SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   [Mark One]

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year 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 no.: 0-22848

                            U.S. WIRELESS DATA, INC.
                            ------------------------
                 (Name of small business issuer in its charter)

           Colorado                                             84-1178691
           --------                                             ----------
(State or other jurisdiction of                              (I.R.S. Employer 
incorporation or organization)                             Identification No.)

           2200 Powell Street, Suite 450, Emeryville, California 94608
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (510) 596-2050

        Securities registered pursuant to Section 12(b) of the Act: None

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

                        No Par Value Class A 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 the past 90 days.

                                    Yes _X_   No___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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-KSB or any
amendment to this Form 10-KSB. [ X ]

The issuer's revenues for the fiscal year ended June 30, 1997 were $1,315,362

The  aggregate  market value of the issuer's  voting stock held as of August 31,
1997 by non-affiliates of the Registrant was approximately  $18,581,000 based on
an average price of $3.49 as of August 29, 1997.

As of August  31,  1997,  the issuer  had  9,113,952  shares of its no par value
common stock outstanding.

The Company's  Proxy  Statement  covering the fiscal year ended June 30, 1997 is
incorporated by reference into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (check one):

                                    Yes___   No _X_
<PAGE>
PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)      Business Development.

         U.S.  Wireless Data,  Inc., a Colorado  corporation,  (the "Company" or
"USWD"),  was  organized  on  July  30,  1991  for  the  purpose  of  designing,
manufacturing  and  marketing a line of wireless  and  portable  credit card and
check  authorization  terminals.  The  Company's  first  product,  known  as the
POS-50(R),  is the  world's  first  integrated  wireless  credit  card and check
authorization terminal using cellular communication technology. The POS-50(R) is
certified to operate on the major credit card  transaction  processing  networks
and is presently  being marketed in the U.S. by a variety of  Independent  Sales
Organizations ("ISOs"), cellular service providers, and directly by the Company.
The POS-50(R) allows a merchant to  electronically  capture a credit card, debit
card or check transaction at the point of sale virtually anywhere cellular voice
service exists and complete the  authorization  process in  approximately  16-18
seconds.  Because of its  portable and wireless  nature,  the  POS-50(R) is well
suited  for the  small to medium  sized  mobile  retailer  or  service  company.
Examples of current  POS-50(R)  customers  include craft show vendors,  sporting
event concessionaires,  towing services,  cart and kiosk vendors and essentially
any business on the go that wants to safely accept credit cards,  debit cards or
checks for their products and services.  With over 4,000 POS-50(R)  terminals in
the marketplace,  the Company is recognized as the leader in providing  wireless
terminal transaction equipment for the mobile marketplace.
The POS-50(R)  product  accounted for most of the sales  recorded in fiscal year
1997.

          Over the past two and a half  years,  USWD  has  focused  its  product
development  effort  on  incorporating   Cellular  Digital  Packet  Data  (CDPD)
technology  into its product  line.  CDPD is a high speed  digital  packet data,
internet  protocol (IP) based  technology that operates in parallel with current
cellular  voice  networks.   It  is  designed  for  high  speed  encrypted  data
transmission  over the air-link and will not interfere with or degrade  cellular
voice  traffic.  Because of the high speed  nature of CDPD  technology,  and the
ability to bypass the public switched telephone network,  the Company's new line
of CDPD-based terminals can have significant  performance and communication cost
advantages when compared with the traditional  dial-up terminals currently being
sold in the U.S. market today. The result is that the Company now offers two new
CDPD products  (POS-500 & TRANZ  Enabler) that reduce the current  authorization
time from approximately 15 seconds to 3 to 5 seconds.

         The most significant new USWD product is the TRANZ Enabler which allows
current Verifone TRANZ(R) 330 or TRANZ(R) 380 users to immediately convert their
terminals and printers from a land-line  telephone  dial-up mode to a high-speed
wireless mode of operation. By effecting this technological upgrade, the cost of
dedicated  telephone  lines is  eliminated  as are the  delays  created  by busy
telephony networks during peak periods of authorization  activity.  Furthermore,
the  efficiencies  created by adopting the CDPD  technology and USWD's  alliance
with a major  transaction  processor  enabled  U.S.  Wireless  Data to develop a
pricing  schedule  which lowers  transaction  and/or  discounts  rates that most
retailers are currently paying to handle credit and debit card transactions. The
TRANZ  Enabler was  introduced in pilot mode in March of 1996 and is directed at
the existing  U.S.  installed  base of more than 3.5 million TRANZ 330 and TRANZ
380 terminals.

         The second  CDPD  product  created by the  Company  is the  POS-500,  a
self-contained  card  terminal  and  printer  that  provides  the same  mobility
features of the POS-50(R) product and also incorporates the processing  benefits
of the TRANZ Enabler. The unit is geared for the user who either does not have a
dial-up  terminal/printer  in  place  or  requires  the  advantages  of the CDPD
technology in a mobile application. This product was introduced in pilot mode in
January of 1996.

         In mid fiscal year 1997,  the Company  made a  fundamental  decision to
change the manner in which it generates  revenue.  If successfully  implemented,
this  significant  decision  transforms  the Company from being a "box maker" in
which it earned one time  wholesale  margins  from the sale of its  products  to
earning  recurring  revenue by  providing  wireless  credit  card and debit card
processing services to retail merchants. In January, 1997 the Company executed a
Member  Service  Provider  ("MSP")  agreement  with  NOVA  Information   Systems
("NOVA"),  the nations  7th largest  credit  card  transaction  processor.  As a
registered MSP of NOVA, the Company can enroll merchants to process their credit
and debit card  transactions  with NOVA. This MSP agreement allows U.S. Wireless
Data to earn  revenue  on each  card  swipe  and  every  dollar  processed  from
merchants enrolled by the Company.
               *TRANZ is a registered trademark of Verifone, Inc.
                                       -2-
<PAGE>
         Another key component of the Company's  strategy  involves the entry of
service resale agreements with major CDPD service  providers.  To date, USWD has
signed agreements with GTE Mobile Communications Service Corporation (GTE), AT&T
Wireless Services and Bell Atlantic NYNEX Mobile. The net result of the NOVA MSP
agreement,  the Company's new CDPD products, and becoming a national reseller of
CDPD  service  positions  the  Company  to offer  high  performance  transaction
processing services at very competitive  discount rates. These relationships are
significant  in  USWD's  strategy  of  providing  high  performance,   low  cost
transaction processing services to the merchant base.

         A key element of USWD's strategic  direction is the close alliance with
large  communications  carriers  such as GTE  Mobilnet.  In addition to the CDPD
service  agreement,  the Company  successfully  negotiated  and executed a joint
marketing and operating agreement with GTE to market the Company's TRANZ Enabler
and processing  services  through GTE's commercial and major account sales force
in all of its CDPD markets.  Under the terms of the  agreement,  the Company and
GTE will act as each other's exclusive  agents,  within markets serviced by GTE,
and GTE will exclusively market USWD's TRANZ Enabler product as its CDPD product
offering in its Wireless  Merchant  Program.  The joint  marketing  program will
focus on retail  merchants  who  currently  utilize a Verifone  TRANZ 330 or 380
credit  card  authorization  terminal.  Presently  there  are over  3.5  million
Verifone  TRANZ  330/380  terminals  located in the US retail  marketplace.  The
product offering  includes a TRANZ Enabler at no cost to the merchant,  provided
that they meet  established  minimum  transaction  volumes,  a very  competitive
discount rate and  authorization  speeds of less than 5 seconds.  The Company is
also required to build a sales and support organization to provide local support
for  more  than  450  GTE  sales   representatives.   By  leveraging  the  sales
organizations  of the major CDPD  providers,  the Company has the  potential  to
reach a large number of merchants  very  quickly.  The Company  plans to execute
similar joint marketing  agreements  with the other CDPD service  providers with
which it currently has cellular service resale agreements.

Direct Data Acquisition and Dissolution

         During fiscal 1995, the Company acquired all of the outstanding  shares
of Direct Data, a distributor of POS-related products.  During fiscal year 1996,
the Direct Data assets were  surrendered  to Direct Data's  secured  creditor in
lieu of the creditor's foreclosure on a past due $1.3 million obligation. Direct
Data was left with no assets,  ceased  operations,  and was dissolved on October
19, 1995.  As a result of the surrender of Direct Data's assets in settlement of
the $1.3 million  obligation and the  dissolution of Direct Data in fiscal 1996,
the  Company  recognized  a gain  on  restructuring  of  payables  and  debt  of
$2,332,411.

(b)      Business of Issuer.

Industry Overview

Credit Card and Debit Card Industry

         Americans  reached  for their  plastic  credit and debit  cards over 32
billion  times to  purchase  over $800  billion in goods and  services  in 1995,
however, nearly 80% of all retail payments were non-electronic.  Credit card and
debit card purchases are growing at a rate of 16% annually with volumes expected
to reach $1 Trillion in 1997. Recent studies have indicated that consumers spend
30% more per transaction when using credit cards than when using cash or checks.
The  proliferation  in the uses and types of credit,  charge,  stored-value  and
debit  cards,  rapid  technological   advances  in  transaction  processing  and
financial  incentives  offered by credit  card  associations  and  issuers  have
contributed  greatly to wider merchant  acceptance and increased consumer use of
transaction cards.

         Unfortunately,  fraud  is also on the rise  and as a  result,  merchant
acquirers,  transaction processors and card issuers are trying to minimize their
losses by offering  incentives  and  requiring  merchants to utilize  electronic
draft  capture  ("EDC")  terminals  to  conduct  on-line  credit  and debit card
transactions. An EDC terminal magnetically reads the encoded account information
from the magnetic  strip on the back of a credit or debit card and sends it to a
transaction  processor for electronic  on-line  authorization.  The  transaction
processor  authorizes  the card with the  issuer,  electronically  captures  the
transaction,  generates an approval  code and returns the data to the  terminal,
which  prints a customer  receipt.  Presently,  the  majority  of EDC  terminals
communicate with the transaction  processor via a telephone or leased line. This
dial-up  type  transaction  process  takes  approximately  10  - 30  seconds  to
complete. At the end of the business day, the EDC terminal dials the transaction
processor to initiate the settlement, collection and electronic deposit of funds
to the  merchant's  local bank account.  Losses from  fraudulent  cardholder use
where  no   authorization   was  obtained  at  the  retail  point  of  sale  are
electronically "charged back" to the merchant.
                                       -3-
<PAGE>
         Payment acceptance guidelines have been introduced by Visa that require
a merchant to comply  with  specific  procedures  in order to receive the lowest
transaction  processing fees or discount rates. These requirements  include: (1)
the presence of the bank card at the point of sale, (2) transmission of all data
encoded on the card's magnetic strip, and (3) settlement  within two days of the
authorization.  If any one of these  requirements  is not met,  the  merchant is
penalized  with a  higher  discount  rate and a  surcharge  is  applied  to each
transaction not complying with the new requirements.

         The Company  manufactures a line of wireless EDC terminals and wireless
enabling  products that allow a merchant to safely accept credit and debit cards
virtually  anywhere  cellular  and/or CDPD service is  available.  The Company's
products  comply  with the  recent  payment  acceptance  guidelines  and allow a
merchant to qualify for the lowest  discount  rates when  processing  credit and
debit card transactions.

Transaction Processing Industry

         The transaction  processing industry is characterized by a small number
of  large  transaction  processors  that  primarily  focus  on  servicing  large
merchants  and by many  smaller  transaction  processors  that provide a limited
range of services to  small-to-medium  sized  merchants.  Large  merchants (i.e.
those with multiple locations and high volumes of card  transactions)  typically
demand and receive the full range of transaction  processing services as well as
customized  information  services at low  per-transaction  costs.  By  contrast,
small-to-medium  sized  merchants  historically  have not been  offered the same
level  of  services  as large  merchants  and have  incurred  relatively  higher
per-transaction  costs. The growth in card  transactions and the transition from
paper-based to electronic  transaction  processing  have caused  small-to-medium
sized merchants increasingly to demand sophisticated  transaction processing and
services similar to those provided to large merchants.

         Transaction   processing   services   are  marketed  and  sold  to  the
small-to-medium  sized  merchant  market  segment  primarily  by  community  and
regional banks and Independent Sales Organizations  (ISOs) that outsource all or
a portion  of the  transaction  processing  services  they  offer.  The costs to
convert from  paper-based to electronic  processing,  merchant  requirements for
improved customer service, and demands for additional customer applications have
made it  difficult  for  community  and  regional  banks  and  ISO's  to  remain
competitive.  As a result,  transaction  processing  continues to undergo  rapid
consolidation in recent years.  The industry remains  fragmented with respect to
the number of entities  providing merchant services and the economic factors are
expected to drive additional consolidation of transaction processors.

