 1999, from
an exercise price of $3.00 per share to $1.465 per share,  the fair market value
of the Common Stock as of January 4, 2000.  Finally,  the Company also agreed to
issue Mr.  Leavitt  additional  options to  purchase up to  2,500,000  shares of
Common Stock pursuant to a newly authorized stock option plan to be submitted to
shareholders for their approval at the next meeting of shareholders,  which will
be scheduled as soon as practicable. The options to be issued to Mr. Leavitt are
contingent  upon  approval  of the stock  option  plan by  shareholders  and the
exercise  price of the  options  will be set at that  date.  See also  Note 10 -
Subsequent Events.


Note 9 - LITIGATION

     In  April  1998,  USWD  entered  into  an  agreement  with  certain  former
noteholders of its Demand Notes under which USWD issued 525,800 shares of common
stock in settlement of the dispute  regarding  conversion  terms of their notes.
Terms of the settlement  entitled the  noteholders to certain  guarantee  and/or
"put"  provisions  related to the shares issued in conversion of the notes.  The


                                       9

<PAGE>



shares  originally issued upon conversion of the notes and the additional shares
resulting from the settlement  were reflected as redeemable  common stock on the
balance  sheet.  The  guarantee  expired as to all shares no later than June 19,
1999. The "put" expired as to all shares no later than June 24, 1999. As of June
30,  1999,  the "put"  provisions  related  to the  shares  had  expired or been
relinquished in return for the Company's agreement to issue up to 200,000 shares
of common stock to certain holders who had exercised their "put" rights.  In the
fourth fiscal  quarter of 1999,  $49,000 was accrued to reflect the  settlement,
which is subject to a final  agreement  prior to  issuance  of the  shares.  The
agreement  has been executed and the  settlement  expense may be adjusted at the
date of share issuance.


Note 10 - SUBSEQUENT EVENTS

     The Company  has  entered  into  agreements  with the holders of  1,727,353
shares of the Company's  Series B Preferred  Stock, no par value per share,  and
the holders of $1,000,000 of the Company's 6% Debentures,  due July 21, 2000, to
repurchase such securities at the earlier of the closing of a financing in which
the Company raises no less than  $5,000,000 or March 31, 2000.  The  outstanding
shares of Series B Preferred Stock and Debentures are convertible into shares of
Common  Stock at the  option  of the  holder  at any time at 80% of the five day
average  closing bid price of the Company's  Common Stock.  On February 7, 2000,
the holder of the remaining  $800,000 of 6%  Debentures,  which had opted not to
participate in the repurchase  transaction  described above,  elected to convert
its Debentures,  including accrued interest, into 404,745 shares of Common Stock
at $2.05 per share.

     During January and February 2000, the Company borrowed the $905,000 balance
under the December 1999 bridge loan commitment entered into with an affiliate of
an investment bank and Mr. Dean Leavitt. In February 2000, the Company agreed to
amend the Common  Stock  Purchase  Warrants  (entitling  the lenders to purchase
15,000,000  shares of Common Stock at $0.01 per share).  In consideration of the
lenders  agreeing to make an  additional  $275,000  available  under the lending
commitment,  the amendment to the common stock purchase warrants  eliminated the
provision  that if the lenders  were unable or  unwilling to complete a proposed
private placement,  then, subject to certain exceptions,  the lenders would have
either paid a break-up fee of $5 million or agreed to the cancellation of 50% of
the warrants, at the lenders option.

     On January 31 and February 14, 2000,  the Company  entered into  employment
agreements  with two  executives  that  commit the Company to  aggregate  annual
salary  compensation  of  $295,000,  target  incentive  bonus of up to  $275,000
subject to  attainment  of specific  financial  or  operational  objectives  and
450,000 stock  options,  with exercise  prices equal to fair market value of the
common stock as of the dates of issuance.

     On January 4, 2000,  the Board of  Directors  approved an  amendment to the
Company's  Articles  of  Incorporation  to  increase   authorized  capital  from
55,000,000  shares to 225,000,000  shares.  Of that number,  200,000,000  shares
would be designated as no par value Common Stock and 25,000,000  shares would be
designated as preferred stock, with the rights,  designations and preferences of
any  series  of  preferred  stock to be fixed  and  determined  by the  Board of
Directors at the time of issuance,  without further action by shareholders.  The
amendment to the Articles of  Incorporation  is to be submitted to the Company's
shareholders as soon as practicable.

