<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, 1997

          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)
<TABLE> 
<CAPTION> 
                          Delaware                                                94-2746681
<S>                                                                  <C> 
(State or other jurisdiction of incorporation or organization)       (I.R.S. Employer Identification No.)
</TABLE> 

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


              Registrant's telephone number, including area code:
                                 510/463-8356

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 7, 1997, Registrant had outstanding 7,575,291 shares of Common
Stock, $.01 par value.

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

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C> 
 
PART 1    FINANCIAL INFORMATION
 
          ITEM 1 - Financial Statements
 
          Balance Sheets as of June 30, 1997 and December 31, 1996          1
 
          Statements of Operations for the Three Months and Six Months
               Ended June 30, 1997 and 1996                                 2
 
          Statements of Cash Flows for the Six Months Ended June 30, 
               1997 and 1996                                                3
 
          Notes to Financial Statements                                     4
 
          ITEM 2 - Management's Discussion and Analysis of Financial 
               Condition and Results of Operations                          5
 
          ITEM 4 - Submission of Matters to a Vote of Securityholders      10
 
PART II   OTHER INFORMATION
 
          ITEM 6 - Exhibits, Financial Statements Schedules, and 
               Report on Form 8-K                                          11
 

SIGNATURES                                                                 12
</TABLE>
<PAGE>
 
                             ULTRADATA CORPORATION
                           CONDENSED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE> 
<CAPTION>  
                                                       JUNE 30,      DEC 31,
                                                         1997         1996
                                                      -----------   -------
                                                      (Unaudited)
<S>                                                   <C>           <C>
                 ASSETS
                 ------
Current assets:
     Cash and cash equivalents                          $ 1,107     $ 1,583  
     Short term investments                                 453       1,420  
     Restricted cash                                        657          --  
     Trade accounts receivable, net                       3,667       6,586  
     Unbilled revenues                                    3,581       3,870  
     Inventories                                            794       1,173  
     Prepaid expenses and other current assets              762       1,027  
     Income taxes receivable                                 --         958  
                                                        -------     ------- 
          Total current assets                           11,021      16,617  
Property and equipment, net                               4,773       3,532  
Other assets                                                 74         254  
                                                        -------     -------
                                                        $15,868     $20,403  
                                                        =======     =======

    LIABILITIES AND STOCKHOLDERS' EQUITY     
    ------------------------------------     
                                                                             
Current liabilities:                                                         
     Bank Borrowings                                    $   657     $    96  
     Accounts payable                                     2,641       3,659  
     Accrued expenses                                     1,965       2,008  
     Deferred revenue and customer advances               2,908       3,508  
                                                        -------     -------
          Total current liabilities                       8,171       9,271  
Deferred revenue and customer advances                    1,442       1,313  
Bank Borrowings, excluding current portion                  ---         323  
                                                        -------     -------
          Total liabilities                               9,613      10,907  
                                                        -------     -------
Stockholder's' equity:                                                       
Preferred stock; par value $.001;                                 
 2,000,000 shares authorized; none                                     
 outstanding                                                ---         ---  
Common stock; par value $.001;                                               
 23,000,000 shares authorized;                                               
 7,575,740 and 7,526,313 shares 
 issued and outstanding; 
 in 1997 and 1996, respectively                               8           7  
Additional paid in capital                               15,114      14,941  
Accumulated deficit                                      (8,867)     (5,452) 
                                                        -------     -------
          Total stockholders' equity                      6,255       9,496
                                                        -------     -------  
                                                        $15,868     $20,403
                                                        =======     =======   
</TABLE>

          See accompanying notes to condensed financial statements

                                       1
<PAGE>
 
                            ULTRADATA CORPORATION 
                      CONDENSED STATEMENTS OF OPERATIONS 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED              SIX MONTHS ENDED 
                                                           JUNE 30,                       JUNE 30,
                                                      ------------------            ------------------
                                                        1997       1996               1997       1996
                                                      -------    -------            -------    -------
<S>                                                    <C>       <C>                <C>        <C>
Revenues:
     Software                                          $2,101    $ 4,975            $ 3,140    $ 8,130
     Maintenance                                        2,571      2,008              5,107      3,956
     Services and other                                 1,984      2,055              3,290      3,930
     Hardware                                           2,052      3,910              3,682      9,033
                                                      -------    -------            -------    -------
          Total revenues                                8,708     12,948             15,219     25,049
                                                      -------    -------            -------    -------
 
