<PAGE>
 
================================================================================


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549


                                   FORM 10-Q
                                        

     X      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
  -------   Exchange Act of 1934 for the quarterly period ended June 30, 1998. 

            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:  0-27468

                             ULTRADATA CORPORATION

             (Exact name of Registrant as specified in its charter)

                Delaware                                         94-2746681
      (State or other jurisdiction                           (I.R.S. Employer   
    of incorporation or organization)                       Identification No.) 
                                                             
   5000 Franklin Drive, Pleasanton, CA                           94588-3031
(Address of principal executive officers)                        (Zip Code)


              Registrant's telephone number, including area code:
                                  925/463-8356

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  
                                -----      -----     

As of August 6, 1998, Registrant had outstanding 7,724,737 shares of Common
Stock, $.001 par value.


================================================================================
<PAGE>
 
                             ULTRADATA CORPORATION

                               TABLE OF CONTENTS


<TABLE> 
<CAPTION> 
                                                                                      PAGE
                                                                                      ----
<C>         <S>                                                                       <C> 
PART I      FINANCIAL INFORMATION

            ITEM 1 - Financial Statements

            Condensed Balance Sheets as of June 30, 1998 and
               December 31, 1997                                                        3

            Condensed Statements of Operations for the Three and Six Months
               Ended June 30, 1998 and 1997                                             4

            Condensed Statements of Cash Flows for the Six Months
               Ended June 30, 1998 and 1997                                             5
        
            Notes to Condensed Financial Statements                                     6

            ITEM 2 - Management's Discussion and Analysis of
               Financial Condition and Results of Operations                            8


PART II     OTHER INFORMATION

            ITEM 4 - Submission of Matters to a Vote of Security Holders                14

            ITEM 6 - Exhibits and Report on Form 8-K                                    14


SIGNATURES                                                                              15
</TABLE> 
<PAGE>
 
                                             ULTRADATA CORPORATION
                                                 BALANCE SHEETS
                                (In thousands, except share and per share data)
<TABLE> 
                                                                                   JUNE 30,         DECEMBER 31,
                                    ASSETS                                           1998              1997
                                    ------                                     ----------------  ----------------
<S>                                                                             <C>              <C>
                                                                                  (Unaudited)
Current assets:
     Cash and equivalents                                                              $ 1,178          $   486
     Short-term investments                                                                ---              303
     Restricted cash                                                                       433              536
     Trade accounts receivable, net                                                      4,003            4,057
     Unbilled revenues                                                                   3,553            2,330
     Inventories                                                                         2,219              815
     Prepaid expenses and other current assets                                             386              456
     Income taxes receivable                                                                28               53
                                                                               ----------------  ----------------
          Total current assets                                                          11,800            9,036
Property and equipment, net                                                              3,973            4,533
                                                                               ----------------  ----------------
                    Total assets                                                       $15,773          $13,569
                                                                               ================  ================

                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------                      

Current liabilities:
     Bank borrowings and current portion of long-term obligations                      $   991          $   663
     Accounts payable                                                                    2,674            2,284
     Accrued expenses                                                                    1,532            1,239
     Deferred revenue and customer advances                                              2,001            1,852
                                                                               ----------------  ----------------
          Total current liabilities                                                      7,198            6,038
Deferred revenue and customer advances                                                     897            1,113
Long-term obligations, excluding current portion                                           927              120
                                                                               ----------------  ----------------
          Total liabilities                                                              9,022            7,271
                                                                               ----------------  ----------------
Stockholders' equity:
     Preferred stock; par value $.001;  2,000,000 shares authorized; none
      outstanding                                                                          ---              ---
     Common stock; par value $.001; 23,000,000 shares authorized; 7,676,332                             
      and 7,607,133 shares issued and outstanding in 1998 and 1997,                                     
      respectively                                                                           8                8
     Additional paid in capital                                                         15,402           15,202
     Accumulated deficit                                                                (8,659)          (8,912)
                                                                               ----------------  ----------------
     Total stockholders' equity                                                          6,751            6,298
                                                                               ----------------  ----------------
                    Total liabilities and stockholders' equity                         $15,773          $13,569
                                                                               ================  ================
</TABLE> 

                See accompanying notes to financial statements.

