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 year ended February 28, 2001


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

For the transition period from                 to


Commission file number  0-14401

                                    SANDATA, INC.

           (Exact Name of Small Business Issuer as Specified in Its Charter)

            Delaware                               11-2841799

(State or Other Jurisdiction of                    (I.R.S. Employer
Incorporation or Organization)                   Identification No.)

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

                                  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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

                         DURING THE PRECEDING FIVE YEARS

     Check whether the registrant 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 the issuer's  common stock,  par value
$00.1, as of April 10, 2001 was 2,506,473 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 February 28, 2001 (unaudited)
           and May 31, 2000                                                3

           UNAUDITED CONSOLIDATED CONDENSED
           STATEMENTS OF OPERATIONS for the three and
           nine months ended February 28, 2001 and February 29, 2000      5

           UNAUDITED CONSOLIDATED CONDENSED
           STATEMENTS OF CASH FLOWS for the nine months
           ended February 28, 2001 and February 29, 2000                   6

           NOTES TO CONSOLIDATED CONDENSED
           FINANCIAL STATEMENTS                                            7

ITEM 2  -  MANAGEMENT'S DISCUSSION AND
           ANALYSIS OR PLAN OF OPERATION                                  12

PART II -  OTHER INFORMATION                                              15

ITEM 1  -  LEGAL PROCEEDINGS                                              15

ITEM 2  -  CHANGES IN SECURITIES AND USE OF PROCEEDS                      15

ITEM 3  -  DEFAULTS UPON SENIOR SECURITIES                                15

ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 5  -  OTHER INFORMATION                                              15

ITEM 6  -  EXHIBITS AND REPORTS ON FORM 8-K                               15

<PAGE>


                         SANDATA, INC. AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                         SANDATA, INC. AND SUBSIDIARIES

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS


                      CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<S>                                                                             <C>                      <C>
                                                                                     UNAUDITED           AUDITED
                                                                                   February 28,           May 31,
                                                                                       2001                2000
                                                                                 ---------------        -----------

ASSETS:

CURRENT ASSETS

         Cash and cash equivalents                                                 $      143,168       $  1,229,718
         Accounts receivable, net of allowance for doubtful
            accounts of $350,000 and $448,000 respectively                              2,459,694          2,308,901
         Receivables from affiliates                                                      692,793            405,732
         Inventories                                                                       62,784             17,165
         Prepaid expenses and other current assets                                        406,745            413,119
                                                                                 ----------------       ------------

TOTAL CURRENT ASSETS                                                                    3,765,184          4,374,635

FIXED ASSETS, NET                                                                       9,306,370          8,911,655

OTHER ASSETS

         Notes receivable                                                                 118,319            126,221
         Cash surrender value of officer's life insurance,
            security deposits and other                                                   853,094            832,988
                                                                                 ----------------       ------------

TOTAL ASSETS                                                                       $   14,042,967       $ 14,245,499
                                                                                =================       ============
</TABLE>



              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

                   CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


<PAGE>


                         SANDATA, INC. AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<S>                                                                             <C>                     <C>
                                                                                  UNAUDITED                    AUDITED
                                                                                February 28,                   May 31,
                                                                                    2001                        2000
                                                                                ----------------            -------------

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
         Accounts payable and accrued expenses                                       $2,266,777                $2,580,143
         Deferred/unearned revenue                                                       23,032                    38,848
         Deferred income                                                                319,056                   322,678
                                                                                -----------------             -----------

TOTAL CURRENT LIABILITIES                                                             2,608,865                 2,941,669

LONG TERM DEBT                                                                        2,900,000                 2,750,000
DEFERRED INCOME                                                                         183,542                   315,253
DEFERRED INCOME TAXES                                                                   802,636                   702,158
                                                                                -----------------             -----------

TOTAL LIABILITIES                                                                     6,495,043                 6,709,080

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
         Common stock                                                                     2,506                     2,506
         Additional paid in capital                                                   5,803,704                 5,803,704
         Retained earnings                                                            3,261,373                 3,249,868
         Notes receivable-officers                                                   (1,519,659)               (1,519,659)
                                                                                ----------------               -----------

