<PAGE>
 
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                                 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 March 31, 1999.

_______   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 of                    (I.R.S. Employer
 incorporation or organization)                   Identification No.)

  5000 Franklin Drive, Pleasanton, CA                 94588-3031
(Address of principal executive offices)              (Zip Code)


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

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 May 1, 1999, Registrant had outstanding 7,746,382 shares of Common Stock,
$.001 par value.


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<PAGE>
 
                             ULTRADATA CORPORATION
                                        
                               TABLE OF CONTENTS

                                                                         PAGE
                                                                         ----
 
PART 1      FINANCIAL INFORMATION

            ITEM 1 - Condensed Financial Statements
 
            Condensed Balance Sheets as of March 31, 1999 and
               December 31, 1998                                          3 
                                                                            
            Condensed Statements of Operations for the Three Months         
               Ended March 31, 1999 and 1998                              4
                                                                            
            Condensed Statements of Cash Flows for the Three Months         
               Ended March 31, 1999 and 1998                              5
                                                                            
            Notes to Condensed Financial Statements                       6
                                                                            
            ITEM 2 - Management's Discussion and Analysis of              
               Financial Condition and Results of Operations              7
 

PART II     OTHER INFORMATION

            ITEM 6 - Exhibits and Report on Form 8-K                     15

SIGNATURES                                                               16
<PAGE>
 
                             ULTRADATA CORPORATION
                           CONDENSED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE> 
<CAPTION> 
                                                                                      MARCH 31,                 DECEMBER 31,
                                     Assets                                              1999                        1998
                                     ------                                      -------------------         ------------------
                                                                                          (Unaudited)
<S>                                                                              <C>                         <C>
Current assets:
     Cash and equivalents                                                        $             3,113         $            2,418
     Restricted cash                                                                             ---                        321
     Trade accounts receivable, net                                                            5,803                      6,523
     Inventories                                                                                 879                      1,932
     Prepaid expenses and other current assets                                                   277                        383
                                                                                 -------------------         ------------------
          Total current assets                                                                10,072                     11,577
Property and equipment, net                                                                    3,168                      3,312
                                                                                 -------------------         ------------------
 
                    Total assets                                                 $            13,240         $           14,889
                                                                                 ===================         ==================
 
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------ 
 
Current liabilities:
     Bank borrowings and current portion of long-term obligations                $               965         $            1,075
     Accounts payable                                                                            779                      1,545
     Accrued expenses                                                                          1,589                      1,646
     Deferred revenue and customer advances                                                    1,177                      1,479
                                                                                 -------------------         ------------------
          Total current liabilities                                                            4,510                      5,745
Deferred revenue and customer advances                                                           562                        682
Long-term obligations, excluding current portion                                                   5                        632
                                                                                 -------------------         ------------------
          Total liabilities                                                                    5,077                      7,059
                                                                                 -------------------         ------------------
 
Stockholders' equity:
     Preferred stock; par value $.001;  2,000,000 shares authorized; none
        outstanding                                                                              ---                        ---
     Common stock; par value $.001; 23,000,000 shares authorized; 7,746,132
      and 7,725,674 shares issued and outstanding in 1999 and 1998,                                 
     respectively                                                                                  8                          8
     Additional paid in capital                                                               15,606                     15,515
     Accumulated deficit                                                                      (7,451)                    (7,693)
                                                                                 -------------------         ------------------
     Total stockholders' equity                                                  $             8,163         $            7,830
                                                                                 -------------------         ------------------
                    Total liabilities and stockholders' equity                   $            13,240         $           14,889
                                                                                 ===================         ==================
</TABLE>

           See accompanying notes to condensed financial statements.

                                       3
<PAGE>
 
                             ULTRADATA CORPORATION
                           Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 

<TABLE> 
<CAPTION> 
                                                                     THREE MONTHS ENDED
                                                                          MARCH 31,
                                                              -------------        -------------
                                                                  1999                 1998
                                                              -------------        -------------
<S>                                                           <C>                  <C>
Revenues:
     Software                                                 $       2,608        $       2,522
     Services and other                                               4,509                3,752
                                                              -------------        -------------         
          Subtotal                                                    7,117                6,274
     Hardware                                                           211                  988
                                                              -------------        -------------       
          Total revenues                                              7,328                7,262
                                                              -------------        -------------       
Cost of revenues:
     Software                                                           757                  231
     Services and other                                               2,256                2,632
     Hardware                                                           213                  873
                                                              -------------        -------------               
          Total cost of revenues                                      3,226                3,736
                                                              -------------        -------------          
          Gross margin                                                4,102                3,526
                                                              -------------        -------------          
Operating expenses:
     Product development                                                996                1,195
     Selling, general and administrative                              2,861                2,298
                                                              -------------        -------------   
          Total operating expenses                                    3,857                3,493
                                                              -------------        -------------         
            Operating income                                            245                   33
Interest expense, net                                                   (42)                 ---
Other income                                                             74                    7
                                                              -------------        -------------      
Income before income taxes                                              277                   40
                                                              -------------        -------------     
Income tax expense                                                       35                  ---
                                                              -------------        -------------   
          Net income                                          $         242        $          40
                                                              =============        =============   

