<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
                                            
                                  FORM 10-K/A
                               AMENDMENT TO THE       
                                 ANNUAL REPORT
    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED                             COMMISSION FILE NUMBER
     June 30, 1997                                            0-20706

                                DATA RACE, INC.
             (Exact name of registrant as specified in its charter)
      Texas                                             74-2272363
(State of Incorporation)                  (I.R.S. Employer Identification No.)

                            12400 Network Boulevard
                           San Antonio, Texas 78249
                           Telephone (210) 263-2000
              (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)

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

   Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES  X  NO
                                        ---    ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  _____

On September 30, 1997, the aggregate market price of the voting stock held by
non-affiliates of the Company was approximately $47,265,083. (For purposes
hereof, directors, executive officers and 10% or greater shareholders have been
deemed affiliates).

On September 30, 1997, there were 5,541,677 outstanding shares of Common Stock,
no par value.

<PAGE>
    
                                   PART III.
     
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------


The following table sets forth certain information regarding the ownership of
Common Stock as of September 30, 1997, by (i) each person known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock; (ii)
each director; (iii) each named executive officer and (iv) all executive
officers and directors as a group. Unless otherwise noted, each shareholder has
sole voting and investment power with respect to the shares beneficially owned.
Options included in the following table represent options currently exercisable
or exercisable within 60 days of September 30, 1997.

    
<TABLE>
<CAPTION>
 
 
 
                                                                           Number of     Percent of Stock
                                 Name                                       Shares         Outstanding
                                 ----                                      ---------     ----------------
<S>                                                                        <C>           <C>
W. B. Barker...........................................................   301,677(1)         5.20%
Jeffrey P. Blanchard...................................................    37,115(2)           *
George R. Grumbles.....................................................    13,000(3)           *
Marcelo A. Gumucio.....................................................     7,500(4)           *
Matthew A. Kenny.......................................................    13,000(5)           *
Dwight E. Lee..........................................................    18,500(6)           *
Edward A. Masi.........................................................         -              *
Walter D. Warren.......................................................    83,977(7)         1.49%
Gregory T. Skalla......................................................    35,400(8)           *
Haig A. Sarkissian.....................................................    28,298(9)           *
All Directors and Executive Officers as a Group (13 persons)...........   548,588(10)        9.16%

</TABLE>     

_____________

*Less than 1%.

    
(1)  Includes 265,000 shares subject to options held by Dr. Barker.
(2)  Includes 10,000 shares subject to options held by Mr. Blanchard.
(3)  Includes 13,000 shares subject to options held by Mr. Grumbles.
(4)  Includes 7,500 shares subject to options held by Mr. Gumucio.
(5)  Includes 13,000 shares subject to options held by Mr. Kenny.
(6)  Includes 10,000 shares subject to options held by Mr. Lee.
(7)  Includes 76,931 shares subject to options held by Mr. Warren.
(8)  Includes 29,250 shares subject to options held by Mr. Skalla.
(9)  Includes 12,500 shares subject to options held by Mr. Sarkissian.
(10) Includes 445,931 shares subject to options held by such persons.      

         
                                      -2-
<PAGE>
 
                                  SIGNATURES
                                        
          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended the Registrant has duly caused this report to
be signed on behalf of the undersigned, thereunto duly authorized.

                                        DATA RACE, INC.

    
                                        By: /s/ GREGORY T. SKALLA
                                           --------------------------------
                                           Gregory T. Skalla
                                           Vice President - Finance,
                                           Chief Financial Officer,
                                           Treasurer and Secretary
     
                                        Date:  October 16, 1997          

         

                                      -3-