China Huaren Organic Products, Inc. – ‘10KSB’ for 12/31/97

As of:  Wednesday, 4/1/98   ·   For:  12/31/97   ·   Accession #:  931947-98-17   ·   File #:  0-25380

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       44±   203K 
 2: EX-10       Material Contract                                     12±    52K 
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     1      5K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

SECURITIES AND EXCHANGE COMMISSION                                              
Washington, D.C.   20549                                                        
FORM 10-KSB                                                                     
(    ) Annual Report Pursuant to Section 13 or 15(d) of the Securities          
Exchange Act of 1934                                              

(  X  )Annual Report Pursuant to Section 13 or 15(d) of the Securities          
Exchange Act of 1934 for the fiscal year ended December 31, 1997  

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange  
Act of 1934 for the transition period from_____ to_____                       

Commission File Number:   33-85218C                                           

ULTRADATA SYSTEMS, INCORPORATED                                                 
(Name of small business issuer in its charter)                                
   Delaware                                                           43-1401158
(State or other jurisdiction of    (IRS Employer Identification No.)            
incorporation or organization)                                                

9375 Dielman Industrial Drive, St. Louis, MO.           63132                   
(Address of principal executive office)            (Zip code)                   

Issuer's telephone number, including area code: (314) 997-2250                  

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

Common Stock, $.01 Par Value                                                    
(Title of Class)                                                                

Check whether the Issuer (1) has 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 the Form 10-KSB.                                
Yes     X                               No                      

State the issuer's revenues for its most recent fiscal year: $13,817,231        

The aggregate market value at March 13, 1998 of the voting stock held by        
non-affiliates, based on the closing price as reported by NASDAQ National       
Market System (NMS), was approximately $10,049,108.  The aggregate market       
value has been computed by reference to a share price of $4.25 (The price at    
which stock was sold, or the average bid or asked price of such stock on        
March 13, 1998).  All directors and more than five percent of stockholders of   
the Registrant have been deemed "affiliates" for the purpose of calculating     
such aggregate market value.                                                    

The number of shares outstanding of the issuer's common stock, as of            
March 13, 1998, was 3,412,493.                                                  

Transitional Small Business Disclosure Format:    Yes___    No  X               

DOCUMENTS INCORPORATED BY REFERENCE:                    None                    

PART I                                                                          

Item 1. BUSINESS                                                                

GENERAL DEVELOPMENT OF BUSINESS                                                 

 Ultradata Systems, Incorporated ("The Company") is engaged in the
manufacture and marketing of a line of hand-held data retrieval devices       
that employ the Company's proprietary data compression technology.            
During 1987, the Company identified this area of its business as having       
the greatest strategic value for its stockholders.  The Company, therefore,   
elected to reduce its initial focus on research and development activities    
leading to the manufacture of laser communication systems, and target         
electronic data retrieval devices as its core growth path for the future.     
To better reflect this business reorientation, the Company changes its        
name in November 1994 from Laser Data Technology, Inc. to Ultradata           
Systems, Incorporated.                                                        

     The Company's primary focus today remains in the research, development, and
marketing of electronic consumer travel products which utilize the Company's  
proprietary data compression technology for storing large quantities of       
information on, and retrieving it rapidly from, a microprocessor memory       
chip.  Each of the Company's consumer products is designed to allow the       
consumer to gain easy and immediate access to useful information stored in    
convenient hand-held units.  The Company's products generally sell            

PRODUCTS                                                                        

CONSUMER PRODUCTS                                                               

       The Company's Consumer Products Division primarily develops and markets
hand-held travel computers, the majority of which bear the ROAD WHIZ          
registered trademark. Various models contain custom developed data            
to provide the traveler with directions and information regarding             
the services available along the U.S. Interstate Highway System.              
Some versions include city information as well. The travel database           
contained in most of the models offered by the Company is proprietary         
and contained on a memory chip built into each unit. The travel database      
contains over 100,000 services.  This service information includes            
destination, mileage, gas stations, hotels, motels, hospitals, 24-hour        
restaurants, and highway patrol emergency numbers along the United States     
Interstate Highway System.  ROAD WHIZ owners can update their unit by         
purchasing memory updates or upgrades as offered by the Company.              

The hand-held travel computers made by the Company provide routing and          
services similar to other travel software products in the market.               
The Company's database of over 100,000 services, however, is proprietary to     
the Company's travel computers. The Company sells its products through          
independent sales representatives, catalog companies, department stores,        
office supply stores, direct mail promotions, luggage stores and selected       
television  shopping channels.  During 1996, the Company made a breakthrough in 
the private label market. Private label sales contributed $6.9 million, or      
52.1% of total consumer sales of $13.3 million for fiscal 1997.  The private    
label market is viewed as an important strategic growth opportunity for the     
Company.                                                                        

MAJOR PRODUCT OFFERINGS                                                         

ROAD WHIZ FAMILY                                                                

ROAD WHIZ was introduced during 1990.  Since 1990, the Company has developed    
other travel computer versions of the ROAD WHIZ, including ROAD WHIZ PLUS,      
ROAD WHIZ ULTRA and ROAD WHIZ COMPANION,  ROAD & CITY, TOWN & COUNTRY,          
ULTRAFINDER and more recently,  KIDS ROAD WHIZ. The Company's growth strategy   
for the Road Whiz family of products is to expand its line of travel            
computers to include additional features and functions at generally lower       
retail prices.  In fiscal 1997, research and development was incre            
e Company to develop other hand-held information products, including Global     
Positioning Satellite (GPS)-based products and Personal Data Assistant (PDA)    
type products.                                                                  

ROAD WHIZ ULTRA                                                                 

ROAD WHIZ ULTRA was introduced in April 1994.  It contains all of the           
features and data offered by ROAD WHIZ and ROAD WHIZ PLUS, plus additional      
data of over 3,000 small towns and shopping outlet malls.  It also provides     
complete routing information for over 250 cities giving distances, driving      
time and detailed directions to cities. ROAD WHIZ ULTRA contains over 60,000    
services and has double the memory capacity of first generation travel          
computers, including ROAD WHIZ PLUS and ROAD WHIZ COMPANION.  ROAD WHIZ ULTRA   
marketed in upscale retail outlets, through mass mailings primarily to oil      
company credit card customers, and magazine ads.                                

ROAD WHIZ COMPANION                                                             

ROAD WHIZ COMPANION was introduced by QVC in the summer of 1994.  ROAD WHIZ     
COMPANION included the low price advantage of the ROAD WHIZ  PLUS blended       
with several advanced features and services of the ROAD WHIZ ULTRA.             

OTIS-THE  RV NAVIGATOR                                                          

OTIS - THE RV NAVIGATOR was developed for owners of recreational vehicles       
(RV's).  This unit functions as both an RV campground guide and an interstate   
travel guide.  The RV NAVIGATOR database includes a location and feature        
directory of over 13,000 campgrounds and RV repair and service providers        
throughout the U.S.  The RV Navigator contains over 40,000 attractions and      
directions, including gas and diesel fuel stations, interstate mile markers,    
restaurants, hospitals, and rest stops.  RV NAVIGATOR feature                   
travel guide. The RV NAVIGATOR database includes a location and feature         
directory of over 13,000 campgrounds and RV repair and serviced providers       
throughout the U.S.  The RV Navigator contains over 40,000 attractions and      
directions, including gas and diesel fuel stations, interstate mile markers,    
restaurants, hospitals and rest stops.  RV Navigator features and updatable     
plug-in memory card and long life batteries.  The Company purchased exclusive   
rights to this campground database from Trailer Life Enterprises for an initial 
fee of $10,000 and a royalty of one dollar ($1.00) for each unit sold over the  
first 5,000 units.  The Company had the  exclusive right to use the database    
until March 1997 when the milestone of 20,000 units for exclusivity was         
satisfied.  The exclusive licensing agreement was not renewed and expired       
during March 1997.  However, database information continues to be regularly     
updated, and the product continues as a staple in the Company's product line.   

ULTRAFINDER                                                                     

ULTRAFINDER was introduced in 1995.  It is the most powerful hand-held travel   
unit marketed by the Company. It contains over 60,000 services and specific     
routes to over 500 cities, giving distance and driving time.  ULTRAFINDER       
features a two-line display and an updateable plug-in memory module. It is      
priced to sell at $99.95 at retail.  During 1996, the Company received a        
$4.0 million order for a custom UltraFinder, with follow-on rights for          
additional quantities.    During fiscal 1997, the Company essentially completed 
this order, realizing revenue in excess of $6.9 million.                        

GREENSFINDER/GOLF GUIDE                                                         

GREENSFINDER and GOLF GUIDE represent the Company's two entries into the        
sports leisure and travel market. Introduced in December 1994, GREENSFINDER     
is a hand-held data retrieval device which contains information on over         
10,000 U.S. golf courses, including greens fees, restaurant facilities,         
phone numbers, types of terrain, travel directions to the course,               
availability of carts, caddies, clubs, and other course features.               
GREENSFINDER( also contains a four-player scorekeeper with player name entry    
and records individual player scores.GOLF GUIDE lists more than 13,000          
courses in the U.S., with directions and phone numbers. Other information       
includes course descriptions, number of holes, hours, fees and senior           
citizen discount availability.  The Company acquired the software database      
for these products from a third party.  The Company is required to pay this     
third party a royalty of 10% based on net sales and 20% for upgrades to         
the software developer.                                                         

TOWN & COUNTRY                                                                  

      The TOWN & COUNTRY, introduced in 1996, provides a list of 60,000 services
along the nation's highways, parkways and toll roads and directions to over   
7,000 towns on Interstates and U.S. Highways.  This product was sold          
exclusively on the QVC home television network during September 1996.         
Following the expiration of the exclusivity period, the company began         
selling the product through upscale retail locations such as Brookstone       
and Rand McNally.                                                             

SUPER ROAD WHIZ                                                                 
     The SUPER ROAD WHIZ was introduced during 1997. It lists interstate highway
services including gas stations, restaurants, motels, campgrounds, malls,     
tourist sites and hospitals in over 160 major cities.                         

The ROAD WHIZ  RV SPECIAL                                                       

The ROAD WHIZ RV SPECIAL was introduced in 1997.  It provides interstate      
services, U.S. highway data, including distance and driving time between      
towns with populations of over 1,000, and city-to-city directions for over    
250 cities, including shortest complete route, total distance, and driving    
time.                                                                         

KIDS ROAD WHIZ                                                                  

     The KIDS ROAD WHIZ, introduced in December 1996, is a travel computer
providing directions to amusement parks, water parks and other entertainment  
sites for children traveling with parents.  It also includes word games.      

HOME & GARDEN/GARDEN GURU                                                       

     The HOME & GARDEN and GARDEN GURU products were introduced in late 1996 and
1997, respectively, to provide a convenient home reference on first aid and   
helpful household hints on a variety of subjects, including spot removers     
and home decor.  For the garden enthusiast, information is provided on        
planting and on plant care, with over 4,000 pages of related information.     
The Company developed this database with the help of the Missouri Botanical   
Garden, a non-profit foundation dedicated to the development and preservation 
of plant species.                                                             

LASER SYSTEM CONTRACTS                                                          

       The business of the Company when it was initially founded was primarily
focused on the fulfillment of research and development contracts leading to   
the manufacture of laser communications systems.  The Company submits bids    
for laser system research and development contracts and production contracts  
to government and government-related agencies, typically under cost plus or   
fixed-fee contracts. Most of the Company's research and development laser     
systems contracts are beyond one year in scope.  Upon the award of a research 
and development contract, the Company realizes revenues from progress payments
received during the course of completion of such contracts.  Any required     
capital equipment is generally supplied to the Company by the customer.  The  
technology developed during the Company's performance of a research and       
development contract becomes the exclusive property of the contracting party. 