Earnings (loss) per share information:
-------------------------------------
     Basic net income per share                                $       0.03        $        0.01
     Diluted net income per share                                      0.03                 0.01
     Shares used to compute basic net income
        per share                                                     7,740                7,637
     Shares used to compute diluted net income
        per share                                                     8,000                7,705
</TABLE>


           See accompanying notes to condensed financial statements.

                                       4
<PAGE>
 
                             ULTRADATA CORPORATION
                           Statements of Cash Flows
                                 In thousands
                                  (Unaudited)
 

<TABLE> 
<CAPTION> 
                                                                               THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                          -----------------------------        
                                                                              1999             1998
                                                                          ------------     ------------ 
<S>                                                                       <C>              <C> 
Cash flows from operating activities:
  Net income (loss)                                                       $        242     $         40
 
  Adjustments to reconcile net income (loss) to net cash
  provided by (used for) operating activities:
    Depreciation and amortization                                                  330              515  
    Write off related to renegotiation of agreement                                149              ---  
    Changes in operating assets and liabilities:                                                          
          Trade accounts receivable, net                                           720              291  
          Inventories                                                              276               65  
          Prepaid expenses and other current assets                                106             (349)
          Income taxes receivable                                                  ---               24  
          Accounts payable                                                        (348)             167  
          Accrued expenses                                                         (57)              (6)
          Deferred revenue and customer advances                                  (422)            (198)
                                                                          ------------     ------------    
      Net cash provided by operating activities                                    996              549   
                                                                          ------------     ------------ 
 
Cash flows from investing activities:
   Capital expenditures                                                           (186)            (262)
   Sale of short-term investments                                                  ---              303
                                                                          ------------     ------------          
      Net cash provided by (used for) investing activities                        (186)              41
                                                                          ------------     ------------ 
 
Cash flows from financing activities:
  Decrease in restricted cash                                                      321              ---
  Repayment of debt                                                               (527)             (18)
  Net proceeds from issuance of common stock                                        91              101
                                                                          ------------     ------------     
      Net cash provided by (used for) financing activities                        (115)              83
                                                                          ------------     ------------ 
 
Net increase (decrease) in cash and equivalents                                    695              673
Cash and equivalents at beginning of period                                      2,418              486
                                                                          ------------     ------------ 
Cash and equivalents at end of period                                     $      3,113     $      1,159
                                                                          ============     ============
</TABLE>

           See accompanying notes to condensed financial statements.

                                       5
<PAGE>
 
                             ULTRADATA CORPORATION
                         Notes to Financial Statements
                            March 31, 1999 and 1998


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, 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, 1998.

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 March 31, 1999 and the results of operations and cash flows for
the interim periods presented.  The results for the interim period ended March
31, 1999 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, and collection of the resulting receivable is deemed
probable.  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.

Software cost of revenues includes direct costs of software purchased from third
parties and royalties. Services and other cost of revenues include maintenance,
the direct and indirect costs of providing training and installation, and
consulting services relating to customer contracts. Hardware cost of revenues
includes the costs of the hardware and freight.

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.

                                       6
<PAGE>
 
4.  Computation of Earnings (Loss) Per Share (in thousands except per share
data)

The following is a reconciliation of the denominator in the computation of
diluted earnings per share (the numerator equals net income):

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED  
                                                                 MARCH 31,      
                                                        ------------------------ 
                                                           1999          1998   
                                                        ----------    ----------
          <S>                                           <C>           <C>       
          Net income                                    $      242    $       40
                                                        ==========    ==========
          Weighted average outstanding shares                7,740         7,637
          Common stock equivalents                             260            68
                                                            
          Shares used to compute diluted net income     ----------    ----------                             
               per share                                     8,000         7,705
                                                        ==========    ==========
          Antidilutive common stock equivalents                                 
           excluded                                          1,122         1,081
                                                        ==========    ========== 
</TABLE>

5.  Recent Accounting Pronouncements

In 1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," which requires an enterprise
to report, by major components and as a single total, the change in net assets
during the period from nonowner sources.  Adoption of this standard did not have
an impact on the Company's financial position, results of operations or cash
flows.  During the quarters ended March 31, 1999 and 1998, the Company's sole
source of comprehensive income is its net income.