Check Payment Industry

         Checks are still the American  consumers second favorite way to pay for
purchases,  behind  cash.  Americans  wrote 60  billion  checks  last  year.  Of
approximately  $3 trillion  worth of retail  purchases  nationwide,  almost $700
billion were paid by check,  of which  approximately  $13 billion were  returned
unpaid for insufficient funds or other reasons.

         Nationwide,  the  number  of bad  checks  is  increasing.  The  cost of
insufficient  funds  checks  often  leads  merchants  either to refuse to accept
checks  or  to  utilize  check  verification  and  guarantee   services.   Check
verification or guarantee services require the merchant to magnetically read the
MICR line of a check or hand key certain  information into an EDC terminal which
communicates  with a  database  maintained  and  operated  by  the  verification
service.  If the check is approved,  an approval code is generated and sent back
to the terminal to complete the check verification or guarantee.

         The  Company's  wireless  terminal and enabling  products  expand check
verification services to mobile and fixed retail merchants where phone lines are
either  not  available  or too slow and  expensive,  and the risks of  accepting
checks are high.


The Company's Products

         POS-50(R) - The Company's first product, known as the POS-50(R), is the
first  fully-integrated,  wireless portable  credit/debit card authorization and
check  verification  terminal.  It is packaged in a compact,  lightweight design
which includes an ergonomic handle for maximum portability. The battery operated
POS-50(R) uses a proprietary  printed circuit board module to integrate a 3-watt
cellular transceiver,  credit card terminal, rechargeable battery and a printer.
The POS-50(R) has been in the U.S.  market since January 1994, and addresses the
mobile  retail  sales and  service  marketplace.  A  merchant  can  utilize  the
POS-50(R)  to safely  accept  and  process a credit  or debit  card  transaction
anywhere  cellular voice service is available.  With the cellular  handset,  the
                                       -4-
<PAGE>
terminal can also be used as a cellular telephone. The POS-50(R) may be operated
in a vehicle,  at a weekend craft show or similar  temporary  locations,  can be
carried from site-to-site or can be used at a fixed location.  When a phone line
is available,  intelligent  circuitry  recognizes the connection to a phone line
and  automatically  transmits  data by telephone line without using the cellular
transceiver, thereby reducing cellular charges.


New Products

         POS-500  -  During  the  third  fiscal  quarter  of 1996,  the  company
introduced two new products utilizing CDPD technology.  The Company's first CDPD
product,  known as the POS-500,  is a fully  integrated  EDC  terminal,  receipt
printer and CDPD  wireless  modem that allows a merchant to complete a credit or
debit card transaction in less than 5 seconds. The POS-500 is designed to target
the traditional  small-to-medium sized retailer.  Because response times are 3-5
times faster than dial-up terminals, and per-transaction communication costs are
competitive  with current dial-up costs,  the POS-500 can compete  favorably and
eventually  replace dial-up credit card terminal  technology in areas where CDPD
service is  available.  The POS-500 has been  deployed with a number of small to
medium sized retailers as well as some high profile  customers such as Villanova
University, The Houston Astrodome and some of the AT&T Wireless retail stores.

         TRANZ Enabler - The TRANZ Enabler was also released in test mode during
the third  fiscal  quarter of 1996,  and was  designed  to enable  the  existing
installed  base of Verifone  TRANZ 330 or 380 dial-up  terminals to operate over
the CDPD  network  resulting  in high  speed,  low cost  transaction  processing
solution for the retail  marketplace.  The TRANZ Enabler connects to the printer
port of the TRANZ 330 or 380 terminal  and  utilizes  power from the credit card
terminal power supply.  The TRANZ Enabler features a printer port for connection
to a receipt printer and can complete a credit or debit card transaction in less
than 5 seconds.  In  addition to credit and debit card  transactions,  the TRANZ
Enabler has recently been successfully  tested in an Electronic Benefit Transfer
(EBT)  application,  a College  student card  application  and a vending machine
application.

         The  Company's new CDPD products and  transaction  processing  services
benefit merchants in the following ways:

Faster Transactions

         A CDPD-enabled  credit card authorization is 3 to 4 times faster that a
transaction   completed  via  a  telephone  line.  A  CDPD-enabled  credit  card
transaction  bypasses the local  telephone and  interexchange  carrier  networks
resulting in faster transactions and fewer delays due to busy telephony networks
and  inefficiencies.  The TRANZ  Enabler and POS-500 can  complete a credit card
transaction in less than 5 seconds.  Faster transactions afford the merchant the
ability to  process  more  business  in a given  period of time while  improving
customer convenience and satisfaction.

Lower Transaction Fees.

         Because of the ability to bypass the traditional telephony networks and
the costs  associated  with them,  the  Company  can offer its  customers  lower
transaction  fees and  discount  rates.  Favorable  buy rates under the NOVA MSP
agreement  also  contribute to the Company's  ability to offer very  competitive
rates.  Lower  transaction  fees and discount  rates are a key  component in the
merchant's  decision  making  process when  evaluating a transaction  processing
relationship that can have a significant effect on a merchant's bottom line.

Increases Sales

         Consumers  often make  purchases  when they have no cash on hand if the
merchant accepts credit cards or checks.  Research indicates that when customers
have the  option to use a credit  card,  they  spend  30% more per  transaction.
Merchants that accept alternative  methods of payment such as credit/debit cards
or checks believe such alternative methods provide a competitive  advantage over
merchants who do not.

Controls Bad Debt

         All of the  Company's  products  allow a merchant  to obtain an on-line
authorization and electronically capture each credit card transaction.  Once the
customer's  credit  card  transaction  has been  electronically  authorized,  an
approval  code is  assigned  and  funds  are  electronically  "captured"  (i.e.,
reserved to pay for the authorized  transaction).  Since each transaction begins
by swiping the credit card through the terminal's magnetic card reader, there is
                                      -5-
<PAGE>
a  significant  reduction  in the  risk  of  fraud  loss  due to  lost,  stolen,
overextended,  or  physically-altered  credit cards.  Debit or ATM  transactions
require that the customer keys in a personal  identification  number  ("PIN") to
complete a transaction.  Debit or ATM transactions cannot be reversed or charged
back to a merchant thereby further reducing bad debt.  Losses from  insufficient
checks are collected or guaranteed by check service  Company's  under a separate
fee agreement with the merchant.

Improves Cash Flow

         Once funds have been  authorized  and  electronically  captured and the
settlement  procedure  initiated,  they are  transferred  electronically  to the
merchant's local bank account.  When compared to paper submission of credit card
transactions,   the  Company's   products   expedite  the  funding   process  by
electronically depositing the day's credit card transactions into the merchant's
local bank account usually within 24 to 48 hours.


Circuit Switched Cellular, CDPD, and EDC Terminal Technology

         The Company's products integrate  circuit-switched  cellular, CDPD, and
credit card  terminal  technology  to access  credit card,  debit card and check
verification  services.  The POS-50(R)  terminal can be used  anywhere  advanced
mobile phone service (AMPS) cellular service is available.  Upon card swipe, and
once  the  sales  amount  is  entered  via the  terminal  keypad,  the  cellular
transceiver  acquires a cellular  channel  and  transmits  the data over the air
waves to a cell site, which is connected to a mobile telephone  switching office
(MTSO) and then connected to the public switched  telephone network (PSTN).  The
call is then routed over one of several  inter-exchange  carriers (IEC's) to the
transaction  processor.  Once an  authorization  is  obtained,  a  corresponding
approval  code is returned to the  terminal,  which prints a duplicate  customer
receipt  and  electronically  captures  the  entire  transaction  data.  A check
authorization  utilizes  essentially the same technology and communication path,
but  authorizes  the  check  data with a  negative  file  maintained  by a check
verification or guarantee company.

         The CDPD  products,  including the TRANZ  Enabler and POS-500,  utilize
dedicated  CDPD  channels  to  transmit  high  speed,   encrypted   credit  card
authorization  from the  merchant  location to the nearest  CDPD cell site which
routes the data to the local mobile data  intermediate  system (MDIS) which then
routes the transaction to NOVA via a leased line or frame relay connection. Once
the transaction is authorized,  the response is returned to the terminal in less
than 300 milliseconds.  The CDPD protocol is based on internet protocol (IP) and
each  terminal and  authorization  host has its own unique IP address.  The CDPD
infrastructure  includes  a  network  of  routers  that  direct  the data to the
appropriate IP addresses.  A CDPD enabled  terminal is essentially  on-line with
the transaction processor whenever it is powered up.

         The credit card application  software within the Company's  products is
unique to each transaction processor (FDC, NOVA, CES, First USA Paymentech,  GPS
etc.) with which it  communicates.  In addition to  proprietary  software,  each
terminal has a unique merchant identification number embedded in the software to
accurately  identify the merchant and bank account  information  for  settlement
purposes.  The application  software can be updated or remotely  downloaded by a
unique  procedure of  keystrokes  by the  merchant or by the terminal  supplier.
Electronic  passwords  prevent  unauthorized  changes  in  either  the  terminal
application software or in the identification numbers.


Cellular Communication Networks

         Presently there are cellular  communication networks providing coverage
in over 700 metropolitan statistical area ("MSA") and rural service area ("RSA")
markets in the U.S. It is estimated that the present cellular service  footprint
covers 95% of the U.S.  population.  The POS-50(R) can be used in any area where
cellular voice-grade coverage is present.

         With approximately 20,000 cellular phones being sold each day, cellular
voice technology is rapidly becoming a commodity  service.  To support this type
of explosive  growth,  the cellular  carriers are spending a substantial part of
their revenues to expand  capacity by upgrading  their  infrastructure  with new
digital technology.  The Company believes the cellular carriers are now focusing
on incremental revenue streams,  including wireless data transmission.  Wireless
data can be transmitted over the same cellular  infrastructure  as voice. It has
been estimated that, by the year 2000, as much as 30% of cellular  revenues will
be derived from data transmission.
                                      -6-
<PAGE>
Wireless Data Networks

         There are several  terrestrial-based  wireless data networks  currently
providing  regional and national data services in the U.S. market.  Listed below
are several  networks  the Company  perceives  as current and  potential  future
carriers of POS data traffic.  USWD  continuously  monitors and  evaluates  this
technology   to  determine   feasibility,   and   applicability   for  POS  data
transmission.

Cellular Digital Packet Data (CDPD)

         The Company believes that CDPD is the superior wireless data technology
for transaction  processing.  Presently over 260 metropolitan  statistical areas
have CDPD service provided by AT&T Wireless Services,  Bell Atlantic Mobile, GTE
Wireless,   Ameritech  Cellular  and  360  Communications,   and  an  aggressive
deployment  schedule is expected to  continue  throughout  the U.S.,  Canada and
Latin America.  CDPD appears to be the standard  protocol for transmitting  data
over a cellular  network and presently  covers  approximately  70% of the retail
marketplace.

         Because of the encrypted packet data and IP (internet  protocol) nature
of CDPD  technology,  CDPD-enabled  POS  terminals can  out-perform  traditional
dial-up terminal technology operating over public switched telephone networks. A
CDPD  network   provides  high  speed  (19.2  bps)  wireless  access  between  a
CDPD-enabled  POS terminal and a transaction  processor,  effectively  bypassing
local phone line service and the monthly costs associated with it. The result of
utilizing CDPD technology is sub-5 second authorization  response times at lower
than dial-up rates. In addition to fast,  secure and low transaction  costs, the
merchant can also  eliminate  the monthly  recurring  cost of a dedicated  phone
line, which averages between $30-40 per month.  However,  the Company recommends
that at least one dial-up  line be  maintained  as a back up in the event that a
CDPD network interruption occurs.

Digital Cellular

         Present  cellular  networks  consist of digital and analog  technology.
There are two digital voice  technologies  competing for market  acceptance  and
dominance:   Code  Division   Multiplexing   Access  (CDMA)  and  Time  Division
Multiplexing  Access (TDMA). Both digital voice technologies have the ability to
transmit data over their respective  networks,  but a data standard is presently
not established. The Company perceives these networks as suitable for nationwide
POS applications if the pricing  structure is competitive with other packet data
networks.