Cost of revenues:
     Software                                             248        849                500      1,669
     Maintenance                                        1,515      1,187              3,132      2,194
     Services and other                                 1,838      2,142              3,030      3,865
     Hardware                                           1,424      2,916              2,655      6,296
                                                      -------    -------            -------    -------
          Total cost of revenues                        5,025      7,094              9,317     14,024
                                                      -------    -------            -------    -------
          Gross margin                                  3,683      5,854              5,902     11,025
                                                      -------    -------            -------    -------
 
Operating expenses:
     Product development                                1,105      1,356              2,497      2,774
     Selling, general and administrative                3,250      3,531              7,073      6,750
                                                      -------    -------            -------    -------
          Total operating expenses                      4,355      4,887              9,570      9,524
                                                      -------    -------            -------    -------
          Operating (loss) income                        (672)       967             (3,668)     1,501
Interest income (expense), net                             (5)       122                 (1)       177
Other income                                              238         17                254         44
                                                      -------    -------            -------    -------
(Loss) income before income taxes                        (439)     1,106             (3,415)     1,722
Income tax expense                                        ---        409                ---        637
                                                      -------    -------            -------    -------
          Net (loss) income                           $  (439)   $   697            $(3,415)   $ 1,085
                                                      =======    =======            =======    =======
Net (loss) income per common and common 
  equivalent share                                    $ (0.06)   $  0.09            $ (0.45)   $  0.15
                                                      =======    =======            =======    =======
Shares used in per share computations                   7,575      7,810              7,567      7,317
                                                      =======    =======            =======    ======= 
</TABLE>

         See accompanying notes to condensed financial statements
                           
                                       2
<PAGE>
 
                             ULTRADATA CORPORATION
                      CONDENSED STATEMENTS OF CASH FLOWS
                                 IN THOUSANDS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED     
                                                                             JUNE 30,        
                                                                       -------------------   
                                                                         1997       1996     
                                                                       --------    -------   
<S>                                                                    <C>         <C>       
Cash flows from operating activities:                                                        
  Net (loss) income                                                    $ (3,415)   $ 1,085   
                                                                                             
  Adjustments to reconcile net income                                                        
   (loss) to net cash provided by
   (used for) operating activities:                                                                                
    Depreciation and amortization                                           599        492   
    Deferred income taxes                                                    --        181   
    Gain on sale of joint venture                                          (238)        --   
    Loss of disposition of property and equipment                            17         --   
    Equity in earnings of unconsolidated subsidiary                         (16)       (44)  
                                                                                             
                                                                                             
    Changes in operating assets and liabilities:                                             
          Trade accounts receivable                                       2,919       (916)  
          Unbilled revenues                                                 289     (6,243)  
          Inventories                                                       379       (790)  
          Prepaid expenses and other assets                                 199         81   
          Income taxes receivable                                           958         --   
          Accounts payable                                               (1,018)      (693)  
          Accrued expenses                                                  (43)     1,166   
          Income taxes payable                                               --        414   
          Deferred revenue and customer advances                           (471)    (2,041)  
                                                                       --------    -------   
    Net cash (used for) provided by operating activities                    159     (7,308)  
                                                                       --------    -------   
                                                                                             
Cash flows from investing activities:                                                        
  Capital expenditures                                                   (1,857)    (1,292)  
  Sale of investment in joint venture                                       500        ---   
  Sale of short term investments                                            967        ---   
  Decrease of stockholders notes receivable                                 ---      1,453   
                                                                       --------    -------   
    Net cash provided by (used for) investing activities                   (390)       161   
                                                                       --------    -------   
                                                                                             
Cash flows from financing activities:                                                        
  Bank borrowings, net                                                      592     (1,000)  
  Repayment of debt                                                        (354)      (220)  
  Restricted cash                                                          (657)       ---   
  Net proceeds from issuance of stock                                       174        ---   
  Net proceeds from initial public offering                                 ---     14,279   
                                                                       --------    -------   
    Net cash provided by (used for) financing activities                   (245)    13,059  
                                                                       --------    -------   
                                                                                             
