U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB
(Mark One)

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934

For the quarterly period ended         November 30, 1997

[ ] Transition  report under Section 13 or 15(d) of the Securities  Exchange Act
of 1934

For the transition period from                        to

Commission file number              0-14401

                                  SANDATA, INC.
                 (Name of Small Business Issuer in Its Charter)

                           Delaware                        11-2841799
         (State or Other Jurisdiction of                (IRS Employer
         Incorporation or Organization)                 Identification No.)

         26 Harbor Park Drive, Port Washington, NY      11050
         (Address of Principal Executive Offices)       (Zip Code)

                                  516-484-9060

                (Issuer's Telephone Number, Including Area Code)

(Former  Name,  Former  Address and Former  Fiscal Year,  if Changed  Since Last
Report)

         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 90 days.

Yes        X               No


  APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                                PAST FIVE YEARS

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

Yes                        No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The  number of shares  outstanding  of each of the  issuer's  classes  of common
equity,  as of  December  31,  1997 was  1,559,955  shares.  Transitional  Small
Business Disclosure Format (check one):

Yes                        No       X


<PAGE>



                               
                                  




                                      INDEX


                                                                  Page

PART I    FINANCIAL INFORMATION                                     

Item 1    FINANCIAL STATEMENTS:

          CONSOLIDATED CONDENSED BALANCE
          SHEETS as of November 30, 1997 (unaudited)
          and May 31, 1997                                           3

          UNAUDITED CONSOLIDATED CONDENSED
          STATEMENTS OF OPERATIONS for the three and six
             months ended November 30, 1997 and  November 30, 1996   5

          UNAUDITED CONSOLIDATED CONDENSED
          STATEMENTS OF CASH FLOWS for the six
          months ended November 30, 1997 and November 30, 1996       6

          NOTES TO CONSOLIDATED CONDENSED
          FINANCIAL STATEMENTS                                       7

Item 2    MANAGEMENT'S DISCUSSION AND
          ANALYSIS OR PLAN OF OPERATION                             11

PART II   OTHER INFORMATION                                         17

Item 1    LEGAL PROCEEDINGS                                         17

Item 2    CHANGES IN SECURITIES                                     17

Item 3    DEFAULTS UPON SENIOR SECURITIES                           17

Item 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS                                                   17

Item 5    OTHER INFORMATION                                         17

Item 6    EXHIBITS AND REPORTS ON FORM 8-K                          17




                                  Page 2 of 18




<PAGE>



                         Sandata, Inc. and Subsidiaries


                      CONSOLIDATED CONDENSED BALANCE SHEETS





<TABLE>


                                                                                         UNAUDITED              AUDITED
                                                                                        November 30,             May 31,
                                                                                            1997                1997
<S>     <C>    <C>    <C>    <C>    <C>    <C>
ASSETS:
CURRENT ASSETS
       Cash and cash equivalents                                                         $1,572,534          $  1,200,014
       Accounts receivable, net of allowance for doubtful accounts
           of $250,800 and $331,000 respectively                                          1,194,772             1,254,589
       Receivables from affiliates                                                          620,389               949,906
       Receivable from former affiliate                                                         711                12,074
       Notes receivable - officers                                                              ---               102,867
       Inventories                                                                           62,057                16,335
       Prepaid expenses and other current assets                                            658,680               212,114
                                                                                            -------               -------

TOTAL CURRENT ASSETS                                                                      4,109,143             3,747,899

FIXED ASSETS, NET                                                                         5,789,414             5,279,512

OTHER ASSETS
       Note receivable                                                                      100,000               100,000
       Cash surrender value of officer's life insurance, security
           deposits and other                                                               474,746               411,137
                                                                                       ------------            ----------

TOTAL ASSETS                                                                            $10,473,303            $9,538,548
                                                                                        ===========            ==========





</TABLE>




            See notes to consolidated condensed financial statements

                                  Page 3 of 18

<PAGE>


                         Sandata, Inc. and Subsidiaries

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>



<CAPTION>
                                                                                          UNAUDITED              AUDITED
                                                                                          November 30,           May 31,
                                                                                             1997                1997
                                                                                             ----                ----
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
<S>                                                                                      <C>                  <C>       
       Accounts payable and accrued expenses                                             $2,092,651           $1,691,456
       Current portion of long-term debt                                                    156,228              267,864
       Deferred/unearned revenue                                                             31,073                2,733
       Deferred income                                                                      160,614              237,202
                                                                                            -------           ----------