     On January  4, 2000,  the Board of  Directors  approved a new stock  option
plan, subject to approval by the Company's  shareholders at the next shareholder
meeting.  Once approved by shareholders  (and assuming an increase in authorized
common stock is also  approved by  shareholders)  the option plan would  reserve
15,000,000  shares of Common Stock for issuance  pursuant to options that may be
granted under the plan. Dean Leavitt, the Company's Chief Executive Officer, was



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<PAGE>


granted  2,500,000  options to be issued with the exercise price to be set as of
the date of shareholder approval of the plan. The plan is to be submitted to the
Company's shareholders as soon as practicable.


ITEM 2 - 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 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 forward-looking  statements include,  but
are not limited to: the Company's requirement for additional capital; failure of
the Company to raise additional capital critical to continue ongoing operations;
the failure to execute definitive  agreements with potential  strategic alliance
partners;  technological change; system capacity constraints or system failures;
the  ability  of the  Company  to  develop  new  distribution  channels;  or the
intensification  of  competition.  Additional  factors may be described in other
reports  filed by the  Company  under the  Securities  Exchange  Act of 1934.  A
detailed  statement  of risks  and  uncertainties  relating  to  forward-looking
statements  is set forth in the  Company's  Annual Report on Form 10-KSB for the
fiscal  year ended June 30, 1999 filed on October  14,  1999,  under the caption
"Risk  Factors"  in  Item 6 of  that  Report,  and  is  hereby  incorporated  by
reference.

OVERVIEW

     The Company was  incorporated in the State of Colorado in July 1991 for the
purposes of designing,  manufacturing and marketing wireless and portable credit
card and check  authorization  terminals for use in the  transaction  processing
business. The Company completed an initial public offering in December 1993.

     The  Company  has now  repositioned  itself as a  device-neutral,  wireless
carrier-neutral,  merchant  acquirer and front-end  processor neutral enabler of
wireless transaction processing services through the creation of what USWD calls
Wireless Express Payment ServiceSM or WEPSSM ("WEPS").

     USWD serves the  transaction  processing  community  by  applying  wireless
technology  and  value-added  services  to  the  transport  and  translation  of
wirelessly  generated electronic  transactions.  USWD's WEPS technology provides
the payment  processor with fast and flexible  transaction  processing tools and
state-of-the-art  on-line customer service capabilities.  USWD provides merchant
acquirers,  Independent Sales Organizations  ("ISOs") and third party processors
with a wireless  transaction  management  service  that can be  utilized at both
conventional  and  emerging   merchant   segments,   permits  the  retrieval  of
on-line/real-time  transactional  reports and  diagnostics  via the Internet and
simplifies the customer service and application  development  effort.  Via WEPS,
merchants  can  process  payments  as  fast  as  cash,   without  the  cost  and
inconvenience of being tethered to a telephone line.

Revision of Business Plan

     In  fiscal   year  1998,   USWD   entered   into   agreements   with  large
telecommunications  carriers for direct distribution of products and services to
merchants.  USWD signed  joint  marketing  and  operating  agreements  with Bell



                                       11

<PAGE>


Atlantic  Mobile,  Ameritech  Mobile  Communications,  Inc.,  and GTE  Wireless.
Commencing in the second  quarter of fiscal 1998 and  continuing  into the first
quarter  of  fiscal  1999,  USWD  made  significant  investments  to  support  a
nationwide  deployment  of TRANZ  Enablers to merchants  through GTE's and other
telecommunications  carriers'  national  sales  forces.  Under these  deployment
programs,  the  carrier's  sales  representative  introduced  USWD's credit card
processing  solution and TRANZ Enabler to the end user merchant.  Upon execution
of a credit card processing  agreement,  a TRANZ Enabler unit(s) was provided to
the merchant by USWD. Under this program, USWD retained a portion of the monthly
credit card fees based on the dollar volume and number of transactions processed
through the TRANZ Enabler.

     Placements  of TRANZ  Enabler  units  pursuant  to USWD's  agreements  with
telecommunications  carriers did not develop as rapidly as  anticipated  and did
not reach  anticipated (and necessary)  levels to pay for the  infrastructure to
support the  programs.  Costs to USWD of  implementing  the joint  marketing and
distribution  agreements  with GTE Wireless,  Bell Atlantic Mobile and Ameritech
exceeded revenue generated by the programs since they began.

