SANDATA, INC. 

                         AND SUBSIDIARIES

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 $2,656,636 for the three months ended August 31, 1996 as 
compared to $2,177,171 for the three months ended August 31, 1995, an 
increase of $479,465 or 22%.
 
 Service fee revenue for the three months ended August 31, 1996 was 
$2,488,850 as compared to $2,074,000 for the same period of the prior 
fiscal year, an increase of $414,850 or 20%.  The increase is 
attributable to revenues derived from a new product called SanTrax.
 
 Real estate rental income for the three month period ended August 31, 
1996 was $81,540 as compared to $35,994 for the three month period 
ended August 31, 1995, an increase of $45,546 or 56%.
 
 Other income for the three month period ended August 31, 1996 was 
$83,266, as compared to $52,987 for the three month period ending 
August 31, 1995. This increase is primarily 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 of deferred gain was recognized for the 
three months ended August 31, 1996.
 
Expenses Related to Services

 Operating expenses were $1,432,035 for the three months ended August 
31, 1996 as compared to $1,209,758 for the three months ended August 
31, 1995, an increase of $222,277 or 18%.
 
 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 $464,289 for the 
three months ended August 31, 1996, as compared to $529,919 for the 
three months ended August 31, 1995, a decrease of $65,630 or 12%.  The 
decrease is primarily due to a decrease in payroll and related costs 
and administrative costs related to SanTrax and existing product 
lines.

Depreciation and amortization expense increased $72,580 to $302,940 
for the three months ended August 31, 1996 as compared to $155,370 for 
the three months ended August 31, 1995. The increase was primarily 
attributable to fixed asset additions, including software capitalization costs.

Interest expense was $53,943 for the three month period ended August 
31, 1996 as compared to $53,296 for the three month period ended 
August 31, 1995.

Expenses Related to Real Estate Operations

Expenses include all expenses related to the operation of the 
Facility, as defined below, including real estate taxes, depreciation 
expense and interest expense.
 
 Income Tax Expenses
 
 Income tax expense for the three month period ended August 31, 1996 
was $44,500 as compared to $27,912 for the three month period ended 
August 31, 1995.

Liquidity and Capital Resources

The Company's working capital increased as of August 31, 1996 to 
$2,071, 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 $446,000 in fixed asset additions, 
including software capitalization costs in connection with revenue 
growth and new product development.

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.  At the present time, Compuflight is indebted 
to the Company in the amount of $160,570, of which $134,568 represents 
the balance due on the note and $26,002 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 (at the Company's 
option) to a rate of either prime plus 3/4 of 1%, or the applicable 
fixed rate if offered by the Bank. Commencing October 1, 1995, 
principal, together with interest, is being repaid in equal monthly 
installments based on a 15 year amortization, with the balance of 
unpaid principal due September 1, 2005.  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.
 
As of July 31, 1995, by an Assignment and Assumption and First 
Amendment to Lease between the Company and BFS, the Company became the 
beneficial owner of and leases the Facility from the NCIDA 
(collectively the "Assignment Transaction"). In connection with the 
Assignment Transaction, the Sublease was terminated.  The Company 
currently pays 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, among other things, for a term expiring in September, 
2005. The expiration of the Lease term coincides with the maturity 
date of the existing Bond financing through the NCIDA. Upon the 
expiration of such term, the Company currently intends to exercise its 
rights to become record owner of the Facility.  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.

Subject to obtaining the proper approvals, and further analysis by 
management, management of the Company is considering conveying the 
Company's rights to become the record owner of the Facility to an 
affiliate of the Company's Chairman, in consideration of, among other 
things, being released from primary liability under the aforementioned 
obligations, although the Company will remain liable as a guarantor.  
In the event of the foregoing, the Company's indebtedness will be 
reduced and lease payments will be expensed.  No assurances can be 
given that the aforementioned transaction will occur, or that if it 
occurs, that it will occur under the contemplated terms.

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 
entire $750,000 proceeds have been used to repay a portion of the Bond 
indebtedness to the Bank.  The Company entered into the Assignment 
Transaction primarily to satisfy certain requirements of the SBA. The 
Term Loan is payable in 240 monthly installments of $6,255, which 
includes principal and interest at a rate of 7.015%.

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 August 31, 1996 there is no outstanding balance on the line of 
credit and $166,656 remaining on the Term Loan.

The Company believes the results of its continued operations, together 
with the available Credit Line, Term Loan and financings from the IDA 
and SBA 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 Company is in the process of preparing 
the offering document and negotiating a placement agreement.  No 
assurance can be given that the private offering will be consummated 
on the terms described herein or at all.



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.



                                             SANDATA, INC.
                                             (Registrant)



Date:  October 25, 1996                   By: /s/ Bert E. Brodsky
                                          Bert E. Brodsky
                                          Chairman of the Board
                                          President, Chief Executive
                                          Officer, Chief Financial
                                          Officer





October 25, 1996



Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C.  20549

             Re:      Sandata, Inc., File No. 0-14401

Dear Sir or Madam,

Transmitted herewith through the EDGAR system is Amendment No. 1 to 
Form 10-QSB for the quarter ending August 31, 1996  for Sandata Inc.  
If you have any questions or comments, please contact me at (516)484-4400, 
extension 215.

Very truly yours,
Linda Scarpantonio
Legal Coordinator