SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 FORM 10-K/A
                              (Amendment No. 1)

                      FOR ANNUAL AND TRANSITION REPORTS
                   PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934


(Mark One)
(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 Number: 0-25590

                           DATASTREAM SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)

      Delaware                                  57-0813674
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

50 Datastream Plaza, Greenville, South Carolina 29605
(Address of Principal Executive Offices)      (Zip Code)


Registrant's telephone number, including area code:  (864) 422-5001
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $.01 par value
                               (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 the Registrant's  knowledge, in definitive proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-K or any amendment to this Form 10-K.  (   )

      Aggregate  market  value of the voting stock held by  non-affiliates  of
the Registrant as of March 20, 1998:  $302,339,223.

      Number  of  shares of Common  Stock  outstanding  as of March 20,  1998:
18,981,777.

                                  PART III.

Item 10.  Directors and Executive Officers of the Registrant.

Director Nominees Biographical Information

      Set forth below is certain  biographical  information  furnished  to the
Company by its  directors,  including  Richard T. Brock and Ira D. Cohen,  the
director  nominees for the Company's Class II  directorships  to be elected at
the Company's 1998 Annual  Meeting of  Stockholders  on June 12, 1998,  with a
term expiring in the year 2001.  Messrs.  Brock and Cohen  currently  serve as
directors of the Company.

RICHARD T. BROCK
Age:  50
Class II Director - Term Expires 1998

      Mr. Brock has served as a director of the Company  since August 1993. In
1984, Mr. Brock founded Brock International,  Inc. ("Brock International"),  a
publicly-held  provider of sales and marketing automation software,  for which
he has served in various  capacities,  including  Chairman of the Board, Chief
Executive  Officer  and  President,  since 1984.  Currently,  he serves as the
Chairman of the Board of Brock  International.  He also  founded and  formerly
served as Chief  Executive  Officer of Management  Control  Systems,  Inc. Mr.
Brock is a  nationally-recognized  developer,  author  and  speaker  on sales,
marketing and service automation and business development strategy.

IRA D. COHEN
Age:  46
Class II Director - Term Expires 1998

      Mr. Cohen has been a director of the Company since February 1995.  Since
1988, Mr. Cohen has served as the Managing Director of Updata Group,  Inc., an
investment   banking  firm  focused  on  mergers  and   acquisitions   in  the
information technology industry. Mr. Cohen founded Updata Software,  Inc., and
from 1986 to 1988 served as that Company's Chief Financial Officer.  Mr. Cohen
is also a director of Computer Learning Centers, Inc.

Biographical Information Concerning Other Directors

LARRY G. BLACKWELL
Age:  57
Class III Director - Term Expires 1999

      Dr.  Blackwell,  the founder of the  Company,  has served as Chairman of
the Board,  Chief  Executive  Officer and  President  of the Company  from its
inception  in 1986 until the present.  Prior to founding  the Company,  he was
President of the  Datastream  Systems  Division of a  subsidiary  of Wisconsin
Power & Light.  He also  co-founded  and  formerly  served as  Chairman of the
Board  of EDI  Technology  Companies,  an  environmental  process  engineering
consulting company.  Dr. Blackwell holds a B.S. degree in Engineering from the
University  of  Mississippi,  a Master  of  Science  degree  from The  Georgia
Institute of Technology and a Ph.D. in Environmental  Systems Engineering from
Clemson  University.  Dr. Blackwell is a registered  Professional  Engineer in
Illinois,  Pennsylvania and South Carolina and was named Inc.  magazine's 1994
"Entrepreneur of the Year" in the Master  Entrepreneur  category for the State
of South Carolina.  Dr.  Blackwell has been a member of the Board of Directors
of Emergent Group, Inc. since 1997.

JOHN M. STERLING, JR.
Age:  60
Class III Director - Term Expires 1999

      Mr.  Sterling  has served as a director  of the Company  since  February
1986.  He has also served as the Chairman of the Board of Directors  and Chief
Executive  Officer of Emergent Group, Inc.  ("Emergent  Group") since December
1990 and served as President of Emergent  Group from  December  1990 to August
1996.  Mr.  Sterling  has also served as  President  of Palmetto  Seed Capital
Corp.  from September  1993 to the present and served as a General  Partner of
Reedy River  Ventures  Limited  Partnership  ("Reedy  River")  from 1981 until
August 1995.  Reedy River provided  venture  capital  financing to the Company
to fund its  early  development,  and Mr.  Sterling  originally  served on the
Board  of  Directors  of  the  Company  pursuant  to  that  relationship.  Mr.
Sterling is the father of John M. Sterling,  III, an executive  officer of the
Company.

