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, 1999
                                  

[  ] 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            (IRS 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  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 April 12, 1999 was 2,481,482 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, 1999 (unaudited)
                  and May 31, 1998                                         3

                  UNAUDITED CONSOLIDATED CONDENSED
                  STATEMENTS OF OPERATIONS for the three and nine
                  months ended February 28, 1999 and February 28, 1998     5

                  UNAUDITED CONSOLIDATED CONDENSED
                  STATEMENTS OF CASH FLOWS for the nine months
                  ended February 28, 1999 and February 28, 1998            6

                  NOTES TO CONSOLIDATED CONDENSED
                  FINANCIAL STATEMENTS                                     7

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

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>

                                          Sandata, Inc. and Subsidiaries


                                       CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<S>                                                                                <C>                    <C>
                                                                                        UNAUDITED                  AUDITED
                                                                                       February 28,                May 31,
                                                                                           1999                     1998
                                                                              

ASSETS:
CURRENT ASSETS
         Cash and cash equivalents                                                   $    277,925            $  1,794,947
         Accounts receivable, net of allowance for doubtful
            accounts of $422,000 and $443,000 respectively                              2,133,473               1,611,457
         Receivables from affiliates                                                      584,148                 619,687
         Inventories                                                                       38,373                  27,003
         Prepaid expenses and other current assets                                        310,448                 140,873
                                                                                     ------------            ------------         
TOTAL CURRENT ASSETS                                                                    3,414,367               4,193,967

FIXED ASSETS, NET                                                                       7,119,189               5,814,381

OTHER ASSETS
         Notes receivable                                                                 174,365                 100,000
         Cash surrender value of officer's life insurance,
            security deposits and other                                                   764,708                 525,281
                                                                                     ------------            ------------   

TOTAL ASSETS                                                                         $ 11,472,629            $ 10,633,629
                                                                                     ============            ============ 










See notes to consolidated condensed financial statements
</TABLE>

<PAGE>


                                       CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<S>                                                                               <C>                        <C>
                                                                                      UNAUDITED                  AUDITED
                                                                                     February 28,                May 31,
                                                                                       1999                       1998
                                                                           

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
         Accounts payable and accrued expenses                                     $  1,736,226              $  2,507,042
         Current portion of long-term debt                                                  ---                    22,296
         Deferred/unearned revenue                                                       35,623                    23,410
         Deferred income                                                                267,523                   186,358
                                                                                   ------------              ------------

TOTAL CURRENT LIABILITIES                                                             2,039,372                 2,739,106

LONG TERM DEBT                                                                        1,300,000                       ---
DEFERRED INCOME                                                                         255,255                   215,945
DEFERRED INCOME TAXES                                                                   382,000                   382,000
                                                                                   ------------              ------------

TOTAL LIABILITIES                                                                     3,976,629                 3,337,051

SHAREHOLDERS' EQUITY
         Common stock                                                                     2,481                     1,560
         Additional paid in capital                                                   5,772,079                 4,173,091
         Retained earnings                                                            3,241,101                 3,121,927
         Notes receivable-officers                                                   (1,519,659)                      ---
                                                                                   ------------              ------------
                                                                                 
TOTAL SHAREHOLDERS' EQUITY                                                            7,496,002                 7,296,578
                                                                                   ------------              ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                         $ 11,472,629              $ 10,633,629
                                                                                   ============              ============ 








See notes to consolidated condensed financial statements

</TABLE>

<PAGE>

<TABLE>
                             UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

<S>
                                                            <C>                 <C>            <C>               <C>
                                                                   THREE MONTHS ENDED                NINE  MONTHS ENDED
                                                                       FEBRUARY 28,                     FEBRUARY 28, 
                                                                 1999               1998            1999             1998
                                                                 ----               ----            ----             ----
REVENUES:                                                                                                              
       Service fees                                          $  3,597,042       $  3,155,692    $ 10,155,602     $  9,103,123
       Other income                                                55,118             61,831         352,832          205,264
       Interest income                                             38,723             14,411         102,207           60,748
                                                             ------------       ------------    ------------     ------------
                                                                3,690,883          3,231,934      10,610,641        9,369,135
                                                             ------------       ------------    ------------     ------------

COSTS AND EXPENSES:
       