Personal Communication Services (PCS)

         With the allocation of additional RF spectrum and the FCC's  successful
auctioning  of  these  air  wave  licenses,  a  variety  of  competing  Personal
Communication  Services  ("PCS")  networks  are  beginning  to offer  local  and
regional  wireless voice and data services.  As these networks are developed and
deployed,  PCS could become a viable POS wireless access technology.  The future
viability of PCS as a wireless POS access  technology  will be  contingent  on a
"standardized" protocol and a competitive data pricing structure. Presently, the
major PCS service providers are deploying GSM, CDMA and TDMA  infrastructure and
products.  The Company  will  continue to evaluate  the  benefits  and  customer
opportunities regarding PCS based products and services.

RAM Mobile Data

         RAM Mobile Data is a wireless packet data network  currently  available
in over  7,500  U.S.  cities  and  towns,  covering  90% of the  urban  business
population. The network is very similar to, but separate from the cellular voice
network. RAM is designed as a data-only infrastructure. RAM is also connected to
a limited  number of  transaction  processors and currently has credit card data
transversing its network. The Company believes, however, that RAM Mobile Data is
not the most  effective  technology  for wide spread  deployment due to its data
pricing structure, building penetration inefficiencies and other factors.

Nextel

         Nextel currently has a digital  Specialized Mobile Radio (SMR) network,
based on TDMA technology,  providing voice and messaging  services in the top 50
major  metropolitan  service  areas,  covering  approximately  65% of  the  U.S.
population.  Presently,  Nextel's  network is not suitable for POS data traffic,
but it is  anticipated  that  over the next two years it will be  upgraded  to a
                                      -7-

<PAGE>
packet-based  data-ready  network.  When the network is upgraded to packet-based
status,  it could become a viable POS data  network if the pricing  structure is
competitive.  The Company will continue to evaluate  Nextel as a potential  data
highway for its wireless products and services.

Metrocom

         Metrocom is currently  operating a  packet-based  data network in major
cities including San Francisco, Seattle, and Washington D.C. Metrocom's Ricochet
network  is a low  power  packet  data  network  designed  for  wireless  mobile
computing  applications  including  E-mail  and  internet  access.  The  Company
perceives the Ricochet network as a potentially viable POS data network when the
coverage area expands to a nationwide footprint.

Markets

         Current  market  research  indicates  that  there  are  over 4  million
stand-alone  credit  card  terminals  installed  in the  U.S.  market.  In 1996,
1,088,000 POS  terminals  were shipped in the U.S.  market,  a 36% increase over
1995. One  contributing  factor to this healthy  increase is the growth of debit
card  processing  and  larger  memory  requirements  due to the amount of data a
credit card terminal must capture on each transaction.  A debit card transaction
requires  a personal  identification  number  (PIN) to be  entered  into the POS
terminal,  and a large  percentage  of the existing  terminal  base is not debit
ready.  In addition to the increased  demand for  debit-ready  terminals,  other
market  segments  are emerging for POS  terminal  devices  including  Electronic
Benefit Transfer (EBT) transactions.

         In the U.S., mobile service and retail sales companies have experienced
large growth as Americans have developed a demand for  convenience and a need to
save time.  To a larger  extent than in past years,  the retail point of sale is
often  wherever  the customer is located,  and the merchant  must be prepared to
complete the sale at that location. Thus, a wide range of business services such
as towing services, locksmiths, concessionaires,  special event vendors, in-home
appliance repair services,  mobile auto repair, delivery, and similar businesses
depend almost exclusively on completing the sales transactions at the customer's
location.  A recent  research  report  estimates  that the total North  American
wireless POS market size is in excess of 4 million  units and will increase over
5% annually.


International Applications

         The same research  report  referenced  above  estimates  that the total
international  wireless POS market size is in excess of 4 million units and will
increase  over 5% annually.  The Company  believes that  international  markets,
particularly Latin America, where land-based telephone lines are not in place or
are unreliable,  represent  realistic market potential for the Company's POS-500
and  TRANZ  Enabler   products.   The  Company  is  presently   evaluating   its
international  strategy  and will  enter  these  markets if it can  establish  a
recurring revenue model that is consistent with its business plan.

         Several Latin American countries have operational CDPD networks and POS
transaction  processing is being viewed as one of the initial and most immediate
applications to be pursued.  The Company expects that it may be able to leverage
its current cellular alliances to assist it in entering international markets.


Product Distribution

POS-50(R) Distribution

         The  POS-50(R)  can be purchased or leased  through a variety of ISO's,
cellular  companies or the Company  directly.  The Company has no  agreements in
which the reseller or  distributor  is  obligated  to purchase  product from the
Company.

         The Company's most successful distributor is Cardservice  International
("CSI") of Agoura Hills,  California.  CSI  currently  processes in excess of $4
billion  in  credit  and  debit  card  transactions  for  approximately   90,000
merchants.
POS-50(R)  sales to CSI accounts for  approximately  53% of the Company's  total
revenues.

         In  addition  to  CSI,  the  Company  has  entered  into   distribution
agreements  with several  other ISO's to sell and provide help desk services for
their POS-50(R)  customers.  ISO's usually use a commission-only  sales force to
                                      -8-

<PAGE>
call on merchants to offer their  credit card  processing  services and terminal
equipment.  Presently,  ISO's sell or lease nearly 80% of all stand-alone credit
card terminals used in the marketplace.

         The Company has  agreements  with two master  distributors  that supply
other ISO's, small banks and other resellers. The Company also sells directly to
merchants  that  currently  have a bankcard  relationship  and are  looking  for
hardware only. Due to the lack of an  advertising  budget or a public  relations
campaign,  sales volumes have  remained  fairly flat,  with no new  distribution
channels or internal sales people added during the past fiscal year.


TRANZ Enabler and POS-500 Sales and Marketing Plan

         As  the  Company  enters  fiscal  year  '98,  it is in the  process  of
implementing a new sales and marketing strategy for its CDPD- based products and
bankcard processing services. The Company will only sell or provide its products
to merchants  that sign up for bankcard  processing  services  with the Company.
This  approach  is the  fundamental  basis of the  Company's  sales and  marking
strategy.  The Company  will no longer just sell a "box"  without the ability to
earn recurring  revenue from each transaction  originated by its customers.  The
Company will market its products and bankcard  processing services through joint
marketing  and  operating  agreements  with its cellular  alliances  and its own
direct sales  organization.  Presently,  the Company is focused on launching the
TRANZ  Enabler and its  bankcard  processing  program  though a joint  marketing
effort with GTE's  commercial  account and major account sales  representatives.
The Company will  concentrate  on developing  distribution  of its products with
associated  processing  services in conjunction with CDPD carrier partners,  and
through its own direct sales force to major accounts.  The CDPD carrier partners
provide an opportunity to leverage large sales organizations in the distribution
of the Company's products and services to the merchant.


Competition

         Currently,  the Company believes it has no direct POS-50(R)  competitor
that  is   manufacturing  an  integrated,   battery  powered,   circuit-switched
cellular-based terminal and printer product. However, the company has identified
several non-integrated cellular based solutions that compete with the POS-50(R),
but are not as elegant or functional.  These non-integrated solutions range from
a few hundred dollars to a few thousand dollars  depending upon the distribution
channels and the type and number of components.

         The Company has identified several potential competitors  attempting to
develop CDPD-based terminals and solutions.  Hypercom, a Phoenix-based  terminal
manufacturer,  has publicly  announced their CDPD-based  terminal  product.  The
Company  perceives this product as direct  hardware  competition to the POS-500.
With the  fundamental  decision to enter the  recurring  revenue  business,  the
Company believes that it may be able to develop supplier  relationships with its
perceived   competitors  which  will  essentially   minimize   potential  direct
competition.


Manufacturing

         The Company utilizes high quality,  third party  manufacturers to build
its products.  Uniform Industrial Corporation manufactures the Company's POS-50.
Wellex Corporation,  a Freemont California based manufacturer,  builds the TRANZ
Enabler product line, and Finite Technologies, of Pueblo, Colorado manufacturers
the POS-500 CDPD-based terminal line.

         The Company recently entered an agreement with Wellex Corporation which
includes specific build schedules and operating terms for the manufacture of the
TRANZ Enabler. The Company's engineering team develops a detailed  manufacturing
manual for each of its product lines and manages the manufacturing  process with
each respective manufacturer.
                                      -9-
<PAGE>
Customers

         CSI has been the Company's single largest  customer,  with sales to CSI
representing  approximately 25% and 53% of the Company's  POS-50(R) revenues for
the twelve months ended June 30, 1996,  and June 30, 1997  respectively.  CSI is
one of the fastest  growing  credit card  processing  companies in the U.S. with
1,800 agents and a customer base of over 90,000  merchants  processing an annual
bank card volume in excess of $3 billion.  The  Company's  remaining  revenue is
comprised of sales to a variety of ISO's and direct sales.  To date, the Company
has shipped  approximately  4200 POS-50(R)  terminals and is currently  shipping
approximately  50 terminals per month.  The Company  currently relies on CSI for
approximately half of its POS-50 business. The Company has developed a new sales
and marketing plan for the CDPD based products. If successfully implemented, the
joint marketing and  distribution  agreements with major cellular  carriers will
provide  USWD  with  a  much  broader  reach  to  the  merchant  end-user.   See
"Description of Business - Business Development".


Patents, Trademarks and Licenses

         The  Company  was  granted a design  patent on  certain  aspects of the
POS-50(R) product in June, 1994. The Company expects to file additional  patents
as it determines appropriate.

         POS-50(R),  is a  registered  trademark  of the  Company.  The  Company
identifies its mark in all its marketing material and advertising campaigns. The
Company may register future product related trademarks if appropriate.

         Proprietary  technology  involved  in  the  primary  components  of the
Company's products,  including the cellular and CDPD transceiver and printer, is
owned by the respective  component supplier.  The Company does claim proprietary
rights with respect to the  integration and use in the Company's  products.  The
Company also claims  proprietary  rights on certain  aspects of its  application
software  as it  relates  to CDPD  point-of-sale  functionality  and  diagnostic
features.   The  Company  is  also  pursuing  potential   intellectual  property
protection on its hardware and software products.


Government Regulation

         The  POS-50(R),  POS-500 and TRANZ  Enabler use cellular RF channels in
the 800-900  megahertz  bandwidth  and are subject to  regulation by the FCC for
both  cellular  transmission  and  unintentional   interference  radiation.  The
products  incorporate  either a  circuit-switched  cellular or CDPD  transceiver
manufactured by suppliers that comply with the appropriate FCC  requirements and
have been issued an FCC identification number.

         The Company has received  confirmation  from the FCC that the POS-50(R)
terminal  product does not require FCC approval to sell the terminal in the U.S.
marketplace.

         The  POS-50(R),  POS-500 and TRANZ Enabler have passed all known UL and
CSA requirements in testing conducted at an independent certified test site.

         Most foreign countries accept United States federal regulatory approval
for purposes of permitting  commercial  sales of electronic  products;  however,
specific  regulatory  approval of the product may be required in some  countries
and could become an obstacle to sales of the product in such areas.


Research and Development

         A substantial  portion of the Company's early  activities were involved
in the engineering and development of the initial  POS-50(R)  terminal  product.
The Company  completed  development  in early  1993.  During the last two fiscal
years, ending June 30, 1996 and 1997, the Company expended $458,407 and $406,522
respectively, in research and product development activities.
                                      -10-
<PAGE>
         The  Company  employs  four  people  who are  engaged in  research  and
development. Current efforts are focused on CDPD-based products and on POS-50(R)
enhancement,  including  bringing a new  manufacturer  on line,  cost reduction,
product efficiency and reliability,  customization and software development. The
Company expects to add personnel to its R&D staff as the financial  condition of
the Company improves and/or additional development contracts are obtained.


Employees

         As of  August  31,  1996,  the  Company  had  reduced  its  staff to 11
full-time employees including its officers;  sales and marketing staff;  product
research  and  development  team;  technical  and  customer  support  staff  and
administrative  staff.  Due to  continuing  financial  pressure,  headcount  has
remained at  approximately  this level and was at 8 full-time  employees at June
30, 1997 and 11 employees on August 31, 1997. During the first quarter of fiscal
1998,  the company added several key  management  positions and is  aggressively
building a national sales and marketing organization. See "Management Discussion
and Analysis: Results of Operations and Subsequent Events".


Documents Filed as Exhibits

         References  made in this report to material  contracts,  agreements  or
other  documents  are  summaries  only and are  qualified  in their  entirety by
reference to the complete  copy of the document  which is filed as an Exhibit to
this Report.  Copies of such  documents  can be obtained  from the United States
Securities  and  Exchange  Commission  or from the Company by a written  request
addressed to the attention of the Corporate Secretary.