Net increase (decrease) in cash                                            (476)     5,912   
Cash and cash equivalents at beginning of period                          1,583      1,124   
                                                                       --------    -------   
Cash and cash equivalents at end of period                              $ 1,107    $ 7,036    
                                                                       ========    =======
</TABLE>

                   See accompanying notes to condensed financial statements

                                       3
<PAGE>
 
                             ULTRADATA CORPORATION
                     Notes to Condensed Financial Statements
                             June 30, 1997 and 1996


1. BASIS OF PRESENTATION

These unaudited financial statements have been prepared in accordance with the
instructions for Form 10-Q and therefore certain information and footnote
disclosures normally contained in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These statements should be read in conjunction with the financial statements
contained in the Company's report on Form 10-K for the year ended December 31,
1996.

The accompanying unaudited financial statements of the Company reflect all
adjustments of a  normal recurring nature which are, in the opinion of
management, necessary to present a fair statement of the financial position as
of June 30, 1997 and the results of operations and cash flows for the interim
periods presented.

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.
 
3.  RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB)recently issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" which is
effective for annual and interim periods ending after December 31, 1997. SFAS
No. 128 requires the presentation of basic earnings per share ("EPS") and, for
companies with complex capital structures or potentially dilutive securities,
such as convertible debt, options and warrants, diluted EPS. Had SFAS No. 128
been effective for the quarter and six months ended June 30, 1997, basic EPS and
diluted EPS would not have been significantly different from the reported net
loss per share. The FASB also recently issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 130 and 131 are effective for
fiscal 1998. The company is currently evaluating the impact of these statements
on the financial statements.

                                       4
<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.

OVERVIEW

The Company provides open architecture, fully-integrated on-line information
management solutions that enable relationship-oriented financial institutions to
efficiently manage their businesses and offer real-time customized financial
services 24 hours per day, seven days per week.  These solutions allow the
Company's customers to provide among other things financial services such as
checking, savings and investment accounts, credit and debit cards, ATM access
and consumer lending.  The Company's products are currently targeted primarily
to large and mid-sized credit unions.  

The Company derives its revenues from software license fees, maintenance fees,
service bureau operation fees and disaster recovery services, custom
development, training and installation services and sales of third party
software and hardware products. A significant portion of the Company's revenues
are derived from substantial 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 from three to twelve
months to complete.

Each new customer system consists of the Company's ULTRAFIS product which may be
combined with selected client-server applications, hardware and services.  The
Company expects revenues related to the ULTRAFIS system to represent a
significant portion of its total revenues for the next several years.

The high volume of system sales in 1995 and 1996 and the introduction and demand
for the Company's new client-server applications across its customer base,
exceeded the capacity of the Company's training, installation and customer
support organizations during the last twelve months. In addition, the Company's
customers expressed strong demand for the new client-server applications causing
the Company to release certain products before implementation of an effective
product field testing process.  Customer difficulties occurred as certain
product errors and failures arose and as customers became aware of certain
perceived functionality issues.  As a result, broad market acceptance did not
occur, and the Company made some economic accommodations to resolve the product
issues.  These difficulties resulted in an increase in the Company's unbilled
revenues, a significant increase in the Company's reserve for doubtful accounts
and sales returns and contributed to significant decreases in new customers and
software sales during the last two quarters of 1996 and the first quarter of
1997.

Improved operating results for the quarter ended June 30, 1997 reflect steps
taken to correct these difficulties and failures.  Second quarter sales and
gross margins were higher and operating expenses were substantially lower than
any of the preceding three quarters.

The Company's employee headcount at June 30, 1997 was 205 compared to 305 at
December 31, 1996  The headcount reductions were primarily in administrative and
management overhead positions across the Company and were combined with a
reallocation of Company resources to focus on client-server product lines,
product standardization and customer support.

                                       5
<PAGE>
 
RESULTS OF OPERATIONS

REVENUES

The Company's revenues are generated from software licenses, hardware sales,
maintenance support and various installation and support services.  Revenues for
the three months ended June 30, 1997 decreased 33% to $8.7 million compared to
$12.9 million for the same period last year.  However, revenues increased $2.2
million, or 34%, in the second quarter compared to the first quarter of 1997.
Software sales accounted for half of the increase.