The Financial Accounting Standards Board issued SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information."  SFAS No. 131 establishes
annual and interim reporting standards for an enterprise's business segments and
related disclosures about its products, services, geographic areas and major
customers.  The Company has determined that it operates in three segments:
software, services and hardware.  Management reviews the operating results of
these segments only at the gross margin level and assets are not allocated by
operating segment.

In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities."  This statement requires companies to
record derivatives on the balance sheet as assets or liabilities, measured at
fair value.  Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting.  SFAS No. 133 will be effective for
the Company's year ending December 31, 2000.  Management believes that this
statement will not have a significant impact on the Company's financial
position, results of operations or cash flows.

6.  Short-Term Obligations

In 1998, the Company entered into an agreement ("License Agreement") to
distribute certain products developed by a third party.  In the first quarter of
1999, the Company renegotiated this agreement which effectively reduced the
number of licenses purchased (which had been recorded as inventory), long-term
debt obligations and the related maintenance commitments. Under the revised
License Agreement, payments totaling $1.2 million are due through April 2001 and
include payments of $0.4 million for maintenance. This revision resulted in a
charge of $149,000 during the quarter ended March 31, 1999,which is included in
software cost of revenues in the accompanying income statement.

                                       7
<PAGE>
 
In connection with the renegotiated License Agreement, in April 1999, the
Company executed an irrevocable standby letter of credit for $700,000 as
collateral for the amounts due under the License Agreement.


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, among other things, engage in cross-selling,
relationship pricing, data mining and workflow control as well as provide
financial services such as checking, savings and investment accounts, home
banking, credit and debit cards, ATM access and consumer lending.  The Company's
products today are primarily targeted at large and mid-sized credit unions that
want to operate their system in-house.  For smaller credit unions, the Company
works through VARs to provide the Company's products.  Combining the in-house
installations with services provided by the Company's VARs, the approximately
430 credit unions using the Company's software represent over 5.7 million
members and $30.0 billion in assets.

The Company derives its revenues primarily from software license fees,
professional service fees including training and installation, custom services,
disaster recovery and software maintenance fees.  A significant portion of the
Company's revenues are derived from substantial contracts with organizations
that have long decision-making cycles, typically from three to twelve months.
Each new customer system generally consists of the Company's ULTRAFIS product
and selected information management modules and selected professional services.


Results of Operations
Revenues

The Company's revenues are comprised of software, services and other revenues
and hardware revenues.  Revenues for the three months ended March 31, 1999 were
comparable to the same period in 1998.  Revenues from the Company's core
business, which excludes hardware, increased 13% from $6.3 million in the first
quarter of 1998 to $7.1 million in the first quarter of 1999.

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 March 31,
1999 and 1998:

                                       8
<PAGE>
 
<TABLE>
<CAPTION>
                           Revenues                       Gross Margin          Gross Margin
                        (In thousands)                   (In thousands)               %
                         Three Months                     Three Months          Three Months       
                            Ended              %              Ended                Ended                %
                          March 31,        Increase         March 31,             March 31,         Increase
                        1999      1998    (Decrease)     1999       1998       1999       1998     (Decrease)
-----------------------------------------------------------------------------------------------------------------
<S>                     <C>      <C>      <C>            <C>       <C>         <C>        <C>      <C>
  Software              $2,608   $ 2,522          3%     $1,851    $ 2,291        71%         91%        (20%)
  Services and other     4,509     3,752         20%      2,253      1,120        50%         30%         20%
 ----------------------------------------------------------------------------------------------------------------
     Subtotal core       7,117     6,274         13%      4,104      3,411        58%         54%          4%
  Hardware                 211       988        (79%)        (2)       115        (1%)        12%        (13%)
-----------------------------------------------------------------------------------------------------------------
Total Revenues          $7,328   $ 7,262          1%     $4,102    $ 3,526        56%         49%          7%
=================================================================================================================
</TABLE>
                                                                                
The software revenues increased to $2.6 million in the first quarter of 1999
from $2.5 million in the first quarter of 1998 was due to increased new system
sales.

Services and other revenues increased 20% from $3.8 million in the first quarter
of 1998 to $4.5 million in the first quarter of 1999.  Service and other
revenues primarily consist of installation, training and maintenance or support
revenue. The increase in revenue is due to maintenance revenues from an
increased installed base of software products and increased training and
installation services.