                                       3
<PAGE>
 
                                          ULTRADATA CORPORATION
                                         STATEMENTS OF OPERATIONS
                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                               (UNAUDITED)
 
<TABLE> 
<CAPTION> 
                                                        THREE MONTHS ENDED                              SIX MONTHS ENDED
                                                             JUNE 30,                                       JUNE 30,
                                                  1998                      1997                   1998                   1997
                                           -----------------         -----------------      -----------------        ---------------
<S>                                        <C>                       <C>                    <C>                      <C>
Revenues:
     Software                                    $2,884                    $2,101                  $5,406                 $ 3,140
     Maintenance                                  2,827                     2,571                   5,532                   5,107
     Services and other                           1,071                     1,984                   2,118                   3,290
                                           -----------------         -----------------      -----------------        ---------------
          Subtotal                                6,782                     6,656                  13,056                  11,537
     Hardware                                       768                     2,052                   1,756                   3,682
                                           -----------------         -----------------      -----------------        ---------------
          Total revenues                          7,550                     8,708                  14,812                  15,219
                                           -----------------         -----------------      -----------------        ---------------
Cost of revenues:
     Software                                       259                       248                     490                     500
     Maintenance                                  1,843                     1,515                   3,492                   3,132
     Services and other                             996                     1,838                   1,979                   3,030
     Hardware                                       568                     1,424                   1,441                   2,655
                                           -----------------         -----------------      -----------------        ---------------
          Total cost of revenues                  3,666                     5,025                   7,402                   9,317
                                           -----------------         -----------------      -----------------        ---------------
          Gross margin                            3,884                     3,683                   7,410                   5,902
                                           -----------------         -----------------      -----------------        ---------------
Operating expenses:
     Product development                          1,207                     1,105                   2,402                   2,497
     Selling, general and                                               
      administrative                              2,461                     3,250                   4,759                   7,073
                                           -----------------         -----------------      -----------------        ---------------
           Total operating expenses               3,668                     4,355                   7,161                   9,570
                                           -----------------         -----------------      -----------------        ---------------
            Operating income (loss)                 216                      (672)                    249                  (3,668)
Interest income, net                                (50)                       (5)                    (50)                     (1)
Other income                                         47                       238                      54                     254
                                           -----------------         -----------------      -----------------        ---------------
          Net income (loss)                      $  213                    $ (439)                 $  253                 $(3,415)
                                           =================         =================      =================        ===============
<CAPTION> 
Earnings (loss) per share information:
---------------------------------------
     Basic net income (loss) per share            $0.03                     $(0.06)                 $0.03                   (0.45)
     Diluted net income (loss) per share           0.03                      (0.06)                  0.03                   (0.45)
     Shares used to compute basic net
      income (loss) per share                     7,676                      7,575                  7,657                   7,567
     Shares used to compute diluted
      net income (loss) per share                 8,065                      7,575                  7,885                   7,567
</TABLE> 
 

                See accompanying notes to financial statements.

                                       4
<PAGE>
 
                                      ULTRADATA CORPORATION
                                    STATEMENTS OF CASH FLOWS
                                          IN THOUSANDS
                                           (UNAUDITED)

<TABLE> 
<CAPTION> 
  
                                                                             SIX MONTHS ENDED
                                                                                   JUNE 30,
                                                                     ----------------------------------
                                                                         1998                  1997
                                                                     -------------        -------------
<S>                                                                  <C>                  <C> 
Cash flows from operating activities:                                                   
  Net income (loss)                                                       $  253             $(3,415)   
  Adjustments to reconcile net income (loss) to net cash                                                        
    provided by operating activities:                                                                             
      Depreciation and amortization                                          928                 599          
      Equity in earnings of unconsolidated subsidiary                        ---                 (16)         
      Gain on sale of joint venture                                          ---                (238)         
      Loss of disposition of property and equipment                          ---                  17          

      Changes in operating assets and liabilities:                                                                  
          Trade accounts receivable, net                                      54               2,919          
          Unbilled revenues                                               (1,223)                289         
          Inventories                                                     (1,404)                379         
          Prepaid expenses and other assets                                   70                 199          
          Income taxes receivable                                             25                 958          
          Accounts payable                                                   390              (1,018)         
          Accrued expenses                                                   293                 (43)         
          Deferred revenue and customer advances                             (67)               (471)        
          Long-term obligations                                            1,268                 ---          
                                                                     -------------        -------------
      Net cash provided by (used for) operating activities                   587                 159          
                                                                     -------------        -------------
Cash flows from investing activities:                                                                         
   Capital expenditures                                                     (368)             (1,857)
   Proceeds on sale of joint venture                                         ---                 500          
   Sale of short-term investments                                            303                 967          
                                                                     -------------        -------------
      Net cash provided by (used for) investing activities                   (65)               (390)        
                                                                     -------------        -------------
Cash flows from financing activities:                                                                         
  Bank borrowings                                                            ---                 592          
  Repayment of debt                                                         (133)               (354)        
  Restricted cash                                                            103                (657)         
  Net proceeds from issuance of common stock                                 200                 174          
                                                                     -------------        -------------
      Net cash provided by (used for) financing activities                   170                (245)         
                                                                     -------------        -------------
Net increase (decrease) in cash and equivalents                              692                (476)         
Cash and equivalents at beginning of period                                  486               1,583          
                                                                     -------------        -------------
Cash and equivalents at end of period                                     $1,178             $ 1,107
                                                                     =============        =============
</TABLE>


                See accompanying notes to financial statements.