TOTAL CURRENT LIABILITIES                                                                 2,440,566            2,199,255

LONG-TERM DEBT                                                                                  ---            1,034,201
DEFERRED INCOME                                                                             176,491              243,305
DEFERRED INCOME TAXES                                                                       501,699              370,000
                                                                                            -------           ----------

TOTAL LIABILITIES                                                                         3,118,756            3,846,761
                                                                                          ---------            ---------

SHAREHOLDERS' EQUITY
       Common stock                                                                           1,560               1,216
       Additional paid in capital                                                         4,133,347            2,795,801
       Retained earnings                                                                  3,219,640            3,031,656
                                                                                          ---------            ---------
                                                                                          7,354,547            5,828,673
       Less Treasury stock                                                                      ---             (136,886)
                                                                                       ------------             --------

TOTAL SHAREHOLDERS' EQUITY                                                                7,354,547            5,691,787
                                                                                          ---------            ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $10,473,303           $9,538,548
                                                                                        ===========           ==========




</TABLE>




            See notes to consolidated condensed financial statements

                                  Page 4 of 18


<PAGE>

<TABLE>



                          Sandata Inc. and Subsidiaries

            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>

                                                             THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                                NOVEMBER 30,                        NOVEMBER 30,
                                                            1997            1996              1997              1996
                                                            ----            ----              ----              ----
REVENUES:
<S>                                                      <C>          <C>               <C>               <C>       
       Service fees                                      $2,972,524       $2,622,024       $5,947,431        $5,110,874
       Real estate rental income                                ---           53,160              ---           134,700
       Other income                                          71,732           85,291          143,433           168,557
       Interest income                                       12,057            1,999           46,337             4,979
                                                        -----------     ------------      -----------       ------------
                                                          3,056,313        2,762,474         6,137,20         5,419,110
COSTS AND EXPENSES:
       Service Fees:
              Operating                                   1,869,484        1,538,327        3,850,754         2,970,362
              Selling, general and administrative           645,073          551,894        1,241,448         1,016,183
              Depreciation and amortization                 346,394          294,061          676,645           597,001
              Interest expense                               13,646           50,994           36,162           104,937
                                                        -----------      -----------      -----------        ----------
                                                          2,874,597        2,435,276        5,805,009         4,688,483
                                                          ---------        ---------        ---------         ---------
       Real Estate:
              Operating                                         ---           93,177             ---            246,894
              Depreciation and amortization                     ---           18,944             ---             47,302
              Interest expense                                  ---           52,378             ---            133,918
              Real estate taxes                                 ---           32,012             ---             71,012
                                                                ---          196,511             ---            499,126
                                                                ---      -----------             ---           ---------

TOTAL COSTS AND EXPENSES                                  2,874,597        2,631,787        5,805,009          5,187,609
                                                          ---------        ---------        ---------          ---------

Earnings from operations
       before income taxes                                  181,716          130,687          332,192            231,501

       Income tax expense                                    78,000           57,685          144,209            102,185
                                                       ------------    -------------     ------------        ------------

NET EARNINGS                                          $     103,716     $     73,002        $ 187,983         $  129,316
                                                      =============     ============        =========         ===========

EARNINGS PER COMMON SHARE                          $           0.05   $         0.04     $       0.09      $        0.07
                                                   ----------------   --------------     ------------      --------------

Weighted average common shares
       outstanding                                        2,340,098        1,724,757        2,340,098         1,724,757
                                                        ===========        =========        =========         =========