TOTAL SHAREHOLDERS' EQUITY                                                            7,547,924                 7,536,419
                                                                                ----------------               ----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $    14,042,967            $   14,245,499
                                                                                ===============            ==============

</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

                   CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


<PAGE>


            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                        <C>                  <C>            <C>             <C>

                                                                   THREE MONTHS ENDED              NINE  MONTHS ENDED
                                                                    Feb. 28,    Feb. 29,            Feb.28,     Feb. 29,
                                                                     2001         2000               2001        2000
                                                                     ----         ----               ----        ----
REVENUES:

       Service fees                                         $   4,304,970         $4,499,917     $13,257,225   $   13,006,062
       Other income                                                93,793            114,563         278,185          301,183
       Interest income                                             45,189             38,523         140,708          118,781
                                                            -------------       ------------   -------------   --------------
                                                                4,443,952          4,653,003      13,676,118       13,426,026
                                                            -------------       ------------   -------------   --------------

COSTS AND EXPENSES:
       Operating                                                2,314,056          2,917,330       7,663,632        8,387,617
       Selling, general and administrative                      1,355,707            971,580       3,645,773        2,880,890
       Depreciation and amortization                              686,021            581,022       2,045,238        1,767,897
       Interest expense                                            60,149             64,250         189,139          176,302
                                                            -------------       ------------   -------------   --------------

TOTAL COSTS AND EXPENSES                                        4,415,933          4,534,182      13,543,782       13,212,706
                                                            -------------       ------------   -------------   --------------

EARNINGS FROM OPERATIONS
  BEFORE INCOME TAXES                                              28,019            118,821         132,336          213,320

       Income tax expense                                          33,612             48,716         120,831           87,461
                                                            -------------       ------------   -------------   --------------

NET EARNINGS (LOSS)                                         $     (5,593)       $     70,105   $      11,505   $      125,859
                                                            =============       ============   =============   ==============

BASIC EARNINGS PER SHARE                                    $        0.00       $       0.03   $        0.00   $         0.05
                                                            -------------       ------------   -------------   --------------

DILUTED EARNINGS PER SHARE                                  $        0.00       $       0.03   $       0.00    $         0.05
                                                            -------------       ------------   -------------   --------------


</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

                   CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


<PAGE>


            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                    <C>                  <C>

                                                                                            NINE  MONTHS ENDED
                                                                                           Feb.28            Feb. 29
                                                                                            2001               2000
                                                                                            ----               ----
Cash flows from operating activities:

Net earnings                                                                           $   11,505           $  125,859
Adjustments to reconcile net earnings to net cash
  provided by operating activities:
     Depreciation and amortization                                                      2,045,238            1,767,897
     Gain on disposal of fixed assets                                                    (122,956)            (379,290)
     Decrease in allowance for doubtful accounts                                           97,203               70,388
     (Decrease) increase in deferred income                                              (135,333)              93,903
     (Increase) decrease in receivables from affiliates                                  (287,061)             414,235
     Decrease in deferred revenue                                                         (15,816)              (5,135)
     (Increase) Decrease in operating assets                                             (299,445)             126,533
     Decrease in operating liabilities                                                   (212,888)          (1,258,349)
                                                                                         ---------          -----------

Net cash provided by operating activities                                               1,080,447              956,041
                                                                                        ---------              -------

Cash flows from investing activities:

     Purchases of fixed assets                                                         (2,865,340)          (4,445,001)
     Proceeds from sale/leaseback transaction                                             548,343            1,953,254
                                                                                          -------            ---------

Net cash used in investing activities                                                  (2,316,997)          (2,491,747)
                                                                                       -----------          -----------

Cash flows from financing activities:

     Proceeds from term loan                                                              100,000                  ---
     Principal payments on term loan                                                     (100,000)                 ---
     Proceeds from line of credit                                                         800,000            2,000,000
     Principal payments on line of credit                                                (650,000)          (1,800,000)
                                                                                         ---------          -----------

Net cash provided by financing activities                                                 150,000              200,000
                                                                                          -------              -------

     Net Decrease in cash and cash equivalents                                         (1,086,550)          (1,335,706)
     Cash and cash equivalents at beginning of period                                   1,229,718            1,533,576
                                                                                       ----------           -----------
     Cash and cash equivalents at end of period                                        $  143,168           $  197,870
                                                                                       ==========           ==========

