SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------

                                    FORM 10-K
-----
| x |             ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
-----             SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended DECEMBER 31, 1997
                          -----------------
OR
-----             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|   |             OF THE SECURITIES EXCHANGE ACT OF 1934
-----
For the transition period from         to

                           Commission file no. 0-3677

                                  DATATAB, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

     NEW YORK                                13-1917838
--------------------------------------------------------------------------------
(State or other jurisdiction of   (I.R.S. Employer Identification No.)
 incorporation or organization)

49 EAST 21ST STREET, NEW YORK, NEW YORK                 10010
--------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:  (212) 228-6800
                                                      -------------
Securities registered pursuant to Section 12(b) of the Act:     NONE
                                                                ----
Securities registered pursuant to Section 12(g) of the Act:

                    COMMON SHARES, PAR VALUE $1.00 PER SHARE
--------------------------------------------------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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
                                      ---
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K. ( )

--------------------------------------------------------------------------------
                     The number of common shares, $1.00 par
                value, outstanding at March 20, 1997 was 705,836.


<PAGE>



                                     PART I
ITEM 1. BUSINESS.
-----------------
                  (a)   GENERAL DEVELOPMENT OF BUSINESS.

                  The Registrant was incorporated on June 5, 1959 as a New
Jersey  corporation,  commenced  business  operations  in  May,  1960,  and  was
re-incorporated on March 29, 1965 as a New York corporation.

                  (b)   FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
                  For the past three years, market research accounted for 100%
of consolidated  operating  revenues.  No other segment accounted for as much as
15% of consolidated operating revenues during the last three years.

                  (c)   NARRATIVE DESCRIPTION OF BUSINESS.
1.  SERVICES
    --------
                  The Registrant  operates a data  processing  service center in
New York City,  providing a variety of services  principally  utilizing computer
packages for the processing of data for use in market  research.  These packages
can be  marketed  to many  different  clients  with  only very  limited  program
adaptation.

                  Market  research data  processing  performed by the Registrant
includes the  processing  of public  opinion,  readership  audience,  political,
consumer,  and general survey research data for  manufacturers,  market research
companies,   advertising   agencies,   governmental   agencies,   financial  and
educational institutions,  and foundations. The Registrant also designs, prints,
mails, and processes surveys for use in large database  research.  Data supplied
by the  Registrant's  clients  is  refined  by the  Registrant  into  statistics
designed to be of assistance to the client.

                  The above  applications  utilize computer software licensed to
the Registrant. (See Item 2, INFRA.)


                                      I - 1


<PAGE>



2.  SOURCES OF RAW MATERIALS
    ------------------------

                  The  Registrant's   major  equipment   suppliers  are  Gateway
Computers, Hewlett-Packard, IBM, Megadata Corporation, and Qualstar Corporation.

                  The  Registrant  has been  granted a perpetual  license to use
copies of World Research  Systems' ("WRS") UNCLE software for cross  tabulations
as a result of a marketing  agreement  between the two companies under which the
Registrant was given the right to market software developed by WRS.

3.   DEPENDENCE ON CERTAIN CUSTOMERS
     -------------------------------

                  In 1997,  there was one client who accounted for more than 10%
of  consolidated   operating   revenues.   This  client  reflected  72%  of  the
consolidated operating revenues. Management believes that the loss of any one or
a few of its  largest  clients  would have a material  adverse  effect  upon the
Registrant.

4.  COMPETITION
    -----------

                  The data processing  service  industry is highly  competitive.
The  Registrant  conducts  business in direct  competition  with many  companies
(including  both  independent  service  bureaus and  diversified  companies with
service divisions) which offer a wide range of general data processing services,
including  those  performed  by  the  Registrant.   Some  of  the   Registrant's
competitors  are  smaller,  and some are larger and  possess  greater  financial
resources. Another competitive factor in the data processing service business is
"in-house" data processing,  in which a company installs its own data processing
equipment.   The  increasing   availability   and  lower  prices  of  mini-  and
micro-computers  have permitted  companies to install their own data  processing
equipment and to perform their own processing.

                                      I - 2


<PAGE>



                  Companies in the industry  compete on the basis of a number of
factors,  including price, quality of service, and product features.  Management
believes the Registrant's  particular strengths are its reputation and expertise
in a wide variety of  applications,  a well  qualified  staff,  and its advanced
software.  The Registrant  provides extensive staff support to its clients while
maintaining a competitive price structure within the industry.

5.  RESEARCH AND DEVELOPMENT
    ------------------------

                  The Registrant did not engage in any research and  development
activities  during the last  fiscal year and  Registrant  has not engaged in any
customer-sponsored   research   activities   relating  to  the   development  or
improvement of products or services during such period.

6.  EMPLOYEES
    ---------
                  As  of  March  20,  1998,   the  Registrant  had  5  full-time
employees. Part-time personnel are employed as needed.