KENNETH D. TRACY
Age:  55
Class I Director - Term Expires 2000

      Dr.  Kenneth  D. Tracy has served as a  director  of the  Company  since
1990.  He  currently  serves as Vice  President-Environmental  Technology  for
Warner-Lambert  Company,  a position  he has held since  February  1991.  From
1984  to  1991,  he held  positions  of  increasing  responsibility  with  Air
Products and  Chemicals,  Inc.,  including  Director of Research  from January
1990 to  February  1991.  Prior to  joining  Air  Products,  Dr.  Tracy  was a
principal in the EDI Technology Companies,  where he was involved with process
engineering  consulting as well as software design and sales.  Dr. Tracy holds
B.S. and Master of Science degrees in engineering  from Penn State  University
and a Ph.D. in Environmental Systems Engineering from Clemson University.

Additional Information Concerning The Board Of Directors

      The  Company's  Board of  Directors  held five  meetings  during  fiscal
1997.   During  fiscal  1997,   the  Board  had  an  Audit   Committee  and  a
Compensation  Committee,  but did not have a Nominating Committee. No director
attended  less than 75% of the  aggregate  number of meetings of the Board and
the  committees of the Board on which he served that were held during his term
as a director of the Company.

      Committees  of the Board of Directors.  In  connection  with its initial
public offering in March 1995, the Company  established an Audit Committee and
a Compensation  Committee.  The Audit  Committee is responsible  for reviewing
and making  recommendations  regarding the Company's employment of independent
auditors,  the annual  audit of the  Company's  financial  statements  and the
Company's internal accounting  practices and policies.  It consists of Messrs.
Cohen  (Chairman),  Sterling and Tracy.  In fiscal 1997,  the Audit  Committee
held one meeting.

      The Compensation  Committee is responsible for making recommendations to
the  Board  of  Directors  regarding  compensation   arrangements  for  senior
management   of   the   Company   (including   annual   bonus   compensation),
recommendations  concerning  the adoption of any  compensation  plans in which
management  is eligible to  participate  and grants of stock  options or other
benefits under such plans. It consists of Messrs.  Brock (Chairman),  Sterling
and Tracy.  The Compensation Committee held one meeting in fiscal 1997.

      Compensation   of  Directors.   The  Company's  Board  of  Directors  is
comprised of five members. In fiscal 1997,  non-management  directors received
an annual  retainer of $7,000 and were  reimbursed  for  expenses  incurred in
connection   with  attendance  at  meetings  of  the  Board  of  Directors  or
committees  thereof.  The  Company  also has  adopted a Stock  Option Plan for
Directors,  which provides,  on January 1 of each year, for an automatic grant
of options to purchase  shares of Common  Stock to  non-management  directors.
During 1997, the automatic  grant of options to purchase  shares was increased
from 1,000 to 2,000 shares.

Executive Officers

      The  executive  officers of the Company  serve at the  discretion of the
Board of Directors  and  presently  include Mr.  Blackwell,  John Fury Christ,
Daniel H. Christie and John M. Sterling,  III. See  "Biographical  Information
Concerning Other Directors" for information about Mr. Blackwell.

JOHN FURY CHRIST
Vice President of Development and
  Chief Technology Officer
Age:  42

      Dr.  Christ  served as Manager of  Development  of the Company  from May
1992 to  December  1994,  and has  held  the  position  of Vice  President  of
Development  since  December 1994. In January 1997, Dr. Christ was named Chief
Technology  Officer  of  the  Company.  Prior  to  joining  the  Company  on a
full-time  basis,  Dr.  Christ  served as  President of  Positech,  Inc.  from
January  1990 to May 1992.  During this  period,  Positech was awarded a Small
Business  Innovative  Research Contract for the application of neural networks
in support of the U.S.  Government's  Strategic Defense Initiative.  From 1988
to 1990, Dr. Christ provided  contract  software  development  services to the
Company.  Dr.  Christ holds B.S. and Master of Science  degrees in  Electrical
and Computer  Engineering,  and a Ph.D. in Computer Science,  all from Clemson
University.