                                       5
<PAGE>
 
                             ULTRADATA CORPORATION
                         Notes to Financial Statements
                             June 30, 1998 and 1997

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange Commission for
interim financial statements and therefore certain information and footnote
disclosures normally contained in annual financial statements have been
condensed or omitted.  These financial statements should be read in conjunction
with the audited financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.

The accompanying unaudited financial statements of the Company reflect all
adjustments, consisting solely of adjustments of a normal recurring nature which
are, in the opinion of management, necessary to fairly present the financial
position as of June 30, 1998 and the results of operations and cash flows for
the interim periods presented.  The results for the interim periods ended June
30, 1998 are not necessarily indicative of the results to be expected for the
entire year.

2. REVENUE RECOGNITION

The Company recognizes revenues from licenses of computer software provided that
a noncancelable license agreement has been signed, the software and related
documentation have been shipped, there are no material uncertainties regarding
customer acceptance, collection of the resulting receivable is deemed probable,
and no other significant vendor obligations exist.  Maintenance revenues are
deferred and recognized over the related contract period, generally three months
to five years.  Services and other revenues generated from professional
consulting and training services and software customization services are
recognized as the services are performed.  Hardware revenues are recognized upon
shipment.

Effective January 1, 1998, the Company adopted Statement of Position ("SOP") 97-
2 "Software Revenue Recognition," ("SOP 97-2") and SOP 98-4 "Deferral of the
Effective Date of a Provision of SOP 97-2, Software Revenue Recognition" ("SOP
98-4") which were issued October 27, 1997 and March 31, 1998, respectively, and
supersede SOP 91-1. These SOPs address revenue recognition from a conceptual
level and do not specifically address implementation guidance.  These SOPs did
not have a material impact on the Company's results for the six month period
ended June 30, 1998.  The Company believes, based on its reading and
interpretation of these SOPs, that these statements may result in a deferral of
future revenue recognition, but the Company feels that any impact of this
statement will be reduced by its anticipated changes to its business practices
relative to its direct sale and service of hardware. These SOPs are complex
issues that must be integrated into the Company's current and future business
practices.  The final implementation of this statement may differ from the
Company's current interpretation with respect to the impact of future earnings.

3.  INVENTORIES

Inventories consist of hardware and software purchased from third parties
pending shipment to customers and are recorded at the lower of cost or market.

4.  COMPUTATION OF EARNINGS (LOSS) PER SHARE (IN THOUSANDS EXCEPT PER SHARE
    DATA)

On December 31, 1997, the Company adopted SFAS No. 128, Earnings Per Share
("SFAS No. 128").  In accordance with SFAS No. 128, basic earnings per share is
computed using the weighted average number of common shares outstanding during
the period.  Diluted earnings per share is computed using the weighted average
number of common and dilutive common equivalent shares outstanding during the
period, using the treasury stock method for options.  The following is a
reconciliation of the denominator in the computation of diluted earnings per
share (the numerator equals the net income (loss)):

                                       6
<PAGE>
 
<TABLE>
<CAPTION>
                                                Three Months Ended              Six Months Ended
                                                     June 30                        June 30
                                                ------------------              ----------------
                                                1998          1997              1998        1997
                                                ----          ----              ----        ----
<S>                                             <C>           <C>               <C>         <C> 
Weighted average outstanding shares             7,676         7,575             7,657       7,567
Common stock equivalents                          389           --                228         --
                                                -----         -----             -----       -----
Shares used to compute diluted net
  income (loss) per share                       8,065         7,575             7,885       7,567
                                                =====         =====             =====       =====
Antidilutive CSE excluded                         713         1,830               897       1,853
                                                =====         =====             =====       =====
</TABLE> 

5.  RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" ("SFAS 130").  During the periods presented, the Company
had no changes in equity from transactions or other events and circumstances
from non-owner sources.  Accordingly, a statement of comprehensive income has
not been provided as comprehensive loss applicable to common stockholders equals
net loss applicable to common stockholders for all periods presented.