</TABLE>

              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

                   CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


<PAGE>


                         SANDATA, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The  Consolidated   Condensed  Balance  Sheet  as  of  February  28,  2001,  the
Consolidated  Condensed  Statements of  Operations  for the three and nine month
periods  ended  February  28, 2001 and  February  29, 2000 and the  Consolidated
Condensed  Statement of Cash Flows for the nine month periods ended February 28,
2001 and February 29, 2000 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 February  28, 2001 and for all periods  presented
have been made. Results of Operations for the period ended February 28, 2001 are
not necessarily indicative of the operating results expected for the full year.

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, 2000.

2. RELATED PARTY TRANSACTIONS

The Company entered into an agreement in November,  1996 (the  "Agreement") with
an  affiliate  of the  Company's  Chairman of the Board (the  "Affiliate"),  the
Nassau County Industrial  Development Agency ("NCIDA") and a bank. In connection
with the Agreement, the Affiliate assumed all of the Company's obligations under
a lease with the NCIDA and  entered  into a sublease  with the  Company  for its
facility. The Company conveyed to the Affiliate the right to become owner of the
facility upon expiration of the lease. In addition,  pursuant to a sublease, the
Company has assumed certain obligations owed by the Affiliate to the NCIDA under
the lease.  The  Affiliate has  indemnified  the Company with respect to certain
obligations  relative  to the lease and the  Agreement.  The  Company  made rent
payments for its  facility  amounting to $124,002 and $421,835 for the three and
nine months ended February 28, 2001 as compared to $175,863 and $516,243 for the
three and nine months ended  February 29, 2000. The reduction is the result of a
verbal  agreement  between  the  Company  and the  Affiliate  to reduce the rent
$150,000 on an annual basis effective June 1, 2000. Management  anticipates that
negotiations for a new, long-term lease, on substantially  similar terms (except
for market value  adjustments  in rent,  expenses,  and the like) as the present
lease, will begin in the near future.

The Company makes various lease payments to affiliates of the Company's Chairman
of the Board. The payments for equipment rental amounted to $99,893 and $297,072
for the three and nine months ended February 28, 2001 as compared to $98,590 and
$295,313 for the three and nine months ended February 29, 2000.

The Company  derives  revenue from National  Medical  Health Card Systems,  Inc.
("Health Card"), a company  affiliated with the Company's Chairman of the Board,
for  providing  data  base  and  operating  system  support,  hardware  leasing,
maintenance and related  administrative  services.  The revenues  generated from
Health Card  amounted to $493,851 and  $1,754,430  for the three and nine months
ended February 28, 2001 as compared to $415,788 and $1,342,938 for the three and
nine months ended  February 29, 2000.  At February 28, 2001 the Company was owed
$356,569 from Health Card.

At February  28,  2001,  the Company  owed  Health Card  $500,000  pursuant to a
promissory note, dated May 31, 2000, made payable by the Company to the order of
Health Card in the original  principal  amount of $500,000  plus interest at the
rate of  9-1/2%,  payable  quarterly.  The note,  which was  originally  due and
payable on June 1, 2001,  was  subsequently  amended to extend  such due date to
September  1, 2001 and  amended by Second  Amendment  to extend such due date to
March 31,  2002.  At February  28, 2001 the Company  owed  interest of $3,958 to
Health Card, which was subsequently paid.

Medical Arts Office  Services,  Inc.  ("MAOS"),  a company  which the  Company's
Chairman  of the  Board is the  sole  shareholder,  provided  the  Company  with
accounting, bookkeeping and paralegal services. The payments made by the Company
to MAOS  amounted to $96,193 and  $239,767  for the three and nine months  ended
February  28, 2001 as compared  to $74,859 and  $207,990  for the three and nine
months ended February 29, 2000. At February 28, 2001 the Company owed $21,776 to
MAOS, which was subsequently paid.