DANIEL H. CHRISTIE
Chief Financial Officer
Age:  45

      Mr.  Christie  served as  Controller  of the  Company  from July 1993 to
December  1994,  and has held the position of Chief  Financial  Officer  since
December 1994.  Prior to joining the Company,  from 1991 to 1993, Mr. Christie
served as Group Finance Manager for Digital Equipment  Corporation.  From 1989
to 1991, Mr.  Christie also served as Digital  Equipment's  PWB Group Cost and
Budgets  Manager  and the Plant  Controller  for Digital  Equipment's  Printed
Wiring Board Advanced  Technology  Center in Greenville,  South  Carolina.  He
presently  serves  as a  director  and  as  the  President  and  Treasurer  of
Vaughn-Russell  Candy Co. Mr.  Christie holds an A.B. degree in Economics from
Colgate  University  and an M.B.A.  in  Accounting/International  Finance from
Cornell University.

JOHN M. STERLING, III
Managing Director of European Operations
Age:  36

      From  February  1997 to the  present,  Mr.  Sterling  has  served as the
Company's Managing Director of European  Operations.  Mr. Sterling also served
as the Company's Vice  President of Sales from 1989 to January 1997.  Prior to
joining  Datastream,  Mr.  Sterling was a Regional  Sales  Manager for Silicon
Valley  Products.  Mr. Sterling holds a B.S. degree in Political  Science from
The  Citadel.  Mr.  Sterling is the son of John M.  Sterling,  Jr., one of the
Company's directors.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Section  16(a) of the  Securities  Exchange  Act of 1934 (the  "Exchange
Act")  requires the Company's  directors,  executive  officers and persons who
own  beneficially  more than 10% of the Company's Common Stock to file reports
of ownership  and changes in ownership of such stock with the  Securities  and
Exchange  Commission  (the "SEC") and the National  Association  of Securities
Dealers,   Inc.   Directors,   executive   officers   and  greater   than  10%
stockholders  are  required by SEC  regulations  to furnish  the Company  with
copies of all such forms they file. To the Company's  knowledge,  based solely
on a review  of the  copies  of such  reports  furnished  to the  Company  and
written  representations  that no other reports were required,  its directors,
executive  officers and greater than 10%  stockholders  complied during fiscal
1997 with all applicable Section 16(a) filing requirements,  except for a Form
4 for Mr. J. Fury  Christ for the month of April  1997.  Such Form 4 was filed
to report the purchase of 7,500  shares of Common Stock by Mr.  Christ in that
month and, due to an administrative  oversight,  was filed one month after the
deadline for filing such form.

Item 11.  Executive Compensation

Compensation Committee Interlocks and Insider Participation

      The  Compensation  Committee  of the Board of  Directors is comprised of
Messrs.   Brock,   Sterling   (Jr.)  and  Tracy.   During  fiscal  1997,   the
Compensation  Committee  did not include any member of the Board of  Directors
who at that time served as an officer or employee of, or a consultant  to, the
Company.  The Company's  Chief  Executive  Officer,  Mr.  Blackwell,  is not a
member  of the  Compensation  Committee,  but  typically  participates  in its
deliberations  by  making  recommendations  to the  Committee  concerning  the
performance   of  the  Company's   executive   officers  and   recommendations
concerning  proposed  adjustments to their  compensation.  During fiscal 1997,
Mr.  Blackwell served as a member of the Board of Directors of Emergent Group,
for which Mr.  Sterling serves as Chairman of the Board of Directors and Chief
Executive Officer.

Executive Compensation Tables

                    Table I -- Summary Compensation Table

      The following  table presents  certain  information  required by the SEC
relating to various  forms of  compensation  awarded to,  earned by or paid to
the Company's Chief Executive Officer,  Vice President of European  Operations
and Vice  President of  Development  during fiscal 1997 (the "Named  Executive
Officers").  No other  executive  officer  earned  more than  $100,000  during
fiscal 1997.