The following table sets forth the Company's revenues, gross margins and gross
margin percentages for the three month periods ended June 30, 1997 and 1996,
respectively:
<TABLE>
<CAPTION>
                                                                                                                
                              REVENUE                GROSS MARGIN               GROSS MARGIN           CHANGE IN     
                          (IN THOUSANDS)            (IN THOUSANDS)           (BASED ON REVENUES)      GROSS MARGIN
                        THREE MONTHS ENDED        THREE MONTHS ENDED         THREE MONTHS ENDED         INCREASE
                             JUNE 30,                  JUNE 30,                   JUNE 30,             (DECREASE)
                        ----------------------------------------------------------------------------------------
                          1997     1996             1997      1996               1997    1996      
                        ------    -------          ------    ------              ----    ----             
  <S>                    <C>       <C>              <C>      <C>                 <C>     <C>          <C> 
  Software               2,101      4,975           1,853     4,126               88%     83%              5% 
  Maintenance            2,571      2,008           1,056       821               41%     41%             --% 
  Services & Other       1,984      2,055             146       (87)               7%    (4)%             11% 
  Hardware               2,052      3,910             628       994               31%     25%              6% 
                        ----------------------------------------------------------------------------------------
                        $8,708    $12,948          $3,683    $5,854               42%     45%             (3%) 
                        ----------------------------------------------------------------------------------------
</TABLE>

Software revenues decreased 58% from $5.0 million in the second quarter of
1996 to $2.1 million in the second quarter of 1997. The decrease was due
primarily to a reduction in the number of new customer contracts signed and
a reduction in sales volume of the Company's client-server applications.

Maintenance revenues increased 28% from $2.0 million in the second quarter of
1996 to $2.6 million in the second quarter of 1997. The increase was primarily a
result of growth in the number of credit unions using ULTRADATA systems.  The
Company's installed customer base grew from approximately 171 systems on June
30, 1996 to approximately 185 systems on June 30, 1997.

Services and other revenues decreased 3% from $2.1 million in the second quarter
of 1996 to $2.0 million in the second quarter of 1997.  The decline was mainly
attributable to decreases in training and installation activities due to lower
sales volumes during the last twelve months.  Services and other revenues also
includes custom development, service bureau operation fees and disaster recovery
contracts.

Hardware revenues decreased from $3.9 million in the second quarter of 1996 to
$2.1 million in the second quarter of 1997. This 47% decrease was primarily
attributable to the decrease in the number of new customer hardware purchases
and customer product installations during the last twelve months.  The Company's
high volume of shipments during the first six months of 1996 were due to the
number of new order's received during the second half of 1995 requiring delivery
during the first six months of 1996.  The percentage of hardware revenues
depends on the mix of customer orders and the timing of particular customer
installations and can be expected to fluctuate substantially from quarter to
quarter.

                                       6
<PAGE>
 
GROSS MARGIN

Total gross margin as a percentage of total revenue declined 3% from 45% in the
second quarter of 1996 to 42% in second quarter of 1997 primarily due to the
reduced proportion of software sales.

Software gross margin as a percentage of software revenue improved 5% due to a
lower proportion of sales of software purchased and licensed from third parties.
This change in mix was due to the lower volume of orders for upgrades and new
customer sales requiring third party software.

The gross margin percentage from maintenance revenues for the second quarter of
1997 was unchanged from the 1996 quarter.

The gross margin percentage from services and other revenues increased by 11%
for the second quarter of 1997 primarily reflecting improved cost controls
established during the first six months of 1997, as well as a favorable mix of
higher margin service bureau and disaster recovery services and lower margin
training and installation services.

Hardware gross margin as a percentage of hardware revenues increased 6% for the
second quarter of 1997 due to the mix of hardware shipped during the second
quarter of 1997.

<TABLE>
<CAPTION>
 
OPERATING EXPENSES
                                                 THREE MONTHS                                        
                                                    ENDED                                                    AS A PERCENT OF        
                                                   JUNE 30,                       (DECREASE)                     REVENUE
                                                --------------------------------------------------------------------------
                                                 1997     1996                   $          %                 1997    1996
                                                ------   ------                ---------------                ----    ----
<S>                                             <C>      <C>                   <C>        <C>                  <C>     <C>
OPERATING EXPENSES
 Product development                             1,105    1,356                 (251)     (19%)                13%     11%
 Selling, general and administrative             3,250    3,531                 (281)      (8%)                37%     27%
                                                --------------------------------------------------------------------------
                                                $4,355   $4,887                $(532)     (11%)                50%     38%
                                                ==========================================================================
</TABLE>

Product Development expenses decreased 19% to $1.1 million compared to $1.4
million for the same quarter of the prior year. These costs were primarily for
staffing to support new product development programs such as Ultra-Access Remote
Banking modules, Optical Disk Systems modules, product enhancements, and
regulatory compliance. Product development expenses as a percentage of total
revenues increased from 11% to 13% during the second quarter of 1997 compared to
the same quarter of 1996 primarily as a result of the reduction in revenues
compared to the prior year.