       Operating                                                2,124,860          2,077,541       6,211,423        5,928,295
       Selling, general and administrative                        925,287            728,559       2,675,168        1,970,007
       Depreciation and amortization                              521,887            347,377       1,460,438        1,024,022
       Interest expense                                            48,264             10,294          64,809           46,456
                                                             ------------       ------------    ------------     ------------

TOTAL COSTS AND EXPENSES                                        3,620,298          3,163,771      10,411,838        8,968,780
                                                             ------------       ------------    ------------     ------------

Earnings from operations before income taxes                       70,585             68,183         198,803          400,355

       Income tax expense                                          31,304             30,285          79,629          174,494
                                                             ------------       ------------    ------------     ------------

       NET EARNINGS                                          $     39,281       $     37,878    $    119,174     $    255,861
                                                             ============       ============    ============     ============

BASIC EARNINGS PER SHARE                                     $       0.02       $       0.03    $       0.05     $       0.16
                                                             ------------       ------------    ------------     ------------

DILUTED EARNINGS PER SHARE                                   $       0.02       $       0.02    $       0.05     $       0.11
                                                             ------------       ------------    ------------     ------------






See notes to consolidated condensed financial statements

</TABLE>
<PAGE>
<TABLE>

            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<S>                                                                                <C>                        <C> 
                                                                                                NINE  MONTHS ENDED
                                                                                                    FEBRUARY 28,
                                                                                           1999                      1998
Cash flows from operating activities:
Net earnings                                                                         $    119,174              $    225,861
Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
     Depreciation and amortization                                                      1,460,438                 1,024,022
     (Gain) on disposal of fixed assets                                                 (269,948)                 (184,642)
     (Decrease) in allowance for doubtful accounts receivable                            (21,258)                  (94,600)
     (Increase) in deferred income                                                        120,475                  (20,592)
     (Increase) in deferred revenue                                                        12,213                    14,272
     (Increase) in operating assets                                                     (917,902)                 (535,989)
     (Decrease) in operating liabilities                                                (779,767)                   (1,351)
                                                                                     ------------              ------------

Net cash provided by operating activities                                               (336,575)                   426,981
                                                                                     ------------              ------------

Cash flows from investing activities:
     Collection of note receivable - officer                                                   --                   102,867
     Purchases of fixed assets                                                        (3,595,298)                (1,75,918)
     Decreases in receivables from affiliates                                              35,538                   345,310
     Collections of note receivable-former affiliates                                          --                    11,363
     Proceeds from sale/leaseback transaction                                           1,100,000                   700,000
                                                                                     ------------              ------------

Net cash (used in) investing activities                                               (2,459,760)                 (600,378)
                                                                                     ------------              ------------

Cash flows from financing activities:
     Proceeds from stock transactions                                                       1,609                 1,575,683
     Principal payments on term loan                                                     (22,296)                 (212,803)
     Proceeds from line of credit                                                       3,150,000                        --
     Principal payments on line of credit                                             (1,850,000)               (1,000,000)
                                                                                     ------------              ------------

Net cash provided by financing activities                                               1,279,313                   362,880
                                                                                     ------------              ------------

     (Decrease) increase in cash and cash equivalents                                 (1,517,022)                   189,483
     Cash and cash equivalents at beginning of period                                   1,797,947                 1,200,014
                                                                                     ------------              ------------
     Cash and cash equivalents at end of period                                      $    277,925              $  1,389,497
                                                                                     ============              ============



See notes to consolidated condensed financial statements

</TABLE>
<PAGE>


                         Sandata, Inc. and Subsidiaries


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


                                         


1.       CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The  Consolidated   Condensed  Balance  Sheet  as  of  February  28,  1999,  the
Consolidated  Condensed  Statements of  Operations  for the three and nine month
periods  ended  February  28,  1999  and  1998  and the  Consolidated  Condensed
Statement of Cash Flows for the nine month periods  ended  February 28, 1999 and
1998 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, 1999 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, 1998. Results of Operations for the period ended February 28, 1999
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  certain  of 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 (the  "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 the
Company's Chairman 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, 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 a 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
$3,140,884,  which was assumed by BFS; the net  difference was recorded as other
income in the financial statements in fiscal 1997.