      During 1994, the Company engaged in a research and development contract to
develop modifications and upgrades to U.S. Army Laser Pointing and Tracking   
Systems (PATS).  This contract was completed in early 1995.  In 1995,         
the Company received $1.7 million government production contract from the     
Yuma Proving Ground to manufacture their PATS design.  For the three years    
ended December 31, 1997, 1996 and 1995, the Company realized revenues of      
$563,251,$810,484 and $675,465, respectively, against this contract.  At      
December 31, 1997,there remain approximately $119,400 in direct costs to      
complete the contract. The original contract provided for an override clause  
for additional sites, which the customer exercised in February 1997.  Since   
August 1995, the Company received individual purchase orders totaling         
$2,245,461 for this contract.                                                 

MANUFACTURING                                                                   

    The Company does not manufacture any of its consumer products and is
entirely dependent upon third parties to manufacture and assemble the         
components comprising its products.  From 1988 to 1994, Siemens               
Manufacturing Co. of Freeburg, Illinois ("Siemens") was the exclusive         
manufacturing source of travel computers for the Company.  An alternate low   
cost foreign manufacturer was established late in 1995 and supplied           
approximately 18.6% of the total production units during 1997.  The Company   
generally receives annual pricing from each of its manufacturers based upon   
estimated annual quantities.  Thereafter, the Company releases individual     
purchase orders for production. The Company's arrangements with each          
manufacturer are terminable at will by either party.  If either or both       
arrangements were to be terminated, the Company believes that alternate       
sources would become readily available.  The sudden loss of one of the        
manufacturers or unanticipated interruptions or delays from present           
manufacturers would likely result in a temporary interruption to the Company's
planned operations. The Company intends to maintain its practice of engaging  
subcontractors to meet its manufacturing requirements for the foreseeable     
future.                                                                       

    Raw materials used by the Company include hardware, keypads, computer memory
chips, microprocessors, and other discrete electronic parts used in building  
circuit boards.   Most of these are standard stock items that are generally   
available from multiple vendors.  To date, the Company has been able to       
obtain adequate and timely supplies of raw materials. The Company presently   
has one sole source component.  The sole supplier for this custom item is a   
major vendor with whom the Company has enjoyed a solid relationship for years.
The inability to obtain timely or sufficient deliveries of this sole-source   
component and certain custom parts would materialy disrupt production until an
alternative vendor could be located and qualified, and production could begin.

BACKLOG                                                                         

      As of December 31, 1997, the Company's total backlog was approximately
$280,000, versus a backlog of approximately $6.9 million on December 31,      
1996. Included in the December 1996 backlog were two orders for private       
label products valued at approximately $6.5 million.  The first order valued  
at $4.0 million was completed during the year.  The second order, valued at   
$2.5 million, was subsequently canceled.  Generally, orders for standard      
products are shipped within 24 hours and are subject to cancellation without  
additional contracts of the type booked in late 1996, backlog is generally    
very low at December 31, due to low post holiday demand and normally short    
retailer lead times for standard products shipped from inventory. The         
Company has occasionally experienced cancellations or postponements in its    
delivery of orders.                                                           

SALES AND MARKETING                                                             

     The Company's primary sales and marketing strategy is to remain the leading
supplier of low-cost, hand-held travel computers.  To support this strategy,  
the Company believes it must offer a growing line of affordable standard and  
custom travel computers.  Such new devices are principally aimed at           
providing increased features and functionality.                               

      The Company identifies its prospective customers and markets through a
combination of direct mail, telemarketing, media advertising, tradeshow       
participation, and periodic appearances on home shopping television           
channels. The Company advertises extensively in magazines and trade journals  
and periodically distributes promotional materials to increase market         
awareness of its products.  Historically, the Company has focused its         
primary marketing efforts on establishing customer relationships with local   
and regional retailers and upscale retail outlets. During 1996 and            
continuing into 1997, the Company has aggressively pursued programs to        
develop new markets by offering custom versions of travel computers.          

The Company's products are marketed through independent sales   
representatives, mail order catalogs, and office supply stores.  In fiscal    
1997, the Company spent $2,066,472 on advertising, promotion, and marketing   
programs, as compared to $1,773,373 and $942,402 in 1996 and 1995,            
respectively.  The Company spent $221,705 during 1997 to advertise in the     
SkyMall magazine, the popular airline buying guide.  In addition,             
the Company generated sales for custom travel computers during fiscal 1997    
of $6.9 million with a marketing firm using coupon promotions for gift        
catalog redemption. The end customer for the 1997 redemption was an           
international tobacco company. This program was completed at the end of       
1997.  A direct mail program similiar to one completed in 1996 was            
undertaken again in 1997 with Roy Thomas, a direct mail customer.             
It included approximately 23 million advertising inserts distributed          
beginning with October 1997 oil credit card statements.                       

       To further extend its market position, in 1997 the Company entered into a
joint product agreement with a leading developer of trip planning software,   
TravRoute, Inc., to integrate their software and database into a new CD-Rom   
based product called TripLink.  The development of TripLink was placed on     
hold during 1997 due to unanticipated design delays and the decision to       
enter into newly emerging technology.  A significant portion of the           
technical and engineering development effort expended to-date is being        
incorporated into a new line of advanced Global Positioning System (GPS)      
products.                                                                     

      During 1996,  the Company also acquired an exclusive U.S. and European
license for Time Tracker, a product which attaches to cellular phones and     
enables users to track phone call costs on a continuous basis. Time Tracker   
was discontinued during 1997 due to technical and other design problems.      

     During 1997, the Company established a joint product and marketing alliance
with SmartTime  Network  to develop and market e-mail and data retrieval      
appliances on the Internet.  Both parties agreed to share certain expenses    
in a 50/50 development project.  The Company invested $290,635 of deferred    
software development costs and spent an additional $131,577 in other          
development expense related to this project during 1997. Such strategic and   
partnering arrangements with other technology marketers are an outgrowth of   
the Company's strategy to maintain its dominant position as the leading       
supplier of hand-held travel devices.                                         

DEPENDENCE ON CUSTOMERS                                                         

       During 1997, the Company recorded revenue of $6.9 million, representing
52.1% of total consumer sales, to one customer.   This order was the largest  
ever received by the Company.  It was completed during 1997.  Since this      
type of promotion is a one-time event, management does not expect             
significant residual benefits to occur during 1998, although discussions on   
new promotions for 1998 are on-going, and some benefit may result from the    
sale of updates.                                                              

   During 1997, Roy Thomas, Inc., a direct mail customer, accounted for 14.5% of
consumer sales.  This customer accounted for sales of $1,918,987 in 1997      
compared to $1,723,185, or 20.8% of total consumer sales, during 1996.        

    Prior to 1997, The QVC Network had been the largest customer of the Company.
For the three years ended December 31, 1997, 1996 and 1995, QVC sales         
totaled  $349,223, $617,443 and $4,455,035 respectively,  representing        
approximately 2.6%, 7.5% and 47.2% of consumer sales.                         

COMPETITION                                                                     

        Competition in the electronics industry is intense. The Company believes
that the primary competitive factors necessary to maintain its market         
leadership in the hand-held travel market include product features such as    
performance, product reliability, functionality, ease of use, product         
reputation, price, timeliness of product upgrades, and quality of customer    
support and service.  The Company believes that price is a significant        
factor in determining future sales and the Company carefully monitors this.   
Mass merchandise discounters regard $29.95 as an important retail consumer    
price for the Compnay's [products to be successful in the mass market. The    
Company introduced ROAD WHIZ which is priced to sell at retail for $29.95,    
and is attempting to position this product as a mass market item.  It has     
not yet achieved a mass market status is any major retail account.            

      The segment of the electronics industry in which the Company is engaged is
populated by competitors with substantially greater financial resources than  
the Company.  The consumer industry in which the Company competes is          
characterized by rapid and significant technological advances, which often    
result in rapid partial or total obsolescence of products.  The Company is    
not aware of any competitor selling affordable hand-held travel computers.    
Although the Company attempts to protect its technology and patents           
wherever possible, it is unable to provide any assurances that its patents    
and trade secrets will not be circumvented in the future.The company faces    
competition from developers of travel software products currently marketed    
with visual mapping displays. To protect the Company's dominant market        
position in affordable travel computers, the Company invested $1,022,095,     
or approximately 7.4% of its' 1997 revenues in research and product           
development. There can be no assurance, however, that the Company will be     
able to develop or acquire new products or increase market channels at a      
rate sufficientto keep the Company competitive. The Company also cannot       
guarantee that new products or product updates will ultimately achieve        
market acceptance.                                                            

RELATED PARTY - POIS, INC.                                                      

        In September of 1993, the Company purchased an 81% ownership interest in
POIS, Inc. with the goal of developing "personal onboard information systems  
("POIS") for use in the automotive Original Equipment Manufacturer (OEM)      
market and aftermarket.  Such systems were intended to be installed and       
operated on board in a vehicle by utilizing their 12-volt electrical system.  
During 1997, 1996 and 1995, POIS realized sales of  $1,579,  $511,650 and     
$299,196, respectively.  The sales in 1996 and 1995 were attributed to two    
custom orders.  POIS hand-held units incorporate the ROADWHIZ software        
and database along with individual customer requirements and special          
information such as dealers names, phone numbers, and locations around        
the country.  POIS has not yet realized any sales for on-board (installed     
directly in the car) information systems.                                     

       During the fourth quarter, the Company decided to close its POIS location
and consolidate POIS operations from Detroit, Michigan to the corporate       
headquarters in St. Louis.  The five active employees were terminated,        
including the founder, who was retained for one year as a transitional        
consultant.  The Company acquired the remaining 19% interest of stock         
then owned by the POIS founder and  now owns  100% of POIS.  The Company      
contemplates that products bearing the POIS brand name  will  be  marketed    
as an after market accessory product sold primarily through automotive        
dealers and auto supply stores.  If the POIS products receive sufficient      
customer recognition in the automotive aftermarket, the Company may again     
seek to more aggressively position POIS products to suppliers in the          
OEM market.                                                                   

RESEARCH AND DEVELOPMENT                                                        

       The Company performs ongoing research and development, seeking to improve
existing products and to develop new products.  These activities are          
primarily done at the Company's corporate headquarters, and at POIS.   The    
Company periodically engages experienced computer system design consultants   
to expedite the completion of the development and test stages.                

     In 1997, the Company began a project in conjunction with SmartTime Network,
a company owned by Intelidata Technologies Corp. (Nasdaq Symbol: INTD).       
The product under development is a low-cost portable Internet device that     
aims to provide access to E-mail and other personal information without a     
laptop computer.  During January 1998, the Company displayed two prototype    
models - PalmNet and E@sy Mail - at the Consumer Electronics Show (CES) in    
Las Vegas.  The Company expects to finalize development and make these        
products available in catalogs, consumer electronics stores, computer and     
office superstores, department stores, mass merchants and warehouse clubs.    
The Internet appliance products will offer on-board features including        
stock quotes, sports scores, weather forecasts, news headlines, a calendar    
reminder, fax-send, calculator and a directory which can be synchronized      
to and restored from SmartTime's intelligent packet data network.  This       
product would retail at less than $200, which is significantly lower than     
other products with portable e-mail capability.  Product development was      
jointly funded by both companies.  To date, the company spent approximately   
$290,635 for its 50% share of the software development cost and $131,577      
in research and development for this project.  Due to a reorganization        
underway at Intelidata, the joint development efforts have slowed.  However,  
the introduction of this product is not expected to be significantly delayed. 

     In 1997, the Company spent $321,007 for research and development of a
portable Global Positioning Satellite (GPS) based travel computer, called     
TravelStar.  This product will have an integrated GPS satellite receiver      
with the ROAD WHIZ data base and will be the first affordable and portable    
GPS Driver Information System on the market.  TravelStar was exhibited at     
the Consumer Electronics Show in Las Vegas.                                   

DATABASE RESEARCH                                                               

        The Company believes that an accurate proprietary database is one of the
most important factors for the future success and development of the          
Company. The potential for additional net sales, as well as the need to       
preserve the Company's reputation for accuracy and reliability, requires that 
the Company continuously validate and update its database.  The Company uses  
various means to update its ROAD WHIZ database, including publicly available  
geographic and demographic data.  The majority of the ROAD WHIZ database is   
compiled by "Road Helpers."  Road Helpers are generally retirees and others   
that travel extensively.  Many of the Road Helpers are formerly ROAD Whiz     
customers. Generally, the Road Helpers are nominally compensated by the       
Company.                                                                      

     The Company maintains a full time staff of researchers who review and
augment the data gathered by the Road Helpers.  In addition to the Road       
Helpers, the research staff contacts travel services and Chambers of          
Commerce across the country to gather other information.                      