ITEM 2.  DESCRIPTION OF PROPERTY

         On  October  23,  1996,  the  Company  closed  its  Boulder  office and
consolidated  operations  in  Colorado  Springs,   Colorado,   where  it  leases
approximately  1,200 square feet of office and  laboratory  space  pursuant to a
lease which extends  through July of 1998. A small  customer  service and POS-50
deployment  office was opened in Wheat  Ridge,  Colorado  and is leased  through
November of 1997. The combined  monthly rent is approximately  $2,100.  With the
creation of a new  management  team in the first  quarter of fiscal 1998 and the
need to establish the required infrastructure to support the marketing and sales
initiatives,   the  Company  will  establish  its  headquarters   operations  in
Emeryville,  California.  See  "Management  Discussion and Analysis:  Subsequent
Events".


ITEM 3.  LEGAL PROCEEDINGS

         In September of 1996, the Company agreed to terms to settle  securities
fraud  litigation,  pending  since  1994,  which was  brought in relation to the
Company's initial public offering of December 1993. The parties'  agreement (the
"Settlement  Agreement")  was filed in the United States  District Court for the
District of Colorado on January  15, 1997 in  consolidated  Case N0.  94-Z-2258,
Appel, et al. v. Caldwell,  et al. By its order  approving the  settlement,  the
court  certified a plaintiffs'  settlement  class and provided the mechanism for
payment of claims. The Company  contributed $10,000 to the total settlement fund
of  $2,150,000.  The remaining  portion of the  settlement  was  contributed  by
certain  underwriters  of the Company's  initial public  offering and securities
counsel. No objections to the Settlement Agreement were made. No potential class
member  opted-out of the settlement and all are bound by the release granted the
Company.  All  claims  against  the  Company  in those  consolidated  cases were
dismissed  by final  federal  court order on  September  4, 1997.  No appeal was
filed.  Similar  state court claims were  dismissed by Colorado  district  court
order dated October 9, 1997.

     To resolve  cross-claims  asserted by underwriters in the litigation,  U.S.
Wireless  Data,  Inc.  agreed to transfer to RAS  Securities  Corporation,  H.J.
Meyers & Co, Inc.,  Sands & Co. Ltd. and R.J.  Steichen & Co. a total of 600,000
U.S. Wireless Data, Inc. common shares upon the effective date of the Settlement
Agreement. The Company has agreed to register such shares upon demand not sooner
than April 26, 1998.  Further, on September 17, 1997 the Company agreed to entry
of a  consent  judgment  against  it  and in  favor  of Don  Walford,  the  sole
shareholder of underwriter Walford  Securities,  Inc., in the amount of $60,000,
payable over a three year period.
                                      -11-
<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the Company's  shareholders during
the fourth quarter of the Company's fiscal year ended June 30, 1997.

<PAGE>
PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)      Market Information.

         The  Company's  Common  Stock was traded on and quoted in the  National
Market  System of the  National  Association  of  Securities  Dealers  Automated
Quotation  System  (NASDAQ)  under the symbol USWDA since the Company's  initial
public offering on December 3, 1993 until July 6, 1995, when the Company's stock
was  de-listed  from  NASDAQ for  failure to meet the  minimum  bid price or the
market value of public float  requirements.  As a result, the Company's stock is
currently  trading on the OTC  Bulletin  Board under the symbol  USWDA.  For the
fiscal quarter  indicated,  the following  table shows the high and low reported
closing  prices of the  Company's  Common  Stock as reported on the OTC Bulletin
Board.

<TABLE>
<CAPTION>
                                   High                     Low
<S>                               <C>                     <C> 
First Quarter `96                  .469                    .125
Second Quarter `96                 .469                    .094
Third Quarter `96                  1.063                   .109
Fourth Quarter `96                 .844                    .281
First Quarter `97                  .406                    .125
Second Quarter `97                 .375                    .156
Third Quarter `97                  .281                    .125
Fourth Quarter `97                 .625                    .218
</TABLE>

The above  quotations were furnished by the OTC Bulletin Board.  Such quotations
represent prices between dealers and do not include retail mark-ups,  mark-downs
or commissions and may not represent actual transactions.

(b)      Holders.

         As of June 30, 1997, the Company had  approximately 233 shareholders of
record of its Common Stock. This number does not include an undetermined  number
of holders who retain their shares in "street name".

(c)      Dividends.

         The Company has not declared cash dividends on its Class A Common Stock
         since its inception and the Company does not anticipate paying any cash
         dividends in the foreseeable future.

(d)      Recent Sales of Unregistered Securities

         Unregistered Common Shares were sold or issued as follows:

                   o November 15,  1996Arthur  Bosworth 102,975 shares Issued in
                  settlement of Company payables of $15,446 at $.15 per share.

                   o May 16, 1997   RAS Securities            384,000 shares
                                    H. J. Meyers              138,000
                                    Sands Brothers             54,000
                                    R. J. Steichen             24,000

                    Issued 600,000 shares in settlement of class action law suit
                    per Board of Directors resolution dated October 9, 1996.

           o June 3, 1997   entrenet Group LLC.   $150,000 Convertible Debenture

                    The  Company  agreed  to issue a  convertible  debenture  in
                    exchange for consulting  services to be rendered  during the
                    balance  of  fiscal  1997  and  1998.   The   debenture   is
                    convertible  into common stock at a stated price of $.50 per
                    share.  If not  converted,  the debenture is due and payable
                    June 3, 1998.
                                      -13-
<PAGE>
                  o Fourth   Quarter  FY  1997   Private   Investors   $185,000
                    Convertible  Demand Notes The Company executed and delivered
                    demand notes to certain  private  investors.  The Notes bear
                    interest at 10% annually and are  convertible  at a price of
                    $.35 per  share  ($75,000  of  Notes)  and  $.50  per  share
                    ($100,000  of notes) for any and all  outstanding  principal
                    and interest. If not converted, the notes are due during the
                    fourth quarter of fiscal 1998.

                  o July 1,  1996  Cardservice  International  142,544  Shares
                    Common Stock Cardservice  International  exercised  warrants
                    and   stock   issued   relating   to   Solectron   inventory
                    procurement.

                  The Company relied upon the registration  exemption  contained
in  Section  4(2)  of  the  Securities  Act  of  1933  for  all  above-described
transactions.   None  of  the   transactions   involved   a   public   offering.
Representations  were  received  from the  purchasers  of the  securities to the
effect that the purchasers were taking for investment purposes only and not with
a view to distribution;  "restricted  securities"  legends were imprinted on all
stock  certificates;   and  stop-transfer  instructions  were  lodged  with  the
Company's  transfer  agent  as to all  shares  of  common  stock  issued  in the
transactions.


ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

         U.S.  Wireless Data, Inc. was  incorporated on July 30, 1991, and is in
the business of  designing,  manufacturing  and marketing a line of wireless and
portable credit card and check authorization terminals. The Company completed an
initial public offering in December of 1993, and in 1994, completed  development
of its initial  product,  negotiated  agreements  with  suppliers of components,
developed a marketing  strategy,  and initiated sales of the POS-50(R)  portable
credit card and check  verification  terminal.  During fiscal 1996,  the Company
continued to promote its product through  Independent Sales  Organization  (ISO)
channels  and  began  development  on its new CDPD  product  line.  The  Company
continued  its  efforts on the  POS-50(R)  and in the  second  half of the year,
introduced two new  CDPD-based  products.  Substantially  all the revenue of the
Company for fiscal year 1996 was derived from the sale of inventories  for which
the Company had previously paid.

         As the Company  entered fiscal year 1997, it continued to struggle with
profitability  and  liquidity.  In October 1996,  the Company closed its Boulder
office and  consolidated  operations  in  Colorado  Springs,  Colorado.  A small
customer  service  and  POS-50  deployment  office  was  opened in Wheat  Ridge,
Colorado.  As  part  of  the  restructuring  plan,  Michael  J.  Brisnehan,  its
president, principal executive officer and chief financial officer resigned. Rod
L.  Stambaugh,  chairman and former vice  president  of  marketing  and business
development was appointed  president and chief executive officer.  During fiscal
year 1997,  headcount  was  maintained at  approximately  10 employees and ended
June, 1997 at eight.

         A strategic  decision  was made to  transition  the Company from a "box
maker" to providing a credit/debit card processing  solution to the marketplace.
In January,  1997 the Company executed a Member Service Provider  agreement with
NOVA Information  Systems that  establishes U.S.  Wireless Data as a transaction
processing  service  provider to retail  merchants.  The NOVA  arrangement  also
allows the Company to generate a recurring revenue stream from each installation
instead  of the  previous  per unit  sales  approach.  Another  key piece of the
strategic  direction  was to  significantly  broaden  distribution  of the TRANZ
Enabler CDPD based  product by  developing  distribution  agreements  with large
communications  carriers for direct distribution of products and services to the
merchant.  In  preparation  for this  effort,  the company  signed CDPD air time
agreements with AT&T Wireless Services, Bell Atlantic NYNEX Mobile and initiated
discussions with GTE regarding a joint marketing and operating  agreement.  USWD
has specific  commitments  under these  agreements  including  minimum  purchase
obligations and staffing requirements.

         In the fourth quarter of fiscal 1997, it was clear that the Company had
a very significant  market  opportunity but had extremely  limited financial and
human resources to apply to an aggressive CDPD product  roll-out.  In June 1997,
the Company engaged entrenet Group, LLC.,  (entrenet),  a management  consulting
group, to assist with the development of a detailed  marketing and business plan
and introduction of financing sources.  The Agreement has a term of one year and
USWD agreed to pay  entrenet  $150,000 in the form of a  convertible  debenture,
                                      -14
<PAGE>
bearing  interest at 10% per annum.  Entrenet is entitled to a finder's  fee for
locating  direct  financing  sources  for the  Company.  USWD and  entrenet  are
discussing certain  modifications to the compensation terms of the agreement and
USWD expects to issue the  debenture  to entrenet in the  immediate  future.  In
August 1997, through an introduction by entrenet,  the Company retained Liviakis
Financial  Communications  Inc.  (Liviakis)  to advise and assist the company in
matters  concerning   investor   relations,   corporate  finance  and  strategic
management planning. Through Liviakis, the Company completed a private placement
of restricted securities. Through this financing, the Company raised $500,000 in
cash for common stock and warrants which, if all warrants were exercised,  would
total 5.1 million shares of common stock. See "Subsequent Events", below.

         The Company  undertook a focused  effort to strengthen  and broaden its
management  team. In early August 1997,  the Company  retained Evon Kelly as its
chief executive  officer.  Also in August, the Company hired a vice president of
sales,  vice  president  of  major  accounts,  and in  September  added  a chief
financial officer.  The company is actively  recruiting and hiring marketing and
sales personnel for deployment on a nationwide basis as joint marketing programs
with the major wireless carriers are implemented.  The retention of these people
is expected to bring the necessary expertise to implement the Company's business
plan.

         In August 1997, GTE and USWD announced a joint  marketing and operating
agreement to distribute  the  Company's  TRANZ  Enabler  credit card  processing
system  through  GTE's CDPD sales  network to  merchants  . Both  companies  are
engaged in a nation  wide  deployment  which will  extend  TRANZ  Enabler  sales
through  over 400 GTE sales  representatives.  The Company  has also  executed a
purchase  agreement  with Wellex  Corporation  for the  manufacture of the TRANZ
Enabler units and is negotiating an agreement with GTE Leasing for the financing
of the inventory procurement.

         The  development of the Company's  infrastructure  and expansion of the
sales and marketing  organization requires additional financing resources.  U.S.
Wireless  is working  both  directly  and through  its  consultants  to secure a
capital  infusion  which will  finance  the  Company's  growth.  See  "Financial
Condition, Capital Resources and Liquidity", below.


Fiscal 1997 Compared to Fiscal 1996

     Net  sales of  $1,315,542  for  fiscal  1997  decreased  from net  sales of
$1,582,553  generated  during  fiscal  1996.  Unit sales  during both years were
approximately  the same.  The decrease in sales dollars is  attributable  to: a)
reductions  in  retail  prices  from one year to the next,  and b)  slower  than
anticipated sales of the CDPD-based POS-500(R) unit.

