<TABLE>
                            SANDATA, INC. 
                          AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
       
                                               UNAUDITED     AUDITED
                                               November 30,   May 31, 
                                                  1996          1996
<S>                                           <C>           <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents                     $  932,578    $  368,400
Accounts receivable - net of allowance for 
doubtful accounts of $293,000 at November 
30, 1996 and $350,000 at May 31, 1996          1,349,163     1,180,905
Receivables from affiliates                      221,027       190,635
Receivable from former affiliate                  26,258        26,258
Note receivable from former affiliate, net
of allowance for doubtful accounts of $119,000
at November 30, 1996 and May 31, 1996, 
respectively                                         -0-        77,100
Notes receivable - officers                      102,867       102,867
Inventories                                       21,258        27,972
Prepaid expenses and other current assets        171,691       172,897
                                               ---------      --------
TOTAL CURRENT ASSETS                           2,824,842     2,147,034
FIXED ASSETS, NET                              5,921,437     9,399,625
OTHER ASSETS
Cash surrender value of officers' life 
insurance, security deposits and other           439,329       410,683
                                               ---------     ---------
TOTAL ASSETS                                  $9,185,608   $11,957,342
                                               ---------    ----------
                                               ---------    ----------
       See notes to consolidated condensed financial statements
</TABLE>
<TABLE>
                   CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
       
                                              UNAUDITED       AUDITED
                                              November 30     May 31, 
                                                 1996            1996
<S>                                           <C>           <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued expenses         $1,180,840    $1,022,058
Current portion of long-term debt              1,004,757       768,354
Note payable - affiliate                         205,000     1,000,000
Deferred/unearned revenue                          7,387         4,299
Deferred income                                  259,378       205,252
                                               ---------     ---------
TOTAL CURRENT LIABILITIES                      2,657,362     2,999,963
LONG-TERM DEBT                                   156,228     4,322,234
NOTES PAYABLE - AFFILIATES                     1,642,000       462,000
DEFERRED INCOME                                  252,336       177,530
DEFERRED INCOME TAXES                            175,675        83,000
                                                --------      --------
TOTAL LIABILITIES                              4,883,601     8,044,727
SHAREHOLDERS' EQUITY 
Common stock                                         916           816
Additional paid in capital                     1,539,686     1,279,710
Retained earnings                              2,898,291     2,768,975
Treasury stock                                  (136,886)     (136,886)
                                               ---------     ---------
TOTAL SHAREHOLDERS' EQUITY                     4,302,007     3,912,615
                                               ---------     ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $9,185,608   $11,957,342
                                               ---------    ----------
                                               ---------    ----------
</TABLE>
<TABLE>
         UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
                                 THREE MONTHS ENDED   SIX MONTHS ENDED
                                     NOVEMBER 30,        NOVEMBER 30,
                                 1996         1995    1996        1995
<S>                            <C>        <C>        <C>        <C>
REVENUES:
Service fees                   $2,622,024 $2,162,135 $5,110,874 $4,236,135
Real estate rental income          53,160     81,897    134,700    118,939
Other income                       85,291     66,104    168,557    118,091
Interest income                     1,999      5,555      4,979     19,697
                                ---------  ---------  ---------  ---------
                                2,762,474  2,315,691  5,419,110  4,492,862
COSTS AND EXPENSES:
Service Fees:
Operating                       1,538,327  1,155,888  2,970,362  2,376,532
Selling, general and administr-
ative                             551,894    557,019  1,016,183  1,086,938
Depreciation and amortization     294,061    239,953    597,001    460,426
Interest expense                   50,994     51,503    104,937    103,800
                                 --------   --------  ---------  ---------
                                2,435,276  2,004,363  4,688,483  4,027,696
                                ---------  ---------  ---------  ---------
Real Estate:
Operating                          93,177    204,077    246,894    242,985
Depreciation and amortization      18,944     13,064     47,302     17,584
Interest expense                   52,378     77,024    133,918    107,655
Real estate taxes                  32,012     33,000     71,012     43,000
                                  196,511    327,165    499,126    411,224
                                  -------    -------    -------    -------
TOTAL COSTS AND EXPENSES        2,631,787  2,331,528  5,187,609  4,438,920
                                ---------  ---------  ---------  ---------
Earnings (loss) from operations
before income taxes               130,687    (15,837)   231,501     53,942
Income tax expense (benefit)       57,685    (31,050)   102,185     (3,138)
                                  -------    -------    -------    -------
NET EARNINGS                     $ 73,002   $ 15,213  $ 129,316   $ 57,080
                                 --------    -------  ---------    -------
                                 --------    -------  ---------    -------
EARNINGS PER COMMON SHARE        $   0.04   $   0.02  $   0.07    $   0.07
                                 --------   --------  --------    --------
Weighted average common shares 
outstanding                     1,724,757    763,955 1,724,757     763,955
          See notes to consolidated condensed financial statements
</TABLE>
<TABLE>
     
           UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
           
                                         SIX MONTHS ENDED NOVEMBER 30,
                                            1996            1995
<S>                                       <C>              <C>
Cash flows from operating activities:
Net earnings                              $  129,316       $  57,080
Adjustments to reconcile net earnings to
net cash provided by (used in) operating
activities: Depreciation and amortization    644,303         478,010 
(Gain) on disposal of fixed assets          (268,340)              --
(Gain) on transfer of facility               (15,586)              --
Decrease in allowance for doubtful 
accounts receivable                          (57,195)        (20,000)
Increase (decrease) in deferred income       (139,408)       153,010
Recognition of deferred revenue               (10,547)            --
(Increase) decrease in operating assets      (162,181)       400,869
Increase in operating liabilities             533,432        198,254
                                             --------       --------
Net cash provided by operating activities     653,794      1,267,223
                                             --------      ---------
Cash flows from investing activities:
Collection of note receivable - officer            --        129,000
Purchases of fixed assets                    (948,074)    (1,648,098)
Increases in advances from affiliates              --         13,000
Collections of note receivable-former 
affiliates                                     77,100        148,370
Proceeds from sale/leaseback transaction      925,000             --
                                              -------       --------
Net cash provided by (used in) investing 
activities                                     54,026     (1,357,728)
Cash flows from financing activities:
Proceeds from private placement offering      260,076              --
Proceeds from term loan                            --         750,000
Principal payments on term loan              (350,718)       (999,430)
Proceeds from line of credit                1,750,000       1,390,000
Principal payments on line of credit       (2,188,000)     (1,035,000)
Proceeds from notes payable - affiliates    2,560,000              --
Principal payments on notes payable
 - affiliates                              (2,175,000)             --
                                            ---------        ---------
Net cash (used in) provided by financing 
activities                                   (143,642)        105,570
Increase in cash and cash equivalents         564,178          15,065
Cash and cash equivalents at beginning 
of period                                     368,400        102,613
                                             --------        --------
Cash and cash equivalents at end
of period                                   $ 932,578       $ 117,678
                                             --------        --------
                                             --------        --------
<FN>
<F1>
Note: As of July 31, 1995 the Company assumed lease obligations totalling 
$4,143,140 of debt as disclosed in the Notes to the Consolidated Condensed 
Financial Statements in conjunction with the acquisition of a facility.
<F2>
Note: As of November 1, 1996 a company affiliated with the Directors of the 
Company assumed certain debt obligations relative to the transfer of a facility 
under a master lease agreement in the amount of $3,140,884 as disclosed in the 
Notes to the Consolidated Condensed Financial Statements.
</FN>
</TABLE>

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The Consolidated Condensed Balance Sheet as of November 30, 1996, the 
Consolidated Condensed Statements of Operations for the three and six-
month periods ended November 30, 1996 and 1995 and the Consolidated 
Condensed Statement of Cash Flows for the six-month periods ended 
November 30, 1996 and 1995 have been prepared by Sandata, Inc. and 
Subsidiaries (the "Company") without audit.  In the opinion of 
Management, all adjustments (which include only normal, recurring 
adjustments) necessary to present fairly the financial position as of 
November 30, 1996 and for all periods presented have been made.

For information concerning the Company's significant accounting 
policies, reference is made to the Company's Annual Report on Form 10-
KSB for the year ended May 31, 1996.  Results of Operations for the 
period ended November 30, 1996 are not necessarily indicative of the 
operating results expected for the full year.