Sales, marketing, support and general and administrative expenses decreased to
$3.3 million in second quarter of 1997 from $3.5 million in second quarter 1996.
The decrease was primarily due to staff reductions.  Selling, general and
administrative expenses as a percentage of total revenues increased from  27% to
37% principally due to the decrease in revenues in 1997 which more than offset
the effect of the reduction of $0.3 million in expenses.


FUTURE OPERATING RESULTS

The Company's operating performance is subject to various risks and
uncertainties as discussed in this report and in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission on May 9, 1997, as
amended. This report on Form 10-Q should be read in conjunction with the 
Form 10-K, particularly "Risk Factors" and "Management's Discussion and Analysis
of Financial

                                       7
<PAGE>
 
Condition and Results of Operations" contained therein. The Company's future
operating results will depend upon 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. In 1996 the
Company experienced difficulty in the installation and training process on
several conversions, resulting in delays, reductions in revenues and increases
in expenses primarily as a result of the increase in new customer activity in
1996 and the failure of the Company's training and installation organization to
perform to contract schedules. 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.

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.
Any significant delay in the development of new products, or the failure of
these new products, if and when installed, to achieve a significant degree of
market acceptance, could have a material adverse effect upon the Company's
business, financial condition and results of operations.

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 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.

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 and potential 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.

                                       8
<PAGE>
 
Substantially all of the Company's revenues historically have been related to
the Company's ULTRAFIS system, and the Company expects that for several years a
substantial portion of its revenues will continue to be related to the ULTRAFIS
system.  The Company is also dependent upon the success of its new client-server
products.  The Company's success will depend in large part on its ability to
sell, install, maintain and enhance the ULTRAFIS system and client-server
products and to develop, on a timely and cost-effective basis, utilizing new
technologies, application modules that meet evolving customer needs.  Any
failure by the Company to anticipate or to respond adequately to new and
changing market conditions, enhance the ULTRAFIS system and develop application
modules, compete with new product offerings by third parties, complete new
stand alone product offerings, respond to emerging industry standards, adapt to
changing technologies, maintain sales of the Company's products, or continue to
sign and complete new customer contracts would have a material adverse effect on
the Company's results of operations.

On October 25, 1996 the U.S. District Court ruled 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.  Accordingly, if this ruling
results in deferred customer purchase decisions for the Company's products, it
could have a material adverse effect on the Company's business, financial
condition, and results of operations.  While federal credit unions represent
approximately 60% of all credit unions, less than half of these credit unions
are affected by this ruling.

LIQUIDITY AND CAPITAL RESOURCES

The Company's management believes current cash, cash equivalents and short-term
investments, expected cash generated from operations and the available bank line
of credit factoring agreement will satisfy its expected working capital and
capital expenditure requirements through the immediate future.

In May 1997, the Company entered into a factoring agreement which provides for
borrowing by the Company of up to $1.5 million, to be effected by the bank's
purchase of eligible accounts receivable and payment to the Company of an amount
equal to 80% of the purchased accounts receivable. Purchases of receivables and
corresponding advances to the Company are at the discretion of the bank. There
is 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 1998 and is terminable by the Company or the bank at any time. The
agreement also provides that the borrowings are secured by all tangible and
intangible assets of the Company. As part of the factoring agreement, no further
draws will be available under the prior capital equipment facility and the
Company established cash collateral for this balance. As of June 30, 1997 the
Company has not drawn on the factoring facility but has an outstanding balance
of $657,000 on the prior capital equipment facility. The Company expects to pay
off this balance and relieve the cash collateral by obtaining asset-backed
lending from another source.

Capital expenditures of $1.9 million during the first two quarters of 1997 were
primarily for furniture and leasehold improvements related to the Company's
occupancy of new office facility during February 1997.