         Gross margins increased from a negative  $1,303,879 in fiscal 1996 to a
positive $506,095 for fiscal 1997. This increase is attributable to a $1,525,000
write-down of inventories during fiscal 1996,  resulting from declines in market
value of such  inventories  relative to cost,  compared to the 1997 gross margin
which shows a  significant  increase due mainly to lower costs for the POS-50(R)
from a major supplier.

         Selling,  general and administrative expenses decreased from $1,365,235
in fiscal 1996 to $976,287 in fiscal 1996.  This  decrease was due primarily to:
a)  headcount  reductions  in  sales,  marketing  and  administration  over 1996
staffing  levels  reduced  salary expense by  approximately  $182,000;  b) legal
expense  reductions in 1997 from the  approximately  $226,000 incurred in fiscal
1996  (related to class  action  lawsuits  filed  against the Company due to the
Direct  Data  failure);  and c)  significant  reductions  in bad  debt  expense,
depreciation, royalty expense, relocation expense, and rent expense.

         Inventory  write-offs  decreased from $1,525,000 in fiscal 1996 (due to
declines  in the market  value of  inventories  relative  to cost) to $15,400 in
fiscal 1997.


Financial Condition, Capital Resources and Liquidity

             The Company  continues to have significant  concerns  regarding its
financial  condition and  liquidity.  While the Company is  optimistic  with its
medium and long term opportunities, it is constrained by its immediate financial
condition and requirement for increased liquidity. The Company has accumulated a
deficit of  approximately  $17.0  million  since  inception  and currently has a
negative working capital  position.  The Company's CDPD based products,  the GTE
joint marketing and distribution agreement,  pending distribution agreements and
transition to a recurring  revenue focus present an opportunity  for significant
revenue  growth,  an eventual return to  profitability,  and the generation of a
positive cash flow from operations. At present, the development of the Company's
infrastructure  and expansion of the sales and marketing  organization  requires
additional financing. Implementation of the Company's business plan is dependent
                                      -15-
<PAGE>
on the infusion of new debt or equity financing.  As of the date of this report,
the Company is seeking to raise between $2 to $4 million. The Company is working
both directly and through its  consultants to secure  additional  debt or equity
financing which is expected to fund the Company's  growth.  While  management is
confident it can  accomplish  this  objective,  there is no guarantee  that this
additional funding will occur in the required time frame.


Forward-Looking Statements

             The Company may, in discussions of its future plans, objectives and
expected  performance  in  periodic  reports  filed  by  the  Company  with  the
Securities  and Exchange  Commission  (or  documents  incorporated  by reference
therein)  and in written and oral  presentations  made by the  Company,  include
projections or other  forward-looking  statements  within the meaning of Section
27A of the  Securities Act of 1933 or Section 12E of the Securities Act of 1934,
as  amended.  Such  projections  and  forward-looking  statements  are  based on
assumptions  which the Company believes are reasonable,  but are by their nature
inherently  uncertain.  In all cases results could differ  materially from those
projected.  Some of the  important  factors that could cause  actual  results to
differ from any such projections or other forward-looking statements follow.

             History of Losses and Potential  Fluctuations in Operating Results.
Through  the end of the fiscal  year  ending  June 30,  1997,  the  Company  had
experienced  significant  operating  losses.  In  addition,  because the Company
generally ships its products on the basis of purchase orders,  operating results
in any quarter  are highly  dependent  on orders  shipped in that  quarter  and,
accordingly,  may fluctuate  materially  from quarter to quarter.  The Company's
operating  expense  levels are based on the  Company's  internal  forecasts  for
future demand and not on firm customer orders. Failure by the Company to achieve
these internal  forecasts could result in expense levels which are  inconsistent
with actual revenues.  The Company's results may also be affected by fluctuating
demand for the  Company's  products and by increases in the costs of  components
acquired from the Company's vendors.

             Distribution  Program.  In the past fiscal year CSI  accounted  for
over 50% of the Company's revenue.  The roll-out of the GTE distribution program
is expected to have a material  impact on the Company's  future revenue  stream.
While the Company anticipates it will execute distribution agreements with other
significant partners,  the loss of, or substantial  diminution of purchases from
the Company  through any of these  distributors  could have a material effect on
the Company.

             The  Company's   dependence  on  a  Single  Type  of  Product.  and
Technological  Change.  All of the Company's  revenues are derived from sales of
its credit card transaction or CDPD enabling products. Demand for these products
could be affected by numerous factors outside the Company's control,  including,
among others, market acceptance by prospective customers, or the introduction of
new or superior  competing  technologies.  The Company's  success will depend in
part on its  ability to respond  quickly to  technological  changes  through the
development and improvement of its products.

             Competition by Existing Competitors and Potential New Entrants Into
the Market.. The Company has identified several potential competitors attempting
to develop CDPD based  terminals  and  solutions.  In addition,  companies  with
substantially greater financial, technical,  marketing,  manufacturing and human
resources,  as well as name  recognition,  than the  Company  may also enter the
market.

             Requirement for Additional Capital. Implementation of the Company's
business plan is dependent on the infusion of new debt or equity  financing.  As
of the date of filing this report, the Company is seeking to raise between $2 to
$4  million  through  such  financing.  While  management  is  confident  it can
accomplish  this objective,  there is no guarantee that this additional  funding
will occur in the required time frame.

             Untimely  Filing of 1996 Proxy  Statement.  The Company  apparently
inadvertently  failed to file its 1996 Proxy  Statement  with the Securities and
Exchange  Commission  within 120 days of the end of fiscal year 1996.  Copies of
the Proxy  Statement  were  distributed  to all  shareholders  of the Company in
conjunction with the Company's 1996 Annual Shareholder  Meeting,  which involved
only the election of directors and the retention of accountants. The Company has
since filed the 1996 Proxy Statement with the Commission. It is not certain what
liability, if any, the Company might have as a result of its untimely filing.
                                      -16-
<PAGE>
Subsequent Events

         Subsequent  to June 30, 1997,  the Company has  continued to experience
inadequate sales volume on its products through its traditional  sales channels.
As a result, the Company is implementing a strategic decision to shift from only
a "box maker" to also a reseller of credit card processing products and services
which generate  recurring  revenue.  The Company is focused on strengthening the
management team, building a sales and support organization, implementing the GTE
distribution   roll-out,   starting  the  transition  to  a  recurring   revenue
orientation and acquiring additional funding. Key subsequent events are outlined
as follows:

         o  In  August   1997,   the   Company   retained   Liviakis   Financial
Communications  Inc.  to advise  and assist  the  Company in matters  concerning
investor  relations,   corporate  finance  and  strategic  management  planning.
Remuneration for the consulting  agreement which has a term of one year includes
$10,000 in cash over a one year period and 300,000 shares of unregistered  stock
with 150,000  shares of the stock  payable over a 10-month  period.  The Company
completed a private placement of restricted  securities pursuant to Regulation D
of the Securities Act of 1933 with two officers of Liviakis.  The Company raised
$500,000 in cash for 3.5 million shares of common stock and 1.6 million warrants
to purchase common stock for $.01 per share,  exercisable  from January 15, 1998
through  August 4,  2002.  The  securities  carry  future  registration  rights,
including a one-time demand registration, with fees to be paid by the Company.

         o In early August 1997, the Company  announced the  appointment of Evon
Kelly to the  position  of Chief  Executive  Officer.  At this  same  time,  Rod
Stambaugh assumed the position of President.  Also in August,  the Company hired
Clyde Casciato,  Vice President  Sales; Tom Cote, Vice President Major Accounts;
and in September hired Robert Robichaud, Chief Financial Officer.

         o In August 1997, GTE Wireless and U.S. Wireless Data, Inc. announced a
joint marketing and operating  agreement to distribute USWD's  proprietary TRANZ
Enabler credit card processing  system using GTE's CDPD network.  Both companies
are engaged in a nation wide deployment which will extend TRANZ Enabler sales to
merchants  through over 400 GTE sales  representatives.  The agreement  contains
certain operational and financial performance criteria,  directly related to the
joint marketing program, which must be met by the Company.

         o In September  1997, the Company  executed a lease for office space in
Emeryville,  California.  The lease provides for approximately 4,000 square feet
at an initial rate of $9,942 per month commencing  October,  1997 and containing
an initial term of 5 years.  The monthly rent will progress to a rate of $11,640
in year five.

         o In  September  1997,  the Company  signed an  agreement  with Unicard
Systems Inc. to develop terminal application software that will perform both the
Unicard  enrollment  process as well as deliver wireless credit card transaction
processing. Unicard Systems will become a registered agent of U.S. Wireless Data
and has placed an initial order for 400 TRANZ Enabler units.  Unicard Systems is
a Dallas based service provider to over 500 restaurants and nightclubs in Texas.

         o In October  1997,  The Company  signed an  exclusive  agreement  with
GoldCan  Recycling,  Inc.  for  wireless  monitoring  of its  state  of the  art
automated aluminum redemption  centers.  This is the first application of USWD's
TRANZ Enabler technology outside the credit  card/point-of-sale  industry.  USWD
will receive a monthly equipment and wireless service fee on every TRANZ Enabler
placed by GoldCan. GoldCan anticipates placing in excess of 3,000 units over the
next three years.
                                      -17-
<PAGE>
ITEM 7:  FINANCIAL STATEMENTS
                                                                            Page


Report of Independent Accountants.............................................18


Balance Sheet - as of June 30, 1997...........................................19


Statement of Operations - for the fiscal years ended
         June 30, 1997 and June 30, 1996......................................20


Statement of Cash Flows - for the fiscal years ended
         June 30, 1997 and June 30, 1996......................................21


Statement of Changes in Stockholders' Equity (Deficit) - 
          for the period from July 1, 1995 through June 30, 1997..............22


Notes to Financial Statements..............................................23-32







ITEM  8:  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

(Not Applicable)

                                      -18-
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of U.S. Wireless Data, Inc.

         In  our  opinion,  the  accompanying  balance  sheet  and  the  related
statement of operations,  of changes in  stockholders'  equity  (deficit) and of
cash flows present fairly, in all material  respects,  the financial position of
U.S.  Wireless Data,  Inc. (the  "Company") at June 30, 1997, and the results of
its  operations and its cash flows for each of the two years in the period ended
June 30, 1997, in conformity  with  generally  accepted  accounting  principles.
These financial  statements are the responsibility of the Company's  management;
our responsibility is to express an opinion on these financial  statements based
on our audits.  We conducted our audits of these  statements in accordance  with
generally accepted auditing standards which require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
financial statements, the Company has suffered significant recurring losses from
operations and has an accumulated  deficit of $16,960,853 that raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to this matter are  described  in Note 1.  Additionally,  due to
matters  concerning the Company's ability to continue as a going concern,  there
is also  significant  uncertainty  surrounding  the net realizable  value of the
Company's  inventory  balances  at June 30,  1997  (see Note 2).  The  financial
statements do not include any adjustments  that might result from the outcome of
these uncertainties.



PRICE WATERHOUSE LLP

Boulder, Colorado
October 13, 1997





<PAGE>



                            U.S. WIRELESS DATA, INC.
<TABLE>
<CAPTION>
                                  BALANCE SHEET
                               As of June 30, 1997



                                     ASSETS


Current assets:
<S>                                                                                    <C>         
   Cash and cash equivalents .......................................................   $      6,083
   Accounts receivable, net of allowance
     for doubtful accounts of $15,903
                                                                                            120,531
   Inventory, net
                                                                                            208,867
   Other current assets
                                                                                            113,859
        Total current assets
                                                                                            449,340

Property and equipment, net
                                                                                             40,445
Other assets
                                                                                             11,495

Total assets .......................................................................   $    501,280
                                                                                       ============



                                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current liabilities:
   Accounts payable ................................................................   $    354,213
   Accrued liabilities .............................................................        125,587
   Notes payable ...................................................................        737,866
                                                                                       ------------
        Total current liabilities ..................................................      1,217,666

Long Term Debt
                                                                                             45,000

Total liabilities ..................................................................      1,262,666

Commitments and contingencies (Notes 9 and 11)

Stockholders' equity (deficit):
   Common stock, no par value,
      12,000,000 shares authorized,
      5,613,952 shares issued and outstanding, stated value $1.00 ..................      5,613,952
   Common stock subscribed
                                                                                                  0
   Additional paid-in capital ......................................................     10,613,465
   Accumulated deficit .............................................................    (16,960,853)
   Notes Receivable from Shareholder
                                                                                            (27,950)
                Total stockholders' equity (deficit)
                                                                                           (761,386)

Total liabilities and stockholders' equity (deficit) ...............................   $    501,280
                                                                                       ============
</TABLE>
   The accompanying notes are an integral part of these financial statements.