2.RELATED PARTY TRANSACTIONS

(A) On July 1, 1992, the Company loaned $1,000,000 to the Company's Chairman,
bearing interest at the prime rate plus 1-1/4% and was due July 1, 1995. On 
September 1, 1993, the Company issued a new note for the then outstanding 
balance of $490,000, bearing interest at prime plus 1-1/4% and was due April 
30, 1994. On May 1, 1994, the Company extended the due date of the note to 
the earlier of April 30, 1995 or as the Company may demand at any time after 
the effective date of the then proposed privatization transaction. The 
Chairman paid $340,000 of the outstanding loan to the Company during the year
ended May 31, 1995. On May 1, 1995, the Company extended the due date of the 
note to October 31, 1995. On July 31, 1995, the Chairman, as a result of the 
assignment of the lease with the Nassau County Industrial Development Agency 
("NCIDA") from BFS Sibling Realty Inc., formerly known as Brodsky Sibling 
Realty Inc. ("BFS") to Sandata, Inc., repaid $129,000. The remaining balance 
of the note receivable was repaid by the Chairman during the quarter ended 
February 29, 1996.

(B)On June 1, 1994, BFS, an affiliate substantially owned by the 
Company's Chairman, borrowed $3,350,000 in the form of Industrial 
Development Revenue Bonds ("Bonds") to finance costs incurred in 
connection with the acquisition, renovation and equipping of the 
Company's new office space located at 26 Harbor Park Drive, Port 
Washington, New York (the "Facility" or the "Building") from the 
NCIDA. These Bonds were subsequently purchased by a bank (the "Bank"). 
The Bonds bore interest at prime plus 3/4 of 1% until August 11, 1995, 
at which time the interest rate became fixed at 9% for a five-year 
term through September 1, 2000.  At that time, the interest rate will 
be adjusted to a rate of either prime plus 3/4 of 1%, or the 
applicable fixed rate if offered by the Bank.  As a condition to the 
issuance of the Bonds, the NCIDA obtained title to the Facility, which 
it then leased to BFS.

(C) On June 21, 1994 (as of June 1, 1994), the Company and its 
Chairman guaranteed the full and prompt payment of principal and 
interest of the Bonds and the Company granted the Bank a security 
interest and lien on all the assets of the Company. In connection with 
the issuance and sale of the Bonds, the Company entered into a lease 
agreement (the "Sublease") with BFS, whereby the Company leased the 
Facility for the conduct of its business and, in consideration 
therefor, was obligated to make lease payments that at least equal 
amounts due to satisfy the underlying Bond obligations.

(D) On July 31, 1995 (as of July 1, 1995), by an Assignment and 
Assumption and First Amendment to Lease between the Company and BFS, 
the Company assumed the obligations of BFS under the lease and became 
the direct tenant and the beneficial owner of the Facility 
(collectively the "Assignment Transaction"). In connection with the 
Assignment Transaction, the Sublease was terminated.  During the 
period commencing July 1, 1995 and ending October 31, 1996 the Company 
paid rent for the Facility to NCIDA in the amount of $48,600 per 
month, subject to adjustment based upon the then effective interest 
rate of the Bonds, among other things.  In connection with the 
Assignment Transaction, the Company obtained the right to acquire the 
Facility upon expiration of the lease with the NCIDA (the "Lease") and 
became directly liable to the NCIDA for amounts due thereunder.

In connection with the Assignment Transaction, the Company assumed 
certain indebtedness owed to affiliates of the Company's Chairman as 
follows: (i) the $364,570 remaining balance of a 48-month term loan 
bearing interest at 8.7% per annum, and (ii) the $428,570 remaining 
balance of a 42-month term loan bearing interest at 8.91%.  Each of 
the foregoing loans were incurred in connection with the construction 
of improvements to the Building, are collateralized by the assets of 
the primary obligor and are guaranteed by the Company's Chairman. The 
Company entered into the Assignment Transaction primarily to satisfy 
certain requirements of the U.S. Small Business Administration ("SBA") 
in connection with the financing discussed below.

(E)On August 11, 1995, the Company entered into a $750,000 loan 
agreement with the Long Island Development Corporation ("LIDC"), under 
a guarantee by the SBA (the "SBA Loan").  The entire $750,000 proceeds 
have been used to repay a portion of the Bonds.  The SBA Loan is 
payable in 240 monthly installments and bears interest of 7.015%.

(F) As of November 1, 1996, the Company entered into an Assignment and 
Assumption of and Second Amendment to Lease Agreement among BFS 
Realty, LLC, an affiliate of the Company's Directors (the "Assignee"), 
the Bank and the Company (the "Second Amendment").