</TABLE>

            See notes to consolidated condensed financial statements

                                  Page 5 of 18


<PAGE>

<TABLE>

                         Sandata, Inc. and Subsidiaries
            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<CAPTION>
                                                                                        SIX MONTHS ENDED
                                                                                            NOVEMBER 30,
                                                                                  1997                      1996
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Cash flows from operating activities:
Net earnings                                                                $  187,983                   $129,316
Adjustments to reconcile net earnings to net cash
    provided by (used in) operating activities:
       Depreciation and amortization                                           676,645                    644,303
       (Gain) on disposal of fixed assets                                          ---                   (268,340)
       (Gain ) on transfer of facility                                             ---                    (15,586)
(Decrease) in allowance for doubtful
accounts receivable                                                            (80,200)                   (57,195)
       (Decrease) in deferred income                                          (143,402)                  (139,408)
       Increase (decrease) in  deferred revenue                                 28,340                    (10,547)
(Increase) in operating assets                                                (415,880)                  (162,181)
Increase in operating liabilities                                              320,352                    533,432
                                                                                -------                   -------

Net cash  provided by operating activities                                     573,838                    653,794
                                                                               -------                    -------

Cash flows from investing activities:
       Collection of note receivable - officer                                 102,867                       ---
       Purchases of fixed assets                                            (1,186,547)                   (948,074)
       Increases in advances from affiliates                                   329,517                       ---
       Collections of note receivable-former affiliates                         11,363                      77,100
       Proceeds from sale/leaseback transaction                                    ----                    925,000
                                                                                   ----              --------------

Net cash provided by (used in) investing activities                           (742,800)                     54,026
                                                                              ---------                     ------

Cash flows from financing activities:
       Proceeds from private placement offering                                                            260,076
       Proceeds from stock                                                   1,575,683                        ---
       Principal payments on term loan                                                                    (350,718)
       Proceeds from line of credit                                                                      1,750,000
       Principal payments on line of credit                                 (1,034,201)                 (2,188,000)
       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                            541,482                    (143,642)
                                                                               -------                    ---------

       Increase in cash and cash equivalents                                   372,520                     564,178
       Cash and cash equivalents at beginning of period                      1,200,014                     368,400
                                                                              ---------                   -------
       Cash and cash equivalents at end of period                            $1,572,534              $     932,578
                                                                             ==========              =============
</TABLE>

Supplemental Disclosure of Noncash Investing and Financing Activities:
As of July 31, 1995 the Company assumed lease obligations totaling $4,143,140 as
disclosed in the Notes to the  Consolidated  Condensed  Financial  Statements in
conjunction with the acquisition of a facility. As of November 1, 1996 a company
affiliated with the Directors of the Company  assumed certain lease  obligations
relative to the transfer of a facility in the amount of  $3,140,884 as disclosed
in the Notes to the Consolidated Condensed Financial Statements.

            See notes to consolidated condensed financial statements
                                  Page 6 of 18

<PAGE>


                         Sandata, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The  Consolidated  Condensed  Balance  Sheets  as  of  November  30,  1997,  the
Consolidated  Condensed  Statements  of  Operations  for the three and six month
periods  ended  November  30,  1997  and  1996  and the  Consolidated  Condensed
Statement of Cash Flows for the six month  periods  ended  November 30, 1997 and
1996 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, 1997 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, 1997. Results of Operations for the period ended November 30, 1997
are not necessarily  indicative of the operating  results  expected for the full
year.

2.       RELATED PARTY TRANSACTIONS

On June 1, 1994, BFS Sibling  Realty,  Inc.  ("BSRI")  formerly known as Brodsky
Sibling  Realty,  Inc.,  a  company  affiliated  with the  Company's  Directors,
borrowed  $3,350,000  in  the  form  of  Industrial  Development  Revenue  Bonds
("Bonds") to finance costs  incurred in connection  with the  acquisition of the
Company's  facility  ("Facility") from the Nassau County Industrial  Development
Agency  ("NCIDA"),  and for renovating  and equipping the Facility.  These Bonds
were subsequently  purchased by a bank (the "Bank"). The aggregate cost incurred
by BSRI in  conjunction  with such  acquisition,  renovation  and  equipping was
approximately  $4,377,000.  In  addition,  the  Company  incurred  approximately
$500,000  of  indebtedness  to  affiliates  of Mr.  Brodsky 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 BSRI.