                            U.S. WIRELESS DATA, INC.
                             STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                                                 Fiscal Year Ended
                                                              June 30,       June 30,
                                                                1997           1996
                                                                ----           ----

<S>                                                         <C>            <C>        
Revenue .................................................   $ 1,315,542    $ 1,582,553
Cost of goods sold ......................................       809,447      2,886,432
                                                            -----------    -----------

Gross margin (deficit) ..................................       506,095     (1,303,879)
                                                            -----------    -----------

Operating Expenses:
    Selling, general and administrative .................       812,687      1,365,235
    Research and development ............................       406,522        458,407
                                                            -----------    -----------
                                                              1,219,209      1,823,642
                                                            -----------    -----------

Loss from operations ....................................      (713,114)    (3,127,521)

Interest income .........................................            94            685
Interest expense ........................................       (32,637)       (33,621)
Other income ............................................        44,873         (4,506)
Litigation settlement ...................................      (163,600)
                                                                                     0

Loss from continuing operations .........................      (864,384)    (3,164,963)
                                                            -----------    -----------

Loss from discontinued operation ........................             0       (309,206)
                                                            -----------    -----------

Loss before extraordinary item ..........................      (864,384)    (3,474,169)

Extraordinary gains on restructuring of payables and debt             0      3,431,823
                                                            -----------    -----------

Net loss ................................................   $  (864,384)   $   (42,346)
                                                            ===========    ===========

Earnings (loss) per share:
    From continuing operations ..........................   $      (.17)   $      (.72)
    From discontinued operation .........................             0
                                                                                  (.07)
    From restructuring of payables and debt .............             0            .78
                                                            -----------    -----------
    Net loss per share ..................................   $      (.17)   $      (.01)
                                                            ===========    ===========

Weighted average common shares outstanding ..............     4,986,767      4,418,618
                                                            ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      -21-
<PAGE>
                            U.S. WIRELESS DATA, INC.
<TABLE>
<CAPTION>
                             STATEMENT OF CASH FLOWS


                                                                            Fiscal Year Ended
                                                                           June 30,       June 30,
                                                                            1997            1996
                                                                            ----            ----

<S>                                                                     <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss .........................................................   $  (864,384)   $   (42,346)
   Adjustments to reconcile net income to net cash
     used in operatingactivities:
        Gain on restructuring of payables and debt ..................           --      (3,431,823)
        Loss due to market decline of inventory .....................           --       1,525,026
        Depreciation and amortization ...............................        56,958        107,525
        Stock issued for services ...................................           --           3,880
        Lawsuit settlement ..........................................       163,600            --
        Consulting services .........................................        50,000            --
        Loss on disposal of asset ...................................          (441)           --
        Debt relieved by product sales ..............................       (32,400)           --
   Changes in assets and liabilities:
        Accounts receivable .........................................       (78,768)       197,293
        Inventory ...................................................       412,369      1,702,058
        Other current assets ........................................        21,847         93,048
        Accounts payable ............................................       136,581        (46,764)
        Accrued liabilities .........................................      (102,010)      (686,707)
                                                                        -----------    -----------
   Net cash used in operating activities ............................      (236,648)      (578,810)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment and furniture .............................          --           (3,000)
   Proceeds from sale of equipment ..................................           499         23,296
   (Increase) decrease in other assets ..............................        11,261           (565)
                                                                        -----------    -----------
      Net cash provided by (used in) investing activities ...........        11,760         19,731

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of debt ...................................       185,000        292,678
   Net proceeds from issuance of stock ..............................         5,621         12,650
                                                                        -----------    -----------
      Net cash provided by (used in) financing activities ...........       190,621        305,328

(DECREASE) IN CASH ..................................................       (34,267)      (253,751)

CASH, Beginning of period ...........................................        40,350        294,101
                                                                        -----------    -----------

CASH, End of period .................................................   $     6,083    $    40,350
                                                                        ===========    ===========

Supplemental disclosures of cash flow information:
   Cash paid during the year for interest ...........................   $    13,833    $    33,621
                                                                        ===========    ===========

Supplemental schedule of non-cash investing and financing activities:
   Debt relieved with sale of inventory .............................   $    32,400    $       --
                                                                        ===========    ===========

   Inventory purchased with stock ...................................             $    $   162,500
                                                                        ===========    ===========

   Issuance of debt for services/lawsuit settlement .................   $   210,000    $       --
                                                                        ===========    ===========

   Stock issued for services/lawsuit settlement .....................   $   109,046    $     3,880
                                                                        ===========    ===========

   Note executed for stock issuance .................................   $    27,950    $       --
                                                                        ===========    ===========

   Non cash extinguishment of debt and payables
      Fair value of assets transferred ..............................   $      --      $ 1,031,868
      Payables and debt extinguished ................................          --        4,463,691
                                                                        -----------    -----------
      Gains on restructuring of payables and debt ...................   $      --      $ 3,431,823     
                                                                        ===========    ===========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      -22-
<PAGE>
                            U.S. WIRELESS DATA, INC.
<TABLE>
<CAPTION>
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)



                                                               COMMON                COMMON                    NOTE
                                                               STOCK                 STOCK      PAID IN     RECEIVABLE        ACCUM.
                                                        SHARES         AMOUNT      SUBSCRIBED   CAPITAL     SHAREHOLDER      DEFICIT

<S>                                                <C>             <C>            <C>         <C>              <C>     <C>         
BALANCES, June 30, 1995 .........................     4,390,910    $  4,390,910               11,514,859                (16,054,123)

  Shares issued for services at $.10 - .46 per ..        18,123          18,123                  (14,243)
share
  Stock options exercised at $.215 per share ....         9,300           9,300                   (7,300)
  Warrant exercised at $.10 per share ...........       100,000         100,000                  (90,000)
  Director stock option exercised at $.13 per ...         5,000           5,000                   (4,350)
share
  Stock subscription ............................  $                                 142,544      19,956
  Net loss ......................................                                                                           (42,346)
-------------------------------------------------  ------------    ------------   ----------    ------------            ------------
BALANCES, June 30, 1996 .........................     4,523,333    $  4,523,333   $  142,544  $11,418,922              $(16,096,469)

  Shares issued for services at $.15 per share ..       102,975         102,975                   (87,529)
  Stock issued in connection with class lawsuit .       600,000         600,000                  (506,400)
  Stock options exercised at $.13-.215 per share        245,100         245,100                  (211,530)
  Stock subscription issued .....................       142,544         142,544     (142,544)
  Note receivable on stock option plan ..........                                                             (27,950)
  Net loss ......................................                                                                          (864,384)
  Rounding ......................................                                          2

=================================================  ============    ============   ============ =========== =========== =============
BALANCES, June 30, 1997 .........................     5,613,952    $  5,613,952                $10,613,465   ($27,950) $(16,960,853)
=================================================  ============    ============   ============ ===========  ========== =============
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                      -23-
<PAGE>


                            U.S. WIRELESS DATA, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1.  OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

         U.S.  Wireless Data, Inc. (the "Company") was incorporated in the State
         of Colorado on July 30, 1991. It designs,  develops and  manufactures a
         wireless  credit card  authorization  and check  verification  terminal
         utilizing both analog and digital cellular network  architectures.  The
         Company began  generating  its first  significant  revenue from product
         sales in fiscal  1995.  Prior to fiscal  1995,  the  Company was in the
         development  stage. The Company is now in a transition from only a "box
         maker"  orientation  to also  providing  products  and  services  which
         generate recurring revenue. The recurring revenue component is expected
         to become the dominant component of the Company's business.

Financial Condition

         The Company has incurred an accumulated  deficit of approximately $17.0
         million since inception and has incurred  additional  losses subsequent
         to the year  ended  June 30,  1997.  In  order to  continue  as a going
         concern,  the Company has transitioned to a recurring revenue focus, is
         working on programs to increase revenue levels and product margins;  is
         negotiating new distribution  agreements and seeking additional debt or
         equity financing.

         Subsequent  to  June  30,  1997,  the  Company  has   strengthened  the
         management team,  signed several  significant  distribution  agreements
         which are  expected  to build a  recurring  revenue  base,  started the
         expansion of the sales force and  expanded  its contract  manufacturing
         relationships.  The  current  sales  volume is  inadequate  to fund the
         infrastructure growth and business transition. As a result, and as part
         of its continuing  effort to find working  capital  funding in order to
         continue  operations,  the Company has entered into certain  consulting
         agreements  designed to facilitate  financing  relationships with third
         parties.   While   management  is  confident  it  can  accomplish  this
         objective,  there is no  guarantee  that this  additional  funding will
         occur in the required time frame.

         The accompanying  consolidated  financial statements do not include any
         adjustments  relating  to  the  recoverability  and  classification  of
         recorded  assets and  liabilities  that might be  necessary  should the
         Company be unable to continue as a going concern.

Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect the amounts  reported  in the  financial
         statements and accompanying notes. Actual results could differ from the
         estimates used.

Cash and Cash Equivalents

         The Company considers all highly liquid  investments  purchased with an
         original maturity of three months or less to be cash equivalents.  Cash
         equivalents are carried at cost which approximates fair value.

Inventories

         Inventories  are  stated at the  lower of cost or  market,  cost  being
determined by the first-in, first-out method.

Property and Equipment

         Property  and  equipment  are  stated  at cost.  The  Company  uses the
         straight-line  method of  depreciation  based on the  estimated  useful
         lives of the assets  (generally three to seven years).  Maintenance and
         repairs are charged to operations as incurred.
                                      -24-
<PAGE>
Revenue Recognition and Major Customers

         Direct sales are recognized upon shipment of products to customers. The
         Company also leases  products to  customers  with an option to buy. The
         leasing  arrangements  are accounted for as sales-type  leases.  During
         fiscal 1997, Cardservice International,  Inc. ("CSI") accounted for 53%
         of  revenue.  During  fiscal  1996,  two  customers,  CSI and  Superior
         Bankcard Services, accounted for 25% and 11% of revenue, respectively.

Research and Development Costs

         Research and development costs are expensed as incurred.

Net Loss Per Share

         Net loss per share is based on the weighted average number of shares of
         common stock outstanding during each respective period. Shares issuable
         upon the  conversion of stock options and warrants were not included in
         the calculation since their effect was anti-dilutive.

Fair Value of Financial Instruments

         The carrying  value of assets and  liabilities  reported on the balance
sheet is a reasonable estimate of their fair value.

Recent Pronouncements

         In  February,  1997 the  Financial  Accounting  Standards  Board (FASB)
         issued  Statement  of  Financial  Accounting  Standard  (SFAS) No. 128,
         "Earnings  per Share".  SFAS No. 128,  which is  effective  for periods
         ending after December 15, 1997,  requires  changes in the  computation,
         presentation,  and  disclosure of earnings per share.  All prior period
         earnings per share data must be restated to conform with the provisions
         of SFAS No. 128.  The Company will adopt SFAS No. 128 during the fourth
         quarter of fiscal 1998, but does not expect the new accounting standard
         to have a material impact on the Company's reported loss per share.

         In June, 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive
         Income".  SFAS No. 130,  which is effective  for all periods  beginning
         after  December 15,  1997,  establishes  standards  for  reporting  and
         displaying  comprehensive  income  and its  components  with  the  same
         prominence  as other  financial  statements.  All prior periods must be
         restated to conform  with the  provisions  of SFAS No. 130. The Company
         will adopt SFAS No. 130 during the first  quarter of fiscal  1999,  but
         does not expect the new accounting  standard to have a material  impact
         on the Company's reported financial results.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
         of an  Enterprise  and Related  Information."  SFAS No.  131,  which is
         effective  for  fiscal  years   beginning   after  December  15,  1997,
         establishes  new  disclosure   requirements  for  operating   segments,
         including  products,  services,  geographic areas, and major customers.
         The  Company  will  adopt SFAS No. 131 for the 1999  fiscal  year.  The
         Company does not expect the new accounting  standard to have a material
         impact on the Company's reported financial results.

Reclassifications

         Certain  reclassifications  have been made in prior  year to conform to
current year presentation.

                                      -25-
<PAGE>

<TABLE>
<CAPTION>

NOTE 2.  INVENTORY

                                                                      June 30,
                                                                        1997
                                                                        ----
<S>                                                                   <C>      
Inventory consists of:
   Raw material ...................................................   $ 111,299
   Finished goods .................................................     208,095
   Spare parts and accessories ....................................       1,895
   Lower of cost or market reserve ................................    (112,422)
-------------------------------------------------------------------   ---------
                                                                      $ 208,867
                                                                      =========
</TABLE>

         The Company has  established a reserve  against  finished goods and raw
         materials  to  reflect  the  estimated  net  realizable  value  of  the
         inventory as of June 30, 1997, based on current selling prices.