                  (c)   FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
                        ------------------------------------------------
                        OPERATIONS AND EXPORT SALES.
                        ----------------------------

                  Not applicable.

ITEM 2. PROPERTIES.
------------------

                  The  Registrant  maintained  its  executive  offices  and data
center  operations  at 80 Fifth Avenue,  New York,  New York under a lease which
expired on  December  30,  1996.  In  addition  to the basic  annual  rent,  the
Registrant was  responsible for all taxes,  assessments,  water and sewer rents,
insurance,  etc.. The Registrant shared this space with its parent company, Data
Probe, Inc.




                                      I - 3


<PAGE>



                  The  Registrant,   effective  December  27,  1996,   currently
maintains its executive offices and data center operations at 49 East 21 Street,
New York, New York. The Registrant's parent company, Data Probe, Inc. acquired a
lease for this location,  and the Registrant will be renting space on a month to
month basis. (See Item 13, INFRA.)

                  The  Registrant  owns two Megadata  8300 Model 4's, a Megadata
8300 Model 6, a  Gateway2000  Pentium PC, and various IBM display  terminals and
Hewlett Packard Printers.

ITEM 3. LEGAL PROCEEDINGS.
--------------------------

                  NONE.

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

                  No matter was submitted to a vote of security holders during
the fourth quarter.















                                      I - 4


<PAGE>



                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-----------------------------------------------------------------------
          MATTERS.
          --------

                  a)  MARKET INFORMATION.
                      -------------------

                  The   Registrant's   common   shares   are   traded   in   the
over-the-counter  market and listed on the  National  Quotation  Bureau's  "Pink
Sheets" (symbol:  "DTAB").  The following table sets forth the range of high and
low closing bid quotations for the Registrant's common shares for each quarterly
period  during  the  Registrant's  last two fiscal  years,  as  reported  by the
National Quotation Bureau:

         PERIOD                                CLOSING BID PRICES
         ------                                ------------------
         Fiscal Year Ended
          December 31, 1997
                                               HIGH              LOW
                                               ----              ---
                  First Quarter                N/A *             N/A *
                  Second Quarter               N/A *             N/A *
                  Third Quarter                N/A *             N/A *
                  Fourth Quarter               N/A *             N/A *

         Fiscal Year Ended
          December 31, 1996
                                               HIGH              LOW
                                               ----              ---
                  First Quarter                N/A *             N/A *
                  Second Quarter               N/A *             N/A *
                  Third Quarter                N/A *             N/A *
                  Fourth Quarter               N/A *             N/A *

---------------

 *    Quotations were not available for the period indicated.

                  (b)  HOLDERS.
                       -------

                  The number of equity  security  holders of record at March 20,
1997 was 579.

                  (c)  DIVIDENDS.
                       ---------

                  The  Registrant  has never paid cash  dividends on its shares.
The  Registrant  does not anticipate  paying cash  dividends in the  foreseeable
future.






                                     II - 1


<PAGE>


<TABLE>
<CAPTION>

                         DATATAB, INC. AND SUBSIDIARIES
                         ------------------------------

                             SELECTED FINANCIAL DATA
                             -----------------------

                              YEAR ENDED  DECEMBER 31,
--------------------------------------------------------------------------------
                               1997        1996        1995        1994        1993
                           ----------  ----------  ----------  ----------   -------
For the year:

<S>                        <C>         <C>         <C>         <C>          <C>
Total Revenue              $  496,301  $  520,854  $  665,529  $  608,340   $  224,435
                           ==========  ==========  ==========  ==========   ==========
Net income
  (loss)                   $  (48,761) $    3,991  $  (27,110) $  (32,548)  $ (176,108)
                           ==========  ==========  ==========  ===========  ===========
Income (loss)
  per share                    $(.07)      $ .01       $(.04)      $(.05)       $(.25)
                               ======      ======      ======      ======       ======
Average number
  of shares
  used in
  computing
  earnings or
  loss per
  share                       705,836     705,836     705,836     705,836      705,836
                           ----------  ----------  ----------  ----------   ----------

At year end:

 Total assets              $  302,440  $  429,807  $  351,985  $  517,965   $  428,420
                           ----------  ----------  ----------  ----------   ----------

 Working
  capital                  $  143,888  $  190,797  $  142,432  $  159,964   $  183,799
                           ----------  ----------  ----------  ----------   ----------

Long-term
 indebtedness              $   18,600  $   22,600  $   22,600  $   30,600   $   36,600
                           ----------  ----------  ----------  ----------   ----------

Shareholders'
 equity                    $  130,545  $  179,306  $  174,315  $  202,425   $  234,973
                           ----------  ----------  ----------  ----------   ----------

Book value
 per share                     $ .18       $ .25       $ .25       $ .29        $ .33
                               -----       -----       -----       -----        -----

Cash dividends
 declared per
 common share                   NONE        NONE        NONE        NONE         NONE
                                ----        ----        ----        ----         ----


</TABLE>














                                     II - 2


<PAGE>



ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
---------------------------------------------------------------------
AND RESULTS OF OPERATION.
-------------------------

RESULTS OF OPERATIONS:
----------------------

                  Operating  revenues  for the three most  recent  fiscal  years
ended  December  31, were  $496,301 in 1997,  $520,854 in 1996,  and $665,529 in
1995.