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 sublease  agreement (the "First Sublease") with BSRI, whereby the
Company, as sublessee,  leased the Facility for the conduct of its business and,
in  consideration  therefor,  was  obligated to make lease  payments in at least
equal amounts due to satisfy the underlying Bond obligations.
            

                                  Page 7 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

On July 31, 1995, by an Assignment and  Assumption and First  Amendment to Lease
between the Company and BSRI, the Company  assumed the obligations of BSRI under
the lease and became the direct tenant and the beneficial  owner of the Facility
(collectively  the "First  Amendment").  In connection with the First Amendment,
the First 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
First  Amendment,  the Company  obtained the right to acquire the Facility  upon
expiration of the Lease with the NCIDA and became  directly  liable to the NCIDA
for amounts due thereunder. Furthermore, in connection with the First Amendment,
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 Facility,
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 were used to repay a portion of the Bonds. The Company entered into the
First Amendment  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 a Second  Amendment  with BFS
Realty, LLC ("BFS") (which succeeded to the interest of BSRI with respect to the
Second  Amendment),  the NCIDA  and the  Bank.  In  connection  with the  Second
Amendment, (i) BFS assumed all of the Company's obligations under the Lease with
the NCIDA and entered into the Second  Sublease with the Company,  as sublessee,
for the Facility;  and (ii) the Company  conveyed to BFS the right to become the
owner of the Facility upon expiration of the Lease. In addition, pursuant to the
Second Sublease,  the Company has assumed certain obligations owed by BFS to the
NCIDA under the Lease.  BFS 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 BFS; 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 BFS. The
Company and its Chairman  have  guaranteed  the above  obligation to the SBA and
NCIDA in connection with the foregoing.

                                  Page 8 of 18

<PAGE>

                         Sandata, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

3.       NET EARNINGS PER COMMON SHARE

Earnings per share for the three and six months ended November 30, 1997 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, 1997 was 866,101. Earnings per share for the three and
six months ended  November 30, 1996 include 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.

4.       STOCKHOLDERS' EQUITY

In October,  1996, the Company commenced a private offering,  on a "best efforts
-all or none"  basis,  to raise  $1,500,000  by issuing 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. In February 1997, the
Company completed such private offering. The net proceeds received in connection
with the sale of  300,000  shares of its  common  stock  were  $1,256,415  after
payment  of  expenses  related  to  the  offering.  Contemporaneously  with  the
execution  and  delivery  by the  Company of the letter of intent with regard to
such private offering, 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 from the sale of such 100,000 shares were $260,076.

In  connection  with the closing of such private  offering,  an affiliate of the
placement agent entered into a financial  consulting agreement with the Company,
pursuant to which,  among other things,  such affiliate  will receive  aggregate
annual  payments of $36,000 and certain  assignees  of such  affiliate  received
warrants to purchase an aggregate of 200,000 shares of Common Stock  exercisable
as follows:  100,000  shares at $5.00 per share and 100,000  shares at $7.00 per
share,  such warrants were to be  exercisable  for one year (with respect to the
warrants  exercisable  at $5.00 per  share) and two years  (with  respect to the
warrants  exercisable at $7.00 per share). In September 1997 the warrants issued
to  affiliates  of the  placement  agent  were  modified  so that  they  will be
redeemable  upon notice from the Company  without  regard to the market price of
the Company's  common stock. The Company has extended the expiration date of the
$5.00 warrants for thirty days, until January 21, 1998.

In August 1997 the Board of Directors of the Company  authorized  the redemption
of certain warrants. Prior to redemption 48,500 warrants were exercised at $7.00
per share, generating proceeds of $339,500.

During the three months ended November 30, 1997, 117,500 warrants were exercised
at $7.00 per share  generating  proceeds of $822,500.  Treasury  stock of 52,772
shares were utilized for stock issuances pursuant to the warrant exercises.

                                  Page 9 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Pursuant to the terms of the Company's incentive stock option plan, on August 8,
1997,  certain officers of the Company  exercised 206,667 options at an exercise
price of $1.79 per share and 23,333  options at an exercise  price of $1.875 per
share. The total proceeds generated from option exercises were $413,683.