     USWD's  continued  focus on  direct  sales to the  merchant  community  had
inadvertently  positioned it in direct  competition with the industry's  largest
acquirers,  a competitive  stance that resulted in  disappointing  sales. As the
Company  entered  fiscal  1999,  it was clear that the  Company did not have the
requisite  expertise as a merchant  acquirer and that it should not be in direct
competition  with firms that would  better be its  customers.  USWD hired  Roger
Pierce,  former President of First Data Corporation and Chief Operating  Officer
of Visa International,  as Chief Executive Officer in August 1998. It was during
this period that the Company began the  development  of WEPS. Mr. Pierce retired
in March 1999.

     In May 1999, Dean M. Leavitt,  former President and Chief Executive Officer
of U.S. Data Capture,  a credit card processing company serving a broad spectrum
of conventional card acceptors and emerging  markets,  was hired as Chairman and
Chief Executive  Officer of USWD. Mr. Leavitt has refined the Company's  mission
to   become  a   device   neutral,   wireless   carrier-neutral   and   merchant
acquirer-neutral  provider of wireless processing services. The Company also has
developed a complimentary suite of Internet  browser-based tools to simplify the
activation, troubleshooting and deployment of wireless terminal devices. As part
of USWD's new  strategy,  it has phased out the sale of  products  and  services
directly to merchants,  thereby  positioning  itself as a neutral enabler to the
acquirer  marketplace.  The  Company  now has  significant  efforts  underway to
broaden  the use of  WEPS  through  the  expansion  of its  sales  channels  via
contracts  with merchant  acquirers and  independent  sales  organizations.  The
Company is also in the process of expanding  its WEPS  offerings  by  certifying
additional WEPS enabled point-of-sale devices.

WEPS Operational Overview

     WEPS is a comprehensive and integrated suite of wireless transport services
and network  technology  designed to deliver payment  transactions  securely and
efficiently  between  a  merchant's  location  and  a  payment  processor.  WEPS
technology includes the following key features:

     o    Internet-based   account   set-up  with   automated   IP  /  Radio  ID
          provisioning and terminal activation / deactivation services;
     o    High-speed wireless packet data transport;
     o    Real-time authorization and capture;
     o    Message formatting and protocol conversion;
     o    Real-time remote terminal diagnostics;
     o    Ability to use WEPS certified  wireless  devices from various terminal
          manufacturers;
     o    Second level customer support services;
     o    A customer attrition prevention program;
     o    WEPS certification lab for new terminals; and,
     o    WEPS training center for clients' customer service departments.


                                       12

<PAGE>



     USWD is targeting  large  merchant  acquirers and card  processors for this
service.  The initial  response  for WEPS from the targeted  prospects  has been
positive.

     USWD has  entered  into more  than  thirty  WEPS  agreements  with  various
merchant  acquirers,  including  Card Service  International  (CSI),  Paymentech
Network  Services,  Westamerica  Bank,  Certified  Merchant  Services (CMS), and
anticipates adding additional  agreements in the near future. The WEPS agreement
allows the merchant acquirer to offer WEPS as a wireless transaction  processing
solution to a merchant.  The WEPS  agreement  defines the  services  and billing
terms  between  the  Company  and  merchant  acquirer  if and when the  merchant
acquirer  utilizes  WEPS.  A WEPS  agreement  is not a  firm  commitment  by the
merchant acquirer to purchase any goods or service from USWD.

     USWD  continues to establish  connectivity  between the wireless  networks,
WEPS server and various front-end  processors.  Commercial  transactions running
through  the WEPS  platform  began in the  second  quarter of fiscal  2000.  The
Company is also working with several  point-of-sale  terminal  manufacturers and
front-end processors as part of the ongoing process of adding additional devices
to the WEPS menu of offerings.

     Implementation  of USWD's  business  plan is dependent  upon the  Company's
ability to obtain adequate  financing.  See "Liquidity and Capital Resources" in
this section below.