Net cash provided by operations was $.5 $0.2 million for the six months ending
June 30, 1997, including the $3.4 million net loss for the first half of 1997.
For the quarter ending June 30, 1996, net cash used for operations was $3.5 $7.3
million. Unbilled revenue decreased to $3.6 million at June 30, 1997 compared to
$3.9 million at December 31, 1996 and to the June 30, 1996 balance of $8.5
million. There can be no assurance that the Company will continue to realize
such improvements in the future or that collections of amounts billed will occur
as expected.

                                       9
<PAGE>
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

On May 31, 1997, the Company held its annual meeting of shareholders.  At the
meeting all of the Company's incumbent directors were reelected to office by the
following vote.

<TABLE>
<CAPTION>
 
Name                    Votes for   Votes against   Votes withheld
<S>                     <C>         <C>             <C>
Nigel P. Gallop         6,481,394   0               32,250
John F. Carlson         5,426,394   0               1,087,250
M. M. Stuckey           5,426,394   0               1,087,250
Robert J. Majteles      6,481,345   0               32,299
Lawrence M. Howell      5,426,394   0               1,087,250
</TABLE>

The shareholders also approved an amendment to the Company's 1994 Equity
Incentive Plan to increase the number of authorized shares thereunder from
1,000,000 to 1,300,000, with 5,269,925 votes for,1,231,219 votes against, 12,500
votes abstaining, and zero votes withheld.

The shareholders also approved an amendment to the Company's 1995 Employee Stock
Purchase Plan to increase the number of authorized shares thereunder from
200,000 to 250,000 with 6,477,094 votes for, 23,950 votes against, 12,600 votes
abstaining, and zero votes withheld.

Also at that meeting, the shareholders ratified the selection of KPMG Peat
Marwick, LLP as independent auditors for the Company's current fiscal year, with
5,233,195 votes for, 1,000 votes against, 1,279,449 abstaining, and zero votes
withheld.

                                       10
<PAGE>
 
                          PART II - OTHER INFORMATION

Item 6.         Exhibits and Reports on Form 8-K

(a)             Exhibits

10.27           Distributor Agreement dated June 30, 1997 between the Company 
                and USSI, Inc. and related documents.*

10.28           Employment Agreements dated June 5, 1997 between the Company and
                Executive Management Team and related documents.

10.29           Severance Agreement dated April 30, 1997 between the Company and
                Nigel P. Gallop and related documents.

10.30           Sublease and Consent to Sublease dated June 22, 1997 between the
                Company and 24 Hour Fitness and related documents.

*               Confidential treatment has been requested with respect to
                certain portions of this exhibit. Such portions are being filed
                separately with the Securities and Exchange Commission.

11.01           Computation of Earnings (Loss) per Share (in thousands except
                per share data)

<TABLE>
<CAPTION>
 
                                                  THREE MONTHS              SIX MONTHS        
                                                     ENDED                    ENDED           
                                                    JUNE 30,                 JUNE 30,         
                                               -----------------------------------------      
                                                 1997      1996          1997       1996      
                                               -------    ------       -------    ------      
      <S>                                       <C>       <C>          <C>        <C>         
      Net (loss) income                         $ (439)      697       $(3,415)   $1,085      
                                                ======    ======       =======    ======      
      Weighted average outstanding shares        7,575     7,393         7,567     6,913      
      Common stock equivalents                               417                     404      
                                                ------    ------       -------    ------      
                                                 7,575     7,810         7,567     7,317      
                                                ======    ======       =======    ======      
      Net (loss) imcome per common and                                                        
        common equivalent share                 $(0.06)   $ 0.09       $ (0.45)   $ 0.15      
                                                ======    ======       =======    ======       
</TABLE>

27.01  Financial Data Schedule

(b) There have been no reports filed on Form 8-K during the quarter ended 
    June 30, 1997.

                                       11
<PAGE>
 
                                   SIGNATURES

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

                             ULTRADATA CORPORATION

Date ________________________   By  /s/ ROBERT J. MAJTELES
                                        Robert J. Majteles
                                        President and Chief Executive Officer
 
Date ________________________   By  /s/ PHILIP D. RANGER
                                        Philip D. Ranger
                                        Vice President and 
                                        Chief Financial Officer

                                       12