U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K/A
(Mark One)
         X  Annual Report under Section 13 or 15 (d) of the Securities Exchange 
            Act of 1934

   For the fiscal year ended December 31, 1997

           Transition report under Section 13 or 15 (d) of the Securities 
           Exchange Act of 1934 (No fee required)

         For the transition period from __________ to __________

   
         Commission file number 0-22325
    

                          ALYDAAR SOFTWARE CORPORATION
                 (Name of Small Business Issuer in its Charter)

   
             North Carolina                                87-0399301
    (State of Other Jurisdiction of                     (I.R.S. Employer
     Incorporation or Organization)                     Identification No.)
    

  2101 W. Rexford Road, Charlotte, North Carolina            28211
   (Address of Principal Executive Offices)                (Zip Code)

                                 (704) 365-2324
                (Issuer's Telephone Number, Including Area Code)

        Securities registered under Section 12 (g) of the Exchange Act:

                                  Common Stock
                                (Title of Class)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 past 90 days.
Yes    X      No_____

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-K is not contained in this form, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  X

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days. $173,952,160 as of March 30, 1998.

Documents Incorporated by Reference:  See Footnotes to Exhibits


<PAGE>






<TABLE>
<CAPTION>
Name and Address                       Amount and Nature        Percent of Class

<S>                                           <C>                        <C>  
Robert F. Gruder                              7,030,325                  38.8%
c/o Alydaar Software Corporation
2101 West Rexford Road
Charlotte, NC  28211

V. Hollis Scott                                 186,667 1                  1.0%
c/o Alydaar Software Corporation
2101 West Rexford Road
Charlotte, NC  28211

Thomas J. Dudchik                               226,166 2                  1.3%
c/o Alydaar Software Corporation
2101 West Rexford Road
Charlotte, NC  28211

Frank G. Milligan                                30,000 3                    *
c/o Alydaar Software Corporation
2101 West Rexford Road
Charlotte, NC  28211

James F. Helm                                    20,250 4                    *
c/o Alydaar Software Corporation
2101 West Rexford Road
Charlotte, NC  28211

   
J. Alex McMillan (Director)                      23,340 5                    *
3801 Barnwood Drive
Charlotte, NC  28211
    

John McCarthy (Director)                           -0-                       *
4 Glenwood Circle
East Windsor, NJ  08520-2304

All officers and directors
    as a group (9 persons)                      7,576,248                  42.5%

<FN>
--------
     1  Includes  100,000  shares issuable  upon  exercise of options which vest
on April 24, 1998.   
     2 Includes  200,000  shares  issuable upon  exercise of options.  Of these,
50,000 options vest on April 24, 1998.
     3  Includes  10,000  shares  issuable  upon  exercise  of  options  and  an
additional  20,000 shares issuable upon exercise of options,  which options vest
on April 24, 1998.
     4  Includes  10,000  shares  issuable  upon  exercise  of  options  and  an
additional  10,000 shares issuable upon exercise of options,  which options vest
on April 24, 1998.
     5 Includes 15,000 shares issuable upon exercise of warrants and warrants to
purchase 7,840 shares owned by a company which Mr. McMillan controls.
     * Represents less than 1% ownership.
</FN>
</TABLE>

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<PAGE>



Item 13.  Certain Relationships and Related Transactions

   
         In  connection  with  the  litigation  referred  to in Item  3,  "Legal
Proceedings,"  Mr. Robert Gruder,  President and Chief Executive  Officer of the
Company,  entered  into  agreements  with the Company to  indemnify  the Company
against any liability  resulting from a final unappealable  judgment.  The Colby
Lawsuit was settled by Mr. Gruder in 1997, and the Company was released from all
liability.  Pursuant to the agreement with Mr. Gruder,  the Company paid all his
legal  expenses.  Mr. Gruder has also entered into an agreement to indemnify the
Company from all liability in connection  with the Kaplan  Lawsuit,  which trial
commenced  April 14, 1998 but was adjourned  after one day for three months.  In
consideration  of the agreement to indemnify the Company,  the Company agreed to
pay Mr. Gruder's legal fees and expenses in defending the Kaplan Lawsuit.  As of
December 31, 1997 the Company had paid $85,000 of Mr. Gruder's legal fees.