                  Operating  revenues  decreased  by 4.7%,  or  $24,553  for the
period ending December 31, 1997 as compared to a decrease of 21.7% in 1996.

                  The  decrease  in  revenue  in 1997 was a  combination  of two
factors. The Registrants major client's revenue fell by 13% to $359,000,  or 72%
in 1997, from 80% of the  Registrants  revenue in 1996. That decrease was mostly
offset by several increases in work from smaller existing clients along with the
addition  of a few new  clients.  The  decrease  in  revenue  in 1996 is  mostly
attributable to reduced revenue from the Registrant's largest client.

                  In 1996 this client  accounted  for 80%, or  $410,987,  of the
Registrant's  revenue as compared  with 82%, or $507,632 in 1995.  This  $96,645
decrease in revenue accounted for 67% of the total decrease in overall revenue.

                  The  Registrant is  continuously  trying to add clients to its
base.  However,  the key is to add repetitive  work as opposed to one time work.
While the  Registrant  added several new clients during fiscal 1997, a few other
clients  either did not repeat their  studies or reduced the amount of work sent
to the Registrant.

                  For the past three years market research accounted for 100% of
the Registrant's consolidated revenue.

                  Operating costs increased by 2.2%, or $9,669,  in 1997.  These
same costs decreased by 23.3%, or $135,928 in 1996. The




                                     II - 3


<PAGE>



increase in 1997 costs is attributable to the Registrant's dependance on outside
suppliers to assist in completing  it's projects.  A significant  portion of the
decrease in 1996 is attributable  to those  operating costs directly  associated
with the reduction in revenue.  Operating costs expended on outside  contractors
directly related to revenue production in 1996 decreased  significantly over the
comparative  period of 1995.  The  Registrant  is  continuously  monitoring  the
remainder of the overall  operating cost structure and implementing  cost saving
programs wherever appropriate.

                  Selling and  administrative  expenses  increased by 28.4%,  or
$27,279 in 1997.  This increase was a direct result of the lower  management fee
charged to the  Registrant's  parent  company,  Data Probe,  Inc. The same costs
decreased by 32.5%, or $46,368 in 1996 as compared to 1995. The decrease in this
aggregate  1996 expense  section was the result of an increased  management  fee
charged to the Registrant's parent company, Data Probe, Inc.

                  The  Registrant  operated  at a loss in 1997.  This loss was a
result of a reduced revenue base.

                  The  Registrant  operated at a slight  profit in 1996. In 1996
the decrease in both operating and selling and  administrative  expenses  offset
the decrease in revenue.

                  The  Registrant had no capital  expenditures  in 1997 and 1996
and does not anticipate any capital expenditures in the near future.

                  In the opinion of management, inflation has not had a material
impact on the operations of the Registrant.

LIQUIDITY AND CAPITAL RESOURCES.
--------------------------------

                  Working capital was decreased by approximately $47,000 in
1997.  The working capital at December 31, 1997 was approximately



                                     II - 4


<PAGE>



$144,000 as compared to approximately $191,000 at December 31, 1996.

                  The Registrant's balance sheet at December 31, 1997 reflects
a receivable  from its parent  company,  Data Probe,  Inc.,  which  represents a
significant portion of its current assets and therefore its working capital. The
collectability of this receivable is uncertain.

                  The  Registrant's  continued  losses have greatly  reduced its
working capital.  If the loss trends continue,  or if additional revenues cannot
be  generated,  or  if  significant  operating  costs  cannot  be  reduced,  the
Registrant's  ability to continue to operate  would be severely  affected in the
absence of securing some type of  supplemental  financing,  the  availability of
which there can be no assurance.

















                                     II - 5


<PAGE>



GHASSEMI, PHOEL & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
23 Langdon Place
Lynbrook, NY 11563
Phone:  516-887-4444
Fax:   516-887-4450



                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Datatab, Inc.:

We have audited the accompanying consolidated balance sheet of Datatab, Inc. and
subsidiaries  as of  December  31,  1997 and 1996 and the  related  consolidated
statements of operations, retained earnings (deficit) and cash flows for each of
the years in the  three-years  period ended December 31, 1997.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial  position of Datatab,  Inc. and
subsidiaries at December 31, 1997, and 1996, and result of their  operations and
their cash flows for each of the three years in the period  ended  December  31,
1997, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  As  discussed  in the notes to the
financial statements,  the Company has suffered recurring losses from operations
that raise  substantial  doubt about its ability to continue as a going concern.
The financial  statements do not include any adjustments  that might result from
the outcome of this uncertainty.