3. NET EARNINGS PER COMMON SHARE

In 1997, the Financial Accounting Standards Board issued Standard No. 128 ("SFAS
No. 128"),  "Earnings per Share".  SFAS No. 128 replaced  calculation of primary
and fully diluted  earnings per share with basic and diluted earnings per share.
Basic earnings per share has been computed using the weighted  average number of
shares of common stock outstanding. Diluted earnings per share has been computed
using the basic weighted  average shares of common stock issued plus outstanding
stock options.

Basic earnings per share are based on the  weighted-average  number of shares of
common  stock  outstanding,  which  were  2,506,473  at  February  28,  2001 and
2,481,480  at February  29,  2000.  Diluted  earnings per share are based on the
weighted-average  number of shares of common  stock  adjusted for the effects of
assumed exercise of options and warrants under the treasury stock method,  which
were as follows:  2,617,056 at February  28, 2001 and  2,562,598 at February 29,
2000.

Options to purchase  909,796 shares of common stock were outstanding at February
28, 2001 and were not included in the computation of diluted  earnings per share
because the exercise  price of the options was greater  than the average  market
price of the common stock for the respective period.

4. SALE/LEASEBACK TRANSACTION

On November 22, 2000, the Company entered into a sale/leaseback of certain fixed
assets   (principally   computer   hardware  and  equipment)   with   Macrolease
International  Corporation.  The fixed  assets,  which  had a net book  value of
approximately   $421,500,   were  sold  for  $548,300.  The  resulting  gain  of
approximately  $126,800 was recorded as deferred income and is being  recognized
over the life of the  lease,  which is  thirty-six  (36)  months.  Approximately
$10,600 of the deferred gain was  recognized for the three and nine months ended
February 28, 2001.

5. COMMITMENTS AND CONTINGENCIES

On October 19, 1999, the Company and  Pro-Health  Systems,  Inc.  ("Pro-Health")
brought an action against Provider Solutions Corporation  ("Provider"),  Michael
Milvain and  Charlotte  Fritchie in Supreme  Court,  New York County,  Index No.
99-26033,  based on breach of contract,  fraudulent  misrepresentation and other
causes of action,  demanding  damages of  approximately  $10,000,000 (the "State
Action").

On October 22,  1999,  Provider  brought a federal  action in the United  States
District Court,  Eastern District (the "Federal Action"),  seeking to enjoin the
Company and Pro-Health from (i) hiring certain named employees;  (ii) soliciting
any present or former employees of Provider; and (iii) using, without Provider's
permission,  any trade  secret or other  proprietary  information  belonging  to
Provider.  The Federal Action also sought to enjoin employees from (i) divulging
to the Company,  Pro-Health or any other third party,  any trade secret or other
proprietary  information;  and  (ii)  accepting  employment  from  the  Company,
Pro-Health  or any  other  customer  or  competitor  of  Provider.  The  amended
complaint  ultimately  served on the  Company and  Pro-Health  on March 31, 2000
demanded  relief in the form of a permanent  injunction and damages  against the
Company  and   Pro-Health  for  total  amounts   ranging  from   $10,000,000  to
$15,000,000.  The amended  complaint  alleged  claims of  declaratory  judgment,
copyright  infringement,  breach of  fiduciary  duty,  breach of  contract,  and
misappropriation  of trade secrets,  among others.  The State Action was removed
and consolidated with the Federal Action.

The Company and Pro-Health asserted various counterclaims in the Federal Action,
demanding  damages  of  $10,000,000,   seeking  an  injunction  and  declaratory
judgment,  and  asserting  claims based on, among other  things,  imposition  of
constructive trust, breach of contract, and unfair competition.

On March 8, 2001 the Company, Pro-Health,  Provider and all involved parties and
individuals  settled the  consolidated  Federal Action,  globally  resolving all
issues,  claims and disputes.  The  settlement  entailed the exchange of general
releases  between the Company,  Pro-Health,  Provider  and all parties,  and the
payment of $600,000 to Provider,  of which $50,000 was paid by the Company.  The
balance  of the  payment  under  the  settlement  was  funded  by the  Company's
insurers.  The  settlement  did not  have a  material  effect  on the  Company's
financial performance.  The Company has retained its proprietary interest in the
subject software.