    The Company's Research and Development Group includes five full-time
software engineers and one hardware design engineer and one project           
consultant.  During 1997, the Company employed various subcontractors in      
order to augment its internal research and development resources.             

PATENTS AND TRADEMARKS                                                          

       The Company files patent applications, when applicable,  to protect its
technology, inventions and improvements.  The Company owns two patents.  One  
patent covers its method of compressing data relating to travel information.  
This compression technology permits the Company's travel products to store    
more data on smaller and less expensive memory devices.                       

      The Company has a second patent dealing with the methodology which enables
its travel devices to account for changes which occur when the traveler       
crosses a state border. The Company believes that in order to manufacture a   
similar product, a competitor would have to develop a substantially           
different methodology, at considerable time and expense.                      

      The Company is in the process of filing additional patent applications
related to navigational information products including Travel(Star.  If any   
of these patents were to be granted by the Office of Patents and Trademarks,  
for any of the applications, the Company believes that it would afford them   
a significant competitive advantage for personal navigation and information   
systems.  The Company cannot predict whether any application will result in   
a patent, or what the scope of any such a patent might be.                    

     In addition to its patents, the Company attempts to further restrict access
to its proprietary technologies, trade secrets and processes.   Key           
employees of the Company are covered by employment contracts containing       
restrictive covenants.  These covenants require key employees, as a           
condition of their employment, to hold all proprietary information            
confidential. The Company also restricts customers and visitors site access   
to confidential information.  There can be no assurance that the Company can  
be successful in its efforts to protect either its patents or its             
proprietary technologies and processes.                                       

Item 1. EMPLOYEES                                                               

       The Company currently has 28 full-time employees, including six officers,
all of whom are located at the Company's headquarters in St. Louis, Mo.  The  
Company employs nine people in sales, customer service and shipping, seven    
people in product and database research, five people in executive management  
and administration, two people devoted to government contract work, three     
people in product development, one person in inventory management, and a      
president and chief executive officer.  None of the Company's employees       
belong to a collective bargaining union. The Company has never experienced    
a work stoppage and believes that its employee relations are good.            

Item 2. PROPERTIES                                                              

    The Company's headquarters and principal administrative offices and research
and development  facilities are located in approximately 10,000 square feet   
of leased office space in an industrial building located at 9375 Dielman      
Industrial Drive, St. Louis, Missouri.  The Company maintains no              
manufacturing operations on site and employs outside contractors to perform   
all of its manufacturing requirements.                                        

Aggregate rental expense  totaled $120,088 for the current year, including    
$16,401 for the POIS facility.                                                

The Company believes that its facilities are adequate for the Company's       
present and foreseeable requirements.  The POIS lease was terminated as of    
December 31, 1997.                                                            

Item 3. LEGAL PROCEEDINGS                                                       

There are no pending legal proceedings against the Company.     

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

Not applicable.                                                 

PART II                                                                         

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS   

(a) Market Information                                          
        The following table sets forth the prices for the Company's Common Stock
(NASDAQ: ULTR) as quoted on the NASDAQ National Market for the eight          
quarters starting January 1, 1996 and ending  December 31, 1997.              

                               Bid                             Asked
Quarter Ending              High         Low      High        Low               

March 31, 1996                     $11.88       $8.87       $12.38     $9.37    
June 30, 1996                       $ 9.88       $6.88      $10.13      $7.13   
September 30, 1996              $ 9.63        $6.75         $ 9.88      $7.00   
December 31, 1996                       $ 9.25        $6.62         $ 9.63 $6.75

March 31, 1997             $ 7.88       $5.88    $ 8.38     $6.25               
June 30, 1997              $ 6.94       $5.63    $ 7.38     $6.00               
September 30, 1997         $ 8.25       $5.00    $ 8.50     $5.25               
December 31, 1997          $ 7.88       $5.63    $ 8.25     $5.88               

(b) Holders                                                     
       At March 11, 1998, there were 151 stockholders of record of the Company's
Common Stock.  Based upon information from nominee holders, the Company       
believes the number of beneficial owners of its Common Stock exceeds 1,100.   

(c) Dividends                                                   
       The Company has never paid or declared any cash dividends on its Common
Stock and does not forsee doing so in the foreseeable future.  The Company    
intends to retain its earnings for the future operation and expansion of the  
business.  Any decision as to future payment of dividends will depend on the  
available earnings, the capital requirements of the Company, its general      
financial condition  and other  factors deemed pertinent by the Board of      
Directors.                                                                    

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

OVERVIEW                                                                        

    The Company's net sales are derived from two business segments: (1) consumer
products, marketed through retailers, catalog companies, and direct mail or   
other marketing agencies or group as employed by the Company, and (2) laser   
 systems contract revenues, derived from research and development and production
contracts awarded by government agencies.                                     

The following table summarizes the contributions of consumer products and     
 development contracts, respectively, to total net sales of the Company for each
of the last three year ended December 31. The table should be read in         
conjunction with the audited financial statements for the periods indicated   
and the related notes incorporated herein.                                    

                     NET SALES
                             FOR THE THREE YEARS ENDED DECEMBER 31

             1997     %      1996    %
Consumer Products              $ 13,254   95.9  $ 8,283  91.1  $ 9,437  93.3    

Laser Systems Contracts                 563    4.1      810   8.9      676   6.7

Total                                $ 13,817 100.0 $ 9,093 100.0 $ 10,113 100.0

Year Ended December 31, 1997 vs. Year Ended December 31, 1996                   

  During 1997, sales of consumer products increased by $4,971,544 to
$13,253,980 from $8,282,436 in 1996.  The increase in sales was the result    
of $6.9 million in revenue for a custom Ultrafinder designed and sold to one  
customer. This unit was used as a gift selection item within a promotion      
catalog for the benefit of an international cigarette company. Sales of       
standard products decreased approximately $1,900,000 from the previous year.  
New product sales were adversely impacted as a result of extended delays in   
product development.  The Company introduced its newest product, the Travel   
Star, at the Consumer Electronics Show (CES) in Las Vegas during January      
1998.  TravelStar is a Global Positioning System (GPS) based product that     
will begin shipping during March 1998. The Company believes that TravelStar   
and other new products currently in development are important extensions to   
the present line of travel computers, many of which are in their third year   
of existence.  The Company recognizes that retail electronics consumer        
products have a relatively short life cycle due to the rapid advances of      
technology and intense competition for premium retail shelf space.  The       
Company has employed a long-standing business strategy to expand its market   
channels in hand-held information devices by leveraging its hardware and      
software platforms.  Generally, the Company's product entries into other      
travel niche, or non-travel hand-held markets, such as the sports market      
(with GREENSFINDER), the toy market (with KIDS ROAD WHIZ) and the home and    
gardenmarket (with HOME & GARDEN) generally did not meet with original        
expectations concerning consumer acceptance levels. In addition, the Company  
closed its POIS location in Detroit, Michigan and moved tis operations there  
to the corporate offfices in St. Louis.  POIS sales to the automotive OEM     
market were insufficient to justify the cost of a separate sales office. The  
Company will continue to market trave computers under the POIS Brnad name to  
the automotive aftermarket from its St. Louis location.                       

Contract sales from laser systems totaled $563,251 fir 1997 as compared to    
$810,484 for 1996.  Contract sales were derived from progress billings against
government contracts to upgrade systems which provide high resolution         
trajectory information on airborne objects. The original contract was received
in 1995 and valued at $1.7 million. The contract contained and override       
clause, which resulted in addtional orders fo $450,363 during the year. At    
December 31, 1997, there was approximately $259,300 in contract revenue       
remaining and $119,400 in cost to be expended.                                

Gross profit for the consumer products group totaled $7,888,673 or 59.5% of   
sales for the year ended December 31, 1997, compared to $4,786,221, or 57.8%  
of sales for the prior year.  Gross profit was adversely impacted by          
$260,000 during fiscal 1997 resulting from the write down of certain          
 inventories that became either obsolete or slow moving during the year. Similar
charges during 1996 amounted to $19,000.  Exclusive of these charges for      
inventory the Company would have achieved a 3.3% improvement in gross profit  
percentage.  This improvement is primarily the result of private label sales  
at higher gross margins, and continued cost savings in the form of lower      
cost units received from the foreign manufacturer.                            

Gross profit for contract sales totaled  $271,034, or 48.1% of sales, versus  
a gross profit of $430,277, or 53.1% of sales, last year.                     

Selling expenses for 1997 increased to $4,540,359 from $2,297,307 in 1996.    
The increase of 97.6% resulted from increased sales commissions,              
particularly related to private label and promotion orders, to $2,211,858     
from $299,139 in 1996 and advertising outlays which increased 16.5% from      
$1,773,454 to $2,066,472.  The increases reflect the Company's commitment to  
opening new markets and channels of distribution of information products.     
General and administrative expenses increased to $2,237,498 from $1,691,458 in
1996 and increase of 32.3%.  The increases relate primarily to salaries and   
royalty expenses which increased $149,000 and $126,000 respectively.          
The royalty expense increase relates to increased sales of Road WhiZ and      
Ultrafinder products.  In addition, the company experienced increases in      
professional fees, public relations and legal expenses.                       

The Company made significant investments in research and development totaling 
$1,022,095 during the year.  Much of this investment was attributed to        
TravelStar ($321,007), E@sy Mail ($131,577), and Personal-On-Board            
Information System Products ($393,636) in addition to capitalized software    
development costs of $290,635.  TravelStar will begin limited shipments       
during the first quarter of 1998.  E@sy Mail, an Internet appliance used for  
e-mail, stock quotes, lottery results, horoscopes and more in a hand-held     
format is running behind schedule due to delays encountered with the          
strategic partner providing access to the e-mail connection.  The             
introduction of this product is not expected to be significantly delayed,     
however.                                                                      

    Other income totaled $225,575 for 1997, as compared to $113,320 for the year
ended December 31, 1996. The increase, primarily in interest income, is due   
to high first quarter 1997 collections which were invested in short-term      
municipal bonds at higher average yields than previously used money market    
instruments.                                                                  

       The Company's effective tax rate of 31.9% for 1997 remained comparable to
the 31.8% rate for the year ended December 31, 1996.                          

   As a result of the foregoing, the Company's net income increased to
$337,104, or $0.10 per share, computed on a basic and diluted method as       
compared to net income of $208,137, or $0.08, computed on both basic and      
diluted for the prior year.  There were 3,400,967 and 2,717,837 basic common  
shares and 3,425,613 and 2,773,239 diluted shares, respectively, used in      
calculating earnings per share for the years ended December 31, 1997 and      
1996.  The computation of basic and diluted earnings per share has been       
restated in accordance with SFAS 128.                                         

    The Company recognized certain charges in the fourth quarter of 1997
totaling $496,000, which were comprised of aggregate inventory write-offs     
totaling approximately $260,000, and a provision for returns, net of          
inventory recovery, of $236,000 in 1997 compared to $27,000 in 1996.          
Included in the inventory write-off  was shrinkage of approximately $90,000   
and excess or obsolete inventory of approximately $170,000.  Almost one half  
of the provision related to the private label promotional order and fourth    
quarter deliveries against that order.                                        

Year Ended December 31, 1996 vs. Year Ended December 31, 1995.                  

 During 1996 sales of consumer products decreased by $1,154,803 or
approximately 12.2% from $9,437,239 to $8,282,436 in 1996.  The decrease in   
sales was related primarily to (a) lower sales to a key customer (QVC)  and   
(b)  product development delays resulting in three new products planned for   
1996 sales being carried into 1997.  During 1995, QVC accounted for           
$4,455,035, or 47%, of consumer product sales as compared to $617,443, or     
7.5% of  consumer product sales during 1996.  The $3,837,592 drop in QVC      
sales was attributed to the combined result of decreased demand from QVC      
viewers and fewer appearances on QVC in 1996 versus 1995.  Management         
believes that QVC sales will not return to sales levels of over $4 million    
as seen in 1995 with its current product offerings.  In 1997 there are three  
new products, ROAD WHIZ EXPRESS, TOWN & COUNTRY, and HOME & GARDEN planned    
for QVC.  Additional retail customers were established during 1996,           
especially in direct mail through greater uses of oil company credit card     
mailings.  Exclusive of POIS sales, custom travel computer sales increased    
by approximately $484,000 to $502,000 in 1996 compared to $18,000 in 1995.    
The Company believes that custom units sales will make up a larger portion    
of consumer product revenues in the future.  The Company realized $511,650    
in revenues from its POIS subsidiary in 1996 compared to $299,196 in 1995.    