The FASB also recently issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS No. 131").  SFAS No. 131 establishes
standards for the way public business enterprises are to report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports.  SFAS No. 131 is effective for the Company beginning in 1998.
The Company is in the process of evaluating its business segments as defined 
by SFAS No. 131.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative 
Instruments and Hedging Activities," which defines derivatives, requires that 
all derivatives be carried at fair value, and provides for hedge accounting when
certain conditions are met. SFAS No. 133 is effective for the Company in Fiscal 
2000. Although the Company has not fully assessed the implications of SFAS No. 
133, the Company does not believe adoption of this statement will have a 
material impact on the Company's financial position or results of operations.

6.  LONG-TERM OBLIGATIONS

Effective in the second quarter of 1998, the Company entered into a non-
cancelable license agreement to purchase new license technology which the
Company plans to incorporate into their suite of information management modules.
Payments under this agreement are due through December 2001, with a net present
value of $1,300,000. This amount will be amortized over the expected life of 4
years, at the greater of straight line or the percentage of units sold to date
to total expected unit sales. In addition, the Company entered into a non-
cancelable maintenance agreement with an annual expense of $204,000 in 1998 and
$326,000 each year thereafter through 2004 related to these purchased licenses.

The net present value of the payments, discounted at 12.5%, have been recorded 
as a long-term obligation. The remaining principal payments of $1,268,000 are 
due as follows: $139,000 in 1998, $504,000 in 1999, $323,000 in 2000, and 
$302,000 in 2001.

                                       7
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH REFLECT THE
COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED BELOW AND IN THE OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, THAT COULD CAUSE RESULTS TO DIFFER
MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED.  IN THIS REPORT, THE
WORDS "EXPECTS", "ANTICIPATES", "BELIEVES" AND SIMILAR EXPRESSIONS IDENTIFY
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY DISCLOSE ANY REVISIONS TO THESE FORWARD-
LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES OCCURRING SUBSEQUENT TO
THE FILING OF THIS FORM 10-Q WITH THE SECURITIES AND EXCHANGE COMMISSION.
READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS DISCLOSURES MADE
BY THE COMPANY IN THIS REPORT AND IN THE COMPANY'S OTHER REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING ITS FORM 10-K AND ITS OTHER FORMS
10-Q, THAT ATTEMPT TO ADVISE INTERESTED PARTIES OF THE RISKS AND FACTORS THAT
MAY AFFECT THE COMPANY'S BUSINESS.

OVERVIEW

The Company provides information management software and solutions for
relationship-oriented financial institutions.  These solutions allow the
Company's customers to provide, among other things, financial services such as
checking, savings and investment accounts, home banking, credit and debit cards,
ATM access and consumer lending.  The Company's products are primarily targeted
at large and mid-sized credit unions who want to operate their system in-house.
For smaller credit unions, the Company works through value added resellers
("VARs") to provide the Company's products.  Combining the in-house
installations with services provided by the Company's VARs, the approximately
425 credit unions using the Company's software represent over 5.6 million
members and $30.0 billion in assets.

The Company derives its revenues primarily from software license fees, service
fees including items such as training and installation, custom development and
disaster recovery, and maintenance fees.  A significant portion of the Company's
revenues are derived from contracts with organizations that have long decision-
making cycles, typically from six to twelve months.  The decision to purchase
the Company's products is followed by an installation and training cycle which
is labor-intensive and generally requires at least four months to complete.
Each new customer system consists of the Company's ULTRAFIS product and selected
information management applications, services and hardware.

RESULTS OF OPERATIONS
REVENUES

The Company's revenues are comprised of software, customer maintenance, services
and other revenues and hardware revenues. Revenues from the Company's core
business, which excludes hardware, increased 2% from $6.7 million for the three
months ended June 30, 1997 to $6.8 million for the three months ended June 30,
1998. Revenues from the Company's core business increased 13% from $11.5 million
to $13.1 million for the six month period ended June 30, 1997 and 1998,
respectively. Total revenues (including the direct sale of hardware from which
the Company is transitioning to focus on its core business) for the three months
ended June 30, 1998 decreased 13% over the same period in the prior year from
$8.7 million to $7.6 million, respectively, and decreased 3% from $15.2 million
for the six months ended June 30, 1997 to $14.8 million for the six months ended
June 30, 1998.