<PAGE>


6. SHAREHOLDERS' EQUITY

The Company  has stock  options  outstanding  under four stock  option  plans as
follows:

Employees' Incentive Stock Option Plan (the "1984 Plan")

At February 28, 2001, there were 2,536 options  outstanding under the 1984 Plan.
Options  granted  under the 1984 Plan were  granted at exercise  prices not less
than fair market value on the date of grant.  Options outstanding expire in 2001
and no additional options may be granted under the 1984 Plan.

1995 Stock Option Plan (the "1995 Plan")

At February 28, 2001, there were 590,500 incentive options outstanding under the
1995 Plan, which provides for both incentive and nonqualified  stock options and
reserves  1,000,000 shares of common stock for grant.  Options granted under the
1995 Plan were granted at exercise prices not less than the fair market value at
the date of grant.  All options  outstanding  under the 1995 Plan are  currently
exercisable  at prices  ranging  from $1.41 to $2.61 per share;  the majority of
such  options  are  exercisable  over a period of five years from date of grant,
with an aggregate of 70,000 such options exercisable over 10 years.

1998 Stock Option Plan (the "1998 Plan")

At February 28, 2001, there were 963,260 incentive options outstanding under the
1998 Plan, which provides for both incentive and nonqualified  stock options and
reserves  1,000,000  shares of common stock for grant.  All options  outstanding
under the 1998 Plan vest over three to six year periods and are  exercisable  at
prices  ranging from $1.31 to $3.00 per share over periods of five and ten years
from date of grant.  At February 28, 2001 there were 426,130  options  currently
exercisable.

On July 14,  1998,  the  Company's  Chairman  of the  Board,  certain  officers,
directors  and a former  director who is the spouse of an officer and is also an
employee of Sandsport Data Services,  Inc.  ("Sandsport'),  the Company's wholly
owned subsidiary, exercised their respective options and warrants to purchase an
aggregate  of 921,334  shares of Common  Stock  under the 1998 Plan at  exercise
prices  ranging  from  $1.38  to  $2.61  per  share  for an  aggregate  cost  of
$1,608,861.  Payment  for such  shares was made to the  Company in the amount of
$921  representing  the par value of the  shares,  and a portion  in the form of
non-recourse  promissory  notes due in July  2001,  with  interest  at eight and
one-half percent (8-1/2%) per annum, payable annually, and secured by the number
of shares exercised. The Company has received interest payments on such notes in
the amount of $160,600.  At February 28, 2001, the  outstanding  balance on such
notes, including principal and accrued but unpaid interest, was $1,687,635.

2000 Stock Option Plan (the "2000 Plan")

On October 17, 2000 the Board of  Directors  approved  the  adoption of the 2000
Plan. The 2000 Plan was  subsequently  adopted by  Shareholders at the Company's
Annual  Meeting on November 20, 2000.  At February 28, 2001,  there were 150,000
incentive  options  outstanding  under the 2000 Plan,  which  provides  for both
incentive and nonqualified stock options and reserves 1,500,000 shares of common
stock for issuance in connection with option grants.  Options  outstanding under
the 2000 Plan vest over a  seven-year  period  commencing  December 31, 2000 and
ending December 31, 2007 and are exercisable at $3.00 per share over a period of
ten years from the date of grant. At February 28, 2001 there were 33,333 options
currently exercisable.

2000 Restricted Stock Grant Plan

On  September  1, 2000 the  Board of  Directors  approved  the  adoption  of the
Company's 2000 Restricted  Stock Grant Plan (the "Stock Grant Plan").  The Stock
Grant Plan was subsequently  adopted by the Shareholders at the Company's Annual
Meeting on November 20, 2000.  The Stock Grant Plan provides for the issuance of
shares that are subject to both standard restrictions on the sale or transfer of
such shares  (e.g.,  the standard  seven year vesting  schedule set forth in the
Stock  Grant  Plan)  and/or  restrictions  that the  Board may  impose,  such as
restrictions  relating to length of  service,  corporate  performance,  or other
restrictions.  As of  February  28, 2001 no grants had been made under the Stock
Grant Plan and,  therefore,  no shares had vested  under it.  There are  700,000
shares of Common  Stock  reserved for  issuance in  connection  with grants made
under the Stock Grant Plan.