                                 Page 10 of 18
<PAGE>


                         Sandata, Inc. and Subsidiaries

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


                                           
Results of Operations

Revenues  were  $3,056,313  and  $6,137,201  for the three and six months  ended
November 30, 1997 as compared to $2,762,474 and $5,419,110 for the three and six
months ended November 30, 1996, increasing $293,839 and $718,091 respectively.

Service fee revenues were $2,972,524 and $5,947,431 for the three and six months
ended  November 30, 1997 as compared to $2,622,024  and $5,110,874 for the three
and six months  ended  November  30,  1996,  increasing  $350,500  and  $836,557
respectively. The increase was attributable to the Santrax product.

Real estate rental income was $0 for the three and six months ended November 30,
1997 as  compared  to $53,160 and  $134,700  for the three and six months  ended
November 30, 1996.

The decreases  relating to rental income resulted from the Company  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, whereby the Company became the Sublessee of the Facility.

Other  income  was  $71,732  and  $143,433  for the three and six  months  ended
November  30, 1997 as compared  to $85,291  and  $168,557  for the three and six
months ended November 30, 1996, decreasing $13,559 and $25,124 respectively.

Expenses Related to Services

Operating  expenses were  $1,869,484 and $3,850,754 for the three and six months
ended  November 30, 1997 as compared to $1,538,327  and $2,970,362 for the three
and six months  ended  November  30,  1996,  increasing  $331,157  and  $880,392
respectively.

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 $645,073 and $1,241,448 for
the three and six months ended  November  30, 1997,  as compared to $551,894 and
$1,016,183  for the three and six months ended November 30, 1996, an increase of
$93,179 and $225,265  respectively.  The increase was primarily due to increased
selling effort and increased legal fees.

                                 Page 11 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

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

Depreciation and amortization  expenses were $346,394 and $676,645 for the three
and six months ended  November 30, 1997 as compared to $294,061 and $597,001 for
the three and six months ended  November  30,  1996,  an increase of $52,333 and
$79,644  respectively.  The increase was primarily  attributable  to fixed asset
additions, including software capitalization costs.

Interest  expenses  were  $13,646 and $36,162 for the three and six months ended
November  30, 1997 as compared  to $50,994  and  $104,937  for the three and six
months ended November 30, 1996, a decrease of $37,348 and $68,775  respectively.
This decrease was due primarily to less debt.

Expenses Related to Real Estate Operations

Expenses relating to real estate operations were $0 for the three and six months
ended  November  30, 1997 as compared to $196,511 and $499,126 for the three and
six months ended November 30, 1996.

The  decreases in expenses  relating to the  operation of the Facility  resulted
from the Company  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 that relate to real estate operations.

Income Tax Expenses

Income tax expenses were $78,000 and $144,209 for the three and six months ended
November  30, 1997 as compared  to $57,685  and  $102,185  for the three and six
months ended November 30, 1996, and increase of $20,315 and $42,024.

Liquidity and Capital Resources

The Company's working capital was $1,668,577 as of November 30, 1997 as compared
to $1,548,644, as of May 31, 1997, an increase of $119,933.

The  Company  has  spent  approximately  $1,186,547  in fixed  asset  additions,
including  software  capitalization  costs in connection with revenue growth and
new  product  development.  The Company  expects  the current  levels of capital
expenditures to continue.

In October,  1996, the Company commenced a private offering,  on a "best efforts
-all or none"  basis,  to raise  $1,500,000  by issuing an  aggregate of 300,000
shares of Common Stock and five year warrants for the purchase of 150,000 shares


                                 Page 12 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

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

of Common Stock,  at an exercise price of $7.00 per share. In February 1997, the
Company completed such private offering. The net proceeds received in connection
with the sale of  300,000  shares of its  common  stock  were  $1,256,415  after
payment  of  expenses  related  to  the  offering.  Contemporaneously  with  the
execution  and  delivery  by the  Company of the letter of intent with regard to
such private offering, 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 from the sale of such 100,000 shares were $260,076.