                                       8
<PAGE>
 
The following table sets forth the Company's revenues and gross margin and gross
margin as a percentage of revenues for the three month periods ended June 30,
1998 and 1997:

<TABLE> 
<CAPTION> 
                         REVENUES                        GROSS MARGIN          GROSS MARGIN
                      (IN THOUSANDS)                    (IN THOUSANDS)              %
                   THREE MONTHS ENDED        %        THREE MONTHS ENDED   THREE MONTHS ENDED         
                        JUNE 30,         INCREASE         JUNE 30,             JUNE 30,           PERCENTAGE
                     1998       1997    (DECREASE)      1998       1997      1998       1997        CHANGE
----------------------------------------------------------------------------------------------------------------- 
<S>                <C>        <C>       <C>            <C>        <C>       <C>        <C>         <C> 
  Software          $2,884     $2,101       37%        $2,625     $1,853      91%        88%          3%
  Maintenance        2,827      2,571       10%           984      1,056      35%        41%         (6%)
  Services and 
   other             1,071      1,984      (46%)           75        146       7%         7%        ---%
----------------------------------------------------------------------------------------------------------------- 
  Subtotal core      6,782      6,656        2%         3,684      3,055      54%        46%          8%
  Hardware             768      2,052      (63%)          200        628      26%        31%         (5%)
----------------------------------------------------------------------------------------------------------------- 
TOTAL REVENUES      $7,550     $8,708      (13%)       $3,884     $3,683      51%        42%          9%
=================================================================================================================
</TABLE>

The following table sets forth the Company's revenues and gross margin and gross
margin as a percentage of revenues for the six month periods ended June 30, 1998
and 1997:

<TABLE> 
<CAPTION> 
                         REVENUES                        GROSS MARGIN          GROSS MARGIN
                      (IN THOUSANDS)                    (IN THOUSANDS)              %
                     SIX MONTHS ENDED        %         SIX MONTHS ENDED     SIX MONTHS ENDED         
                        JUNE 30,         INCREASE         JUNE 30,             JUNE 30,           PERCENTAGE
                     1998       1997    (DECREASE)      1998       1997      1998       1997        CHANGE
----------------------------------------------------------------------------------------------------------------- 
<S>                <C>        <C>       <C>            <C>        <C>       <C>        <C>         <C> 
  Software          $5,406     $3,140       72%        $4,916     $2,640      91%        84%          7%
  Maintenance        5,532      5,107        8%         2,040      1,975      37%        39%         (2%)
  Services and 
   other             2,118      3,290      (36%)          139        260       7%         8%         (1%)
----------------------------------------------------------------------------------------------------------------- 
  Subtotal core     13,056     11,537       13%         7,095      4,875      54%        42%         12%
  Hardware           1,756      3,682      (52%)          315      1,027      18%        28%        (10%)
----------------------------------------------------------------------------------------------------------------- 
TOTAL REVENUES     $14,812    $15,219       (3%)       $7,410     $5,902      50%        39%         11%
=================================================================================================================
</TABLE>

Software revenues increased 37% from $2.1 million for the three months June 30,
1997 to $2.9 million for the three months ended June 30, 1998 and increased 72%
from $3.1 million for the six months ended June 30, 1997 to $5.4 million for the
six months ended June 30, 1998. The increase in software revenues is primarily
attributable to the increase in sales of the Company's information management
modules to existing customers.

The Company's maintenance revenues are derived from quarterly, annual, and 
multi-year support agreements with its customers. Maintenance revenues increased
by 10% from $2.6 million for the three months ended June 30, 1997 to $2.8
million for the three months ended June 30, 1998. Maintenance revenues increased
8% from $5.1 million for the six months ended June 30, 1997 to $5.5 million for
the six months ended June 30, 1998. The increase for both periods was primarily
a result of increased new information management application modules installed
during 1997 and the first half of 1998.

                                       9
<PAGE>
Services and other revenues decreased by 46% from $2.0 million for the three
months ended June 30, 1997 to $1.1 million for the three months ended June 30,
1998 and decreased 36% from $3.3 million for the six months ended June 30,
1997 to $2.1 million for the six months ended June 30, 1998. For the six
months ended June 30, 1998, the Company continued to experience some customer
requests to delay installations of products as these customers focused on
meeting Year 2000 preparation and testing requirements. Such delays are expected
to decrease as the Company's customers satisfy their regulator-mandated
requirement to test all critical systems before year end. The revenue decline
was also attributable to a decrease in training and installation activities due
to lower new system sales volumes during the previous twelve months.
Additionally, service revenues declined due to the transfer of the Company's
direct service bureau operations in the third quarter of 1997 to Premier
Systems, Incorporated, ("PSI"), the Company's largest service bureau VAR, for
which the Company recorded a gain of $0.6 million in the third quarter of 1997.