<PAGE>


                         SANDATA, INC. AND SUBSIDIARIES

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                         SANDATA, INC. AND SUBSIDIARIES

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


RESULTS OF OPERATIONS

Revenues were  $4,443,952  and  $13,676,118  for the three and nine months ended
February 28, 2001 as compared to $4,653,003  and  $13,426,026  for the three and
nine  months  ended  February  29,  2000,   decreasing   $209,051  and  $250,092
respectively.

Service fee revenues  were  $4,304,970  and  $13,257,225  for the three and nine
months ended February 28, 2001 as compared to $4,499,917 and $13,006,062 for the
three  and  nine  months  ended  February  29,  2000,  decreasing  $194,947  and
increasing  $251,163  respectively.  The  decrease is  attributable  to a slight
decline in the volume of calls from the  SanTrax(R)  division and services  from
the  SandataNET(R)  division while the increase is due to rate increases in both
the SHARP and SanTrax(R), product lines.

Other  income was  $93,793  and  $278,185  for the three and nine  months  ended
February  28, 2001 as compared to $114,563  and  $301,183 for the three and nine
months ended February 29, 2000, decreasing $20,770 and $22,998 respectively. The
decrease is attributable to a decrease in income  recognized on  sales/leaseback
transactions as this income is recognized over the life of the lease.

Expenses Related to Services

Operating  expenses were $2,314,056 and $7,663,632 for the three and nine months
ended  February 28, 2001 as compared to $2,917,330  and $8,387,617 for the three
and nine months  ended  February  29,  2000,  decreasing  $603,274  and $723,985
respectively.  The primary factors for the decreases in operating  expenses were
reductions  in staff,  which  resulted  in  reductions  in payroll  and  related
expenses,  and the  expiration of certain  equipment  leases,  which resulted in
reduced equipment rental payments.

Selling,  general and administrative expenses were $1,355,707 and $3,645,773 for
the three and nine months ended  February 28, 2001,  as compared to $971,580 and
$2,880,890 for the three and nine months ended February 29, 2000, an increase of
$384,127  and  $764,883  respectively.  The  increases  were  primarily  due  to
increases in consulting,  payroll and commission  expenses  relative to expanded
efforts to increase sales in the SanTrax(R) and SandataNET(R) product lines, and
certain royalties payable to MCI Communications Corporation.

Depreciation  and  amortization  expenses were $686,021 and  $2,045,238  for the
three and nine months  ended  February  28,  2001 as  compared  to $581,022  and
$1,767,897 for the three and nine months ended February 29, 2000, an increase of
$104,999 and $277,341 respectively. The increases were primarily attributable to
fixed asset additions,  including computer hardware and software  capitalization
costs, in connection with ongoing computer system upgrades.

Interest  expenses were $60,149 and $189,139 for the three and nine months ended
February  28, 2001 as compared  to $64,250 and  $176,302  for the three and nine
months  ended  February  29,  2000,  a decrease of $4,101 and  increase  $12,837
respectively. The decrease is due to a lower overall average daily balance under
the Company's revolving credit agreement. The increase was a result of incurring
indebtedness   under  the  promissory   note  with  Health  Card  and  increased
borrowings, later in the quarter, on the Company's revolving credit agreement.

Income Tax Expenses

Income tax  expenses  were  $33,612 and  $120,831  for the three and nine months
ended  February  28,  2001 as  compared to $48,716 and $87,461 for the three and
nine  months  period  ended  February  29,  2000,  a decrease  of $15,104 and an
increase of $33,370 respectively. The decrease is due to a lower taxable income,
which is the result of  approximately  $209,000 less revenue for the quarter and
$119,000 less expenses,  such that the Company realized $90,000 less in earnings
before taxes than it did this time last year. The increase is due to certain tax
treatments of software  development  costs,  depreciation and amortization,  and
revenues from  sale/leaseback  transactions,  offset by net operating loss carry
forwards.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash  decreased  at February 28, 2001 to $143,168 as compared to
$1,229,718 at May 31, 2000. The primary factors that contributed to the decrease
were  increases  in fixed  assets,  receivables  from  affiliates  and  accounts
receivable, and a decrease in accounts payable.