In  connection  with the closing of such private  offering,  an affiliate of the
placement agent entered into a financial  consulting agreement with the Company,
pursuant to which,  among other things,  such affiliate  will receive  aggregate
annual  payments of $36,000 and certain  assignees  of such  affiliate  received
warrants to purchase an aggregate of 200,000 shares of Common Stock  exercisable
as follows:  100,000  shares at $5.00 per share and 100,000  shares at $7.00 per
share,  such  warrants  to be  exercisable  for one year  (with  respect  to the
warrants  exercisable  at $5.00 per  share) and two years  (with  respect to the
warrants  exercisable at $7.00 per share).In  September 1997 the warrants issued
to  affiliates  of the  placement  agent  were  modified  so that  they  will be
redeemable  upon notice from the Company  without  regard to the market price of
the Company's  common stock. The Company has extended the expiration date of the
$5.00  warrant  for  thirty  (30)days until January 21, 1998.  

In August 1997 the Board of Directors of the Company  authorized  the redemption
of certain  warrants.  Prior to  redemption,  48,500  warrants were exercised at
$7.00 per share, generating proceeds of $339,500.

During the three months ended November 30, 1997 117,500  warrants were exercised
at $7.00 per share  generating  proceeds of $822,500.  Treasury  stock of 52,772
shares were utilized for stock issuances pursuant to the warrant exercises.

As discussed above in Note 2 to the Consolidated Condensed Financial Statements,
in November 1996, in connection  with the Second  Amendment of the Lease for the
Company's  Facility,  the Company assumed certain obligations of BFS and BFS has
indemnified the Company with respect to such assumed obligations.

On April 18, 1997, the Company's  wholly owned  subsidiary,  Sandsport,  entered
into the Credit  Agreement  with the Bank which  allows  Sandsport to borrow and
re-borrow  amounts up to  $3,000,000.  Interest  accrues on amounts  outstanding
under the Credit Agreement at a rate equal to the London Interbank  Offered Rate
plus 2% and  will be paid  quarterly  in  arrears  or,  at  Sandsport's  option,
interest  may accrue at the Bank's  prime rate.  The Credit  Agreement  required
Sandsport  to pay a  commitment  fee in the amount of $30,000 and a fee equal to

                                 Page 13 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

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

1/4% per annum payable on the unused  average daily balance of amounts under the
Credit  Agreement.  In addition,  there are other fees and charges imposed based
upon  Sandsport's  failure to  maintain  certain  minimum  balances.  The Credit
Agreement  will  expire on March 1,  2000.  The  indebtedness  under the  Credit
Agreement is guaranteed by the Company and Sandsport's sister  subsidiaries (the
"Group"). The collateral for the facility is a first lien on all equipment owned
by members of the Group,  as well as a collateral  assignment  of  $2,000,000 of
life insurance  payable on the life of Mr. Brodsky.  All of the Group assets are
pledged  to the  Bank as  collateral  for  the  amounts  due  under  the  Credit
Agreement. The Group's guaranty to the Bank was modified to conform covenants to
comply with those in the Credit Agreement.

In addition, pursuant to the Credit Agreement, the Group is required to maintain
certain  levels of net worth and meet  certain  financial  ratios in addition to
various other  affirmative and negative  covenants.  The Group has, in the past,
under  prior  agreements  with the  Bank,  failed  to meet  these  net worth and
financial ratios,  and the Bank has granted the Group waivers.  No assurance can
be given  that the Group  will be able to meet  these  net  worth and  financial
requirements  in the future,  and/or that the Bank will continue to grant to the
Group  waivers.  Although  in the past the Bank  has  renewed  its  loans to the
Company when they matured, there can be no assurance that it will continue to do
so or that the  Company,  if the Bank does not  renew the loan,  will be able to
arrange alternative financing on terms satisfactory to it.

As of November 30, 1997, the  outstanding  balance on the Credit  Agreement with
the Bank was $0.

The Company believes the results of its continued operations,  together with the
available  Credit Line and proceeds from the recent private  offering  should be
adequate to fund presently foreseeable working capital requirements.