As of June 1, 1998, National Medical Health Card Systems,  Inc., ("Health Card")
of which the  Company's  Chairman is Chairman  of the Board of  Directors  and a
principal  shareholder,  hired 11  employees  of the Company in order to provide
development,  enhancement,  modification  and maintenance  services,  previously
provided by the Company.  The Company was paid $208,000 in  consideration of the
Company's  waiving certain rights relative to such employees.  In addition,  the
Company began leasing certain  computer  equipment to Health Card for $2,000 per
month as well as computer  hardware for its data processing  center at a monthly
cost of $20,000 from the Company pursuant to a verbal agreement.  The Company is
expected to continue to provide to Health Card  consulting  services  related to
Health Card's information systems.

The Company  derives  revenue from Health Card for data  processing and computer
services.  The revenue  generated  amounted to $473,896 and  $1,157,150  for the
three and nine  months  ended  February  28,  1999 as  compared to $ 574,684 and
$1,638,828 for the three and nine months ended February 28, 1998.

At February 28, 1999, the Company was owed $241,256 from Health Card,  which was
received in full subsequent to February 28, 1999.

The Company  makes  various  payments  to certain  affiliates  of the  Company's
Chairman.  The payments are for equipment rental, which was $98,316 and $289,031
for the three and nine months ended February 28, 1999 as compared to $94,898 and
$287,483  for the three and nine months ended  February  28, 1998;  rent for the
Facility  which was  $167,490  and  $491,670 for the three and nine months ended
February  28, 1999 as compared to $150,660  and  $442,260 for the three and nine
months ended  February 28,  1998;  and  accounting,  bookkeeping  and  paralegal
services  which was $39,231  and  $148,588  for the three and nine months  ended
February  28, 1999 as compared  to $54,056 and  $170,595  for the three and nine
months ended February 28, 1998.

3.       NET EARNINGS PER COMMON SHARE

In February  1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting Standards No. 128 "Earnings per Share" ("SFAS
128"),  which  establishes  standards for computing and presenting  earnings per
share. The new standard  replaces the presentation of primary earnings per share
prescribed  by  Accounting  Principles  Board Option No. 15 "Earnings per Share"
("APB 15"),  with a  presentation  of basic earnings per share and also requires
dual  presentation  of basic and diluted  earnings  per share on the face of the
statement of operations for all entities with complex capital structures.  Basic
earnings  per  share  excludes  dilution  and is  computed  by  dividing  income
available to common stockholders by the weighted-average number of common shares
outstanding for the period.  Diluted earnings per share is computed similarly to
fully diluted  earnings per share  pursuant to APB 15. The Company  adopted SFAS
128 in the third  quarter of fiscal 1998 and has restated  all prior  periods in
its financial statements.

Basic earnings per share are based on the  weighted-average  number of shares of
common  stock  outstanding,  which  were  2,336,364  at  February  28,  1999 and
1,450,884  at February  28,  1998.  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:  2,544,282 at February  28, 1999 and  2,132,904 at February 28,
1998.  Options to purchase  437,550  shares of common stock were  outstanding at
February 28, 1999 but 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

In January,  1999,  the Company  consummated a  Sale/Leaseback  of certain fixed
assets  (principally  computer  hardware,  software  and  equipment).  The fixed
assets,  which had a net book  value of  approximately  $830,000,  were sold for
$1,100,000.  The  resulting  gain of  approximately  $270,000  was  recorded  as
deferred  income and is being  recognized  over the life of the lease,  which is
thirty-six (36) months. Approximately $7,500 of deferred gain was recognized for
the three months ended February 28, 1999. An unaffiliated  third party purchased
the residual rights in such lease.

5.       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  one  year  financial   consulting  agreement
("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 (the "$5.00 Warrants") and 100,000 shares at $7.00 per
share (the "$7.00  Warrants") such warrants to be exercisable until December 22,
1998 (with  respect to the $5.00  Warrants)  and two years (with  respect to the
$7.00  Warrants).  The $5.00  Warrants have expired on such date without  having
been  exercised.  The warrants issued in such private  offering,including  those
issued to investors as well as the assignees of the placement agent's affiliate,
are redeemable by the Company under certain circumstances.

In August, 1997 the Board of Directors  authorized the execution and delivery of
a notice of redemption to holders of such  warrants.  As a result,  there were a
total of  166,000  warrants  exercised  at $7.00  per  share.  The net  proceeds
generated from warrant exercises were $1,105,827. In September, 1997 the Company
withdrew  its  election to redeem  warrants  issued  pursuant  to the  Financial
Consulting Agreement discussed above.