       The majority of the Company's consumer product sales are highly seasonal.
The fourth quarter of 1996 produced the highest quarter of consumer product   
sales in the history of the Company, posting $4,949,531, or 59.7% of the      
consumer products revenues.  For the comparable quarter ended December 31,    
1995, the Company realized $4,143,530 in revenues, or 43.9% of  annual        
consumer product revenues.  The Company has embarked on a strategy to         
realize a more even distribution of its revenues throughout the year.         
Accordingly, it allocated a greater portion of its resources, including       
the hiring of a full time marketing executive, to locate and develop new      
markets, and especially new vertical markets.  Many of these markets, such    
as private label and premium, are of a non-seasonal nature.                   

        Contract sales for 1996 totaled $810,484, compared to $675,465 for 1995.
Contract sales for 1996 were  derived from progress billing against a         
government contract that was received during August 1995. This contract was   
originally valued at $1.7 million and designed to provide                     
time/space/position data during tracking of aircraft and ground troops. At    
December 31, 1996, there was $120,915 remaining on this contract.  During     
February 1997, the customer exercised the override clause in the original     
contract by ordering two additional units valued at $337,888.                 

    Gross profit for the consumer product group totaled $4,786,221, or 57.8% for
the year ended December 31, 1996, compared to $4,777,833, or 50.6% of sales   
for the prior year.  The 7.2% improvement in gross profit is primarily the    
result of cost savings in the form of lower cost units received from the      
foreign manufacturer and an improved product mix.                             

     Gross profit for contract sales totaled $430,277, or 53.1% of sales, versus
a gross profit of $358,893, or 53.1% of sales, last year.                     

    Selling expenses for 1996 increased 70.3% to $2,297,307, compared to
$1,348,780 in the prior year.  The increase resulted primarily from an        
increase in advertising costs from $942,402 to $1,773,373, which included a   
major Roy Thomas credit card insert promotion in the fourth quarter of 1996.  

   General and administrative expenses increased by  $593,924 (52.5%),
including an increase of $142,486 due primarily to increased personnel in     
all functions, and professional services, which increased approximately       
$150,000 for legal, accounting and consulting services.                       

       Research and Development expenses (R&D) for the year totaled $1,001,646
compared to $556,213 for the prior year, representing an increase of          
$445,433 or 80.1%.  The increase in R&D was the result of higher prototype    
development charges and design fees and expenses incurred in product          
development.  During the year the Company spent $509,956 in research and      
development for POIS products.                                                

    Other income totaled $113,320 for 1997, as compared to $118,711 for the year
ended December 31, 1996.                                                      

    The Company's effective tax rate for the year was 31.8% as compared to 37.7%
for the year ended December 31, 1996.  The Company's lower tax rate is        
attributable to unused federal income tax research and development credits.   

  As a result of the foregoing, the Company's net income declined to
$208,137 or $0.08 per basic and diluted share, as compared to net income of   
$1,381,902 or $0.60 basic and $0.54 diluted earnings per share for the        
prior year.  There were 2,717,837 and 2,308,945 basic common shares and       
2,773,239 and 2,545,692 diluted shares, respectively, used in calculating     
earnings per share for the two years ended December 31, 1997 and 1996.        

LIQUIDITY AND CAPITAL RESOURCES                                                 

    Since inception, the Company has financed its business by supplementing cash
generated from operations with periodic borrowings from banks and equity      
raised from private and public sources. On August 6, 1996, the Company        
called for redemption and exchange all of its then outstanding purchase       
warrants.  The warrant redemption and exchange program was completed during   
September 1996, with the Company receiving $6,172,493 in additional capital.  

       Total cash and cash equivalents increased from $3,960,577 at December 31,
1996 to $5,075,968 at December 31, 1997.  This increase is due to the         
collection of accounts receivable.                                            

      The Company recorded net income of $337,104 in 1997. The Company had a net
inflow of $1,560,415 in cash from operations for the year. The inflow was due 
primarily to a decrease in accounts receivable of $2,936,244, which was       
partially offset by a decrease of $866,223 in trade accounts payable and a    
decrease of $436,000 of accrued expenses.  Cash flows from investing          
activities used funds totaling $351,962 for the year, representing capital    
expenditures.  Net cash used by financing activities totaled $93,062,         
including $37,000 of proceeds from the exercise of stock options and          
$130,062 used for the purchase of treasury stock related to the 1997 Stock    
Repurchase Plan.  During the quarter ended September 30, 1997 the Company     
established a stock repurchase plan, whereby the Company may purchase up to   
200,000 shares of it's Common Stock.  The Company believes this program       
represents efficient management of its cash resources and an excellent way    
to provide additional returns to its shareholders.  As of December 31, 1997   
the Company had repurchased a total of 23,000 shares of Common Stock under    
this plan.                                                                    
       At the end of 1997, there were no material capital spending commitments
outstanding. The Company relies on outside vendors for all of its             
manufacturing.  Consequently,  the Company's operations do not require        
substantial capital outlays other than for the periodic purchase of tooling,  
test equipment, and fixtures.  During 1997, the Company spent  $351,962 for   
capital expenditures. Total capital expenditures are not expected to be       
significant based on the current business outlook.                            

       The Company's credit facility includes a $2.0 million unsecured revolving
bank line of credit with $500,000 for letters of credit facility.  The        
bank's revolving line of credit is subject to renewal or cancellation at the  
end of every 12-month period from the date it was initiated.  The Company     
pays interest monthly on its outstanding loan balance at the Bank's           
Corporate Base  (Prime) Rate, which was 8.5 % at December 31, 1997.  On       
December 31, 1997, the Company's outstanding loan balance was zero.           

  At December 31, 1997, the Company had a working capital surplus of
$10,607,580, as compared to a working capital surplus of $10,761,352 at       
December 31, 1996.  Included in working capital at December 31, 1997 was      
$5,075,968 in cash and cash equivalents. Inventories increased by             
approximately 6.5%, or $215,382, during the year as a result of lower fourth  
quarter sales.  Accounts receivable decreased by 63.7%, or $2,936,244, to     
$1,672,041.  The decrease in accounts receivable results from the collection  
of record shipments posted for the fourth quarter of 1996 including Roy       
Thomas, Inc. receivables that totaled $1,657,571, primarily collected in the  
first quarter of 1997.  However, the business is expecting to launch a        
number of new products in 1998, which will require additional investments     
in inventories and accounts receivable.                                       

     The Company's management has been engaged in developing a strategy aimed at
a more equitable quarterly revenue distribution.  Historically, up to 50% of  
the Company's sales have been realized during the 4th Quarter of the year,    
due to the importance of the Christmas season sales.  This pattern resulted   
in an inefficient use of financial resources during the year and generally    
sharply lower financial results were posted for the first two quarters of     
the year.  Management decided to reduce its dependence on holiday products    
by introducing a promotion strategy to develop and market private label       
travel computers.  The Company recorded consumer revenues of $9.5 million     
for the first nine months ended September 30, 1997, representing over 70%     
of consumer products revenue for the 1997 fiscal year.  Of this amount,       
however, one customer order accounted for approximately 52% of the total      
revenue, but without the adverse impact of a short sales cycle.  The Company  
expects that its working capital and cash generated from operations will be   
sufficient to fund operations for the next 12 months.                         

IMPACT OF ACCOUNTING PRONOUNCEMENTS                                             

       During 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130 "Reporting Comprehensive        
Income" and SFAS No. 131 "Disclosures about Segments of an Enterprise and     
Related Information". The company will be required to implement both of       
these standards during 1998. Although the implementation of these standards   
will have no effect on the reported operations, the Company is assessing the  
impact of the required disclosures on its quarterly and annual reports.       

FACTORS THAT MAY AFFECT FUTURE RESULTS                                        

       Except for the historical information, the information set forth herein
includes forward-looking statements that are dependent on certain risks and   
uncertainties.  The Company's operating results are dependent upon its        
ability to rapidly develop, manufacture, and market innovative products that  
meet customer needs at moderate prices. The process of developing new high    
technology products is both complex and uncertain, requiring innovative       
designs and features which anticipate customer needs and anticipate           
technology trends.  As such, important factors which could cause actual       
results to differ materially from anticipated results include, but are not    
limited to, market positioning, release dates, and consumer acceptance of     
the new products; quarterly fluctuations in promotional activity and          
seasonal factors; timely manufacturing and logistics; the competitive         
environment; technological change and obsolescence factors in the Company's   
primary markets; and dependence on distribution channels and key personnel.   
These factors are difficult to accurately predict, and in some cases are      
beyond the control of the Company.                                            

Item 7. CONSOLIDATED FINANCIAL STATEMENTS                                       
The consolidated financial statements of Ultradata Systems, Incorporated,     
together with notes and the Independent Auditors' Report, are set forth       
immediately following Item 13 of this Form 10-KSB.                            

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                                          
Not Applicable                                                                

PART III                                                                        

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;           
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                             
The following table sets forth certain information regarding the officers and 
directors of the Company as of March 21, 1998:                                

NAME                                  AGE                     POSITION      
Monte Ross                      66 President & Chief Executive Officer, Director
Mark L. Peterson            41 Vice President - Engineering, Secretary, Director
Ernest Clarke           58         Vice President - Government Programs,Director
Leonard Missler         50              Vice President - Software Development   
Duane Crofts                  60              Vice President - Advanced Products
David Biernbaum            43           Chief Operating Officer                 
Daniel Muehlemann               33              Vice President of Sales         
Steven H. Akre, Esq.    45              Director                                
Bruce L. Miller         55              Director                                
John J. Clancy          61              Director                                

    Directors hold office until the annual meeting of the Company's stockholders
and the election and qualification of their successors.  Officers hold        
office, subject to removal at any time by the Board, until the meeting of     
directors immediately following the annual meeting of stockholders and until  
their successors are appointed and qualified.                                 

Background of Directors and Executive Officers:                                 

Monte Ross founded the Company in 1986 and has served as its President and    
Chief Executive Officer since inception. For over 20 years prior to founding  
the Company, Mr. Ross was employed by McDonnell Douglas Corporation in a      
variety of positions.  When he left McDonnell Douglas, Mr. Ross was           
Director of Laser Systems, responsible for the group of approximately         
400 employees which developed the first laser space communication system      
and first space laser radar.  Mr. Ross is a Fellow of the Institute of        
Elecrical and Electonic Engineers and the past President of the International 
 Laser Communication Society. Mr. Ross was awarded a Master fo Science degree in
Electrical Engineering by Northwestern University in 1962.  He is the         
father-in-law fo Mark L. Peterson, the Company's Vice President-Engineering.  

     Mark L. Peterson has been a Director of the Company since it was founded in
1986.  He has served as the Company's Vice President of Engineering since     
1988.  He is responsible for the design of the Company's hand-held products.  
During the four years prior to joining the Company, Mr. Peterson was          
employed by McDonnell Douglas Corporation as an electronics engineer for      
fiber optic products and satellite laser cross-link programs.  Mr. Peterson   
was awarded a Master of Science degree in Electrical Engineering by Washington
University in 1980. He is the son-in-law of Monte Ross.                       