IDA/SBA Financing

On June 1, 1994, BFS Sibling  Realty,  Inc.  ("BSRI")  formerly known as Brodsky
Sibling  Realty,  Inc.,  a  company  affiliated  with the  Company's  Directors,
borrowed  $3,350,000  in  the  form  of  Industrial  Development  Revenue  Bonds
("Bonds") to finance costs  incurred in connection  with the  acquisition of the
Company's  Facility  from  the  NCIDA,  and for  renovating  and  equipping  the
Facility.  These Bonds were subsequently  purchased by a bank (the "Bank").  The
aggregate cost incurred by BSRI in conjunction with such acquisition, renovation
and equipping was approximately  $4,377,000.  In addition,  the Company incurred
approximately   $500,000  of  indebtedness  to  affiliates  of  Mr.  Brodsky  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
BSRI.

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

                                 Page 14 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

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

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, as
sublessee,  entered into a sublease  agreement (the "First Sublease") with BSRI,
whereby the Company  leased the Facility for the conduct of its business and, in
consideration  therefor,  was obligated to make lease payments in 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 BSRI, the Company  assumed the obligations of BSRI under
the lease and became the direct tenant and the beneficial  owner of the Facility
(collectively  the "First  Amendment").  In connection with the First Amendment,
the First 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
First  Amendment,  the Company  obtained the right to acquire the Facility  upon
expiration of the Lease with the NCIDA and became  directly  liable to the NCIDA
for amounts due thereunder. Furthermore, in connection with the First Amendment,
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 Facility,
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 were used to repay a portion of the Bonds. The Company entered into the
First Amendment  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 the Second  Amendment with BFS
(which succeeded to the interest of BSRI with respect to the Second  Amendment),
the NCIDA and the Bank. In connection with the Second Amendment, (i) BFS assumed
all of the Company's obligations under the Lease with the NCIDA and entered into
the Second Sublease with the Company, as sublessee,  for the Facility;  and (ii)
the Company  conveyed to BFS the right to become the owner of the Facility  upon
expiration  of the Lease.  In  addition,  pursuant to the Second  Sublease,  the
Company  has  assumed  certain  obligations  owed by BFS to the NCIDA  under the
Lease.  BFS 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

                                 Page 15 of 18
<PAGE>
                         Sandata, Inc. and Subsidiaries

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

$3,140,884,  which was assumed by BFS; the net difference was recorded as income
in the  financial  statements.  Amounts  owed to  affiliates  of the  Company in
connection with the construction  and improvements  were not assumed by BFS. The
Company and its Chairman  have  guaranteed  the above  obligation to the SBA and
NCIDA in connection with the foregoing.


                                 Page 16 of 18


<PAGE>



                                  
                         Sandata, Inc. and Subsidiaries


                           PART II - OTHER INFORMATION


Item 1 - LEGAL PROCEEDINGS:

Reference is made to Form 10-QSB, August 31, 1997.

Item 2 - CHANGES IN SECURITIES:

Reference is made to "Part I, Item 2 -  Management's  Discussion and Analysis or
Plan  of  Operation"  for a  discussion  of a  private  offering  to  accredited
investors.

Item 3  - DEFAULTS UPON SENIOR SECURITIES:

None

Item 4  - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

None

Item 5 - OTHER INFORMATION:

On January 12, 1998 the number of directors constituting the entire Board of the
Company was  increased to five members.  Paul  Konigsberg  and Ronald Fish were
elected to the Board. In addition, both Mssrs. Konigsberg and Fish will serve on
the Company's Audit Committee.

Mr. Fish serves as the Administrator,  Treasurer and Director of Unlimited Care,
Inc., a privately held company, since 1975.

Mr. Konigsberg serves as the Senior Partner and President of Konigsberg,  Wolf &
Co. P.C., CPA's since 1975.  Mr.  Konigsberg  previously  served on the Board of
Directors of the Company from November 1987 through August 1995.

Item 6  - EXHIBITS AND REPORTS ON FORM 8-K:

Exhibit 27 - Financial Data Schedule (Electronic Filing Only)







                                 Page 17 of 18





<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                      SANDATA, INC.
                                      (Registrant)



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













                                 Page 18 of 18






















<PAGE>







                                                January 15, 1998



Securities and Exchange Commission 
450 5th Street, N.W.

Dear Sir or Madam:

Transmitted  herewith  through  the EDGAR  system is Form 10-QSB for the quarter
ending November 30, 1997 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