In August 1997  pursuant to the terms of the  Company's  incentive  stock option
plan,  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.  Other  option  exercises  by  employees  of the  Company  amounted to an
aggregate  of 222  shares at an  exercise  price of $1.875  per  share.  The net
proceeds  generated from option  exercises  during the fiscal year ended May 31,
1998 were $408,693.

On July 14, 1998 Messrs. Brodsky, Freund, Stoller, Konigsberg, Gerald Shapiro, a
former  director of the Company and Carol Freund,  the spouse of Hugh Freund and
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 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.  The shares of Common  Stock issued upon  exercise  have been
pledged as security for the debt.

In October 1998,  the Board of Directors  approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized  common shares
from 3,000,000 to 6,000,000.

In October 1998, the Company  adopted a stock option plan,  reserving  1,000,000
shares of common stock for grant under the plan. Stock options granted under the
plan may be either  statutory or  non-statutory.  As of February  28,  1999,  an
aggregate of 293,550  statutory  stock options were granted under the plan at an
exercise price of $3.00 per share. Such options are exercisable over a five-year
period and vest over a  three-year  period.  Additionally,  in October  1998 the
Company granted certain directors of the Company  non-statutory stock options to
purchase an  aggregate  of 20,000  shares of the  Company's  common  stock at an
exercise price of $3.00. These options vest immediately and are exercisable over
a five-year period.

In December,  1998, the Company  granted  520,500  statutory  options to certain
officers of the Company  under a Stock Option Plan adopted in January 1995 at an
exercise  price of $1.41 per  share.  These  options  vest  immediately  and are
exercisable over a five-year period.


                         Sandata, Inc. and Subsidiaries

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

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

Results of Operations

Revenues were  $3,690,883  and  $10,610,641  for the three and nine months ended
February 28, 1999 as compared to  $3,231,934  and  $9,369,135  for the three and
nine  months  ended  February  28,  1998,  increasing  $458,949  and  $1,241,506
respectively.

Service fee revenues  were  $3,597,042  and  $10,155,602  for the three and nine
months ended  February 28, 1999 as compared to $3,155,692 and $9,103,123 for the
three  and  nine  months  ended  February  28,  1998,  increasing  $411,350  and
$1,052,479 respectively. The increases are attributable to revenues derived from
SanTrax(R)  and  SandataNET(R),  offset by decreases  in revenue  from  National
Medical Health Card Systems, Inc. ("Health Card").

Other  income was  $55,118  and  $352,832  for the three and nine  months  ended
February  28, 1999 as compared  to $61,831 and  $205,264  for the three and nine
months ended  February  28,  1998,  decreasing  $6,713 and  increasing  $147,568
respectively.  The increase is  attributable  to an amount  received from Health
Card in  connection  with its  hiring  employees  of the  Company,  offset  by a
decrease in income recognized on sales/leaseback transactions.

Expenses Related to Services

Operating  expenses were $2,124,860 and $6,211,423 for the three and nine months
ended  February 28, 1999 as compared to $2,077,541  and $5,928,295 for the three
and nine months  ended  February  28,  1998,  increasing  $47,319  and  $283,128
respectively.  Costs  associated  with  SanTrax  and its  operations,  including
payroll and  telephone  expenses,  in addition to increases in costs  associated
with  SandataNET and its  operations,  primarily  hardware  purchases,  were the
primary factors for the increases in operating expenses.

Selling,  general and  administrative  expenses were $925,287 and $2,675,168 for
the three and nine months ended  February 28, 1999,  as compared to $728,559 and
$1,970,007 for the three and nine months ended February 28, 1998, an increase of
$196,728  and  $705,161  respectively.  The  increases  were  primarily  due  to
increases in consulting,  payroll and commission  expenses relative to increased
efforts to increase  sales in the  SanTrax and  SandataNET  product  lines,  and
certain royalties payable to MCI Telecommunications Corporation.