Ernest Clarke has been employed as the Company's Vice President - Government  
Programs since 1990.  His primary responsibility has been the development of  
custom test systems for organizations involved in government laser systems    
programs.  For over 20 years prior to joining Ultradata, Mr. Clarke was       
employed by McDonnell Douglas Corporation in a variety of positions.  When    
he left McDonnell Douglas, Mr. Clarke was its Laser Product Development       
Manager with responsibility to supervise over 40 engineers.  Mr. Clarke was   
awarded a Master of Science dgree in Electrical Engineering by Washington     
University in 1970.                                                           

Leonard Missler has served as Vice President - Software Development for the   
Company since 1990.  His primary responsibility has been the development of   
software for the Company's hand-held products.  For over 20 years prior to    
joining Ultradata, Mr. Missler was employed in software and electronics       
development and management by Microterm, Inc., Magpower, Magnavox, and        
Interface Technology.  At Microterm, his most recent employer before joining  
the Company, Mr. Missler was the Director of Operations.  Mr. Missler was     
awarded a Master of Science degree in Electrical Engineering by Washington    
University in 1970.                                                           

Duane Crofts joined the Company as Vice President - Advanced Products in 1994.
Prior to joining the Company, Mr. Crofts served for over five years as a      
Program Director with McDonnell Douglas Corporation.  In that role he was     
responsible for engineering management, production management, subcontract    
management, and program management.  Mr. Crofts most recently was manager of  
a multi-million dollar electro-optic development program.  Mr. Crofts was     
awarded a Bachelor of Science degree in Mechanical Engineering by the         
University of Missouri at Rolla.                                              

David Biernbaum joined the Company in 1997 as Vice President and Chief        
Operating Officer.  Prior to joining the Company, Mr. Biernbaum had twenty    
years experience in consumer products marketing, product development, sales   
management and finance.                                                       

Daniel B. Muehlemann joined the Company in October 1996 as Vice President of  
Sales.  Prior to joining the Company, Mr. Muehlemann served for five years    
as Senior Accounts Manager for Maxim Technologies, Inc.  In that position he  
developed and implemented key sales and marketing strategies to increase      
Maxim Technology's national client base.  Mr. Muehlemann holds a Bachelor's   
degree in Communications from Southwest Missouri State University.            

Steven Akre has served as a member of the Board of Directors and as the       
corporate counsel for the Company since it was founded.  Mr. Akre is an       
attorney-at-law, whose specialization is in taxation and corporate mergers    
and acquisitions.                                                             

Bruce L. Miller has been a Director of the Company since 1989.  Since 1992 he 
has been employed as Chairman of the Board of CoreSource, Inc., located in    
Chicago, Illinois, which is engaged in the business of organizing and         
managing health care programs for employees and providers.  From 1989 until   
1992, Mr. Miller was the President of Crabtree Capital Corp., a firm engaged  
in financial services.  Mr. Miller is presently a Director of Harris Bank     
Glencoe, which is a subsidiary of Harris Bank Corp. of Chicago.               

     John J. Clancy joined the Company in 1995 to serve as a member of the Board
of Directors.  Mr. Clancy has served on the Board of Directors at Cimplex     
Corporation, Inc. in San Jose, and Engineering Software Research &            
Development, Inc. in St. Louis.  Mr. Clancy was employed by McDonnell         
Douglas in a variety of positions progressing from Programmer, to Salesman,   
to Divisional President.  Mr. Clancy was awarded a Bachelor of Science;       
Chemical Engineering: University of Illinois; Master of Science: The Johns    
Hopkins University; Master of Business Administration; Washington University  
- St. Louis; Master of Liberal Arts; Washington University - St. Louis; Doctor
of Philosophy in History and Business; Washington University-St. Louis.       

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                               
None of the directors, officers or beneficial owners of more than 10% of the  
Company's common stock failed to file on a timely basis reports required      
during 1997 by Section 16(a) of the Exchange Act, except as follows:  each    
of the Company's five officers was late in filing a report on Form 4, each    
report containing one transaction.                                            

Item 10. EXECUTIVE COMPENSATION                                                 
The following table sets forth all compensation awarded to, earned by, or     
paid by the Company to the following persons for services rendered in all     
capacities to the Company during each of the fiscal years ended December 31,  
1997, 1996, and 1995:  (1) the Registrant's Chief Executive Officer, and (2)  
each of the other executive officers whose total salary and bonus for the     
fiscal year ended December 31, 1997 exceeded $100,000.                        

                      Annual
    Compensation             Long-Term Comp.
Name and  Position   Year    Salary     Bonus    Other(1)    Options            
Monte Ross,                    1997   $130,000   $     0  $  5,000        (2)   
President                        1996   $114,404   $ 14,000 $  3,000        (3) 
                                         1995   $105,000   $  2,000 $ 15,000 (4)

(1)    Includes five annual payments beginning in 1991, of $12,800 to a Rabbi 
trust for the benefit of Mr. Ross.  The trust was established in 1991 as      
deferred compensation for services rendered prior to 1991, for which he       
received $50,000 less than his base salary.                                   

(2)    During 1997 the Board's Stock Option Committee awarded Mr. Ross options
to purchase an additional 12,500 shares of Common Stock at an exercise price  
of $5.75.                                                                     

(3)    During 1996 the Board's Stock Option Committee awarded Mr. Ross options
to purchase an additional 15,000 shares of Common Stock at an exercise price  
of $7.39.  None of the options have been exercised.                           

(4)    During 1995 the Board's Stock Option Committee awarded Mr. Ross options
to purchase a total of 15,000 shares of Common Stock at an average price per  
share of $5.25.  None of the options have been exercised.                     

Employment Agreements;  Royalty Agreement                                       

    Messrs. Ross, Peterson and Clarke have individual employment agreements with
the Company beginning September 1, 1994.  Except as noted herein, the terms   
of the employment agreements are substantially identical.  The agreements,    
which were scheduled to terminate on October 31, 1997, were extended by       
action of the Board of Directors to October 31, 1999.  The agreements         
provide for base salaries, which are adjusted annually by the Board of        
Directors.  If the majority of the Board cannot agree as to a level of of     
salary adjustment, the salary will increase by 10% for Mr. Clark and          
Mr. Peterson and 5% for Mr. Ross.  The employment agreements restrict each    
officer from competing with the Company for one year after the termination    
of his employment unless that employee establishes that his employment by a   
competitor will not involve the use of any information which is considered    
confidential by the Company.                                                  

 Leonard Missler, Vice President - Software Development, has a Royalty Agreement
with the Company dated September 14, 1989.  The Agreement terminates on       
September 13, 2009.  Mr. Missler specifies in the Agreement that he will      
keep confidential all of the Company's information regarding its technology   
and products.  In exchange, the Agreement provides that the Company will pay  
Mr. Missler a royalty equal to 1% of net sales of the Company's ROAD WHIZ     
products and 1/2% of net sales of other products incorporating the ROAD WHIZ  
database. During the three year ended December 31, 1997, royalty expense      
totaling $116,480, $55,540, and $66,477 respectively were recognized.         

STOCK OPTION AWARDS                                                             

The following tables set forth certain information regarding the stock        
options acquired by the Company's Chief Executive Officer during the year     
ended December 31, 1997 and those options held by him on December 31, 1997.   

OPTION GRANTS IN CURRENT FISCAL YEAR                                          

                                                Percent     Potential Realizable
                                                 of Total       Value at Assumed
                                                Options          Annual Rates of
                        Number of       Granted                      Stock Price
                        Securities      to                          Appreciation
                        underlying      Employees       Exercise For Option Term
                        option           in Fiscal      Price         Expiration
  Name            Granted(#)    Year                ($/Sh)   Date         5% 10%
Monte Ross        12,500          24%             $5.75 12/24/02 $19,860 $45,200

AGGREGATED FISCAL YEAR OPTION VALUES                                            

                Number of Securities             Underlying Value of Unexercised
Unexerised Options at Fiscal        in-the-Money Options at   
Name  Year-End(#)                         Fiscal Year-End                 

Monte Ross                      57,50                                   $293,125

STOCK OPTION PLANS                                                            

The 1994 Stock Option Plan                                                    

    On September 28, 1994, the Board of Directors of the Company adopted and the
shareholders approved the Ultradata Systems, Inc. 1994 Stock Option Plan      
(the "Option Plan").  The Option Plan is designed to permit the Company to    
grant either incentive stock options under Section 422A of the Internal       
Revenue Code (the "Code") or non-qualified stock options.  Under the Option   
Plan, a Stock Option Committee (the "Option Committee") of the Board is       
authorized to grant options to purchase up to 175,000 shares of stock         
to key employees, officers, directors, and consultants of the Company.  The   
Option Committee administers the Option Plan and designates the optionees,    
the type of options to be granted (i.e., non-qualified or incentive stock     
options), the number of shares subject to the options, and the terms and      
conditions of each option.  The terms and conditions include the exercise     
price, date of grant, and date of exercise of each option.  An employee may,  
at the discretion of the Option Committee, be permitted to exercise an        
option and make payment by giving a personal note.                            

     Incentive stock options may only be granted to employees of the Company and
not to directors or consultants who are not so employed.  The exercise price  
for incentive stock options must be at least one hundred percent (100%) of    
the fair market value of the Common Stock as determined by the Option         
Committee on the date of grant.  All incentive stock options under the        
Option Plan must be granted within ten years from the date of adoption of     
the Option Plan and each option must be exercised, if at all, within five     
years of the date of grant.  In no event may any employee be given incentive  
stock options whereby more than $100,000 of options are able to be exercised  
for the first time in a single calendar year.  All incentive stock options    
must be exercised by an optionee within 30 days after termination of          
optionee's employment, unless such termination is as a result of death,       
disability, or retirement. In the event an optionee's employment is           
terminated as a result of death or disability, such optionee or his           
designated beneficiary shall be entitled to exercise any and all options      
for a period of six months after such termination.  If an optionee's          
employment is terminated as a result of retirement, the optionee shall be     
entitled to exercise his options for a period of three months following such  
termination.                                                                  

      Non-qualified stock options under the Option Plan are generally subject to
the same rules as discussed above.  Non-qualified stock options may, however, 
also be granted to directors and consultants, whether or not such             
individuals are employees of the Company.  The exercise price for             
non-qualified stock options may not be granted at less than eighty-five       
percent (85%) of the fair market value of the shares on the date of grant.    

The 1996 Stock Option Plan                                                    

The 1996 Plan is designed to permit the Company to grant either incentive     
stock options under Section 422A of the Internal Revenue Code(the"Code") or   
non-qualified stock options.  Under the 1996 Plan, a Stock Option Committee   
(the "Option Committee") of the Board is authorized to grant options to       
purchase up to 175,000 shares of stock to key employees, officers, directors  
and consultants of the Company.  The Option Committee administers the 1996    
Plan and designates the optionees, the type of options to be granted (i.e.    
non-qualified or incentive stock options), the number of shares subject to    
the options, and the terms and conditions of each option.  The terms and      
conditions include the exercise price, date of grant, and date of exercise    
of each option.  An employee may, at the discretion of the Option Committee,  
be permitted to exercise an option and make payment by giving a personal      
note.                                                                         

Incentive stock options may only be granted to employees of the Company and   
not to directors or consultants who are not so employed.  The exercise price  
for incentive stock options must be at least one hundred percent (100%) of    
the fair market value of the Common Stock as determined by the Option         
Committee on the date of grant.  All incentive stock options under the 1996   
Plan must be granted within ten years from the date of adoption of the        
Option Plan and each option must be exercised, if at all, within five years   
of the date of grant. In no event may any employee be given incentive stock   
options whereby more than $100,000 of options become exercisable for the      
first time in a single calendar year.  All incentive stock options must be    
exercised by an optionee within 30 days after termination of optionee's       
employment, unless such termination is as a result of death or disability,    
such optionee or his designated beneficiary shall be entitled to exercise     
any and all options for a period of six months after such termination.  If    
an optionee's employment is terminated as a result of retirement, the         
optionee shall be entitled to exercise his options for a period of three      
months following such termination.                                            

Non-qualified stock options under the 1996 Plan are generally subject to the  
same rules as descussed above.  Non-qualified stock options may, however,     
also be granted to directors and consultants, whether or not such             
individuals are employees of the Company.  The exercise price for non-        
qualified stock options may not be granted at less than eighty-five percent   
(85%) of the fair market value of the shares on the date of grant.            

     During 1997, the Company canceled incentive stock options to purchase
118,100 shares of Common Stock at excercise prices ranging from $5.75 to      
$7.39.  The same number of new options was issued at a price of $5.50.        