Hardware revenues decreased 79% from $1.0 million in the first quarter of 1998
to $0.2 million in the first quarter of 1999 due to the transfer of the
Company's hardware sales to Ex-Cel Solutions, Incorporated ("ESI"). The Company
expects direct hardware revenues in 1999 to continue to decline as the orders
remaining prior to the transfer are fulfilled.

Gross Margin

Gross margin increased seven percentage points from 49% in the first quarter of
1998 to 56% in the first quarter of 1999 primarily as a result of an increase in
the gross margin on services partially offset by a decrease in the gross margin
from software sales.

Software gross margin decreased 20 percentage points from 91% in the first
quarter of 1998 to 71% in the first quarter of 1999 due to a higher proportion
of sales of software purchased and licensed from third parties as well as the
$149,000 charge related to the renegotiation of a license agreement (see Note 6
to condensed financial statements).

Gross margin percentage from service and other revenues increased by 20
percentage points from 30% in the first quarter of 1998 to 50% in the first
quarter of 1999.  The increase was primarily due a reduction in the number of
staff associated with maintenance activities, improved staff utilization in
training and installations and the reduction in support staff providing
maintenance services.

Hardware gross margin as a percentage of hardware revenues decreased 13
percentage points to (1%) for the first quarter of 1999 from 12% for the first
quarter of 1998 primarily due to the write-off of damaged inventory and a larger
portion of low cost items sold with lower margins.

                                       9
<PAGE>
 
Operating Expenses

<TABLE>
<CAPTION>
                                           Three Months                                            As a
                                              Ended                     Increase                Percent of
                                             March 31,                 (Decrease)                 Revenue
                                    ------------------------------------------------------------------------------
                                         1999         1998           $           %            1999       1998
<S>                                  <C>              <C>            <C>         <C>          <C>        <C>
Operating expenses
 Product development                       $  996       $1,195       $(199)       (17%)           14%        16%
 Selling, general and                       
  administrative                            2,861        2,298         563         24%            39%        32% 
                                   -------------------------------------------------------------------------------
                                           $3,857       $3,493       $ 364         10%            53%        48%
                                   ===============================================================================
</TABLE>

Product development expenses decreased from $1.2 million in the first quarter of
1998 to $1.0 million in the first quarter of 1999 due to a reduction in
administrative support following a corporate restructuring.

Selling, general and administrative expenses increased from $2.3 million in
first quarter 1998 to $2.9 million in first quarter 1999.  The increase was due
to an increase in inside sales personnel, an increase in the number of sales
representatives, and consulting expenses associated with the implementation of
new accounting and sales support systems.

Net interest expense in the first quarter of 1999 was $42,000 which was a result
of interest expense of $64,000 from debt obligations for product licenses offset
by $22,000 of interest income. Net interest expense in the first quarter of 1998
was $0 which was a result of interest expense of $18,000 from debt obligations
for product licenses offset by $18,000 of interest income.

Other income in the first quarter of 1999 and 1998 was $74,000 and $7,000,
respectively. Other income in 1999 was primarily additional payments from the
sale of the Company's direct service bureau operations.

Income tax expense for the first quarter of 1999 was $35,000 due to state tax
provisions. No income tax expense was recorded for the first quarter of 1998 due
to net operating loss carryforwards.

Certain Factors Affecting Future Operating Results

Market Conditions.  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 that meet market
demands 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.

Year 2000 Effect on Sales. The Company's customers are required by the National
Credit Union Association ("NCUA") to test their critical systems for Year 2000
compliance.  Due to this extensive testing process, the Company's products have
been undergoing Year 2000 compliance testing since June 1998 at many customer
sites.  While no significant issues have been reported, the Company believes
that  its potential and existing customers may defer purchases and/or
implementation of core processing systems and/or additional software modules
until later in 1999 or into 2000 due to Year 2000 concerns.

Significant Fluctuations in Operating Results.  The Company's quarterly and
annual revenues and operating results have varied significantly in the past, and
may 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 

                                       10
<PAGE>
 
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.

Installation. 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.

Technological Change and Obsolescence; Risks Associated with Development and
Introduction of New Products.  The Company has previously experienced delays in
the development and introduction of new products and product enhancements,
including certain of its client/server products.  The length of these delays has
varied depending upon the size and scope of the project and the nature of the
problems encountered. In addition, software products as complex as those offered
by the Company often contain undetected errors or failures when first introduced
or as new versions are released.  There can be no assurance that, despite
testing by the Company and by current customers, errors will not be found in new
products after commencement of commercial shipments.  The occurrence of such
errors could result in loss of, or delay in, market acceptance of the Company's
products, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

Dependence on Hardware Suppliers. In the fourth quarter of 1997, the Company
established a relationship a hardware supplier to configure, sell, distribute,
and provide service for the HP and IBM hardware products and operating systems
used in conjunction with the Company's software products. Additionally, the
hardware supplier will also build, integrate, deliver, and support the Company's
Ultra-Access suite of remote banking products including Ultra-Access Browser
Banking, self-serve kiosks, voice response systems and firewalls. During the
first quarter of 1999, the Company changed hardware vendors with no significant
impact to its business or operations.  Nevertheless, there can be no assurance
that any such changes in the future would not impact future operations.