/S/  GHASSEMI, PHOEL & CO.
Certified Public Accountants

Lynbrook, New York
March 17, 1998



                                     II - 6



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET




                                     ASSETS


                                                              DECEMBER 31,

                                                           1997           1996
                                                       ------------    ---------


Current Assets:
         Cash ......................................      $  8,682      $ 26,535
         Accounts Receivable .......................        27,520        36,981
         Receivable from Data Probe, Inc ...........       259,781       350,417
         Inventories of work
           in process and supplies .................         1,200         1,275
         Prepaid expenses and other
           current assets ..........................          --           3,490
                                                          --------      --------

Total current assets ...............................       297,183       418,698

Furniture, fixtures, equipment
         and improvements (at cost, less
         accumulated depreciation
         of $ 122,050 in 1997
         and $117,676 in 1996) .....................         4,630        10,442
Other assets .......................................           627           667
                                                          --------      --------
                                                          $302,440      $429,807
                                                          ========      ========

















(CONTINUED)




                                     II - 7



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET




                                   LIABILITIES


                                                             DECEMBER 31,
                                                        1997            1996
                                                    ------------    ------------
Current Liabilities:
         Accounts Payable ........................   $    42,289    $    54,113
         Accrued expenses and taxes ..............        94,606         95,715
         Customer advances .......................        16,400         78,073
                                                     -----------    -----------

Total Current Liabilities ........................       153,295        227,901

Other liabilities ................................        18,600         22,600
                                                     -----------    -----------
                                                         171,895        250,501
                                                     -----------    -----------


                              STOCKHOLDERS' EQUITY

Preferred shares - authorized 500,000
         shares, par value $1 a share;
         none issued .............................          --             --

Common shares -  authorized  2,000,000
         shares, par value $1 a share;
         issued 788,955 shares (including
         shares held in treasury)  ...............       788,955        788,955

Additional paid-in capital .......................     2,490,471      2,490,471

Deficit ..........................................    (3,017,424)    (2,968,663)
                                                     -----------    -----------
                                                         262,002        310,763
Less cost of 83,119 common shares
         held in treasury ........................       131,457        131,457
                                                     -----------    -----------
                                                         130,545        179,306
                                                     -----------    -----------
                                                     $   302,440    $   429,807
                                                     ===========    ===========



           The notes to financial statements are made a part hereof.



                                     II - 8



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS


                                                 YEAR ENDED DECEMBER 31,
                                                 -----------------------
                                             1997         1996          1995
                                             ----         ----          ----

Sales ...................................   $ 496,301    $ 520,854    $ 665,529
Cost of sales ...........................     457,650      447,981      583,909
                                            ---------    ---------    ---------

Gross profit ............................      38,651       72,873       81,620

Selling and administrative
         expenses .......................     123,466       96,187      142,555
                                            ---------    ---------    ---------

Loss from operations ....................     (84,815)     (23,314)     (60,935)

Interest income, net of
         related expenses ...............      36,054       27,305       33,825
                                            ---------    ---------    ---------

Net income (loss) .......................   $ (48,761)   $   3,991    $ (27,110)
                                            =========    =========    =========

Income (loss) per share .................   $    (.07)   $     .01    $    (.04)
                                            =========    =========    =========

Weighted average number of
         shares outstanding .............     705,836      705,836      705,836
                                            =========    =========    =========











           The notes to financial statements are made a part hereof.


                                     II - 9



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF RETAINED EARNINGS (DEFICIT)





                                             YEAR ENDED DECEMBER 31,
                                             -----------------------
                                        1997            1996            1995
                                        ----            ----            ----


(Deficit) - January 1 .............   $(2,968,663)   $(2,972,654)   $(2,945,544)

Net income (loss)
         for the year .............       (48,761)         3,991        (27,110)
                                      -----------    -----------    -----------

(Deficit) - December 31 ...........   $(3,017,424)   $(2,968,663)   $(2,972,654)
                                      ===========    ===========    ===========















           The notes to financial statements are made a part hereof.