    During 1997 the Company issued additional incentive stock options to
purchase 12,500, 3,000, 25,000, and 51,500 shares of Common Stock at          
exercise prices of $6.75, $7.00, $6.88, and $5.75, respectively.  The         
following officers were recipients of options (other than those options       
which were canceled and reissued):                                            
        Number of            Average
Officer                      Shares               Exercise Price
        Monte Ross                                      12,500            $ 5.75
    Mark Peterson                            5,000                  5.75
        Ernest Clarke                            5,000                      5.75
        Leonard Missler                  2,500                              5.75
        Duane Crofts                              5,000                     5.75
        David Biernbaum                 27,500                              6.77
        Daniel Muehlemann                            5,000                  5.75

REMUNERATION OF DIRECTORS                                                       

     Prior to April 21, 1994, the Directors of the Company who were not officers
received 208 shares of Common Stock per meeting as compensation for their     
services.  That policy was terminated on April 21, 1994.  Outside Directors   
now receive $250 per meeting and are reimbursed for out-of-pocket expenses    
incurred on the Company's behalf.                                             

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         
      The following table sets forth the beneficial ownership of outstanding
shares of Common Stock of the Company as of March 13, 1998 by any person      
who, to the knowledge of the Company, owns beneficially more than 5% of the   
outstanding Common Stock, by all directors of the Company, and by the         
directors and officers of the Company as a group.  None of the persons        
identified below owns any securities of the Company other than the Common     
Stock listed below:                                                           

Name and                             Amount and                                 
Address of                         Nature of            Percentage              
Beneficial                        Beneficial            of Outstanding          
Owner (1)                        Ownership              Shares (6)              
Monte Ross(2)            598,500                17.54%                          
shares of               
record                    

Mark L. Peterson(3)      176,705                         5.17%                  
shares of                 
record                    

Ernest Clarke(4)          155,552           4.56%                               
shares of   
record      

Steven Akre(5)             3,496                   0.10%                        
shares of     
record        

Bruce Miller               2,872                   0.08%                        
shares of   
record      

John Clancy                                3,692                         0.11%  
                                             shares of
                                        record

Leonard Missler                      37,936                     1.11%           
                     shares of
record                        

Duane Crofts                           24,239                   0.71%           
                     shares of
record          

David Biernbaum                     27,500                      0.81%           
                     shares of
record                        

Daniel Muehlemann                               5,000                   0.15%   
shares of                     
                                              record

All officers and            1,035,492                  30.30%                   
directors as a group (10 persons)                                               

(1)     The address of each of these shareholders is c/o Ultradata Systems,     
Incorporated,  9375 Dielman Industrial Drive, St. Louis, Missouri 63132       

(2)     Includes 536,000 shares owned by the Monte Ross and Harriet J. Ross     
Living Trust.  Mr. Ross and his wife share investment control over the        
trust; they may revoke it or amend it at will; and they receive all income    
from the trust during the life of either of them.                             

(3)     Includes 134,387 shares owned by the Mark L. Peterson and Ryia Peterson 
Living Trust and 8,318 owned by Ryia Peterson.  Mr. Peterson and his wife     
share investment control over the trust; they may revoke it or amend it at    
will; and they receive all income from the trust during the life of either of 
them.                                                                         

(4)     Includes 130,852 shares owned jointly by Mr. Clarke with his wife.  Also
includes 2,080 shares owned by children residing with Mr. Clarke.             

(5)     Includes 3,120 shares owned by the G. Akre Irrevocable Trust, over which
Mr. Akre's wife has investment control.                                       
(6)     In determining the percentage of outstanding shares, all presently      
exercisable options owned by the shareholder   or the group are treated as    
having been exercised.                                                        

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         
       On May 8, 1987, the Monte Ross and Harriet Ross Living Trust (the "Ross
Trust") sold 93,582 shares of common stock to the Company for $100,000.       
The Company paid for the shares by issuing to Monte Ross, the Company's       
President, a promissory note in the principal amount of $100,000.  The note   
bore interest at 8% per annum and was payable in five equal installments of   
$20,000 plus accrued interest, commencing January 1, 1990.  Mr. Ross had the  
option on each installment date to convert the annual installment and accrued 
interest into 31,588 shares. He did not exercise the option on ony of the five
installment dates, nor did the Company make payments to him on the note.On    
February 22, 1994, the Board of Directors offered payment fo the total        
principal and accrued interest by issuing 157,941 shares of Common Stock. Mr. 
Ross accepted the offer. The Company has allocated these shares on its        
consolidated financila statements among the five years in whcih the options   
were exercisable.                                                             

       On September 17, 1994, the Board of Directors of the Company approved the
sale of 150,000 shares of Common Stock to the Company's three                 
officers/directors as follows:                                                
                                             Shares                  Notes
Monte Ross                      100,000         $  187,500      
Mark L. Peterson               25,000   $   46,875              
Ernest Clarke             25,000          $   46,875            
TOTAL                     150,000         $  281,250                

       The purchase price for the shares was $1.875 per share, which was paid by
each officer/director in the form of a promissory note bearing interest at    
6% per annum.  The principal amount of each note, plus accrued interest, is   
payable on July 1, 1999.                                                      

    In August and September of 1994 nine employees of the Company, including all
five of its officers, exercised incentive stock options and paid the          
purchase price of $1.20 per share by delivering to the Company promissory     
notes.  The promissory notes bear interest at 6% per year and are payable     
upon the earlier of the date on which the employee's employment by the        
Company is terminated or the date on which the employee sells the shares.     
The number of shares so purchased and the principal amount of the notes       
given were as follows:                                                        

Employee                                Shares             Notes
Monte Ross                      55,734          $ 66,500        
Mark Peterson           13,725          $ 16,750                
Ernest Clarke           13,725          $ 16,750                
Leonard Missler         17,676          $ 21,250                
Duane Crofts                  2,080             $  2,500        
Other Employees            4,583                $  5,500        
TOTAL                             107,523               $129,250

       The Company has an agreement with Leonard Missler, its Vice President -
Software Development, under which, through September 13, 2009, it pays Mr.    
Missler a 1% royalty on all net sales of ROAD WHIZ products and 1/2% on net   
sales of other products incorporating the ROAD WHIZ database.  During the     
years ended December 31, 1997, 1996,  and 1995, the Company paid royalties    
to Mr. Missler of $116,480,  $55,540, and $66,477, respectively.              

      Steven H. Akre, Esquire, a member of the Company's Board of Directors, has
performed legal services as general counsel for the Company since its         
inception.  During 1997, 1996 and 1995, Mr. Akre was paid $44,557, $20,219    
and  $21,453, respectively, for legal services.                               

Item 13. EXHIBITS, LIST, AND REPORTS                                            
(a) Consolidated Financial Statements                                           
List of Consolidated Financial Statements Under Item 7 of this  
Report:                                                         

Independent Auditors.Report                                     

Consolidated Balance Sheets as of December 31, 1997 and 1996.   

  Consolidated Statements of Operations for each of the years in the
three-year period ended December 31, 1997.                                    

       Consolidated Statements of Stockholders' Equuity for each of the years in
the three-year period ended December 31, 1997.                                

  Consolidated Statements of Cash Flows for each of the years in the
three-year period ended December 31, 1997.                                    

     Notes to Consolidated Financial Statements for the years ended December 31,
1997 and 1996.                                                                

FINANCIAL STATEMENT SCHEDULE                                                    

(b)  Exhibits Index AND REPORTS ON FORM 8-k                                   
Regulation S-B                                                      

Exhibit Number                                                      

3-a.        Articles of Incorporation, and 1989 amendment. (1)                  
3-a.(1)  Amendment to Articles of Incorporation dated March 4, 1991,            
March 22, 1994, and November 18, 1994. (1)      
3-a.(2)  Certification of Correction of Articles of Incorporation. (1)          
3-b.        By-laws. (1)                                                        
4-a.        Specimen of Common Stock Certificate. (1)                           
4-b.        Form of Warrant Agreement. (1)                                      
4-b.     (1)    Specimen of Class A Warrant. (1)                                
10-a.           Lease dated May 23, 1990, as amended on November 31, 1993, for  
    premises at 9375 Dielman Industrial Drive, St. Louis, Missouri.(1)
10-a.    (1)    Lease Addendum dated October 17, 1995, for premises at 9375     
Dielman Industrial Drive, St. Louis, Missouri.(1)             
10-b.      1994 Stock Option Plan.(1)                                           
10-c.           Employment Agreement with Monte Ross.(1)                        
10-d.           Employment Agreement with Mark L. Peterson.(1)                  
10-e.      Employment Agreement with Ernest Clarke.(1)                          
10-f.      Royalty Agreement dated September 14, 1989, between the Company and  
Leonard Missler.(1)                                           
10-f.(1)     Modification Agreement dated November 4, 1995, to Royalty Agreement
         dated September 14, 1989,   between the Company and Leonard Missler.(1)
10-g.        Promissory Note and Security Agreement dated March 4, 1994, between
the Company and The Boatman's National Bank of  St. Louis.(1) 
10-h.          Letter of Agreement dated March 16, 1992, between the Company and
Trailer Life Enterprises.(1)                                  
10-i.         Agreements dated March 18, 1994, April 25, 1994, and May 23, 1994,
among the Company, Howard Kenig, and POIS, Inc.(1)            
10-j.        Promissory Note and Security Agreement dated April 1, 1995, between
       the Company and the Boatmen's National Bank of St. Louis Missouri.(1)
10-k          Licensing Agreement between Kiniticom, Inc., and the Company dated
March 15, 1996 (3)                                            
10-l           Credit Agreement-Between Boatmen's National Bank of St. Louis and
the Company, dated May 1, 1996. (3)                           
10-m           Call for Redemption of Class A Warrants on Form 8-K, dated August
6, 1996. (3)                                                  
10-n        Letter of agreement dated September 17, 1996 between the Company and
TravRoute Software (3)                                        
10-o          Extended employment agreement as of September 30, 1997 between the
Company and Monte Ross (2)                                    
10-p          Extended employment agreement as of September 30, 1997 between the
Company and Mark L. Peterson (2)                              
10-q          Extended employment agreement as of September 30, 1997 between the
Company and Ernest Clarke (2)                                 
10-r         Employment Agreement as of October 13, 1997 between the Company and
David Biernbaum (2)                                           
11.             Computation of per share earnings.(2)                           
12.      Subsidiaries - POIS, Inc.                                              
27.             Article 27 Financial Data Schedule                              

1) Previously filed as an exhibit to the Company's Registration Statement on    
Form SB-2 (33-85218 C) and incorporated herein by reference.              

(2) Included herewith.                                                          

(3) Previously filed.                                                           

(c)     Reports on Form 8-K                                                     
None during the fourth quarter                                  

INDEPENDENT AUDITORS' REPORT                                                    

The Board of Directors and Stockholders                                       
Ultradata Systems, Incorporated:                                              

We have audited the accompanying consolidated balance sheets of Ultradata     
Systems, Incorporated and subsidiary (the Company) as of December 31, 1997    
and 1996 and the related statements of operations, stockholders' equity, and  
cash flows for each of the years in the three-year period ended December 31,  
1997.  These consolidated financial statements are the responsibility of the  
Company's management.  Our responsibility is to express an opinion on these   
consolidated financial statements based on our audits.                        

We conducted our audits in accordance with generally accepted auditing        
standards. Those standards require that we plan and perform the audit to      
obtain reasonable assurance about whether the financial statements are free   
or material misstatement.  An audit includes examining, on a test basis,      
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and           
significant estimates made by management, as well as evaluating the overall   
financial statement presentation.  We believe that our audits provide a       
reasonable basis for our opinion.                                             

In our opinion, the consolidated financial statements referred to above       
present fairly, in all material respects, the financial position of           
Ultradata Systems, Incorporated and subsidiary as of December 31, 1997 and    
1996 and the results of their operations and their cash flows for each of     
the years in the three-year period ended December 31, 1997 in conformity      
with generally accepted accounting principles.                                