In the fourth quarter of 1997, the Company entered into a relationship with Ex-
Cel Solutions, Incorporated ("ESI") to configure, sell, distribute, and provide
service for the Company's HP and IBM hardware products and operating systems.
This decision was made to allow the Company to focus on its core businesses of
software, services, and maintenance. Accordingly, hardware revenues decreased
from $2.1 million for the three months ended June 30, 1997 to $0.8 million for
the three months ended June 30, 1998. Hardware revenues decreased from $3.7
million for the six months ended June 30, 1997 to $1.8 million for the six
months ended June 30, 1998. The Company expects direct hardware revenues in 1998
to continue to decline due to its newly formed relationship with ESI. This
revenue decline, however, is expected to be partially offset by service fees
from ESI's sale of hardware to the Company's customers.

GROSS MARGIN
 
Gross margin as a percentage of total revenue increased nine percentage points
from 42% for the three months ended June 30, 1997 to 51% for the three months
ended June 30, 1998 and increased 11 percentage points from 39% for the six
months ended June 30, 1997 to 50% for the six months ended June 30, 1998
primarily due to increased sales of software and the Company's transition of
lower margin hardware sales to ESI. Software gross margin as a percentage of
software revenue increased three percentage points from 88% for the three months
ended June 30, 1997 to 91% for the three months ended June 30, 1998 due to a
lower proportion of sales of software purchased and licensed from third parties.
Software gross margin increased seven percentage points from 84% for the six
months ended June 30, 1997 to 91% for the six months ended June 30, 1998 due 
also to mix issues.

Gross margin percentage from maintenance revenues decreased by six percentage
points from 41% for the three months ended June 30, 1997 to 35% for the three
months ended June 30, 1998. Gross margin percentage from maintenance decreased
slightly from 39% for the six month period ended June 30, 1997 to 37% for the
six month period ended June 30, 1998. The decrease was primarily due to
investments to improve customer service and higher fees for third party
maintenance costs. Gross margin percentage from services and other revenues
remained constant at seven percent.

Hardware gross margin as a percentage of hardware revenues decreased five
percentage points to 26% for the three months ended June 30, 1998 from 31% for
the three months ended June 30, 1997. As previously discussed, the Company has
entered into a relationship with ESI to sell and configure hardware in order to
focus on the Company's core businesses. The Company expects direct hardware
revenue in 1998 to continue to decline, and does not expect to have any
appreciable sales or margin from hardware by the end of 1998. This revenue
decline, however, is expected to be partially offset by service fees received
from ESI's sale of hardware to the Company's customers.

                                       10
<PAGE>

OPERATING EXPENSES

Product development expenses increased from $1.1 million for the three months
ended June 30, 1997 to $1.2 million for the three months ended June 30, 1998.
The increase in total dollar spending was primarily the result of additional
costs for new information management module development. Product development as
a percent of total revenues increased from 13% for the three months ended June
30, 1997 to 16% for the three months ended June 30, 1998 and remained constant
at 16% of total revenues for the six month period ended June 30, 1997 and 1998,
respectively.

Selling, general and administrative expenses decreased from $3.3 million for the
three months ended June 30, 1997 to $2.5 million for the three months ended June
30, 1998. This decrease is primarily attributable to severance related expenses
incurred in the second quarter of 1997. Selling, general and administrative
expenses decreased from $7.1 million for the six months ended June 30, 1997 to
$4.8 million for the six months ended June 30, 1998 primarily attributable to
reductions in staffing levels at the end of the first quarter in 1997 and other
general cost reductions. 

CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

The Company's future operating results will depend upon conditions in its market
that may affect demand for its products and its ability to enhance its existing
products and introduce new products on a timely basis.  The Company must also
manage growth and change effectively as failure to do so could materially and
adversely affect its business and operating results.

Installation of the Company's ULTRAFIS system is a complex process that must
typically be done without any disruption of the customer's service.  Failure by
the Company to successfully install an ULTRAFIS system could result in
significant loss of revenue in a particular quarter and fluctuation in the
Company's results of operations.  Although the Company schedules the
installations of its products several months in advance, its ability to achieve
its revenue plans, both in the near term and in the long term, depends on the
Company's continued ability to sign new customer contracts and to complete such
contracts on schedule.  Failure to close new customer contracts as a result of
lost sales or deferrals of customer decisions could have a material adverse
impact on the future operating results.  There can be no assurance that sales or
installations will continue to occur at historical rates or in accordance with
the Company's expectations.  Because the Company's operating expenses are based
on anticipated revenue levels and a high percentage of the Company's expenses
are relatively fixed, a small variation in the timing of the recognition of
specific revenues could cause significant variations in operating results from
quarter to quarter.