NOTE 3.  PROPERTY AND EQUIPMENT
<TABLE>
                                                                        June 30,
                                                                          1997
                                                                          ----

<S>                                                                   <C>      
Property and equipment consists of:
   Equipment and furniture ........................................   $ 295,020
   Tooling ........................................................     124,267
   Less:  accumulated depreciation and amortization ...............    (378,842)
                                                                      ---------
                                                                      $  40,445
                                                                      =========
</TABLE>


                                      -26-
<PAGE>
NOTE 4.  ACCRUED LIABILITIES
<TABLE>
<CAPTION>

                                                                        June 30,
                                                                          1997
                                                                          ----

<S>                                                                     <C>     
Accrued liabilities consists of:
   Accrued wages/commissions ...............................            $ 38,115
   Relocation expense ......................................              30,300
   Accrued revenue and royalty .............................              44,888
   Litigation Settlement ...................................              10,000
   Other
                                                                           2,284
                                                                        --------
                                                                        $125,587
                                                                        ========
</TABLE>




NOTE 5.  NOTES PAYABLE
<TABLE>
<CAPTION>

         Notes payable consist of the following:

                                                                   June 30, 1997
                                                                   -------------
<S>    
Current Portion                                                              <C>     
        Note payable - supplier ..................................      $387,866
        Notes payable - investors ................................       185,000
        Note payable - entrenet ..................................       150,000
        Note payable - lawsuit settlement ........................        15,000
                                                                        --------
                                                                        $737,866

Long-term portion of Note payable - lawsuit settlement ...........      $ 45,000
                                                                        ========
</TABLE>

         Note Payable - Supplier
         The note  payable to a supplier is  currently  in default.  The Company
         continues to accrue monthly interest payments.  As of October 13, 1997,
         the supplier had not called the note. The note bears interest at 8% and
         is  fully  collateralized  with  certain  inventory.   The  Company  is
         currently in discussion with the vendor  regarding  payment of the note
         and the accrued interest.

         Notes Payable - Investors
         During the fourth quarter of fiscal 1997, the Company  executed  demand
         notes with certain  investors.  The notes bear interest at 10% annually
         and are  convertible  to common stock on or after November 1, 1997 at a
         conversion  price of $.35 per share  ($75,000  of  Notes)  and $.50 per
         share  ($100,000  of notes) for any or all  outstanding  principal  and
         accrued  interest.  If not  converted,  the notes are due in the fourth
         quarter of fiscal 1998.

         Note Payable - entrenet
         During  June 1997,  the Company  executed a  convertible  debenture  in
         exchange for consulting  services to be rendered during fiscal 1997 and
         1998 by  entrenet  Group  LLC.  The  debenture  bears  interest  at 10%
         annually and is  convertible  to common stock at a conversion  price of
         $0.50 per share. If not converted, the debenture is due June 3, 1998.

         Note Payable - Lawsuit Settlement
         As part of the class actin lawsuit  settlement,  the Company executed a
         note payable in September 1997 which is due in installments as follows:
         $5,000 due March 17, 1998;  $10,000 due September 17, 1998; $20,000 due
         September 17, 1999;  and $25,000 due September 17, 2000. See additional
         discussion of the lawsuit settlement in Note 11. - Litigation.

                                      -27-

<PAGE>
NOTE 6.  STOCKHOLDERS' EQUITY

Stock Options

         In September  1992, the Company  adopted an incentive stock option plan
         and a  non-qualified  stock option plan covering  600,000 shares of the
         Common Stock. In October 1994, the  Shareholders  approved an amendment
         to the stock option plan  increasing the number of available  shares to
         880,000.  In December 1995, the  Shareholders  approved an amendment to
         the stock  option plan making  certain  clarifications  to the plan and
         providing  for the  annual  grant of an  option  for  20,000  shares to
         non-employee directors.

         Stock  options  have been  granted  under the  option  plan at the fair
         market  value of the  common  stock on the date of grant and  generally
         vest over a period of between two and four years. Options granted under
         the option plan generally must be exercised no later than 10 years from
         the date of grant.

         The  following  table  summarizes   information   about  stock  options
         outstanding at June 30, 1997:
<TABLE>
<CAPTION>

                                       Outstanding Options                      Outstanding Vested Options
                        ------------------------------------------------        --------------------------
                          Average          Weighted                           Weighted
                         Remaining        Average                              Average
            Range of    Contractual       Exercise             Number         Exercise            Number
         Exercise Price    Life             Price           Outstanding        Price            Outstanding
------------------------------------------------------------------------------------------------------------
<S>      <C>     <C>       <C>              <C>               <C>               <C>              <C>    
         $0.00 - $0.13     8.4              $0.13             262,849           $0.13            233,449
         $0.14 - $0.22     8.4              $0.21             166,800           $0.21            128,400
                                                              -------                            -------
                                                              429,649                            361,849
                                                              =========                          =======
</TABLE>

         Stock  option  transactions  for the years ended June 30, 1997 and 1996
were are follows:
<TABLE>
<CAPTION>
                               Options Outstanding
                                                                                Weighted Average
                                                              Number of         Exercise Price
                                                              Shares            Per Share

<S>                                                           <C>             <C>  
                  Balance at June 30, 1995                      462,500         $3.67
                  Granted                                       827,849         $0.16
                  Exercised                                   (  14,300)        $0.19
                  Terminated                                  (482,500)         $3.65
                                                               -------
                  Balance at June 30, 1996                     793,549          $0.16
                  Granted                                       20,000          $0.16
                  Exercised                                   (245,100)         $0.14
                  Terminated                                  (138,800)         $0.22
                                                               -------
                  Balance at June 30, 1997                     429,649          $0.16
                                                               =======

                  Exercisable at June 30, 1997                361,849           $0.18
                                                              =======
</TABLE>


         Notes Receivable from Stockholder

         In connection  with the  resignation  of the Company's  former CEO, the
         Company  received a  promissory  note during  October  1996 to fund the
         exercise of the former CEO's stock  options  pursuant to the  Company's
         Stock Option Plan.  The note evidences a three-year  non-recourse  loan
         which accrues interest at 6% per annum.
                                      -28-
<PAGE>
         SFAS No. 123

         The Company applies APB No. 25 in accounting for its Stock Option Plan,
         and no  compensation  expense  has  been  recognized  in the  financial
         statements  as all options had been granted at the fair market value of
         the underlying common stock. Had compensation expense for the Company's
         Plan been  determined  based on the fair  value of the  options  at the
         grant  dates for awards  under the Plan  consistent  with the method of
         accounting  prescribed by SFAS No. 123, the Company's net loss and loss
         per share would have been increased to the proforma  amounts  indicated
         below:
<TABLE>
<CAPTION>
                                                                June 30,
                                                           1997           1996
                                                           -------------------
<S>                                                    <C>            <C>       
Net loss ..............            As reported         ($864,382)     ($ 42,346)
                                   Pro forma           ( 876,142)     (  58,562)

Net loss per common share          As reported          $  (0.17)     $   (0.01)
                                   Pro forma            $  (0.18)     $   (0.01)
</TABLE>


         In  accordance  with the guidance  under SFAS No. 123,  fair values are
         based on minimum values.  The weighted  average fair value of option is
         estimated  as $0.03 and $0.05 for options  granted  during  fiscal year
         1997 and 1996,  respectively,  using the  Black-Scholes  option-pricing
         model with the following  weighted-average  assumptions used for grants
         during the years ended June 30, 1997 and 1996:  dividend yield of zero;
         expected volatility of 162% and 101%, respectively;  risk-free interest
         rate of 6.4% and 5.5%, respectively; and an expected term of 3.5 years.
         The risk-free rates used in the calculation  represent the average U.S.
         Government  Security interest rates on the stock option grant date with
         maturities  equal to the  expected  term of the  options  granted.  The
         effect  of  actual  forfeitures  is  included  in  the  computation  of
         compensation  cost for options  granted  during each of the  respective
         years.

         Stock Warrants

         In fiscal  1993,  the  Company  issued  warrants to one officer and one
         director of the Company to purchase an aggregate  of 250,000  shares of
         common  stock at $4.00 per  share.  As of June 30,  1997,  all of these
         warrants were fully vested and had the following terms:  100,000 expire
         April 12, 1998;  150,000  expire May 1, 2003.  In  connection  with the
         Company's  December 1993 initial  public  offering,  the Company issued
         warrants  to  the  underwriters  to  purchase  165,000  shares  of  the
         Company's common stock at $12.33 per share,  which were fully vested at
         the date of issuance. Such warrants expire on December 2, 1998.

         In fiscal 1994, in conjunction with the acquisition of Direct Data, the
         Company issued  warrants to four former  shareholders of Direct Data to
         purchase  29,548  shares of common stock at $2.625 per share which were
         fully vested at the date of issuance. In October 1994, warrants for the
         purchase  of 5,000  shares of common  stock  were  exercised  and 5,752
         warrants expired. The remaining 18,796 warrants expire May 31, 1998.

         In  October  1995,  as  partial   consideration  for  entering  into  a
         development  contract,  the  Company  issued  warrants to a customer to
         purchase  100,000  shares of  common  stock at $0.10  per  share.  This
         warrant was subsequently exercised during fiscal year 1996.


NOTE 7.  INCOME TAXES

         At June 30, 1997, the Company had net operating loss  carryforwards for
         federal  income  tax  purposes  of  approximately  $11,700,000.  Annual
         utilization  of  the  loss  carryforwards  is  subject  to  significant
         limitations  due to  changes in the  Company's  ownership  which  could
         result in little or no benefit being derived from these  carryforwards.
         Future   changes  in  ownership   could   further   reduce  the  annual
         availability  of these  benefits.  If unused,  the  carryforwards  will
         expire  beginning in 2008.
                                      -29-
<PAGE>
          Deferred  income taxes  reflect the net tax effects of: (a)  temporary
          differences between the carrying amounts of assets and liabilities for
          financial  reporting  purposes  and the  amounts  used for  income tax
          purposes, and (b) operating loss and tax credit carryforwards. The tax
          effects of significant  items comprising the Company's  deferred taxes
          are as follows:
<TABLE>
<CAPTION>


                                                                  June 30,
                                                           1997            1996
                                                           ----            ----
Deferred tax assets
<S>                                                    <C>           <C>        
    Net operating loss carry-forwards                  $ 4,388,000   $ 3,880,000
    Depreciation ....................                   (    3,000)   (   12,000)
    Inventory reserves ..............                       31,000       195,000
    Allowance for bad debts .........                        6,000        35,000
    Other
                                                            28,000        28,000
                                                      -----------   -----------   
                                                      $  4,450,000     4,126,000

    Valuation allowance .............                   (4,450,000)   (4,126,000)
                                                       -----------   -----------  
Net deferred tax asset ..............                 $        --    $       --
                                                       ===========    ==========
</TABLE>
                                                                      

         Deferred tax assets have been reduced to zero by a valuation  allowance
         based on current  evidence  which  indicates  that it is not considered
         more  likely  than not that these  benefits  will be  realized.  During
         fiscal 1997, the valuation  allowance  increased by $324,000  primarily
         due to additional losses for which no tax benefit was recorded.  During
         fiscal 1996, the valuation allowance decreased by $1,090,000  primarily
         due to the dissolution of Direct Data.

         The  difference  between the zero  provision  for income  taxes and the
         expected  amount  determined by applying the federal  statutory rate to
         the loss before income taxes results  primarily from a reduction of net
         operating  loss  carryforwards  due to an  increase  in  the  valuation
         allowance  for the year ended June 30, 1997 and due to the  dissolution
         of Direct Data for the year ended June 30, 1996.



NOTE 8.  EMPLOYEE BENEFIT PLAN

         In April 1994,  the Company  established  a  qualified  Section  401(K)
         Savings Plan.  The Plan allows  eligible  employees to contribute up to
         15% of their salaries on a pre-tax basis.  The Company did not make any
         contributions to the Plan during fiscal year 1997.



NOTE 9.  COMMITMENTS AND CONTINGENCIES

Lease Commitments

         The Company leases its office  facilities under various operating lease
         arrangements.  Most of the leases contain certain provisions for rental
         adjustments.  In  addition,  the  leases  require  the  Company  to pay
         property taxes,  insurance and normal maintenance costs. Future minimum
         rentals under these  arrangements are $18,105 in 1998. Rent expense was
         $73,550 during fiscal 1997 and sublease  income of $16,680 was received
         during fiscal 1997.