Year 2000 Issues

     While the Company believes the greatest risks associated with the Year 2000
issue have passed,  the Company cannot be certain that the Year 2000 issues with
respect  to the  electronic  payments  infrastructure  utilized  by credit  card
processors,  banks and  financial  institutions  within the United States and on
which USWD is  reliant  will not emerge  over the coming  months.  USWD could be
adversely,  materially  affected,  both  operationally  and financially,  to the
extent third parties with which it  interfaces,  either  directly or indirectly,
have not properly addressed their Year 2000 issues. The Company does not have an
available  contingency  plan that would alleviate a disruption of service in the
electronic transaction sector.

RESULTS OF OPERATION - FISCAL 2000 COMPARED TO FISCAL 1999

Net Revenue

     Revenue of $124,000  for the second  quarter of fiscal 2000  decreased  76%
from revenue of $520,000  generated  during the second quarter of fiscal 1999 as
the Company continued the  implementation of its new business model. As noted in
the overview  section above,  the Company has phased out its direct  offering of
wireless credit card  processing  services and terminals to merchants and is now
marketing  WEPS to  merchant  acquirers  and  payment  processors.  The  Company
currently has over 30 merchant  acquirers or payment  processors  under contract
for WEPS. Billing for the new WEPS service accounted for $46,000 of the services
revenue during the second quarter and should  increase as the Company  completes
installation of the  communications  connectivity and integration of WEPS to the
respective payment  processors  designated under the recent WEPS agreements with
merchant  acquirers.  In  addition,  the  Company  sold one of its two  existing
merchant credit card portfolios at the beginning of July 1999 (see Other Income,
below). The lost revenue from this portfolio accounted for approximately $85,000
of the decrease in services  revenue between the two periods.  Product  revenues
decreased to $61,000 in the current quarter from $343,000 in the prior period as
the Company  completed the transition from one-time product sales to a recurring
revenue model based on WEPS sales.  For the six months ended  December 31, 1999,
total revenues  decreased to $268,000 from $881,000 in the prior year, again due
to transition from the old to the new business model.


                                       13

<PAGE>


Gross Profit (Loss)

     The Company recorded a gross profit of $19,000 in the second fiscal quarter
of 2000  compared to a gross  profit of $96,000 in the second  quarter of fiscal
1999. The second  quarter  product margin of 21% versus 27% in the prior period,
reflects the move to a wholesale versus retail price  structure.  The prior year
six-month  product cost  included a $240,000  one-time gain  resulting  from the
successful  restructuring  of a note  payable  to a  former  terminal  equipment
supplier.  The services costs include ongoing  communications  costs  associated
with the terminals connected through WEPS or terminals deployed via the previous
credit-card  portfolios.  The services  margin was $6,000 for the quarter  ended
December  31,  1999  versus a loss of  $36,000 in the first six months of fiscal
2000.  The current  imbalance  in the  services  revenue and cost  structure  is
impacted by initialization  and transaction costs for new or existing  terminals
that are not yet processing through WEPS, and pending transaction  billing.  The
Company is working on these two issues and  expects to resolve  the  problems in
the near term.  Efforts have been  underway to eliminate  excess CDPD  addresses
from the CDPD carrying cost associated with the previous credit-card portfolios.
The Company  expects the service  margins to improve as WEPS  billing  becomes a
more predominant component of the services offering in the future.

Operating Expenses

     Selling,  general and  administrative  expense was  $945,000 in the current
quarter,  versus  $950,000 in the second quarter of fiscal 1999. For the current
six-month period,  selling,  general and  administrative  expense was $2,063,000
versus  $3,426,000  in the prior year.  The prior  quarter  and prior  six-month
period  included a $379,000 and $645,000  non-cash  credit related to a variable
stock option  which  expired  unexercised  as of November  1999.  A  significant
decrease in total headcount,  related to the change in the business model,  from
53 in September 1998 and 35 in December 1998, to 21 as of September 30, 1999 and
21 as of December 31, 1999, resulted in decreased salary expense of $184,000 and
$601,000 in the three and six-month periods, respectively. Commission expense in
the current quarter increased to $112,000 versus $42,000 in the prior period due
to the signing of WEPS merchant acquirer  agreements by the sales  organization.
For  the  six  month  period,  non-cash  G&A  consulting  expense  decreased  by
$1,032,000  primarily due to a $732,000  decrease  from  $1,083,000 in the first
quarter of fiscal 1999 to  $351,000 in the first  quarter of fiscal 2000 for the
valuation of stock issued to the Company's investor relations under the terms of
the consulting agreements,

     Research and  development  expenses  increased  from $178,000 in the second
fiscal  quarter of 1999 to $277,000 in the first quarter of 2000.  This increase
was due to an increase in  headcount  and full time  consultants  focused on the
implementation  of WEPS.  For the  six-month  period,  research and  development
increased by $210,000 to $468,000 in the current  fiscal  year,  also due to the
increased staffing.

