U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC 20549
                             Form 10Q-SB 
(Mark One)

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

For the quarterly period year ended November 30, 1998

[  ] 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 January 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 November 30, 1998 (unaudited)
                      and May 31, 1998                                        3

                      UNAUDITED CONSOLIDATED CONDENSED
                      STATEMENTS OF OPERATIONS for the three and six
                      months ended November 30, 1998 and November 30, 1997    5

                      UNAUDITED CONSOLIDATED CONDENSED
                      STATEMENTS OF CASH FLOWS for the three and six months
                      ended November 30, 1998 and November 30, 1997           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                                      18

Item 6        -       EXHIBITS AND REPORTS ON FORM 8-K                       18


<PAGE>

               Sandata, Inc. and Subsidiaries

             CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
<S>                                                                                    <C>                       <C>



                                                                                               UNAUDITED                AUDITED
                                                                                              November 30,              May 31,
                                                                                                 1998                    1998
ASSETS:
CURRENT ASSETS
         Cash and cash equivalents                                                     $       1,292,127          $    1,794,947
         Accounts receivable, net of allowance for doubtful
            accounts of $462,000 and $443,000 respectively                                     1,702,239               1,611,457
         Receivables from affiliates                                                             491,248                 619,687
         Inventories                                                                              61,074                  27,003
         Prepaid expenses and other current assets                                               243,304                 140,873

TOTAL CURRENT ASSETS                                                                           3,789,992               4,193,967

FIXED ASSETS, NET                                                                              7,269,912               5,814,381

OTHER ASSETS
         Notes receivable                                                                        187,593                 100,000
         Cash surrender value of officer's life insurance,
            security deposits and other                                                          528,927                 525,281

TOTAL ASSETS                                                                           $      11,776,424         $    10,633,629


</TABLE>



       See notes to consolidated condensed financial statements

<PAGE>
                     Sandata, Inc. and Subsidiaries
                 CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<S>                                                                                 <C>                    <C>
                                                                                            UNAUDITED                  AUDITED
                                                                                           November 30,                May 31,
                                                                                              1998                      1998

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
         Accounts payable and accrued expenses                                      $       2,019,425      $          2,507,042
         Current portion of long-term debt                                                        ---                    22,296
         Deferred/unearned revenue                                                             63,564                    23,410
         Deferred income                                                                      177,540                   186,358

TOTAL CURRENT LIABILITIES                                                                   2,260,529                 2,739,106

LONG TERM DEBT                                                                              1,550,000                       ---
DEFERRED INCOME                                                                               127,174                   215,945
DEFERRED INCOME TAXES                                                                         382,000                   382,000

TOTAL LIABILITIES                                                                           4,319,703                 3,337,051

SHAREHOLDERS' EQUITY
         Common stock                                                                           2,481                     1,560
         Additional paid in capital                                                         5,772,079                 4,173,091
         Retained earnings                                                                  3,201,820                 3,121,927
         Notes receivable-officers                                                         (1,519,629)                      ---

TOTAL SHAREHOLDERS' EQUITY                                                                  7,456,721                 7,296,578

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                          $      11,776,424         $      10,633,629





</TABLE>


               See notes to consolidated condensed financial statements 

<PAGE>


            Sandata, Inc. and Subsidiaries

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


                                                                     THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                        NOVEMBER 30,                      NOVEMBER 30,
                                                                  1998               1997             1998            1997
REVENUES:
       Service fees                                         $   3,335,050    $    2,972,524   $   6,558,560   $     5,947,431
       Other income                                                44,386            71,732         297,714           143,433
       Interest income                                             39,086            12,057          63,484            46,337
                                                                3,418,522         3,056,313       6,919,758         6,137,201

COSTS AND EXPENSES:
       Service Fees:
              Operating                                         1,968,735          1,869,484       4,086,563        3,850,754
              Selling, general and administrative                 857,058            645,073       1,749,881        1,241,448
              Depreciation and amortization                       499,191            346,394         938,551          676,645
              Interest expense                                     10,815             13,646          16,545           36,162

TOTAL COSTS AND EXPENSES                                        3,335,799          2,874,597       6,791,540        5,805,009

Earnings from operations before income taxes                       82,723            181,716         128,218          332,192

       Income tax expense                                          32,038             78,000          48,325          144,209

NET EARNINGS                                                $      50,685    $       103,716   $      79,893   $      187,983

BASIC EARNINGS PER SHARE                                    $        0.02    $          0.07   $         0.04  $        0.013