The Company's quarterly and annual revenues and operating results have varied
significantly in the past, and may continue to do so in the future.  Operating
results may fluctuate due to factors such as the demand for the Company's
products, the introduction and acceptance of new products and product
enhancements by the Company or its competitors, changes in the levels of
operating expenses, customer order deferrals in anticipation of new products,
competitive conditions in the credit union and financial services markets and
economic conditions generally or in various industry segments.  In addition, a
significant portion of the Company's business has been derived from substantial
contracts with large organizations with long decision-making cycles, and the
timing of such orders has caused material fluctuations in the Company's
operating results.  The Company's expense levels are based in part on its
expectations regarding future revenues and in the short term are fixed to a
large extent.  Therefore, the Company may be unable to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall.  As a result,
if anticipated revenues do not occur or are delayed, the Company's operating
results would be disproportionately affected.  The Company expects quarterly and
annual fluctuations to continue for the foreseeable future.  Accordingly, the
Company believes that period-to-period comparisons of its financial results
should not be relied upon as an indication of future performance.

                                       11
<PAGE>
On February 25, 1998, the United States Supreme Court affirmed a ruling by a
United States District Court providing that federal credit unions may not extend
membership benefits to individuals who are not part of the credit union's
original charter group.  This ruling imposes limits on new customers that a
federal credit union may attract.  As a result, some federal credit unions have
expressed a reluctance to pursue extensive capital purchases until the impact of
the ruling is further assessed.  While federal credit unions represent
approximately 60% of all credit unions, less than half of these credit unions
are affected by this ruling.  The interpretation of this ruling could have a
material adverse effect upon the Company's business, financial conditions, and
results of operations. Since this Supreme Court ruling, there has been
significant congressional legislative activity.  On August 7, 1998, President
Clinton signed into law the Credit Union Membership Access Act ("CUMAA").  The
CUMAA allows multiple Select Employee Groups ("SEG's") to have membership in the
same credit union. While CUMAA is effective immediately, certain provisions of
CUMAA require the enactment of rules and regulations prior to implementation.
The Company is currently assessing the impact that CUMAA may have on its
operations and continues to monitor all legislative activity that may affect its
operations.

YEAR 2000 DISCLOSURE

Many software computer programs in the industry rely on an internal date format
using two-digit data programs to perform computation and decision-making
functions that may cause computer systems generally to malfunction with respect
to dates beginning with the Year 2000. The Company's products uses an internal
date format that has never relied on two-digit data programs and which was
upgraded and made available to the Company's customers in August 1994. The
Company believes that date entry will not be a material issue either with the
Company's core ULTRAFIS transaction processing engine or the Company's own
information management applications.

On April 15, 1998,  the Information Technology Association of America ("ITAA")
announced that the Company had achieved ITAA*2000 certification.  ITAA
is a trade association dealing with Year 2000 software conversion in the
information technology industry. ITAA*2000 is the ITAA's century date change
certification program. The ITAA*2000 Certification Program provides information
technology companies with the opportunity to have a neutral, objective third-
party evaluation of their Year 2000 processes and methods.

The Company has evaluated Year 2000 compliance issues with third party hardware
and software products and support providers and has also evaluated its own major
internal systems. The Company has determined that some of the third party
products it has previously marketed are not Year 2000 compliant. The Company is
working with such third party product providers to identify alternatives that
may lead to third party product compliance. In addition, the Company has
communicated the status of these compliance issues to its customers and is
working on making alternatives available to its customers as appropriate.
Because the Company's customers depend on some of the products from these third
party providers, both the Company and its customers may be adversely impacted
depending upon the ability of such third party providers to comply with Year
2000 requirements. The Company is currently not aware of any significant Year 
2000 issues with its major internal systems and will continue to evaluate these 
systems for Year 2000 compliance.

The Company expects no material impact to its financial position as a result 
of any pending Year 2000 issues related to its products.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's management believes current cash, cash equivalents and short-term
investments and expected cash generated from operations will satisfy its
expected working capital and capital expenditure requirements for the
foreseeable future.