Year 2000 Compliance. 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 use an internal date format that has never relied on two-digit data
programs.  The Company believes that date entry will not be a material issue
either with the Company's information management software products or the
Company's own information management applications.

The Company has conducted its own Year 2000 compliance testing of its currently
marketed products, including third-party products, and has found no significant
Year 2000 related issues.

                                       11
<PAGE>
 
In addition, on April 15, 1998, the Information Technology Association of
America ("ITAA") announced that the Company had achieved Year 2000
certification.  ITAA is a trade association dealing with Year 2000 software
compliance 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 not evaluated its customers' Year 2000 compliance status.  The
Company's customers are, however, required by the NCUA to test their critical
systems for Year 2000 compliance prior to December 31, 1998.  Due to this
extensive testing process, the Company's products have been undergoing Year 2000
compliance testing since June 1998 at many customer sites.  To date, no
significant issues have been reported.

The Company has considered obtaining Year 2000 compliance insurance as well as
developing various contingency plans.  Given that both internal and customer
testing has indicated the Company's current products are Year 2000 compliant,
the Company has concluded that neither Year 2000 compliance insurance nor
contingency plans are necessary.  For these same reasons, the Company has also
concluded that any future Year 2000 compliance costs, if any, will not be
material.

The Company has assessed all of its major internal systems, which include the
Company's finance, sales and payroll systems for Year 2000 compliance. The
Company has received written confirmation from its vendor that its finance
system is Year 2000 compliant. The sales and payroll systems will be upgraded to
a Year 2000 compliant system during the second quarter of 1999.  The Company
plans to continue to evaluate its key suppliers but expects that any Year 2000
issues of key supplier and other vendors will not have a material impact on its
business, financial condition and results of operations.

Although the Company believes that its Year 2000 plans will be successful, there
can be no assurance that there will be no unforeseen problems which could have a
material adverse effect on the Company.


Liquidity and Capital Resources

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

The Company's operating activities provided $1.0 and $0.5 million in the first
quarter of 1999 and 1998, respectively. The increase in cash provided by
operating activities was primarily a result of the decrease in accounts
receivable, inventory, accounts payable, and deferred revenue in the first
quarter of 1999.

Net cash used for investing activities was $0.2 million in the first quarter of
1999 and cash provided by investing activities was $41,000 in the first quarter
of 1998. Cash used for capital expenditures was $0.2 and $0.3 million in the
first quarter of 1999 and 1998, respectively. In the first quarter of 1998, cash
provided from the sale of short term investments offset the capital
expenditures.

Net cash used from financing activities for the first quarter of 1999 was $0.1
million as a result of the payoff of the Company's line of credit which released
the restrictions on  $0.3 million of cash and repayment of $0.5 million in debt.
Cash provided from financing activities was $83,000 for the first quarter of
1998 due to the net proceeds from the issuance of common stock.

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.

                                       12
<PAGE>
 
In 1998, the Company entered into an agreement ("License Agreement") to
distribute certain products developed by a third party.  In the first quarter of
1999, the Company renegotiated this agreement which effectively reduced the
number of licenses purchased (which had been recorded as inventory), long-term
debt obligations and the related maintenance committments. Under the revised
License Agreement, payments totaling $1.2 million are due through April 2001 and
include payments of $0.4 million for maintenance. This revision resulted in a
charge of $149,000 during the quarter ended March 31, 1999,which is included in
software cost of revenues in the accompanying income statement.

In connection with the renegotiated License Agreement, in April 1999, the
Company executed an irrevocable standby letter of credit for $700,000 as
collateral for the amounts due under the License Agreement.

                                       13
<PAGE>
 
                          PART II - OTHER INFORMATION


ITEM 6 - Exhibits and report on form 8-K


(a)            Exhibits

Exhibit Number      Exhibit Title
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 March 31, 1999.
None

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<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          May 14, 1999              By /s/ Robert J. Majteles
      ---------------------------       --------------------------
                                           Robert J. Majteles
                                           President and Chief Executive Officer
 
                                        By /s/ Ronald H. Bissinger
                                        --------------------------
                                           Ronald H. Bissinger
                                           Chief Financial Officer

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