DILUTED EARNINGS PER SHARE                                  $        0.02    $          0.05   $         0.04  $         0.08



</TABLE>


                See notes to consolidated condensed financial statements

<PAGE>

                   
                 Sandata, Inc. and Subsidiaries

     UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>

<S>                                                                                 <C>                       <C>
                                                                                                SIX MONTHS ENDED
                                                                                                   NOVEMBER 30,
                                                                                          1998                      1997
Cash flows from operating activities:
Net earnings                                                                         $     79,893             $    187,983
Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
     Depreciation and amortization                                                        938,551                   676,645
     Increase (decrease) in allowance for doubtful accounts receivable                     18,492                   (80,200)
     (Decrease) in deferred income                                                        (97,589)                 (143,402)
     Increase in deferred revenue                                                          40,154                    28,340
     (Increase) in operating assets                                                      (249,422)                 (415,880)
     (Decrease) increase in operating liabilities                                        (496,569)                  320,352

Net cash  provided by operating activities                                                233,510                   573,838
Cash flows from investing activities:
     Collection of note receivable - officer                                                  ---                   102,867
     Purchases of fixed assets                                                         (2,394,082)               (1,186,547)
     Decreases in receivables from affiliates                                             128,439                   329,517
     Collections of note receivable-former affiliates                                         ---                    11,363

Net cash (used in) investing activities                                                (2,265,463)                 (742,800)

Cash flows from financing activities:
     Proceeds from stock transactions                                                       1,609                 1,575,683
     Principal payments on term loan                                                      (22,296)                  (34,201)
     Proceeds from line of credit                                                       1,800,000                 1,750,000
     Principal payments on line of credit                                                (250,000)               (1,000,000)

Net cash provided by financing activities                                               1,529,313                   541,482       

     (Decrease) increase in cash and cash equivalents                                    (502,820)                  372,520
     Cash and cash equivalents at beginning of period                                   1,794,947                 1,200,014  
     Cash and cash equivalents at end of period                                      $  1,292,127             $   1,572,534



</TABLE>


                      See notes to consolidated financial statements
                             
<PAGE>


                 Sandata, Inc. and Subsidiaries
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The  Consolidated   Condensed  Balance  Sheet  as  of  November  30,  1998,  the
Consolidated  Condensed  Statements  of  Operations  for the three and six month
periods  ended  November  30,  1998  and  1997  and the  Consolidated  Condensed
Statement of Cash Flows for the three and six month periods  ended  November 30,
1998 and 1997  have  been  prepared  by  Sandata,  Inc.  and  Subsidiaries  (the
"Company")  without audit. In the opinion of Management,  all adjustments (which
include  only normal,  recurring  adjustments)  necessary to present  fairly the
financial  position as of November 30, 1998 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 November 30, 1998
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  indemified  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 $200,000 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 $382,185 and $703,251 for the three
and six months ended  November  30, 1998 as compared to $504,363 and  $1,063,372
for the three and six months ended  November 30, 1997. 

At November 30, 1998, the Company was owed $152,747 from Health Card,  which was
received in full  subsequent  to November 30, 1998.  

The Company makes various payments to certain affiliated companies. The payments
are for equipment  rental,  which was $97,232 and $190,714 for the three and six
months ended  November  30, 1998 as compared  $94,889 and $189,236 for the three
and six months ended November 30, 1997; rent for the Facility which was $162,090
and $324,180 for the three and six months ended November 30, 1998 as compared to
$145,800 and $291,600 for the three and six months ended  November 30, 1997; and
accounting, bookeeping and paralegal services which was $59,595 and $109,357 for
the three and six months  ended  November  30,  1998 as  compared to $69,105 and
$116,538 for the three months ended November 30, 1997.

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  2,264,995  at  November  30,  1998 and
1,397,133  at November  30,  1997.  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:  2,268,453 at November  30, 1998 and  2,250,998 at November 30,
1998.  Options to purchase  267,400  shares of common stock were  outstanding at
November 30, 1997 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.  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 and 100,000  shares at $7.00 per share,  such warrants
to be  exercisable  until  December  22,  1998  (with  respect  to the  warrants
exercisable  at $5.00 per share)  and two years  (with  respect to the  warrants
exercisable at $7.00 per share).  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. An aggregate of 275,100 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.


                      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  $3,418,522  and  $6,919,758  for the three and six months  ended
November 30, 1998 as compared to $3,056,313 and $6,137,201 for the three and six
months ended November 30, 1997,  increasing $362,209 and $782,557  respectively.