                                     II - 10



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS





                                               YEAR ENDED DECEMBER 31,
                                               -----------------------
                                        1997            1996            1995
                                        ----            ----            ----

Cash flows provided by
  (used in) operating
  activities:
         Cash received from
           customers .................    $ 444,089     $ 565,604     $ 680,976
         Cash paid to suppliers
           and employees .............     (590,070)     (485,072)     (850,649)
         Interest received,
           net .......................       36,054        27,305        33,825
                                          ---------     ---------     ---------

Net cash provided by
  (used in) operating
  activities .........................     (109,927)      107,837      (135,848)
                                          ---------     ---------     ---------

Cash flows provided by
  (used in) investing
  activities:
         Disposition (purchase)
      of equipment ...................        1,438          --            (714)
         Advances from (to)
          an affiliate ...............       90,636       (90,600)       11,637
                                          ---------     ---------     ---------

Net cash provided by
  (used in)
  investing activities ...............       92,074       (90,600)       10,923
                                          ---------     ---------     ---------

Net (decrease)
  increase in cash ...................      (17,853)       17,237      (124,925)

Cash at beginning
  of period ..........................       26,535         9,298       134,223
                                          ---------     ---------     ---------

Cash at end
  of period ..........................    $   8,682     $  26,535     $   9,298
                                          =========     =========     =========

(CONTINUED)







                                     II - 11



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS





                                                  YEAR ENDED DECEMBER 31,
                                                  -----------------------
                                            1997            1996          1995
                                            ----            ----          ----

Reconciliation of net income
   to net cash provided
   by operating activities:

Net income (loss) .......................   $ (48,761)   $   3,991    $ (27,110)

Adjustments to reconcile net
   loss to net cash
   provided by operating
   activities:
                  Depreciation and
                   amortization .........       4,374       17,108       18,968
                  Decrease (increase)
                   in accounts
                   receivable ...........       9,461      (16,424)      15,447
                  Decrease (increase)
                   in inventories .......          75          225          250
                  Decrease (increase)
                   in prepaid expenses
                   and other assets .....       3,530       29,106       (4,533)
                  (Decrease) increase
                   in accounts
                   payable ..............     (11,824)     (22,639)      37,530
                  (Decrease) increase
                   in accrued expenses,
                   taxes and other
                   liabilities ..........     (66,782)      96,470     (176,400)
                                            ---------    ---------    ---------

Net cash provided by (used in)
         operating activities ...........   $(109,927)   $ 107,837    $(135,848)
                                            =========    =========    =========









           The notes to financial statements are made a part hereof.



                                     II - 12



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1997




SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------


         Principles of  Consolidation - The  consolidated  financial  statements
include  the  accounts of the  Company  and its  subsidiaries  (all of which are
wholly-owned)  after  elimination  of  intercompany  investments,  advances  and
transactions.

         Inventory - Inventoried  costs of uncompleted jobs represents  unbilled
labor and overhead  charges.  Inventories of supplies are stated at the lower of
cost (first-in, first-out method) or market.

         Furniture,  Fixtures, Equipment and Improvements - Furniture, fixtures,
equipment and  improvements are recorded at cost. At the time assets are sold or
otherwise disposed of, the cost and accumulated depreciation are eliminated from
the asset and depreciation accounts; profits and losses on such dispositions are
reflected in current  operations.  Expenditures  for maintenance and repairs are
charged to operations; replacements, renewals and betterments are capitalized.

         Depreciation  for  financial  accounting  purposes  is  computed on the
straight-line  method to  amortize  the cost of various  classes of assets  over
their  estimated  useful lives.  Leasehold  improvements  are amortized over the
shorter of the life of the related asset or the life of the lease.

         Depreciation  for income tax  purposes  is  computed  substantially  on
accelerated methods;  deferred income taxes have been provided on the difference
between  depreciation  expense for financial accounting and income tax purposes;
however,  deferred  taxes  previously  provided  were  eliminated as a result of
accumulated net losses.

         Systems  Development  Costs - Systems  development costs are charged to
operations as incurred.



(Continued)











                                     II - 13



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1997




SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
-------------------------------------------------------

         Earnings or Loss per Share - Earnings or loss per share is based on the
average number of shares of common stock  outstanding  each year after deducting
treasury shares.

         Cash  and Cash  Equivalents  - All  highly  liquid  investments  with a
maturity of three  months or less at date of purchase  are carried at fair value
and are considered to be cash equivalents.

         Use  of  Estimates  -  The  preparation  of  financial   statements  in
conformity with generally accepted accounting  principles requires management to
make  estimates  and   assumptions   that  affect  certain  report  amounts  and
disclosures. Accordingly, actual results could differ from those estimates.

         Fair Value of Financial  Instruments - The carrying  value of financial
instruments approximate their fair value.


RECEIVABLE FROM DATA PROBE, DATATAB, INC. AND SUBSIDIARIES:
-----------------------------------------------------------

Data  Probe,  Inc.,  the  majority  stockholder,  is indebted to the Company for
advances  made.  For the year ended  December  31, 1997 and 1996 total  interest
earned on the advances amounted to $35,834 and $26,027 respectively.