                                                           Long-Term
                                                           Compensation
                                                           ------------
                             Annual Compensation           Securities
                             -------------------           Underlying
                                                           Options      All
Name and Principal                           Other Annual   (# of      Other
Position(s)          Year  Salary      Bonus Compensation  Shares) Compensation
-----------          ----  ------      ----- ------------  ------- ------------

Larry G. Blackwell,
   Chairman          1997 $186,851(1)   --        --      34,000      $4,750(2)
   President and     1996 $176,024(1)   --        --          --      $4,750(2)
   Chief Executive   1995 $168,000(1) $24,000     --     114,000      $5,544(2)
   Officer

John M. Sterling III
   Vice President    1997 $103,600(3)   --        --      34,000      $3,528(2)
   of European       1996  $97,683(3)   --        --          --      $2,930(2)
   Operations        1995  $86,378(3) $20,000     --     100,000      $3,173(2)
                 
Mr. John F. Christ
   Vice President    1997 $102,900(4)   --        --      34,000      $3,296(2)
   of Development    1996  $92,042(4)   --        --          --      $2,761(2)
                     1995  $80,529(4) $12,000     --     100,000      $2,776(2)
                           
                            
(1) Includes $9,500 (1996:  $9,500;  1995:  $9,240) deferred  at  the  election
    of  Mr.  Blackwell  pursuant  to  the  Company's  401(k).  Mr.  Blackwell's
    current annual salary is $203,004.
(2) Reflects  matching  contributions  to  the  Company's  401(k)  paid  by the
    Company on behalf of the executive officer.
(3) Includes  $8,288 (1996:  $5,997;  1995:  $8,461) deferred  at  the election
    of Mr. Sterling  pursuant to the Company's 401(k).  Mr. Sterling's  current
    annual salary is $115,000.
(4) Includes   $7,203  (1996:   $4,749;   $1995:   $6,477)  deferred   at   the
    election of Mr.  Christ  pursuant to the  Company's  401(k).  Mr.  Christ's
    current annual salary is $115,000.


<PAGE>
                 TABLE II -- Option/SAR Grants in Fiscal 1997

      This  table  presents  information  regarding  options  granted  to  the
Company's  Named  Executive  Officers during fiscal 1997 to purchase shares of
the  Company's   Common   Stock.   The  Company  has  no   outstanding   stock
appreciation  rights  (SARs)  and  granted  no SARs  during  fiscal  1997.  In
accordance with SEC rules,  the table shows the  hypothetical  gains or option
spreads that would exist for the respective  options based on assumed rates of
annual  compound  stock  price  growth of 5% and 10% from the date the options
were granted over the full option term.

                              Individual Grants
                 -------------------------------------------
                               % of                              Potential
                              Total                              Realizable
                             Options                         Value at Assumed
                  Number of  Granted                          Annual Rates of
                  Securities    to                                 Stock
                  Underlying Employees  Exercise            Price Appreciation
                   Options      in         or               for the Option Term
                   Granted    Fiscal   Base Price Expiration   5%        10%
      Name           (#)       Year    ($/Share)    Date       ($)       ($)
----------------- --------   --------  ---------- --------- --------   --------
Mr. Blackwell....  7,992      0.48%      $8.32     5/5/02    18,371     40,595
                   6,008      0.36%      $7.57     5/5/07    28,602     72,484
                   5,106      0.31%      $9.21     7/1/02    12,992     28,710
                  14,894      0.90%      $8.38     7/1/07    78,493    198,918
                  ------      -----
                  34,000      2.05%

Mr. Christ....... 14,000      0.85%      $7.56     5/5/07    66,562    168,682
                  20,000      1.21%      $8.38     7/1/07   105,403    267,111
                  ------      -----
                  34,000      2.06%

Mr. Sterling..... 14,000      0.85%      $7.56     5/5/07    66,562    168,682
                  20,000      1.21%      $8.38     7/1/07   105,403    267,111
                  ------      -----
                  34,000      2.06%




<PAGE>

                 TABLE III -- Option Exercises in Fiscal 1997
                    and Fiscal 1997 Year-End Option Values

      The  following  table shows the number of options  exercised  during the
1997  fiscal  year and the  number  of  shares  of  Common  Stock  subject  to
exercisable  and  unexercisable  stock  options  held by the  Company's  Named
Executive  Officers as of  December  31,  1997.  The table also  reflects  the
values of such  options  based on the  positive  spread  between the  exercise
price of such  options  and  $15.50,  which was the  closing  sales price of a
share of Common Stock  reported on the Nasdaq  National  Market as of December
31, 1997 (the last trading day prior to the end of the Company's fiscal year).