Service fee revenues were $3,335,050 and $6,558,560 for the three and six months
ended  November 30, 1998 as compared to $2,972,524  and $5,947,431 for the three
and six months  ended  November  30,  1997,  increasing  $362,526  and  $611,129
respectively. The increases are attributable to revenues derived from SanTrax(R)
and SandataNET(R), offset by decreases in revenue from Health Card. 

Other income was $44,386 and 297,714 for the three and six months ended November
30, 1998 as compared to $71,732 and  $143,433 for the three and six months ended
November 30, 1997, decreasing $27,346 and increasing $154,281 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  $1,968,735 and $4,086,563 for the three and six months
ended  November 30, 1998 as compared to $1,869,484  and $3,850,754 for the three
and six  months  ended  November  30,  1997,  increasing  $99,251  and  $235,809
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 $857,058 and $1,749,881 for
the three and six months ended  November  30, 1998,  as compared to $645,073 and
$1,241,448  for the three and six months ended November 30, 1997, an increase of
$211,985  and  $508,433  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  Communications  Corporation.  

Depreciation and amortization  expenses were $499,191 and $938,551 for the three
and six months ended  November 30, 1998 as compared to $346,394 and $676,645 for
the three and six months ended  November  30, 1997,  an increase of $152,797 and
$261,906 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  $10,815 and $16,545 for the three and six months ended
November  30,  1998 as  compared  to $13,646  and  $36,162 for the three and six
months ended  November 30, 1997, a decrease of $2,831 and $19,617  respectively.
This decrease was attributable to less outstanding debt.

Income Tax Expenses

Income tax expenses  were $32,038 and $48,325 for the three and six months ended
November 30, 1998 as compared to $78,000 and $144,209 for the three month period
ended November 30, 1997, a decrease of $45,962 and $95,884 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  increased as of November 30, 1998 to $1,529,463,
as compared with  $1,454,861 at May 31, 1998.  

For the six months ended November 30, 1998, the Company has spent  approximately
$2,394,000 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 November 30,
1998,  the  outstanding  balance  on the  Credit  Agreement  with  the  Bank was
$1,550,000. 

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 $200,000  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.

                                                  
                     Sandata, Inc. and Subsidiaries

                      PART II - OTHER INFORMATION
                                    


Item 1  -  LEGAL PROCEEDINGS:

On December 21, 1998, the Company and MCI Telecommunications Corporation ("MCI")
settled a patent infringement  lawsuit brought by MCI against the Company in the
United States District Court for the Eastern District of New York, captioned MCI
Telecommunications  Corporation v. Sandata, Inc. The settlement provides,  among
other  things,  that the  Company  is granted a license  under  certain of MCI's
patents  which  permits  the  Company to continue to market and sell its SANTRAX
time  and  attendance  verification  product   non-exclusively   nationwide  and
exclusively  in the home health care  industries  for the five New York boroughs
and that the Company will pay MCI certain royalties.

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:

A. The Registrant  held its Annual Meeting of  Stockholders on October 22, 1998.

B. Five (5)  directors  were  elected at the Annual  Meeting to serve  until the
Annual Meeting of  Stockholders  in 1999. The names of these directors and votes
cast in favor of their election and shares  withheld are as follows:

    Name                           Votes For                  Votes Withheld
Bert E. Brodsky                    2,170,412                     11,719
Hugh Freund                        2,170,412                     11,719
Gary Stoller                       2,170,412                     11,719
Paul J. Konigsberg                 2,170,483                     11,719
Ronald L. Fish                     2,170,483                     11,719 

C. An Amendment to the Registrant's  Certificate of Incorporation increasing the
number of authorized Common Shares of the Registrant from 3,000,000 to 6,000,000
was approved as set forth below:

                  Votes For                    Votes Against
                  2,130,898                       48,152

D. The adoption of the Registrant's
Restated  Certificate  of  Incorporation,  including  the  above  Amendment  was
approved as set forth below: 

                  Votes For                   Votes  Against
                  2,134,726                      45,665

E. The adoption of the 1998 Stock Option Plan,  reserving  1,000,000  shares for
issuance under the plan was approved as set forth below:

                  Votes  For                  Votes  Against
                  1,467,657                       65,050

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.to  be  signed  on  its  behalf  by the
undersigned thereunto duly  authorized.authorized.to  be signed on its behalf by
the undersigned thereunto duly authorized.



                                             SANDATA, INC.             
                                             (Registrant)



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




<PAGE>


                                   January 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 November 30, 1998 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