INVENTORIES:
------------

      Inventories are summarized as follows:

                                                 DECEMBER 31,
                                                 ------------
                                            1997           1996
                                            ----           ----

           Work in process . . . . . .     $ 1,200       $ 1,275
                                           =======       =======

(Continued)











                                     II - 14



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1997




FURNITURE, FIXTURES, EQUIPMENT AND IMPROVEMENTS:
------------------------------------------------

         Furniture, fixtures, equipment and improvements comprise the following:

                                       COST AND BOOK VALUE
                                           DECEMBER 31,
                                           ------------
                                                                ESTIMATED
                                                                 USEFUL
                                       1997         1996          LIVES
                                       ----         ----          -----
                  Computer data
                    processing
                    equipment . . .   $118,033     $118,033     7 to 10 years
                  Furniture,
                    fixtures and
                    improvements. .      8,647       10,085     5 to 10 years
                                      --------     --------

                                       126,680      128,118

                  Less accumulated
                    depreciation. .    122,050      117,676
                                       -------      -------
                            Net . .   $  4,630     $ 10,442
                                      ========     ========


INCOME TAXES:
-------------

         At December 31, 1997,  the Company has  available  net  operating  loss
carryforwards  in excess  of  $2,371,000,  of which  $974,000  expires  in 1998,
$116,000 in 1999, $320,000 in 2000, $175,000 in 2001, $199,000 in 2002, $120,000
in 2003 and the balance in 2004 and  thereafter.  In  addition,  the Company has
approximately  $1,000 of  investment  tax credit  carryforwards  which expire in
1998.

         The  Company  has  provided a valuation  allowance  in its  entirety to
offset potential  benefit derived with the utilization of the net operating loss
carryforwards and tax credits available.

         The  consolidated  federal  income tax  returns of the  Company and its
subsidiaries have been examined by the Treasury Department through 1977.


(Continued)




                                     II - 15



<PAGE>




                         DATATAB, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1997




TRANSACTIONS WITH RELATED PARTIES:
----------------------------------

         Data Probe, Inc. charged the Company for the following:

                              TOTAL    SERVICES     RENT
                              -----    --------     ----

                  1997. . .  $218,034   $177,796   $ 40,238
                  1996. . .   116,091    116,091       -
                  1995. . .   194,375    194,375       -

         In addition, the Company charged Data Probe, Inc. for the following:

                               TOTAL    SERVICES     RENT     INTEREST
                               -----    --------     ----     --------

                  1997. . .  $ 95,834   $ 60,000   $   -      $ 35,834
                  1996. . .   230,870    120,000     84,843     26,027
                  1995. . .   201,327     84,000     82,276     30,051

COMMITMENTS:
------------

         The  Company  had  offices in New York City for which it was  obligated
under a net operating lease which expired  December 31, 1996. In addition to the
basic annual rent the Company was subject to all taxes,  assessments,  water and
sewer  rents,  insurance,  etc.  Furthermore,  the Company  rented space to Data
Probe,  Inc. As of January 1, 1997,  Data Probe,  Inc.  acquired a lease for new
office  space,  and the Company will be renting its offices from them on a month
to month basis.


GOING CONCERN:
--------------

         As  reflected in the  accompanying  financial  statements,  the Company
incurred net  operating  losses of $48,761 and $27,110 for each of the two years
ended December 31, 1997 and 1995.  Adverse economic  conditions have limited the
ability of the Company to market its services at amounts  sufficient  to recover
operating and  administrative  cost.  Continued losses have and will exhaust the
remaining  net  working  capital in the near  future.  Working  capital had been
supplemented by the collections of a note receivable,  which was fully collected
as of December 31, 1994.  Because of the conditions  surrounding the Company and
its inability to generate profit,  there is doubt about the Company's ability to
continue  as a going  concern.  The  financial  statements  do not  include  any
adjustments  that might be necessary should the Company be unable to continue as
a going concern.





                                     II - 16



<PAGE>






ITEM #9.    DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE:
--------    -----------------------------------------------------

Not applicable.















                                     II - 17



<PAGE>



                                    Part III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

                  (a), (b)  IDENTIFICATION OF DIRECTORS AND EXECUTIVE
                                    OFFICERS.
                                                            DIRECTOR     OFFICER
 NAME                   AGE        POSITION                    SINCE      SINCE
 ----                   ---        --------                    -----      -----

Yitzhak N. Bachana      65      President, Treasurer,          1983        1983
                                and Director

James R. Sheridan       52      Executive Vice President,      1983        1983
                                Secretary, and Director

Herbert E. Shaver       44      Vice President,
                                Controller, and Director       1989        1981

                  Each director is elected to serve as a director until the next
succeeding  annual  meeting  of  shareholders  and until his  successor  is duly
elected  and  qualified.  Each  executive  officer  is  elected  to serve at the
pleasure of the Board of Directors.

                  (c)   IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES.
                            None.

                  (d)   FAMILY RELATIONSHIPS.
                            None.

                  (e)   BUSINESS EXPERIENCE.