The Company's working capital decreased as of February 28, 2001 to $1,156,319 as
compared with $1,432,966 at May 31, 2000. The decrease in working capital is the
result of a decrease in current  assets,  primarily  cash, that was greater than
the decrease in current payables.

For the nine months ended  February 28, 2001,  the Company  spent  approximately
$2,865,000  in fixed  asset  additions,  including  (i)  computer  hardware  and
software for upgrades and new  installations  and (ii)  software  capitalization
costs in  connection  with new  product  development.  The  Company  expects the
current levels of capital expenditures to continue.

On July 14,  1998,  the  Company's  Chairman  of the  Board,  certain  officers,
directors and, a former  director who is the spouse of an officer and is also an
employee  of  Sandsport  Data  Services,  Inc.  ("Sandsport"),  a  wholly  owned
subsidiary of the Company,  exercised their  respective  options and warrants to
purchase an aggregate  of 921,334  shares of Common Stock under the 1998 Plan at
exercise  prices  ranging from $1.38 to $2.61 per share for an aggregate cost of
$1,608,861.  Payment  for such  shares was made to the  Company in the amount of
$921  representing  the par value of the  shares,  and a portion  in the form of
non-recourse  promissory  notes due in July  2001,  with  interest  at eight and
one-half percent (8-1/2%) per annum, payable annually, and secured by the number
of shares exercised. The Company has received interest payments on such notes in
the amount of $160,600.  At February 28, 2001, the  outstanding  balance on such
notes, including principal and accrued but unpaid interest, was $1,687,635.

On April 18, 1997,  Sandsport  entered into a revolving  credit  agreement  (the
"Credit  Agreement") with a bank (the "Bank") which allowed  Sandsport to 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,  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 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 has been amended by the Bank to
permit  Sandsport  to  borrow  amounts  up  to  $4,500,000  and  to  extend  the
termination date to February 14, 2003.  Interest accrues at the same rate as the
original  Credit  Agreement.  The  indebtedness  under the Credit  Agreement  is
guaranteed by the Company and Sandsport's sister subsidiaries (the "Group"). All
of the Group's  assets are pledged to the Bank as collateral for the amounts due
under the  Credit  Agreement,  which  pledge is  secured  by 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 the Company's  Chairman of
the  Board.  The  Group's  guaranty  to the Bank was  modified  to  include  all
indebtedness incurred by the Company under the amended 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.  At May 31, 2000 the Group
failed to meet these net worth and  financial  ratios,  and the Bank granted the
Group a waiver.  There can be no assurance  that the Bank will continue to grant
waivers  if the Group  fails to meet the net worth and  financial  ratios in the
future.  If such waivers are not granted any loans  outstanding under the Credit
Agreement become immediately due and payble, which may have an adverse effect on
the Company's business, operations or financial condition. At February 28, 2001,
the outstanding balance on the Credit Agreement with the Bank was $2,400,000.

At  February  28,  2001 the Company  owed  Health  Card  $500,000  pursuant to a
promissory note, dated May 31, 2000, made payable by the Company to the order of
Health Card in the original  principal  amount of $500,000  plus interest at the
rate of  9-1/2%,  payable  quarterly.  The note,  which was  originally  due and
payable on June 1, 2001,  was  subsequently  amended to extend  such due date to
September  1, 2001 and  amended by Second  Amendment  to extend such due date to
March 31,  2002.  At February  28, 2001 the Company  owed  interest of $3,958 to
Health Card, which was subsequently paid.

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


<PAGE>

                         SANDATA, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1  -  LEGAL PROCEEDINGS:

          Reference is made to Footnote 5 to the Financial  Statements in Part I
               of this Quarterly Report on Form 10-QSB.

ITEM 2  -  CHANGES IN SECURITIES AND USE OF PROCEEDS:

           None

ITEM 3  -  DEFAULTS UPON SENIOR SECURITIES:

           None

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

           None

ITEM 5  -  OTHER INFORMATION:

           None

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

           None


<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:    April 13, 2001                          By:      /s/ Bert E. Brodsky
                                                         -----------------------
                                                              Bert E. Brodsky
                                                        Chairman of the Board
                                                        Chief Executive Officer