Interest Expense, Other Income and Preferred Stock Dividends

     Interest  expense of $711,000  in the  quarter  ended  December  31,  1999,
includes  interest  on the 6%  Debentures,  a $225,000  note  payable,  $225,000
accrued for late  effective  registration  penalties  on the 6%  Debentures  and
Series B Preferred Stock and a $450,000  accrual for the redemption right of the
holders of the 6%  Debentures  to 120% of face  value,  adjusted to 125% of face
based on the  Company's  current  redemption  offer.  The prior period  interest
expense  of  $382,000  includes  $292,000  for  interest  and  accretion  of the
"in-the-money"  conversion feature of the 6% Debenture,  and a $52,000 valuation
on warrants issued in conjunction with a $500,000 bridge loan.

     The  six-month  interest  expense for the period  ended  December 31, 1999,
includes the current  period  amount  described  above plus the previous  fiscal
quarter's  expense of $221,000,  including  $187,000  accrued for late effective


                                       14

<PAGE>



registration  penalties on the 6% Debentures and Series B Preferred  Stock.  The
prior six month period ended December 31, 1998, includes the prior period amount
described  above  plus the prior  year's  first  quarter  expense  of  $257,000,
including a $117,000 non-cash charge to accrete a portion of the  "in-the-money"
conversion feature 6% Debenture  financing and a $53,000 charge for the value of
a warrant  issued in  conjunction  with a bridge  financing  from RBB Bank.  The
balance of the interest expense was related to interest on the 6% Debentures and
other notes payable.

     Other income of $128,000 for the six-month  period ended  December 30, 1999
included a $124,000  gain on the July 1999 sale of a portion of USWD's  merchant
credit card  portfolio to PMT Services  Inc., a wholly owned  subsidiary of Nova
Corporation. The transaction resulted in a cash payment to USWD of $450,000. The
sale included approximately 450 installed USWD owned TRANZ Enabler point-of-sale
devices deployed with a portion of the respective merchants.

     The $135,000 preferred stock dividend for the second fiscal quarter of 2000
includes  $96,000  to  accrete  the  value  of  the  preferred  stock  up to its
redemption  value by the date at which mandatory  redemption is available to the
holders.  The balance of the preferred stock dividend amount represents Series A
Preferred  Stock  dividends  and Series B Preferred  Stock  dividends  that were
accrued  but not paid in the second  fiscal  quarter of 2000.  The prior  period
includes $351,000 related to the partial  redemption of Series A Preferred Stock
plus accrued dividends.  Preferred Stock dividends of $985,000 for the six month
period ended  December 31,  1999,  include  $874,000 to accrete the value of the
Series  B  preferred  stock  up to its  redemption  value  by the  date at which
mandatory  redemption  is  available  to the  holders.  For the prior  six-month
period, $546,000 includes $464,000 related to the partial redemption of Series A
Preferred Stock plus accrued dividends.


FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY

     USWD  continues  to  face  significant  challenges  due  to  its  financial
condition and lack of liquidity.  While management is optimistic with its medium
and long term  opportunities,  USWD is  constrained  by its immediate  financial
condition and  requirement  for  increased  liquidity.  USWD has an  accumulated
deficit of approximately  $39 million since inception to December 31, 1999, with
a working  capital  deficit  of  approximately  $4,733,000,  versus a deficit of
$3,389,000  at year-end  June 30, 1999.  The  December 31, 1999 working  capital
deficit   includes   $1,800,000  of  6%  Debentures   classified  as  short-term
borrowings.  The Company's current operating commitments require expenditures of
approximately  $350,00 per month. The Company has continued to operate at a loss
subsequent to December 31, 1999.

     The Company has defaulted on certain obligations which, among other things,
as of October 10, 1999 entitled the holders of the Company's  Series B Preferred
Stock and 6%  Debentures  to redeem those  securities  for cash plus  applicable
penalties,  interest and dividends.  The holders of the Series B Preferred Stock
may require USWD to redeem the shares of the Series B Preferred  Stock for $1.25
per share plus accrued penalties and dividends  (approximately  $2,700,000 as of
December 31, 1999).  The holders of the 6% Debentures may require the Company to
redeem the $1,800,000  face amount at 120% of the face value  (increased to 125%
based on pending  redemption  proposal)  plus  accrued  penalties  and  interest
(approximately $2,520,000 as of December 31, 1999).