Depreciation  and  amortization  expenses were $521,887 and  $1,460,438  for the
three and nine months  ended  February  28,  1999 as  compared  to $347,377  and
$1,024,022 for the three and nine months ended February 28, 1998, an increase of
$174,510 and $436,416 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 $48,264 and $64,809 for the three and nine months ended
February  28,  1999 as  compared  to $10,294  and $46,456 for the three and nine
months ended February 28, 1998, an increase of $37,970 and $18,353 respectively.
The increases  were a result of increased  borrowings  on the  Company's  Credit
Agreement.

Income Tax Expenses

Income tax expenses were $31,304 and $79,629 for the three and nine months ended
February  28, 1999 as compared  to $30,285 and  $174,494  for the three and nine
months  period ended  February 28, 1998, an increase of $1,019 and a decrease of
$94,865 respectively.

IDA/SBA Financing

On June 1, 1994, BFS Sibling  Realty,  Inc.  ("BSRI")  formerly known as Brodsky
Sibling  Realty,  Inc.,  a company  affiliated  with  certain  of 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 the Company's  Chairman
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, 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
$3,140,884,  which was assumed by BFS; the net  difference was recorded as other
income in the financial statements in fiscal 1997.

Liquidity and Capital Resources

The Company's  working capital  decreased as of February 28, 1999 to $1,374,995,
as compared with $1,454,861 at May 31, 1998.

For the nine months ended February 28, 1999, the Company has spent approximately
$3,665,000 in fixed asset additions,  including  computer  hardware and software
capitalization   costs  in  connection  with  revenue  growth  and  new  product
development.  The Company expects the current levels of capital  expenditures to
continue.

On July 14, 1998 Messrs. Brodsky, Freund, Stoller, Konigsberg, Gerald Shapiro, a
former  director of the Company and Carol Freund,  the spouse of Hugh Freund and
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 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.  The shares of Common  Stock issued upon  exercise  have been
pledged as security for the debt.

On April 18, 1997, the Company's  wholly owned  subsidiary,  Sandsport,  entered
into a revolving credit  agreement (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 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 the Company's  Chairman.
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. As of February 28,
1999,  the  outstanding  balance  on the  Credit  Agreement  with  the  Bank was
$1,300,000.

As of June 1, 1998,  Health Card hired 11  employees  of the Company in order to
provide  development,   enhancement,   modification  and  maintenance  services,
previously provided by the Company. The Company was paid $208,000  consideration
of the Company's waiving certain rights relative to such employees. In addition,
the Company began leasing certain  computer  equipment to Health Card for $2,000
per  month as well as  computer  hardware  for its data  processing  center at a
monthly cost of $20,000  from the Company  pursuant to a verbal  agreement.  The
Company is expected to  continue to provide to Health Card  consulting  services
related to Health Card's information systems.

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.

Year 2000

The Company  believes that its computer systems and those of its major customers
and suppliers are  substantially  Year 2000 compliant and  anticipates  that the
Company  will be in full  compliance  by May  1999.  The  Company  upgrades  its
computer  systems  from time to time as part of its  ongoing  operations  and is
currently planning Year 2000 compliance to occur in conjunction with its planned
conversion to a new software platform.  Accordingly,  it is anticipated that the
Company will incur significant  expenditures in connection with such conversion.
However,  the  Company  does not expect any  material  effect on its  results of
operations  or  financial  position  solely as a result of Year 2000  compliance
issues.




<PAGE>



                                              
                         Sandata, Inc. and Subsidiaries


                           PART II - OTHER INFORMATION


Item 1 - LEGAL PROCEEDINGS:

         Reference  is  made  to  Form 10-QSB  for the period ended November 30,
         1998.

Item 2 - CHANGES IN SECURITIES:

         Reference is made to Part I - Item 1 - "Notes to Consolidated Condensed
         Financial  Statements"  for  a  discussion  of  stock   option   grants
         which were exempt under Section 4(2) of the Securities  Act of 1933, as
         amended.

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:

         Exhibit 27 - Financial Data Schedule (Electronic Filing Only)

<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 14, 1999                     By: /s/ Bert E. Brodsky
                                            Bert E. Brodsky
                                            Chairman of the Board
                                            President, Chief Executive Officer,
                                            Chief Financial Officer





<PAGE>


                                                                        






                                    April 14, 1999



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

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

Dear Sir or Madam,

Transmitted  herewith  through  the EDGAR  system is Form 10-QSB for the quarter
ending February 28, 1999 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