March 16, 1998                                                                

ULTRADATA SYSTEMS, INCORPORATED AND SUBSIDIARY                                  
Consolidated Balance Sheets                                                     
December 31, 1997 and 1996                                                      

Assets                                                                 1997 1996
Current assets:                                                                 
        Cash and cash equivalents                          $ 5,075,968 3,960,577
Trade accounts receivable, net of allowance for doubtful        
accounts of $34,190 and $16,644 at December 31,1997             
  and 1996, respectively                                     1,672,041 4,608,285
        Costs and estimated earnings on long-term contracts      528,620 438,670
        Inventories                                          3,504,835 3,289,453
        Deferred tax assets                                        63,815 62,600
        Prepaid expenses and other      current assets           700,900 641,376

Total current assets                                       11,546,181 13,000,961

Property and equipment, net                                      784,906 642,245
Deferred compensation trust                                       126,740 91,689
Other assets                                                      340,867 43,968

Total assets                                             $ 12,798,694 13,778,863

Liabilities and Stockholders' Equity                                            

Current liabilities:                                                            
        Accounts payable                                       509,338 1,374,346
        Accrued expenses and other liabilities                   429,263 865,263

Total current liabilities                                      938,601 2,239,609

Deferred rent                                                       16,172 8,708
Deferred compensation liability                                  126,740  91,689
Deferred tax liabilities                                           57,612 23,330

Total liabilities                                            1,139,125 2,363,336

Commitments and contingencies                                                - -
Minority interest                                                            - -

Stockholders' equity:                                                           
Common stock, $.01 par value; 10,000,000 shares authorized;                     
3,410,000 and 3,403,500 shares issued and                                     
outstanding at December 31, 1997 and 1996, respectively    34,100     34,035  
        Additional paid-in capital                           9,799,936 9,763,001
        Retained earnings                                    2,366,095 2,028,991
        Treasury stock                                               (130,062) -
        Notes receivable issued for purchase of common stock (410,500) (410,500)

Total stockholders' equity                                 11,659,569 11,415,527

Total liabilities and stockholders' equity            $12,798,694  13,778,863   

See accompanying notes to consolidated financial statements.                    

ULTRADATA SYSTEMS, INCORPORATED AND SUBSIDIARY                                  

Consolidated Statements of Operations                                           
Years ended December 31, 1997, 1996, and 1995                                   

                                                1997                   1996 1995
Net sales:                                                                      
        Consumer products                       $ 13,253,980 8,282,436 9,437,239
        Contract                                         563,251 810,484 675,465

Total net sales                                   13,817,231 9,092,920 10,112,70

Cost of sales:                                                                  
        Consumer products                          5,365,307 3,496,215 4,659,406
        Contract                                         292,218 380,207 316,572

Total cost of sales                                5,657,525 3,876,422 4,975,978

Gross profit                                       8,159,706 5,216,498 5,136,726

Selling expense                                    4,540,359 2,297,307 1,348,780

General and administrative      expense            2,327,498 1,725,720 1,131,796

Research and development expense            1,022,095   1,001,646     556,213   

Operating profit                                       269,754 191,825 2,099,937

Other income (expense):                                                         
        Interest expense                                (1,155) (3,428) (13,743)
        Interest income                                  225,566 120,693 142,359
        Royalty income                                               570 503 114
        Other, net                                       594    (4,448) (10,019)

Total other income, net                              225,575     113,320 118,711

Income before income tax expense              495,329     305,145   2,218,648   

Income tax expense                                        158,225 97,008 836,746

Net income                                           $ 337,104 208,137 1,381,902

Earnings per share:                                                             
        Basic                                                   $ 0.10 0.08 0.60

        Diluted                                                 $ 0.10 0.08 0.54

See accompanying notes to consolidated financial statements.                    

ULTRADATA SYSTEMS, INCORPORATED AND SUBSIDIARY                                  

Consolidated Statements of Stockholders' Equity                                 
Years ended December 31, 1997, 1996 and 1995                                    

                                                                           Notes
                                                                      receivable
                                        Unrealized                        issued
                Additional      loss on                          for purch Total
Common   paid-in        marketable     Retained Treasury of commons stockholders
stock      capital      securities      earnings stock     stock          equity

Balance at December 31, 1994                                                    
$19,591 2,124,879    (104)     438,952             (413,250)  2,170,068         
Purchase and retirement of 10,400 shares of common stock                        
                     (104)     (12,396)                                 (12,500)
Net proceeds of initial public offering of 402,500 shares                       
  4,025 1,488,547                                                      1,492,572
Net income                                                                      
                                                  1,381,902            1,381,902
Decrease in unrealized loss on marketable securities                            
                                    104                                      104
Repayment of notes receivable issued for purchase of common stock               
                                                                     2,750 2,750
Balance at December 31, 1995                                                    
23,512 3,601,030                 1,820,854              (410,500)  5,034,896  

Exercise of warrants for 1,051,987 shares                                       
 10,520 6,160,099                                                      6,170,619
Exercise of stock options for 300 shares                                        
             3     1,872                                                   1,875
Net income                                                                      
                                                                 208,137 208,137

Balance at December 31, 1996                                                    
 34,035 9,763,001                         2,028,991         (410,500) 11,415,527
Exercise of stock options for 6,500 shares                                      
     65    36,935                                                         37,000
Purchase of 23,000 shares of treasury stock                                     
                                                             (130,062) (130,062)
Net income                                                                      
                                                                 337,104 337,104

Balance at December 31, 1997                                                    
$34,100 9,799,936                   2,366,095  (130,062) (410,500)11,659,569    

See accompanying notes to consolidated financial statements.                    

ULTRADATA SYSTEMS, INCORPORATED AND SUBSIDIARY                                  

Consolidated Statements of Cash Flows                                           
Years ended December 31, 1997, 1996 and 1995                                    

                                                                  1997 1996 1995

Cash flows from operating activities                                            
        Net income                                   $ 337,104 208,137 1,381,902
Adjustments to reconcile net income to net cash provided by     
(used in) operating activities:                                 
Depreciation and amortization                   
                                                          209,301 101,060 62,841
Deferred income tax provision                   
                                                          33,067 (12,815) 14,545
Discount accretion                              
                                                                        (52,960)
Increase (decrease) in cash due to changes in operating assets  
and liabilities:                                                
Trade accounts receivable, net                  
                                                2,936,244 (1,814,031)(1,741,044)
   Costs and estimated earnings on long-term contracts
                                                      (89,950) 173,647 (612,317)
                Inventories                      (215,382) (1,334,869) (514,411)
Prepaid expenses and other current assets       
                                                     (59,526) (518,524) (91,843)
                Other assets                           (296,899) (26,430) 10,740
                Accounts payable                     (865,008) 701,130 (156,631)
Accrued expenses and other liabilities          
                                                        (436,000) 276,531 32,829
                Deferred rent                                7,464 7,464 (6,137)

Net cash provided by (used in) operating activities             
                                               1,560,415 (2,238,700) (1,672,486)

Cash flows from investing activities:                                           
Purchase of marketable securities               
                                                                 - - (2,498,189)
Sale of marketable securities                   
                                                -              800,000 1,852,917
                Capital expenditures               (351,962) (340,282) (274,809)

Net cash (used in) provided by investing activities                             
                                                     (351,962) 459,718 (920,081)

Cash flows from financing activities:                                           
Proceeds from line of credit                                    
                                                        -              - 765,500
Repayments of bridge loan financing                             
                                                                   - - (135,000)
Principal payments on line of credit                            
                                                           - (448,000) (317,500)
        Proceeds from sale of stock                       37,000     6,172,494 -
        Repurchase of stock                             (130,062)     - (12,500)
Net proceeds from initial public offering                       
                                                                   - - 1,492,572
Deferred offering costs                         -            -         183,208  
Proceeds from repayment of notes                                        
 receivable to purchase common stock                                 2,750
        Increase in deferred compensation trust      (35,051)   (8,525) (28,997)
        Increase in deferred compensation liability          35,051 8,525 21,049

Net cash (used in) provided by financing activities                             
                                                    (93,062) 5,724,494 1,971,082

Net increase (decrease) in cash and cash equivalents                            
                                                   1,115,391 3,945,512 (621,485)

Cash and cash equivalents at beginning of year                                  
                                                        3,960,577 15,065 636,550

Cash and cash equivalents at end of year                                        
                                                    $ 5,075,968 3,960,577 15,065

Supplemental disclosure of cash flow information:                               

Cash paid during the year for interest                          
                                                            $ 1,184 5,440 15,761
Cash paid during the year for taxes          275,569       341,389   635,998  

See accompanying notes to consolidated financial statements.                    

(1) Summary of Significant Accounting Policies                                  

(a)     Description of Business                                 

       The principal business activity of Ultradata Systems, Incorporated (the
Company) is the design, manufacture, and sale of hand-held electronic         
information products.  In addition, the Company performs laser system         
development and manufacturing under certain contracts with the United States  
government.                                                                   

(b)     Basis of Presentation                                   

       The consolidated financial statements include the accounts of the Company
and its previously majority-owned subsidiary, POIS, Inc. (POIS).              
During the fourth quarter of 1997, the Company acquired the remaining 19%     
of POIS, Inc. As a result of operating losses incurred by POIS, the           
consolidated financial statements include 100% of the POIS accounts,          
as the minority interest did not have the ability to absorb these losses.     
All significant intercompany balances and transactions have been eliminated   
in consolidation.                                                             

(c)     Use of Estimates                                        

        Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of     
contingent assets and liabilities to prepare these financial statements in    
conformity with generally accepted accounting principles.  Actual results     
could differ from these estimates.                                            

(d)     Cash and Cash Equivalents                               

        For financial statement presentation purposes, cash and cash equivalents
include deposits with initial maturities of less than three months,           
including money market accounts with investments in marketable securities.    

(e)     Accounting for Long-term Contracts                      

   Revenue under the Company's long-term contract is recognized on the
percentage of completion method based upon incurred costs compared to total   
estimated costs under the contract.  Revisions to assumptions and estimates,  
primarily in contract value and estimated costs, used for recording sales     
and earnings are reflected in the accounting period in which the facts        
become known.                                                                 

      Costs and estimated earnings on long-term contracts represent unbilled
revenues, including accrued profits on long-term contracts accounted for      
under the percentage-of-completion method.                                    

(f)     Inventories                                             

       Inventories are valued at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.                                  

(g)     Property and Equipment                                  

       Property and equipment are stated at cost.  Maintenance and repairs are
expensed as incurred.  Major improvements which materially extend useful      
lives are capitalized.  Depreciation is provided on the straight-line basis   
over the estimated useful lives of the assets, generally five years.          
Leasehold improvements are amortized over the shorter of the term of the      
related lease or its useful life.                                             

(h)     Operating Lease                                         

      Lease expense on the corporate facilities is recognized on a straight-line
basis over the primary term of the lease.  The lease provides for             
accelerating rent over the lease term.  Accordingly, deferred rent has been   
recorded in the Company's consolidated balance sheet.                         

(i)     Deferred Compensation Trust                             

     Deferred compensation trust represents contributions made by the Company to
a Rabbi trust plus the related dividend and interest income earned on         
investments.  The amounts are restricted from use for operation purposes and  
investment decisions are made by the trust beneficiary.  The deferred         
compensation trust is recorded at its fair value.                             

(j)     Revenue Recognition                                     

     Revenue is recognized upon shipment of consumer products.  Revenue is
recognized on the percentage-of-completion method for contracts.              
Cost of sales includes the material and other related costs.                  

(k)     Other Assets                                            

Included in other assets are $290,635 of capitalized software development     
costs.  Software development costs are expensed as incurred until             
technological feasibility is achieved, after which they are capitalized       
on a product-by-product basis.  Amortization of capitalized software          
development costs will begin when the product is available for general        
release to customers.  For the period ended December 31, 1997, no             
amortization was recognized, as the product has not yet been released.        

(l)     Royalty Expense                                         

    Royalty expense is recognized on a pro rata basis as units are sold.

(m)     Income Taxes                                            

     Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement      
carrying amounts of existing assets and liabilities and their respective      
tax bases and operating loss and tax credit carryforwards.  Deferred tax      
assets and liabilities are measured using enacted tax rates expected to       
apply to taxable income in the years in which those temporary differences     
are expected to be recovered or settled.  The effect on deferred tax assets   
and liabilities of a change in tax rate is recognized in the period that      
includes the enactment date.                                                    

(n)     Earnings Per Share                                                      

Effective December 31, 1997, the company adopted Statement of Financial       
Accounting Standards (SFAS) No.128, "Earnings per Share."  SFAS No. 128       
requires the presentation of basic and diluted earnings per share for 1997    
interim and annual periods, and restatement of all prior periods presented.   
Restated earnings per share information for 1997 and 1996 interim periods     
are contained in note 19,  "Unaudited Quarterly Financial Information".       