     During the past two fiscal years,  the Company has financed its  operations
through borrowings and private sales of securities.  In fiscal 2000, USWD's cash
flows from financing  activities were $793,000 as compared to $3,091,000  during
the first six months of fiscal 1999. Most recently, the Company has financed its
operations  through the private sale of units  consisting of  restricted  common
stock and common stock purchase warrants. The Company received proceeds from the


                                       15

<PAGE>


sale of these  securities  of $450,000 in the fourth  quarter of fiscal 1999 and
$930,000 through December 31, 1999 of the second quarter.  Through January 2000,
the Company  issued or had  issuable  approximately  1,703,000  shares of common
stock and 341,000 common stock purchase warrants  exercisable at $1.50 per share
through July 6, 2004, in this financing.

     In December 1999, The Company  entered into an agreement with an investment
banking  firm  in  connection  with a  proposed  equity  private  placement.  In
connection  with the  engagement  of this  firm,  the  Company  entered  into an
agreement with an entity  affiliated with the firm under which it agreed to lend
the Company up to $1,000,000, subject to certain conditions, including that Dean
M. Leavitt,  the Company's  Chief  Executive  Officer,  make and honor a similar
commitment to lend the Company up to $100,000.  The 8% notes are  collateralized
by  substantially  all of the Company's  assets  pursuant to a General  Security
Agreement.  As of December  31, 1999,  the Company had borrowed  $195,000 of the
loan  commitment.  During January and February  2000,  the Company  borrowed the
$905,000 balance of the December 1999 bridge loan entered into with an affiliate
of an  investment  bank.  In  consideration  of the lenders  agreeing to make an
additional $275,000 available under the lending commitment, the amendment to the
common stock purchase warrants eliminated the provision that if the lenders were
unable or unwilling to complete a proposed private  placement,  then, subject to
certain  exceptions,  the lenders  would have  either paid a break-up  fee of $5
million or agreed to the  cancellation  of 50% of the  warrants,  at the lenders
option. This amount has been funded in February 2000.

     USWD is  continuing  to work with key vendors on  payables  and the Company
believes that it will be able to restructure  commitments as necessary  while it
completes an anticipated financing event designed to satisfy its obligations and
fund the business plan, although no assurance can be given that this will be the
case.  The failure of the Company to obtain  needed  financing  in the near term
would have an adverse  effect on the Company,  including its ability to continue
as a going concern.


PART II  OTHER INFORMATION

ITEM 1 - LITIGATION

Settlement of Claims of Certain Noteholders

     In  April  1998,  USWD  entered  into  an  agreement  with  certain  former
noteholders of its Demand Notes under which USWD issued 525,800 shares of common
stock in settlement of the dispute  regarding  conversion  terms of their notes.
Terms of the settlement  entitled the  noteholders to certain  guarantee  and/or
"put"  provisions  related to the shares issued in conversion of the notes.  The
shares  originally issued upon conversion of the notes and the additional shares
resulting from the settlement  were reflected as redeemable  common stock on the
balance  sheet.  The  guarantee  expired as to all shares no later than June 19,
1999. The "put" expired as to all shares no later than June 24, 1999. As of June
30,  1999,  the "put"  provisions  related  to the  shares  had  expired or been
relinquished in return for the Company's agreement to issue up to 200,000 shares
of common stock to certain holders who had exercised their "put" rights.  In the
fourth fiscal  quarter of 1999,  $49,000 was accrued to reflect the  settlement,
which is subject to a final  agreement  prior to  issuance  of the  shares.  The
agreement  has been executed and the  settlement  expense may be adjusted at the
date of share issuance.


ITEM 2 - CHANGES IN SECURITIES

Recent Sales of Unregistered Securities

     During the fiscal  quarter  ended  December 31,  1999,  the Company sold or
issued the following equity securities without  registering the securities under
the Securities Act of 1933, as amended (the "Act").