                  The following  sets forth the business  experience  during the
past five years of each director and officer:

                  Mr. Bachana has been President,  Treasurer,  and a director of
Data Probe, Inc., a publicly-traded,  New York based computer service bureau and
parent of Data Probe  Acquisition  Corp., for more than the past five years. Mr.
Bachana has been a director of the Board of Megadata Corporation since April 20,
1976 and has been President and Chief Executive Officer of Megadata  Corporation
since June 3, 1980.  Megadata  Corporation's  securities  are  registered  under
Section 12(g) of the Securities Exchange Act of 1934, as amended.

                                     III - 1


<PAGE>



                  Mr. Sheridan has been Vice President and served as a
supervisor and operations manager of Data Probe, Inc. for more than
the past five years.

                  Mr. Shaver has been Vice President, Controller, and a
director of the Registrant for more than the past five years.  Mr.
Shaver has served as the Controller of Data Probe, Inc. for more than
the past five years.  Mr. Shaver has served as the Controller of
Megadata Corporation since September 1993.

                  (f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.
                  The Registrant knows of no event which occurred during the
past five years and which is described in Item 401(f) of Regulation S-K relating
to any director or officer of the Registrant.

















                                     III - 2


<PAGE>



ITEM 11.  EXECUTIVE COMPENSATION.

                  (a)  COMPENSATION.

                  The following  table sets forth all  compensation  paid to the
executive officers of the Registrant as a group for such fiscal year.

                           SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------

       (A)                      (B)                  (C)                (E)
--------------------------------------------------------------------------------
                                                            COMPENSATION
                                                            ------------
NAME OF INDIVIDUAL        PRINCIPAL POSITION        SALARY             OTHER
------------------        ------------------        ------             -----

Yitzhak N. Bachana        President               $  44,433        $  10,577 (*)

Herbert E. Shaver         VP, Controller          $  61,111        $    --

James R. Sheridan         Executive VP            $  63,500        $  32,090(**)
--------------------------------------------------------------------------------

Executive Officers
as a Group (3 persons)                            $ 169,044        $  42,667
--------------------------------------------------------------------------------

(*)      Represents salary accrued but unpaid as of December 31, 1997.

(**)     Represents commissions earned but unpaid as of December 31, 1997.

                  (b)  (1)          COMPENSATION PURSUANT TO PLANS.

                 The Registrant's employees (including officers) are all
employed on a month-to-month basis.

                           (2)      PENSION TABLE.
                                    Not applicable.

                           (3)      ALTERNATIVE PENSION PLAN DISCLOSURE.
                                    Not applicable.

                           (4)      STOCK  OPTION AND STOCK  APPRECIATION  RIGHT
                                    PLANS. Not applicable.

                  (c)      OTHER COMPENSATION.
                           None.




                                     III - 3


<PAGE>



                  (d)      COMPENSATION OF DIRECTORS.
                           1.       STANDARD ARRANGEMENTS.
                                    None.
                           2.       OTHER ARRANGEMENTS.
                                    None.

                  (e)      TERMINATION  OF  EMPLOYMENT  AND  CHANGE  OF  CONTROL
                           ARRANGEMENT.
                           None.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                    MANAGEMENT.

                  (a)   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

                  The  following  chart sets  forth the name and  address of the
person known to the Registrant to be the beneficial owner of more than 5% of the
Registrant's common shares, par value $1.00, at March 20, 1998.

                              AMOUNT OF
NAME AND ADDRESS OF           BENEFICIAL             PERCENT
BENEFICIAL OWNER              OWNERSHIP              OF CLASS
----------------              ---------              --------

Data Probe
Acquisition Corp.             517,959(1)(2)            73.38
49 East 21 Street
NEW YORK, NEW YORK 10010

----------
(1) All shares are owned of record and beneficially.

(2)  Yitzhak  N.  Bachana,  President  of the  Registrant,  owns  57.22%  of the
outstanding  shares of Data Probe,  Inc.,  the parent of Data Probe  Acquisition
Corp.,  and by virtue thereof may be deemed to be the  beneficial  owner of more
than 5% of the Registrant's outstanding shares.


















                                     III - 4



<PAGE>



                  (b)   SECURITY OWNERSHIP OF MANAGEMENT.

                  The following chart sets forth the number of the Registrant's
common shares, $1.00 par value, beneficially owned by all of the directors
of the Registrant and by the directors and officers of the Registrant as a
group at March 20, 1998:

NAME OF                         AMOUNT OF
BENEFICIAL                      BENEFICIAL          PERCENT
OWNER                           OWNERSHIP (1)       OF CLASS
-----                           -------------       --------

Yitzhak N. Bachana                   0 (2)              0

James R. Sheridan                    0                  0

Herbert E. Shaver                  800                  0

Officers and Directors
 as a Group
(3 PERSONS)                        800 (2)(3)           0

----------------------------

(1) All shares are owned of record and beneficially.

(2) Yitzhak N.  Bachana is the  President,  Chairman of the Board,  and majority
shareholder  of Data Probe,  Inc., the parent of Data Probe  Acquisition  Corp.,
which owns 517,959  common shares of the Registrant (or 73.38% of all issued and
outstanding shares) which are excluded from the foregoing table.