         Between April 1, 1997 and December 31, 1997, The McMillan Group,  owned
by Mr. Alex  McMillan,  who is a Director of the  Company,  was  retained by the
Company to act as an independent  consultant to assist the Company in developing
government   contracts.   (See   "Directors   and  Executive   Officers  of  the
Registrant.")  The McMillan Group received  total  compensation  of $90,000 plus
reimbursement of expenses for the services  rendered to the Company.  The amount
paid to The McMillan Group on a monthly basis was  consistent  with amounts that
the Company had  previously  paid another  consulting  firm  performing the same
general services for the Company.

         In  July  1997,  the  Company  acquired  Alydaar  International,   Ltd.
("Alydaar   International")   as  a  wholly  owned  subsidiary.   Prior  to  the
acquisition,  Alydaar  International  was an  independently  owned company which
marketed  Alydaar's services in Europe and had been granted a license to use the
name "Alydaar." Mr. Robert Gruder,  Chairman and Chief Executive  Officer of the
Company,   along  with  fifteen  other  individuals,   owned  stock  in  Alydaar
International.  When Alydaar  International  was  acquired by the  Company,  the
shareholders of Alydaar International,  including Mr. Gruder, received shares of
the  Company's   Common  Stock  in  exchange  for  their  interests  in  Alydaar
International.  Mr. Gruder received 50,000 shares of the Company's  Common Stock
which  then  had a value  of  $7.75  per  share.  (See  "Consolidated  Financial
Statements--notes to Consolidated Financial Statements.")
    

         Robert F.  Gruder,  Chairman  and  Chief  Executive  Officer,  has made
advances to the  Company  from time to time to assist the Company in its working
capital requirements. As of January 1, 1997, $500,000 of principal and $3,550 of
interest  were owed by the  Company  to Mr.  Gruder.  During  1997,  Mr.  Gruder
advanced  an  additional  $1,100,000  to the  Company,  and  during the year the
Company repaid Mr. Gruder $800,000, leaving a balance due Mr. Gruder at year end
of $800,000 of principal and accrued interest at 10.5% per annum of $27,868. The
advances are evidenced by promissory notes payable on demand.

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<PAGE>



         Just before December 31, 1997, V. Hollis Scott, Chief Financial Officer
of the Company,  advanced the Company $166,700 with interest at 10.5% per annum.
The loan is evidenced by a promissory note payable on demand.



                                     PART IV

Item 14.  Exhibits, List and Reports on Form 8-K

(a)      1.       Financial Statements and Schedules
                  The financial  statements  and schedules  appearing  after the
                  Index to Exhibits are filed as part of this Annual Report.

         2.       Exhibits
                  The  exhibits  listed on the Index to Exhibits  following  the
                  Signature  Page are  filed as part of this  Annual  Report  by
                  incorporation  by reference from the filings  indicated in the
                  footnotes to the Index

(b)      On September 14, 1997, the Company filed a report on Form 8-K reporting
         the  sale of  150,000  shares  of the  Company's  Common  Stock  for an
         aggregate   consideration  of  $2,250,000   pursuant  to  Regulation  S
         promulgated  under the Act.  The  report  included  Item 7 -  Financial
         Statements and Exhibits and Item 9 - Sale of Equity Securities Pursuant
         to Regulation S.

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<PAGE>


                                    SIGNATURE

                  Pursuant  to the  requirements  of  Section  13 or 15(d),  the
Registrant  has duly  caused  this  Amendment  to Form  10-K to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                  ALYDAAR SOFTWARE CORPORATION

                                  By: /s/ Robert F. Gruder
                                      Robert F. Gruder, Chief Executive Officer,
                                         President and Chairman

Dated:  April 22, 1998
                      

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