In connection with the Second Amendment, (i) the Assignee assumed all 
of the Company's obligations under the Lease with the NCIDA and 
entered into a sublease with the Company for the Facility; and (ii) 
the Company conveyed to the Assignee the right to become the owner of 
the Facility upon expiration of the Lease.  In addition, pursuant to 
the sublease, the Company has assumed certain obligations owed by the 
Assignee to the NCIDA under the Lease.  The Assignee has indemnified 
the Company with respect to certain obligations relative to the Lease 
and the Second Amendment.

As a result of the Second Amendment and related transactions discussed above, 
the Company reduced its fixed assets, consisting of land, building and 
improvement costs, by the amount of the cost thereof, net of accumulated 
depreciation, in the amount of $3,125,298 and reduced its long term debt by 
$3,140,884, which was assumed by the Assignee; the net difference was 
recorded as other income in the financial statements.  Amounts owed to 
affiliates of the Company in connection with the construction and 
improvements were not assumed by the Assignee.  The Company and its Chairman
have guaranteed the above obligation to the SBA and NCIDA in connection with
the foregoing.

3. NET EARNINGS PER COMMON SHARE

Earnings per share for the three and six months ended November 30, 
1996 includes the dilutive effect of outstanding stock options and 
warrants.  The number of common stock equivalents determined by 
applying the modified treasury stock method included in the 
calculation of earnings per share for the three and six months ended 
November 30, 1996 was 894,135.  The effect of outstanding options and 
warrants was antidilutive for the three and six months ended November 
30, 1995.  Accordingly, the outstanding options and warrants were not 
included in the calculation of earnings per share for the three and 
six months ended November 30, 1995.

4. SALE/LEASEBACK TRANSACTION

In June 1996, the Company consummated a Sale/Leaseback of certain 
fixed assets (principally furniture, fixtures, computer hardware and 
equipment).  The fixed assets, which had a net book value of 
approximately $657,000, were sold for $925,000.  The resulting gain of 
approximately $268,000 was recorded as deferred income and is being 
recognized over the life of the lease, which is forty-eight (48) 
months.  Approximately $16,800 and $33,600 of deferred gain was 
recognized for the three and six months ended November 30, 1996.

5.STOCKHOLDERS EQUITY

On September 30, 1996 Sandata announced that it entered into a letter 
of intent to raise, on a "best efforts--all or none" basis, $1,500,000 
pursuant to a private offering of an aggregate of 300,000 shares of 
Common Stock and five year warrants for the purchase of 150,000 shares 
of Common Stock at an exercise price of $7.00 per share.  Neither the 
shares of Common Stock, the warrants nor the shares of Common Stock 
underlying the warrants will be registered under the Securities Act of 
1933, as amended, and may not be offered or sold in the United States 
absent registration or an applicable exemption from registration 
requirements.  However, the letter of intent contemplates that 
purchasers of such Units will be granted certain registration rights.  
In connection with such registration, it is contemplated that an 
additional 100,000 shares of the Company's Common Stock will be 
registered for certain security holders of the Company. 
Contemporaneously with the execution and delivery by the Company of 
the letter of intent, certain assignees of the placement agent 
acquired 100,000 shares of the Company's Common Stock at a purchase 
price of $3.00 per share; the net proceeds received by the Company 
after payment of expenses were $260,076. Reference is made to "Part I, Item 
2 - Management's Discussion and Analysis or Plan of Operation" and "Part II, 
Item 2 - Changes in Securities" for a discussion of the sale of Company's 
securities.

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Results of Operations

 Revenues were $2,762,474 and $5,419,110 for the three and six months 
ended November 30, 1996 as compared to $2,315,691 and $4,492,862 for 
the three and six months ended November 30, 1995, increasing $446,783 
and $926,248, respectively.
 
 Service fee revenue for the three and six months ended November 
30, 1996 was $2,622,024 and $5,110,874, an increase of $459,889 and 
$874,739 for the same periods of the prior fiscal year. The increase 
is attributable to revenues derived from a new product called SanTrax.
 
 Real estate rental income was $53,160 and $134,700 for the three and 
six months ended November 30, 1996 as compared to $81,897 and $118,939 
for the three and six months ended November 30, 1995.
 
 Other income for the three and six-month period ended November 30, 
1996 was $85,291 and $168,557, respectively as compared to $66,104 and 
$118,091 for the three and six month-period ending November 30, 1995. 
This increase is partially due from the gain realized upon the sale of 
assets in connection with the following sale/leaseback transaction.