                                Number of Securities 
             Shares                  Underlying         Value of Unexercised
          Acquired on    Value      Unexercised         In-the-Money Options  
            Exercise   Realized Options at Year-End(#)    at Year-End(1) ($)
 Name          (#)        ($) ExercisableUnexercisable ExercisableUnexercisable
 ----          ---        --- ----------- ------------ ----------- ------------

Mr.Blackwell    --        --     47,086    100,914       $494,541    $962,485

Mr. Christ      --        --     40,000     67,334       $394,135    $607,299

Mr. Sterling    --        --     66,665     67,335       $707,455    $607,305


(1)   The value of unexercised in-the-money options at December 31, 1997 is
      calculated as follows:  [(Per Share Closing Sales Price on December 31,
      1997) - (Per Share Exercise Price)]  X  Number of Shares Subject to
      Unexercised Options.  The closing sales price reported by the Nasdaq
      National Market of the Company's Common Stock for December 31, 1997 was
      $15.50 per share.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth information  concerning  (i)those persons
known by  management  of the Company to own  beneficially  more than 5% of the
Company's  outstanding Common Stock, (ii) the directors of the Company,  (iii)
the Named Executive  Officers and (iv) all directors and executive officers of
the  Company as a group.  Such  information  is  provided as of April 1, 1998.
According to rules adopted by the SEC, a person is the  "beneficial  owner" of
securities  if he or she has or  shares  the  power to vote  them or to direct
their  investment  or has the right to acquire  beneficial  ownership  of such
securities  within 60 days  through  the  exercise  of an  option,  warrant or
right,  the conversion of a security or otherwise.  Except as otherwise noted,
the  indicated  owners have sole voting and  investment  power with respect to
shares  beneficially  owned.  An  asterisk  in the  percent  of  class  column
indicates  beneficial  ownership  of less  than 1% of the  outstanding  Common
Stock.

--------------------------------------------------------------------------------
                                             Amount and Nature
                                                     of
                                                 Beneficial         Percent
Name of Beneficial Owner                         Ownership         of Class
--------------------------------------------------------------------------------

Larry G. Blackwell........................        3,466,900(1)       18.4%
John M. Sterling, III.....................          498,208(2)        2.6%
John F. Christ............................           79,530(3)          *
John M. Sterling, Jr......................          141,072(4)          *
Richard T. Brock..........................           16,000(5)          *
Kenneth D. Tracy..........................           14,000(6)          *
Ira D. Cohen..............................            3,000(7)          *
All current directors and
  executive officers as a
  group (8 persons).......................        4,285,386(8)       22.4%


(1) Includes  67,086 shares  of  Common  Stock  subject to options  exercisable
    on or within 60 days after April 1, 1998. Mr.  Blackwell's  address is that
    of the Company.
(2) Includes  93,332 shares of  Common  Stock   subject to options  exercisable
    on or within 60 days after April 1, 1998.
(3) Includes  71,334  shares  of Common  Stock  subject to options  exercisable
    on or within 60 days after April 1, 1998.
(4) Includes  12,000  shares of  Common  Stock  subject to options  exercisable
    on or within 60 days after April 1, 1998.
(5) Includes  12,000  shares of  Common  Stock  subject to options  exercisable
    on or within 60 days after April 1, 1998.
(6) Includes  12,000  shares  of  Common Stock  subject to options  exercisable
    on or within 60 days after April 1, 1998 and 2,000  shares of Common  Stock
    to which Mr. Tracy shares voting and investment power with his spouse.
(7) Represents  3,000 shares of Common Stock subject  to  options   exercisable
    on or within 60 days after April 1, 1998.

Item 13.  Certain Relationships and Related Transactions.

      None.



<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.

                                       Datastream Systems, Inc.



                                       By:  /s/ Daniel H. Christie            
                                                Daniel H. Christie
                                                Chief Financial Officer

Date:  April 16, 1998

      Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this Report has been signed below by the following  persons in the  capacities
indicated on the 16'th day of April, 1998.



               Signature                                 Title


                  *                     Chairman of the Board, President and
         Larry Blackwell                Chief Executive Officer
                                        (principal executive officer)


      /s/ Daniel H. Christie            Chief Financial Officer
         Daniel H. Christie             (principal financial and accounting
                                        officer)


                  *                     Director
         Kenneth D. Tracy


                  *                     Director
         Richard T. Brock


                  *                     Director
         John M. Sterling, Jr.


                  *                     Director
         Ira D. Cohen


*By:  /s/ DANIEL H. CHRISTIE        
         Daniel H. Christie
         Attorney-in-Fact