                                       16

<PAGE>


     Between  October 21 and  December  11,  1999,  the Company  issued  856,566
restricted  shares of common stock and 171,313 common stock purchase warrants to
ten investors in consideration of $530,000.  The warrants are exercisable over a
5- year period at $1.50 per share.

     Between  October 11 and  December 29, 1999,  the Company  issued  1,013,808
shares of common stock to two  investors  pursuant to the  conversion of 680,895
shares of Series A Preferred Stock plus accrued dividends.

     On December 29,1999, the Company issued 443,077 restricted shares of common
stock  to John  M.  Liviakis  (see  Note 8  Related  Party  Transactions  in the
Financial Statements).

     As to each of the  foregoing  transactions,  the  Company  relied  upon the
registration  exemption contained in Section 4(2) of the Securities Act of 1933,
as amended (the "Act").  The  transactions  did not involve a public offering of
securities;  the Company received investment representations from each purchaser
to the effect that such purchaser was taking for investment  only and not with a
view to distribution  of the securities;  the Company had reason to believe that
each  purchaser  had such  knowledge and  experience,  either alone or through a
purchaser  representative  not affiliated with the Company,  that such purchaser
was capable of evaluating  the merits and risks of an investment in the Company;
each  purchaser,  either in his or her capacity as an investor or an employee or
consultant to the Company,  had access to adequate  information  concerning  the
Company and its business;  all  certificates  representing  the securities  were
appropriately  imprinted with customary  "restricted  securities"  legends,  and
instructions  were lodged with the Company's  transfer agent with respect to all
shares of common stock issued in the transactions as "restricted securities."


ITEM 3 - DEFAULT ON SENIOR SECURITIES

     In the fourth  quarter of fiscal 1999,  USWD entered into an agreement with
the purchasers of its Series B Preferred  Stock and holders of its 6% Debentures
to  file a  registration  statement  with  the SEC  covering  the  common  stock
underlying the Series B Preferred  Stock, a common stock purchase warrant issued
at the same time as the Series B Preferred  Stock,  the 6%  Debentures,  and the
common stock purchase  warrants issued to the 6% Debenture holders in July 1998,
within 30 days of May 6, 1999,  to be  effective  within 90 days of May 6, 1999.
This date was  subsequently  extended to May 11,  1999.  USWD filed the required
registration statement on June 30, 1999. The Company thereby became subject to a
late filing penalty of $74,000 (following waiver of the "late filing" penalty by
the holder of 1,500,000  shares of Series B Preferred  Stock).  The registration
statement  did not become  effective by August 10, 1999.  The Company  therefore
become  subject to an initial  "late  effectiveness"  penalty of 3% of the total
original  purchase price of $1,800,000 of 6% Debentures and 1,954,705  shares of
Series B  Preferred  Stock,  which  were  outstanding  as of  August  10,  1999.
Additional late  effectiveness  penalties  accrue monthly (or for any portion of
any month) that the registration statement is not effective, in amounts equal to
2% of the original  purchase price of the  outstanding  Series B Preferred Stock
and 3% of the face amount of the  outstanding 6% Debentures.  As of December 31,
1999,  $413,000 of penalties  was accrued as a charge to interest  expense.  The
registration  statement  has not become  effective as of the date of filing this
report.

     As of October 10, 1999,  the Series B  Registration  Statement has not been
declared effective. The holders of the Series B Preferred Stock may require USWD
to  redeem  the  shares  of Series B  Preferred  Stock for $1.25 per share  plus
accrued  penalties  and dividends  (approximately  $2,700,000 as of December 31,
1999),  and holders of the 6% Debentures to redeem the $1,800,000 face amount at
120% of the face value (increased to 125% based on pending redemption  proposal)
plus accrued penalties and interest (approximately  2,520,000 as of December 31,
1999).



                                       17

<PAGE>


     The Company  has  entered  into  agreements  with the holders of  1,727,353
shares of the Company's  Series B Preferred  Stock,  no par value per share (the
"Series B Preferred  Stock"),  and the holders of $1,000,000 of the Company's 6%
Debentures, due July 21, 2000 (the "Debentures"),  to repurchase such securities
at the earlier of the closing of a financing in which the Company raises no less
than $5,000,000 or March 31, 2000. The outstanding  shares of Series B Preferred
Stock and Debentures are  convertible  into shares of Common Stock at the option
of the holder at any time at 80% of the five day  average  closing  bid price of
the  Company's  Common Stock.  On February 7, 2000,  the holder of the remaining
$800,000 6%  Debentures,  which had opted not to  participate  in the repurchase
transaction  described  above,  elected to  convert  its  Debentures,  including
accrued interest, into 404,745 shares of Common Stock at $2.05 per share.