The Company has a factoring agreement and a capital equipment facility.  The
factoring agreement provides for a 0.5% administrative fee for each receivable
purchased and a 1.75% monthly finance charge for as long as each purchased
receivable remains outstanding.  The factoring agreement renews, unless
terminated by the Company or the bank, in April 1999.  As of June 30, 1998, the
Company has not utilized the factoring agreement.  As of June 30, 1998 the
outstanding balance on the capital equipment facility was $433,000.  The capital
equipment facility bears interest at prime plus 0.25%. No further draws are
available and the Company established cash collateral for the capital equipment
facility balance.  The Company is paying off this balance and reducing the cash
collateral in monthly installments of $17,000. Borrowings under the factoring
agreement and capital equipment facility are secured by all tangible and
intangible assets of the Company.

Capital expenditures of $0.4 million during the first six months of 1998 were
primarily for computer and miscellaneous equipment.

Net cash provided by operations was $0.6 million for the six months ended June
30, 1998, including a $253,000 net income for the six months ended June 30,
1998. For the six months ended June 30, 1997, net cash provided by operations
was $0.2 million. Unbilled revenues increased $1.2 million from $2.3 million to
$3.6 million. This increase can be attributed to the large number of information
management module orders signed late in the second quarter that have yet to be
installed. Inventories increased $1.4 million from June 1997 to June 1998 due
primarily to the purchase of third party software licenses. The increase of $1.3
million in long-term obligations is also related to the purchase of these 
software licenses.

Effective in the second quarter of 1998, the Company entered into a 
non-cancelable license agreement to purchase new license technology which the 
Company plans to incorporate into their suite of information management modules.
Payments under this agreement are due through December 2001, with a net present 
value of $1,300,000. This amount will be amortized over the expected life of 4 
years, at the greater of straight line or the percentage of units sold to date 
to total expected unit sales. In addition, the Company entered into 
a non-cancelable maintenance agreement with an annual expense of $204,000 in
1998 and $326,000 each year thereafter through 2004 related to these purchased
licenses. 
                                       13
<PAGE>
                          PART II - OTHER INFORMATION

ITEM 4 - Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Stockholders on May 8, 1998 at which two
proposals were submitted to a vote of the Company's security holders through the
solicitation of proxies.

Proposal 1:   The nominees for election for the Board of Directors and the
              number of votes cast for, against, or withheld were as follows:

<TABLE>
<CAPTION>
NOMINEE                            FOR             AGAINST          WITHHELD
-------                            ---             -------          --------            
<S>                             <C>                <C>              <C>
Nigel P. Gallop                 5,087,444            0               14,976
John F. Carlson                 5,087,627            0               14,793
M.M. Stuckey                    5,088,120            0               14,300
Robert J. Majteles              5,086,951            0               15,469
Lawrence M. Howell              5,088,120            0               14,300
</TABLE>                                                              

Proposal 2:   The votes cast for, against or withheld, as well as the number of
              abstentions and broker non-votes for the ratification of the
              selection of Deloitee & Touche LLP as independent auditors for the
              Company for the current fiscal

Item 6.       Exhibits and Report on Form 8-K

<TABLE>
<CAPTION>
FOR                 AGAINST            WITHHELD         NON-VOTES
---                 -------            --------         ---------         
<S>                 <C>                <C>              <C>
5,101,168            1,252                 0                0
</TABLE> 

(a) Exhibits

Exhibit
Number    Exhibit Title
-------   -------------
10.33     Employment Agreement dated as of March 6, 1998 between the Company
          and Ronald Bissinger.

27.01     Financial Data Schedule, which is submitted electronically to the
          Securities and Exchange Commission for information only and is not
          filed.

(b) Reports filed on Form 8-K during the quarter ended June 30, 1998.

On April 8, 1998, the Registrant filed a Current Report on Form 8-K reporting
the Company's dismissal of its prior certifying accountants, KPMG Peat Marwick
LLP, and the engagement of Deloitte & Touche LLP as its principal auditors.  No
financial statements were filed with this Current Report on Form 8-K.

On April 16, 1998, the Registrant filed a Current Report on Form 8-K/A attaching
as an exhibit a letter from KPMG Peat Marwick LLP regarding its concurrence with
the statements made by the Registrant in the Current Report on Form 8-K filed on
April 8, 1998 concerning the dismissal of KPMG Peat Marwick LLP.  No financial
statements were filed with this Current Report on Form 8-K/A.
 
                                       14
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, ULTRADATA
Corporation has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                   ULTRADATA CORPORATION


Date    August 14, 1998              By  /s/ Robert J. Majteles
      -------------------                -------------------------
                                         Robert J. Majteles
                                         President and Chief Executive Officer
 
                                     By  /s/ Ronald H. Bissinger
                                         -------------------------
                                         Ronald H. Bissinger
                                         Chief Financial Officer


                                      15