 In June 1996, the Company consummated a sale/leaseback of certain 
fixed assets (principally furniture, fixtures, computer hardware and 
equipment).  The fixed assets, which had a net book value of 
approximately $657,000, were sold for $925,000.  The resulting gain of 
approximately $268,000 was recorded as deferred income and is being 
recognized over the life of the lease, which is forty-eight (48) 
months.  Approximately $16,800 and $33,600 of deferred gain was 
recognized for the three and six months ended November 30, 1996.
 
Expenses Related to Services

 Operating expenses increased $382,439 or 33% and $593,830 or 25% for 
the three and six months ended November 30, 1996 as compared to the 
three and six months ended November 30, 1995.  
 
 Programming and payroll costs relating to existing applications and 
costs associated with SanTrax and its operations, including telephone 
and expenses related to equipment, were the primary factors for the 
increase in operating expenses. 

Selling, general and administrative expenses were $551,894 and 
$1,016,183 for the three and six months ended November 30, 1996, as 
compared to $557,019 and $1,086,938 for the three and six months ended 
November 30, 1995, a decrease of $5,125 and $70,755, respectively.  
The decrease is primarily due to a decrease in payroll and related 
costs and administrative costs related to existing product lines.

Depreciation and amortization expense increased $54,108 and $136,575 to 
$294,061 and $597,001 for the three and six months ended November 30, 1996 
as compared to $239,953 and $460,426 for the three and six months ended 
November 30, 1995.  The increase was primarily attributable to fixed asset 
additions, including software capitalization costs.

Interest expense was $50,994 and $104,937 for the three and six months 
ended November 30, 1996 as compared to $51,503 and $103,800 for the 
three and six months ended November 30, 1995.

Expenses Related to Real Estate Operations

Operating expenses were $93,177 and $246,894 for the three and six 
months ended November 30, 1996, as compared to $204,077 and $242,985 
for the three and six months ended November 30, 1995, a decrease of 
$110,900 and an increase of $3,909, respectively.

Interest expense was $52,378 and $133,918 for the three and six months 
ended November 30, 1996 as compared to $77,024 and $107,655 for the 
three and six months ended November 30, 1995.

The decreases in expenses relating to the operation of the Facility for the 
three months ended November 30, 1996 and the increases in expenses for the 
six months ended November 30, 1996 resulted from the Company's becoming the 
beneficial owner and Lessee of the Facility as of July 31, 1995 in addition 
to the effect of the subsequent Second Amendment transaction as of November 1, 
1996 (as described below), whereby the Company became the Sublessee of the 
Facility.

The Company has reported real estate operating expenses only through the 
period ended November 1, 1996. The Company does not expect to incur any costs 
in the future.

Income Tax Expenses

Income tax expense for the three and six months ended November 30, 
1996 was $57,685 and $102,185, respectively.   For the three and six 
months ended November 30, 1995, the income tax benefit was $31,050 and 
$3,138, respectively. The tax benefit arose from the filing of amended 
tax returns for prior years which has resulted in a refund of an overpayment.

Liquidity and Capital Resources

The Company's working capital increased as of November 30, 1996 to $167,480, 
as compared with a deficiency at May 31, 1996 of $852,929. 

In June 1996, the Company entered into a sales/leaseback transaction 
whereby certain fixed assets were sold for $925,000 and concurrently 
leased back to the Company.  The proceeds were used to repay 
outstanding advances against the Company's Credit Agreement (as defined 
below).

The Company has spent approximately $948,000 in fixed asset additions, 
including software capitalization costs in connection with revenue 
growth and new product development.

In September 1996, the Company sold 100,000 shares of its common stock 
in connection with a private placement offering (as described later in 
this section).  The net proceeds received by the Company after payment 
of expenses relating to the offering were $260,076.  Reference is made 
to "Part II, Item 2 - Changes in Securities" for a discussion of the 
sale of such securities.