ITEM 5 - OTHER INFORMATION

     On  February  14,  2000,  Charles I. Leone  joined the Company as its Chief
Financial Officer and Chief Operating Officer. Prior to joining the Company, Mr.
Leone served as Senior Vice President,  Systems and Finance, Retail Division for
Phoenix Investment Partners, Ltd., a leading U.S. investment management company.
He also  served  as  Chief  Financial  Officer  and a First  Vice  President  of
Zweig/Glaser  Advisors and Zweig Securities Corp. and as Treasurer and Assistant
Secretary of Euclid Advisors LLC.

     On January 31, 2000,  John H. (Jack)  Perveiler  joined the Company as it's
Vice  President/National  Sales Manager in February 2000. Mr.  Perveiler will be
responsible  for leading the  Company's  sales team in marketing  the  Company's
services to new processors, acquiring banks and ISOs as sales channels for WEPS.
Prior to joining  the  Company,  Mr.  Perveiler  served as  Director  of Western
Regional Sales for Hypercom  Corporation,  a leading POS terminal  manufacturer,
and has more than ten years of experience in selling and sales management to the
merchant acquiring industry.

     The employment  agreements with the above two executives commit the Company
to annual  salary  compensation  of $295,000,  target  incentive  bonus of up to
$275,000 subject to attainment of specific  financial or operational  objectives
and 450,000 stock  options,  with exercise  prices equal to fair market value of
the common stock as of the dates of issuance.

     On January 13, 2000,  Marc R. Shultz was  appointed as the  Company's  Vice
President of Business Development. Mr. Shultz had served as the Company's Senior
Account Executive since May 1999.  Immediately prior to joining the Company,  he
served as the Director of Sales for  Intellect  Electronics,  the United  States
division of an international manufacturer of wireless POS terminals.

     The Company  entered into a sublease for space located at 805 Third Avenue,
New York,  New York,  10022.  The sublease  will  commence  upon approval by the
landlord which is expected to occur in February. The Company intends to move its
principal  offices to this location as soon as  practicable.  In June 1999,  the
Company  entered  into a lease  with  Palmer  Lake  Technology  Center for space
located at 850 Commercial Lane,  Palmer Lake,  Colorado 80133. The Company moved
its product development group to this location in January 2000.

     On January 4, 2000,  the Board of  Directors  approved an  amendment to the
Company's  Articles  of  Incorporation  to  increase   authorized  capital  from
55,000,000  shares to 225,000,000  shares.  Of that number,  200,000,000  shares
would be designated as no par value Common Stock and 25,000,000  shares would be
designated as preferred stock, with the rights,  designations and preferences of
any  series  of  preferred  stock to be fixed  and  determined  by the  Board of
Directors at the time of issuance,  without further action by shareholders.  The
amendment to the Articles of  Incorporation  is to be submitted to the Company's
shareholders as soon as practicable.



                                       18

<PAGE>


     On January  4, 2000,  the Board of  Directors  approved a new stock  option
plan, subject to approval by the Company's  shareholders at the next shareholder
meeting.  Once approved by shareholders  (and assuming an increase in authorized
common stock is also  approved by  shareholders)  the option plan would  reserve
15,000,000  shares of Common Stock for issuance  pursuant to options that may be
granted under the plan. Dean Leavitt, the Company's Chief Executive Officer, was
granted  2,500,000  options to be issued with the exercise price to be set as of
the date of shareholder approval of the plan. The plan is to be submitted to the
Company's shareholders as soon as practicable.


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

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

        27    Financial Data Schedule

     b) Reports on Form 8-K

     On December 8, 1999,  the Company  filed a report on Form 8-K  reporting an
event of December 6, 1999. The report contained disclosures under Item 5 - Other
Events, relating to the resignation of the Company's President and Director, Rod
L. Stambaugh.


                                  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 17, 2000                      By: \s\ Dean M. Leavitt
       -----------------                          ------------------------------
                                                  Chief Executive Officer


       February 17, 2000                      By: \s\ Robert E. Robichaud
       -----------------                          ------------------------------
                                                  Chief Financial Officer







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