         In  September  1997,  the Company  executed a lease for office space in
         Emeryville,  California. Rental payments commence October 1, 1997 at an
         initial rental rate of $9,942 per month for a term of 5 years.  In year
         five, the rental rate increases to $11,640 per month.
                                      -30-
<PAGE>
NOTE 10.  EXTRAORDINARY GAINS AND DISCONTINUED OPERATION

         During  the year ended  June 30,  1996,  the  Company  recognized  $3.4
million in gains related to the restructuring of debt and payables as follows:
<TABLE>
<CAPTION>

<S>                                                                                       <C>            
                   Release of guarantee of bank debt by former officer of Direct Data     $       593,132
                   Release of liability for inventory by supplier                               1,099,412
                   Liabilities of dissolved Direct Data subsidiary                              1,739,279
                                                                                                ---------
                                                                                          $     3,431,823
                                                                                          ===============
</TABLE>

         The  release of  guarantee  of bank debt by a former  officer of Direct
         Data ("the Officer")  occurred as a result of the September 1995 demand
         for payment by a financial  institution creditor of a $1.3 million loan
         made to Direct Data.  The loan was  guaranteed  by the Officer who paid
         the loan and became a security  holder of Direct Data's assets in early
         October 1995.  The Company was obligated to remove the Officer from his
         guarantee of the bank loan,  and in  consideration  for release of such
         liability,  surrendered  the  assets of Direct  Data to the  Officer on
         October 5, 1995.  The excess  carrying  value of the debt over the book
         value  (which  approximated  fair value) of the assets  surrendered  in
         satisfaction  of the obligation was $593,132.  In connection  with this
         transaction,  the Officer  granted the Company an option to  repurchase
         397,684 shares of Company stock from the Officer at a price of $.25 per
         share, as well as the right to vote such shares.

         During its fiscal year 1995,  the Company  entered an agreement  with a
         supplier, whereby the Company became liable for the purchase of certain
         raw  materials  the  supplier  procured  for  manufacturing  of Company
         products.  During 1996,  the Company and the  supplier  agreed that the
         Company would settle the liability of $1.4 million for consideration of
         approximately $325,000, and that the Company or its designee would take
         possession  of  the  raw  materials.   Accordingly,   the  Company  has
         recognized  a gain of $1.1  million  as a result of  restructuring  the
         liability during fiscal year 1996.

         During  October  1995,  the Company  dissolved  Direct  Data.  Upon the
         dissolution  of Direct  Data,  approximately  $1.7 million of unsecured
         trade debt remained  unpaid and the creditors were notified that Direct
         Data  would be unable to pay its  remaining  obligations.  The  Company
         believes it has no liability for future claims  arising from the unpaid
         obligations of Direct Data;  therefore,  such unpaid  obligations  have
         been  recognized  by  the  Company  as a  gain  from  restructuring  of
         liabilities of the dissolved Direct Data subsidiary during fiscal 1996.

         Management  believes  Direct Data  represented  a separate and material
         line of business from the Company. The pretax loss on disposal has been
         accounted for as a loss from  discontinued  operations  and prior years
         financial statements have been reclassified to reflect the disposition.
         Revenue of Direct Data for the year ended June 30, 1996 was $657,667.



NOTE 11.  LITIGATION

         In September of 1996, the Company agreed to terms to settle  securities
         fraud litigation,  pending since 1994, which was brought in relation to
         the Company's  initial  public  offering of December 1993. The parties'
         agreement (the  "Settlement  Agreement") was filed in the United States
         District  Court for the  District  of  Colorado  on January 15, 1997 in
         consolidated Case N0. 94-Z-2258,  Appel, et al. v. Caldwell,  et al. By
         its order approving the  settlement,  the court certified a plaintiffs'
         settlement class and provided the mechanism for payment of claims.  The
         Company  contributed  directly or by indemnification a total of $10,000
         to the total  settlement fund of $2,150,000.  The remaining  portion of
         the settlement was contributed by certain underwriters of the Company's
         initial public  offering and securities  counsel.  No objections to the
         Settlement  Agreement were made. No potential class member opted-out of
         the  settlement  and all are bound by the release  granted the Company.
         All  claims  against  the  Company  in those  consolidated  cases  were
         dismissed by final  federal court order on September 4, 1997. No appeal
         was filed.  Similar  state  court  claims  were  dismissed  by Colorado
         district court order dated October 9, 1997.
                                      -31-

<PAGE>
          To resolve  cross-claims  asserted by  underwriters in the litigation,
          U.S.  Wireless  Data,  Inc.  agreed  to  transfer  to  RAS  Securities
          Corporation,  H.J.  Meyers  & Co,  Inc.,  Sands & Co.  Ltd.  and  R.J.
          Steichen & Co. a total of 600,000  U.S.  Wireless  Data,  Inc.  common
          shares  upon  the  effective  date of the  Settlement  Agreement.  The
          Company has agreed to register such shares upon demand not sooner than
          April 26, 1998.  Further,  on September 17, 1997 the Company agreed to
          entry of a consent  judgment  against it and in favor of Don  Walford,
          the sole shareholder of underwriter Walford  Securities,  Inc., in the
          amount of $60,000, payable over a three year period.

         The  total  charge  recognized  during  fiscal  1997  consists  of  the
         following: $93,600 for the value of the common shares issued based upon
         the fair market  value of the  Company's  common  stock on the date the
         commitment of such shares was made;  $10,000 for actual cash to be paid
         by the  Company  pursuant  to the  settlement  with  stockholders;  and
         $60,000 for the note  payable  executed  with Don Walford as  discussed
         above.



NOTE 12.  RELATED PARTIES

         A director of the Company is also an officer of the  Company's  largest
         customer,  Cardservice International,  Inc. ("CSI").  Additionally, CSI
         owns  approximately 5% of the Company's  outstanding common stock as of
         June 30,  1997.  Sales to CSI  approximated  $698,000  and  $398,000 in
         fiscal years 1997 and 1996, respectively.

         During fiscal 1996, CSI advanced the Company  $162,500 for the purchase
         of raw materials in exchange for 142,544  shares of common stock issued
         subsequent  to June 30, 1996 at 150% of then  current fair market value
         plus registration rights after one year on all stock owned by CSI. This
         transaction  increased CSI's ownership to from 2% to 5%.  Additionally,
         the  Company  will make  royalty  payments  to CSI on  future  sales of
         POS-50(R)  product  built with the raw  materials  purchased  using the
         amounts  advanced  from CSI. As of June 30,  1997,  no units were built
         using the raw materials referred to above.



NOTE 13. SUBSEQUENT EVENTS

         In August 1997, the Company  received  $500,000 for the issuance of 3.5
         million unregistered shares of common stock and 1.6 million warrants to
         purchase  common  stock at an exercise  price of $0.01 per share to two
         officers of Liviakis Financial Communications,  Inc. ("Liviakis").  The
         warrants are exercisable from January 15, 1998 through August 4, 2002.

         Additionally,   in  August  1997,  the  Company  executed  a  one  year
         consulting  agreement  with  Liviakis  for  consulting  services  to be
         rendered during fiscal 1998 and 1999. Fees related to the agreement are
         payable in cash of $10,000 and stock, the issuance of 300,000 shares of
         common stock to occur at various times during the consulting agreement,
         commencing November 15, 1997.

         The Liviakis securities carry future registration  rights,  including a
         one-time demand registration, with fees to be paid by the Company.

         On  August  4,  1997,  the  Company  retained  Evon A.  Kelly  as chief
         executive officer.  As part of Mr. Kelly's  compensation  package,  the
         Board of Directors issued 600,000 shares of non-qualified stock options
         exercisable at $1.00 per share.

         On  September  4, 1997 and October 9, 1997,  respectively,  the Company
         received notice that the federal and state courts  dismissed all claims
         against the Company  related to the class action  shareholder  lawsuits
         filed in 1994. See additional discussion in Note 11. - Litigation.

         In September 1997, the Company entered into a lease agreement for 
         office space in California.  See additional discussion in 
         Note 9. - Commitments and Contingencies.
                                      -32-
<PAGE>
PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The information required by this item is incorporated by reference from the
U.S.  Wireless Data, Inc. 1997 Proxy Statement  sections  entitled  "Election of
Directors" and "Compliance with Section 16(a) of the Securities  Exchange Act of
1934."



ITEM 10.  EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference from the
U.S.  Wireless  Data,  Inc. 1997 Proxy  Statement  section  entitled  "Executive
Compensation."



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated by reference from the
U.S.  Wireless Data,  Inc. 1997 Proxy  Statement  section  entitled  "Beneficial
Ownership of Common Stock."



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference from the
U.S.  Wireless  Data,  Inc.  1997  Proxy  Statement  section  entitled  "Certain
Transactions."

                                      -33-
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K

(a)          List of Exhibits Required by Item 601 of Regulation S-B
             -------------------------------------------------------

                Exhibit    Description
                3.1        Copy of Amended Articles of Incorporation (2)
                3.2        Copy of Amended Bylaws (2)
                10.1       License and Volume Purchase Agreement with OMRON 
                              Systems of America with
                           Solectron Addendum (1)
                10.2       Promissory Note with OMRON Systems, Inc. (2)
                10.3       Supply Agreement with Novatel Communications LTD. (2)
                10.4       Release Agreement with Richard P. Draper (2)
                10.5       Copy of Amended 1992 Stock Option Plan
                10.6       Agreement for Manufacture and Purchase between USWD,
                              Uniform Industrial Corp
                           and Cardservice International, Inc.
                10.7       AT&T CDPD Value Added Reseller Agreement dated 
                              April 30. 1997

                10.8
                    Bell  Atlantic  AIRBRIDGE  Packet  Service  Agreement  dated
                    August 12, 1997 10.9 Engagement  Agreement  between USWD and
                    entrenet  Group,  LLC dated June 3, 1997  10.10 GTE  Leasing
                    Corporation Promissory Note dated August 6, 1997

                10.11  
                    GTE Mobilnet  Communications Service and Equipment Agreement
                    dated  August 1, 1997  10.12 Form of Demand  Note  issued to
                    private investors during the fourth quarter of 1997

                10.13     
                    Liviakis   Financial    Communications,    Inc.   Consulting
                    Agreement,  and  Subscription  Agreement for the purchase of
                    U.S.  Wireless  Data,  Inc.  Common Stock and Warrants dated
                    July 25, 1997

                10.14  
                    Member  Service  Provider  Sales  and  Service  Credit  Card
                    Processing  Agreement  between U.S.  Wireless Data, Inc. and
                    NOVA Information Systems, Inc. dated January 1, 1997

                10.15    
                    Purchase   Agreement  with  Unicard   Systems,   Inc.  dated
                    September 18, 1997

                10.16
                    Purchase  Agreement  with  Wellex  Systems  Manufacturing  &
                    Distribution Group dated August 7, 1997

                21.1       List of Subsidiaries (2)
                23.1       Consent of Independent Accountants
                27         Financial Data Schedule


     (1)  Incorporated by reference to the reference  Exhibit and Exhibit number
in Registration Statement No. 33-69776-D.

     (2)  Incorporated by reference to the Company's report on Form 10-KSB filed
on October 13, 1996. (Control No. 95201388)


(b)      Reports on Form 8-K

     There were no reports on Form 8-K that were filed  during the last  quarter
of the fiscal year ended June 30, 1997.

                                      -34-
<PAGE>
SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

         Dated:  October 14, 1997


U.S. WIRELESS DATA, INC.



\s\ Evon A. Kelly           Chief Executive Officer        October 14. 1997
----------------------                                     ----------------
Evon A. Kelly


In  accordance  with the Exchange  Act, this Report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated:




\s\ Evon A. Kelly           Chief Executive Officer          October 14, 1997
------------------                                           ----------------
Michael J. Brisnehan





\s\ Rod L. Stambaugh        President                        October 14, 1997
----------------------                                       ----------------
Rod L. Stambaugh




\s\ Alan B. Roberts         Director                         October 14, 1997
--------------------------                                   ----------------
Alan B. Roberts




\s\ Chester N. Winter       Director                         October 14, 1997
-------------------------                                    ----------------
Chester N. Winter




\s\ Caesar Berger           Director                         October 14, 1997
-------------------------                                    ----------------
Caesar Berger