On July 1, 1992, the Company loaned $1,000,000 to the Company's 
Chairman, bearing interest at the prime rate plus 1-1/4% and was due 
July 1, 1995. On September 1, 1993, the Company was issued a new note 
for the then outstanding balance of $490,000, bearing interest at 
prime plus 1-1/4% and being due April 30, 1994. On May 1, 1994, the 
Company extended the due date of the note to the earlier of April 30, 
1995 or as the Company may demand at any time after the effective date 
of the then proposed privatization transaction. The Chairman paid 
$340,000 of the outstanding loan to the Company during the year ended 
May 31, 1995. On May 1, 1995, the Company extended the due date of the 
note to October 31, 1995. On July 31, 1995, the Chairman, as a result 
of the assignment of the lease with the Nassau County Industrial 
Development Agency ("NCIDA") from BFS Sibling Realty Inc., formerly 
known as Brodsky Sibling Realty Inc. ("BFS"), an affiliate 
substantially owned by the Company's Chairman, to Sandata, Inc., 
repaid $129,000.  The remaining balance of the note receivable was 
repaid by the Chairman during the quarter ended February 29, 1996.

On July 31, 1993, the Company received a promissory note from 
Compuflight, Inc. ("Compuflight"), a former affiliate (the Company's 
Chairman was a principal stockholder and Chairman of Compuflight 
through December 1, 1993) to evidence the Company's accounts 
receivable from Compuflight.  The note was payable in increments of 
$20,000 per month including interest at the rate of one percent above 
prime on the unpaid balance and was due April 1, 1994.  On November 1, 
1993, the note was amended.  The amended note is payable in minimum 
increments of $20,000 per month with interest at ten percent (10%) per 
annum and contains provisions for accelerated payments based upon 
Compuflight achieving certain results. Payments commenced on February 
28, 1994 and are to continue until such time as the indebtedness and 
any accrued interest are paid in full.  In connection with the 
promissory note, the Company received a security interest in 
substantially all the then existing assets of Compuflight, which has 
been assigned to the Bank as collateral for the Company's Credit 
Agreement with the Bank.  Aa of November 30, 1996, Compuflight is indebted 
to the Company in the amount of $145,039, of which $118,781 represents 
the balance due on the note and $26,258 represents accounts receivable.

 On June 1, 1994, BFS borrowed $3,350,000 in the form of Industrial 
Development Revenue Bonds ("Bonds") to finance costs incurred in 
connection with the acquisition, renovation and equipping of the 
Company's new office space located at 26 Harbor Park Drive, Port 
Washington, New York (the "Facility" or the "Building") from the 
NCIDA. These Bonds were subsequently purchased by the Bank.  The 
aggregate cost incurred by BFS in conjunction with such acquisition, 
renovation and equipping was approximately $4,377,000.  In addition, 
the Company incurred approximately $500,000 in connection with 
additional capital improvements. The Bonds bore interest at prime plus 
3/4 of 1% until August 11, 1995, at which time the interest rate 
became fixed at 9% for a five-year term through September 1, 2000.  At 
that time, the interest rate will be adjusted to a rate of either 
prime plus 3/4 of 1%, or the applicable fixed rate if offered by the 
Bank.  As a condition to the issuance of the Bonds, the NCIDA obtained 
title to the Facility which it then leased to BFS.  On June 21, 1994 
(as of June 1, 1994), the Company and its Chairman guaranteed the full 
and prompt payment of principal and interest of the Bonds and the 
Company granted the Bank a security interest and lien on all the 
assets of the Company. In connection with the issuance and sale of the 
Bonds, the Company entered into a lease agreement (the "Sublease") 
with BFS, whereby the Company leased the Facility for the conduct of 
its business and, in consideration therefor, was obligated to make 
lease payments that at least equal amounts due to satisfy the 
underlying Bond obligations.
 
On July 31, 1995, by an Assignment and Assumption and First Amendment 
to Lease between the Company and BFS, the Company assumed the 
obligations of BFS under the lease and became the direct tenant and 
the beneficial owner of the Facility (collectively the "Assignment 
Transaction"). In connection with the Assignment Transaction, the 
Sublease was terminated.  During the period commencing July 1, 1995 
and ending October 31, 1996 the Company paid rent for the Facility to 
the NCIDA in the amount of $48,600 per month, subject to adjustment 
based upon the then effective interest rate of the Bonds, among other 
things.  In connection with the Assignment Transaction, the Company 
obtained the right to acquire the Facility upon expiration of the 
lease with the NCIDA (the "Lease") and became directly liable to the 
NCIDA for amounts due thereunder.  In connection with the Assignment 
Transaction, the Company assumed certain indebtedness owed to 
affiliates of the Company's Chairman as follows: (i) the $364,570 
remaining balance of a 48-month term loan bearing interest at 8.7% per 
annum, and (ii) the $428,570 remaining balance of a 42-month term loan 
bearing interest at 8.91%.  Each of the foregoing loans were incurred 
in connection with the construction of improvements to the Building, 
are collateralized by the assets of the primary obligor and are 
guaranteed by the Company's Chairman.