                  (c)      CHANGES IN CONTROL.

                           Not applicable.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                  (a)  TRANSACTIONS WITH MANAGEMENT AND OTHERS.

                  The  Registrant,  up until  December 30, 1996,  maintained its
executive offices and data center  operations at 80 Fifth Avenue,  New York, New
York. The Registrant shared this space with its parent company, Data Probe, Inc.
pursuant to an allocation  arrangement  providing that Data Probe,  Inc. pay the
Registrant $84,843 for the fiscal year ended December 31, 1996.

                  The  Registrant,   effective  December  27,  1996,   currently
maintains its executive offices and data center operations at 49 East 21 Street,
New York, New York. The Registrant's parent company, Data Probe, Inc.






                                     III - 5


<PAGE>




acquired a lease for this  location,  and the  Registrant has been renting space
pursuant to an allocation  arrangement  providing  that the  Registrant pay Data
Probe, Inc. on a month to month basis  approximately  $5,000 commencing April 1,
1997. (See Item 13, INFRA.)

                  From time to time the  Registrant  and Data Probe,  Inc.  hire
each other's employees for specific projects. For the fiscal year ended December
31, 1997,  the  Registrant  incurred  expenses of $177,796 with respect to these
transactions.  The  Registrant  was  charged  $40,238  for rent  pursuant  to an
allocation  arrangement.  The Registrant  charged Data Probe,  Inc.  $60,000 for
services and $35,834 for interest in 1997.

                  All fees are determined on a project-by-project  basis and, in
the opinion of Registrant's management, are no less favorable to Registrant than
those which could be obtained from unrelated third parties.

                  (b)      CERTAIN BUSINESS RELATIONSHIPS.
                           None.

                  (c)      INDEBTEDNESS OF MANAGEMENT.
                           None.

                  (d)      TRANSACTIONS WITH PROMOTERS. Not applicable.









                                     III - 6


<PAGE>




                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM
          8-K.
                                                                     PAGE
                                                                     ----
            (a)      1.       FINANCIAL STATEMENTS

                     Included in Part II of this report:

                     Selected Financial Data at
                      December 31, 1997, 1996, 1995,
                      1994, 1993                                      II-2

                     Report of Independent Certified
                      Public Accountants                              II-6

                     Consolidated Balance Sheets at
                      December 31, 1997 and 1996                      II-7

                     Consolidated Statements of Operations
                      for the years ended December 31,
                      1997, 1996, and 1995                            II-9

                     Consolidated Statements of Retained
                      Earnings (Deficit) for the years
                      ended December 31, 1997, 1996,
                      and 1995                                        II-10

                     Consolidated Statements of Cash
                      Flows for the years ended December 31,
                      1997, 1996, and 1995                            II-11

                     Notes to Consolidated Financial
                      Statements                                      II-13

                     2.   Financial Statements Schedules

                              Included in Part IV of this report:

                     Accountant's report on financial
                     statement schedules                              IV-4

                     Schedule V-Equipment and
                     Improvements for the years ended
                     December 31, 1997, 1996, and 1995                IV-5

                     Schedule VI-Depreciation and
                     Amortization of Equipment and
                     Improvements for the years ended
                     December 31, 1997, 1996, and 1995                IV-6





                                     IV - 1



<PAGE>




                  Schedules,  other than those listed  above,  have been omitted
since  they  are not  required  or the  information  required  therein  has been
presented elsewhere in the financial statements.

                  Separate financial  statements of Datatab,  Inc. (parent) have
been omitted since the conditions for omission have been met.

                  (b)      REPORTS FILED ON FORM 8-K.

                           None

                  (c)      EXHIBITS

                           None










































                                     IV - 2



<PAGE>



                                   SIGNATURES

                  Pursuant  to the  requirements  of  Section 13 or 15(d) 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.

                                      DATATAB, INC.

Dated:  March 27, 1998                By:  /S/ YITZHAK N. BACHANA
                                           ----------------------
                                           Yitzhak N. Bachana,
                                           President

                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Registrant and in the capacities and on the dates indicated:

Dated:  March 27, 1998                 /S/ YITZHAK N. BACHANA
                                       ----------------------
                                       Yitzhak N. Bachana, President,
                                       Treasurer, Principal Executive
                                       Officer, Principal Financial
                                       Officer, Director


Dated:  March 27, 1998                 /S/ JAMES R. SHERIDAN
                                       ---------------------
                                       James R. Sheridan, Executive Vice
                                       President, Director


Dated:  March 27, 1998                 /S/ HERBERT E. SHAVER
                                       ---------------------
                                       Herbert E. Shaver,
                                       Vice President, Controller,
                                       Principal Accounting Officer,
                                       Director
























                                     IV - 3