On August 11, 1995, the Company entered into a $750,000 loan agreement 
with the Long Island Development Corporation ("LIDC"), under a 
guarantee by the U.S. Small Business Administration ("SBA") (the "SBA 
Loan").  The entire $750,000 proceeds have been used to repay a 
portion of the Bonds. The Company entered into the Assignment 
Transaction primarily to satisfy certain requirements of the SBA. The 
SBA Loan is payable in 240 monthly installments of $6,255, which 
includes principal and interest at a rate of 7.015%.

As of November 1, 1996, the Company entered into an Assignment and 
Assumption of and Second Amendment to Lease Agreement among BFS 
Realty, LLC, an affiliate of the Company's Directors (the "Assignee"), 
the Bank and the Company (the "Second Amendment").

In connection with the Second Amendment, (i) the Assignee assumed all 
of the Company's obligations under the Lease with the NCIDA and 
entered into a sublease with the Company for the Facility; and (ii) 
the Company conveyed to the Assignee the right to become the owner of 
the Facility upon expiration of the Lease.  In addition, pursuant to 
the sublease, the Company has assumed certain obligations owed by the 
Assignee to the NCIDA under the Lease.  The Assignee has indemnified 
the Company with respect to certain obligations relative to the Lease 
and the Second Amendment.

As a result of the Second Amendment and related transactions discussed above,
the Company reduced its fixed assets, consisting of land, building and 
improvement costs, by the amount of the cost thereof, net of accumulated 
depreciation, in the amount of $3,125,298 and reduced its long term debt by 
$3,140,884, which was assumed by the Assignee; the net difference was 
recorded as other income in the financial statements.  Amounts owed to 
affiliates of the Company in connection with the construction and improve-
ments were not assumed by the Assignee.  The Company and its Chairman have
guaranteed the above obligation to the SBA and NCIDA in connection with the
foregoing.

On April 20, 1995 the Company's $2,000,000 secured revolving credit 
agreement (the "Credit Agreement") with the Bank was amended, extending  
the due date for a period of two years.  Upon maturity, the Company 
may, at its option convert the outstanding principal balance of the 
Credit Agreement to a five-year self-amortizing term loan.  The amended 
Credit Agreement revised the Company's requirements to maintain a 
stated net worth amount and maximum net loss amount, plus specific 
working capital and liquidity ratios, capital expenditure limitations 
and restrictions on the payment of dividends.  Contemporaneously, the 
Bank tended a two-year term loan (the "Term Loan") of $500,000 to the 
Company.  The proceeds of the Term Loan were used to partially repay 
outstanding advances against the Company's Credit Agreement.  Principal 
and interest of the Term Loan are to be repaid over a 24-month period.  
As of November 30, 1996 there is a balance of $600,000 outstanding on 
the line of credit and $104,154 remaining on the Term Loan.

The Company believes the results of its continued operations, together 
with the available credit line and Term Loan should be adequate to fund 
presently foreseeable working capital requirements.

On September 30, 1996 Sandata announced that it entered into a letter 
of intent to raise, on a "best efforts--all or none" basis, $1,500,000 
pursuant to a private offering of an aggregate of 300,000 shares of 
Common Stock and five year warrants for the purchase of 150,000 shares 
of Common Stock at an exercise price of $7.00 per share.  Neither the 
shares of Common Stock, the warrants nor the shares of Common Stock 
underlying the warrants will be registered under the Securities Act of 
1933, as amended, and may not be offered or sold in the United States 
absent registration or an applicable exemption from registration 
requirements.  However, the letter of intent contemplates that 
purchasers of such Units will be granted certain registration rights.  
In connection with such registration, it is contemplated that an 
additional 100,000 shares of the Company's Common Stock will be 
registered for certain security holders of the Company. 
Contemporaneously with the execution and delivery by the Company of 
the letter of intent, certain assignees of the placement agent 
acquired 100,000 shares of the Company's Common Stock at a purchase 
price of $3.00 per share; the net proceeds received by the Company 
after payment of expenses were $260,076. Reference is made to "Part II, 
Item 2 - Changes in Securities" for a discussion of the sale of Company's 
securities.

The private placement of the Company's securities consummated subsequent to 
November 30, 1996.