(o)     Fair Value of Financial Instruments                                     

      The Company discloses estimated fair values for its financial instruments.
A financial instrument is defined as cash or a contract that imposes on one   
entity a contractual obligation to deliver cash or another financial          
 instrument to a second entity, and convesys to that second entity the rieght to
receive cash or another financial instrument from the first entity.           

(p)     Stock-Based Compensation                                

        SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but
does not require companies to record compensation costs for stock-based       
employee compensation at fair value.  The Company has chosen to continue to   
account for stock-based compensation using the intrinsic value method         
prescribed in Accounting Principles Board Opinion (APB) No. 25, "Accounting   
for Stock Issued to Employees."                                               

(q)     Reclassifications                                       

       Certain 1996 and 1995 balances have been reclassified to conform with the
1997 presentation.                                                            

(2)    Advertising                                                            

       The Company expenses the production costs of advertising the first time
advertising takes place, except for direct response advertising, which is     
capitalized and amortized over its expected period of future benefits.        

      At December 31, 1997 and 1996, $ 191,814 and $510,521 of advertising costs
were reported as an asset.  Included in the 1997 assets is $103,187 which     
represents capitalized costs of direct-response advertising.                  
Direct-response advertising consists primarily of credit-card inserts that    
include order coupons for the Company's products.  The capitalized costs of   
the advertising are amortized on a declining basis over the four-month        
period following the mailings.  Advertising expense totaled $2,066,472,       
$1,773,454 and $942,402 for fiscal years 1997, 1996, and 1995, respectively.  

(3)    Inventories                                                            

   Inventories at December 31, 1997 and 1996 consist of the following:

                                                                1997        1996

        Raw materials                   $ 1,474,792                   $1,783,741
Work in process             170,369                   130,876   
     Finished goods                 1,859,674                    1,374,836
                                                        $ 3,504,835  $ 3,289,453

(4)    Property and Equipment                                                 

  Property and equipment at December 31, 1997 and 1996 consist of the following:

                                                                       1997 1996
        Research and development equipment                $  147,881   $ 127,144
        Production equipment                                       44,501 44,501
        Tooling and test equipment                               689,124 398,389
        Office furniture and equipment                   275,973         212,344
        Sales displays                                             69,011 59,548
        Tooling in process                                              - 57,569
        Leasehold improvements                                    109,908 84,941

                                           1,336,398             984,436
Less accumulated depreciation                                   
                and amortization                                 551,492 342,191
                                                             $ 784,906 $ 642,245

    Depreciation and amortization expense for the years ended December 31, 1997,
1996, and 1995 totaled $209,301, $101,060, and $62,841, respectively.         

(5)    Leases                                                                 

     The Company revised and expanded its corporate facilities lease as of
November 1, 1995.  The lease is an operating lease which expires October 31,  
2001.  The lease is cancelable after October 1998.  The Company pays monthly  
rent plus 31% of all building expenses.  Rental expense totaled               
approximately $120,100,  $117,300, and  $49,300 for the years ended           
December 31, 1997, 1996, and 1995, respectively.                              

     Future minimum lease payments and the related totals expensed for financial
reporting under the operating lease consist of the following:                 

                                                                            Rent
                                                              Cash expense to be
                                                              Payment recognized

Year ending December 31:                                        
                                1998                            $  94,544 99,520
                                1999                              106,984 99,520
                                2000                              106,984 99,520
                                2001                               89,153 82,933
                                                              $  397,665 381,493

(6)    Accrued Expenses and Other Liabilities                                 

    Accrued expenses and other liabilities at December 31, 1997 and 1996 consist
of the following:                                                             

                                                                       1997 1996

Accrued sales commissions and royalties $   90,003      $ 95,119
        Accrued advertising                                       51,850 433,811
        Income taxes payable                                      27,278 173,637
        Other                                                    260,132 162,696
                                                              $ 429,263 $865,263

(7)    Deferred Compensation                                                  

    Deferred compensation represents the market value of investments made by the
Company in conjunction with a deferred compensation arrangement with the      
Company's President for services provided prior to 1991.  Five annual         
payments of $12,800 were paid through December 31, 1995 to a Rabbi trust for  
the benefit of the Company's President (see note 1).                          

(8)     Line of Credit                                                          

    On March 4, 1994, the Company entered into a revolving line of credit with a
commercial bank which requires monthly interest payments at the prime rate    
(8.5 %, and 8.25% at December 31, 1997 and 1996, respectively) on             
outstanding borrowings. The line of credit totaled $2,000,000 at December     
31, 1997 and 1996. There were no outstanding borrowings at December 31, 1997  
or 1996.  The line of credit is unsecured and expires May 1, 1998.            
Management anticipates renewing the line of credit prior to that time.        

(9)     Initial Public Offering and Subsequent Warrant Conversion               

 Effective on February 7, 1995, the Company completed an initial public offering
of securities. The proceeds, net of underwriting fees and offering expenses,  
from the aggregate sale of 402,500 shares of common stock and 402,500         
redeemable Class A warrants were $1,492,572.  Each Class A warrant permitted  
the holder to purchase one share of common stock for $6.00 from January 31,   
1996 through January 30, 1988.  An additional 600,000 Class A warrants were   
sold to the public by certain selling security holders at that time.          

       During 1996, the Class A warrants were converted into 1,051,987 shares of
common stock, including 1,022,887 shares which were converted in the fourth   
quarter as a result of the Company calling for the redemption of all of its   
outstanding warrants, including underwriters' warrants, at a redemption       
value of $0.05 per warrant.  Net proceeds totaled $6,172,494 after deducting  
expenses totaling $135,603.                                                   

(10)    Notes Receivable Issued for Purchase of Common Stock                    

        Notes receivable issued for purchase of common stock represent unsecured
advances made by the Company to various employees for stock options           
exercised.  The notes bear interest at 6% per annum and are due, together     
with accrued interest, on demand on either the termination of employment or   
the sale of underlying stock, whichever comes first.                          

(11)    Earnings Per Share                                                      

A reconciliation of the numerator and denominator of the earnings per share   
calculations is provided for all periods presented.  The numerator for basic  
and diluted earnings per share is net income for all periods presented.  The  
denominator for basic and diluted earnings per share for 1997, 1996 and 1995  
follows:                                                                      

                                                                  1997 1996 1995
Weighted average shares used for basic earnings per share                       
                                         3,400,967   2,717,837   2,308,945
Effect of dilutive securities:                                                  
        Warrants                                                     - - 214,725
        Stock Options                                       24,646 55,402 22,022

Weighted average shares used for diluted earnings per share                     
                                         3,425,613   2,773,239   2,545,692

Options to purchase 102,000 shares of common stock at prices ranging from     
$6.75 to $7.39 per share were outstanding during 1997 but were not included   
in the computation of diluted earnings per share because the options'         
exercise price was greater than average market price of the common shares.    

(12)    Income Taxes                                                            

       Income tax expense (benefit) for the years ended December 31, 1997, 1996,
and 1995 consists of:                                                         
                                                                            1997
                                                          Current Deferred Total
Federal                                                  $100,446 29,922 130,368
State                                                      $ 24,712 3,145 27,857

                                                         $125,158 33,067 158,225

                                                                            1996
                                                          Current Deferred Total
Federal                                                 $ 90,784 (11,466) 79,318
State                                                      19,039 (1,349) 17,690

                                                       $ 109,823 (12,815) 97,008

                                                                            1995
                                                          Current Deferred Total
Federal                                                  $755,277 13,340 768,617
State                                                        66,924 1,205 68,129
                                                         $822,201 14,545 836,746

        Income tax expense for the years ended December 31, 1997, 1996, and 1995
differed from the amounts computed by applying the statutory U.S. federal     
corporate income tax rate of 34% to income before income tax expense as a     
result of the following:                                                      

                                                       1997         1996    1995

Expected income tax expense                            $ 168,412 103,749 754,340
Increase (decrease) in income taxes                                           
resulting from:                                                               
State income taxes,net of Federal Benefit:                      
                                                     18,386   11,675    44,966
Nondeductible expenses for federal income tax purpose           
                                                            13,995 15,100 65,195
Research and experimental credits                               
                                                       (25,589) (33,147)(27,755)
        Other, net                                              (16,979) (369) -
                                                        $ 158,225 97,008 836,746

      The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997 and  
1996:                                                                         

                                               1997       1996
Deferred tax assets:                                            
        Capital loss carryforwards                                 $ 6,664 6,664
Accounts receivable, principally due to                         
    accrual for financial reporting purposes             12,992   16,450
Inventories, principally due to additional                      
costs inventoried for tax purposes                              
     pursuant to the Tax Reform Act of 1986                32,936   31,316
        Other                                                  11,223      8,170
        Total deferred tax assets                                $ 63,815 62,600

Deferred tax liabilities:                                       
        Prepaid advertising                                         $ (39,211) -
Property, plant and equipment, principally      
        due to differences in depreciation basis               (18,401) (23,330)
      Total deferred tax liabilities                     $ (57,612) (23,330)
Net deferred tax assets                            $   6,203   39,270           

Management of the Company believes the deferred tax assets will more likely   
than not be realized and, therefore, no valuation allowance has been          
recorded at December 31, 1997 or 1996.                                        

(13)    Employee Benefit Plans                                                  

(a)     Simplified Employee Pension Plan                        

     The Company maintains a simplified employee pension plan covering all
full-time employees.  Subject to approval by the Board of Directors, the      
Company matches employee contributions up to 3% of the compensation paid to   
participating employees, as defined by the plan.  Employees may contribute    
up to 12% of their compensation.  Expense attributable to Company             
contributions totaled $33,030, $27,546 and  $17,848, during the years ended   
December 31, 1997, 1996, and 1995, respectively.                              

(b)     Incentive Stock Option Plans                            

       At December 31, 1997, the Company has two fixed stock option plans, which
are described below.  The Company applies APB Opinion No. 25 and related      
interpretations in accounting for its plans.  Accordingly, no                 
compensation cost has been recognized for its fixed stock option plans.  Had  
compensation cost for the Company's two fixed stock option plans been         
determined consistent with SFAS No. 123, the Company's net income and         
earnings per share would have been reduced to the pro forma amounts           
indicated below:                                                              

                                                                  1997 1996 1995

Net income                                                                      
                As reported                      $ 337,104 $ 208,137 $ 1,381,902
         Pro forma                               $ 115,127 $ 109,993 $ 1,179,853

Basic earnings      As reported         $  0.10     $ 0.08         $ 0.60       
per share                Pro forma                $  0.03     $ 0.04     $ 0.51 

Diluted            As reported          $  0.10     $ 0.08         $ 0.54       
earnings per share Pro forma              $  0.03           $ 0.04        $ 0.46

     Under the 1994 Incentive Stock Option Plan, the Company may grant incentive
stock options to its employees, officers, directors, and consultants of the   
Company to purchase up to 175,000 shares of common stock.  Under the 1996     
Incentive Stock Option Plan the Company may grant incentive stock options     
to its employees, officers, directors, and consultants of the Company to      
purchase up to 175,000 shares of common stock.  Under both plans, the         
exercise price of each option equals the market price of the Company stock    
on the date of grant, and the options' maximum term is five years.  Options   
are granted at various times and are exercisable immediately.                 

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average    
assumptions used for grants in 1997, 1996 and 1995, respectively:  dividend   
yield of zero for all years; expected volatility of 52.3%, 58.6% and 47.3%;   
risk-free interest rates of 5.70%, 6.42% and 6.00%; expected lives of five    
years for both plans.                                                         

     A summary of the status of the Company's two fixed stock option plans as of
December 31, 1997, 1996, and 1995 and changes during the years then ended is  
presented below:                                                              

The following table summarizes information about fixed stock options          
outstanding at December 31, 1997                                              

                          1997             1996           1995
                                   Weighted         Weighted        Weighted
                                  average          average         average
                                   exercise         exercise        exercise
                      Shares    price    Shares  price    Shares price

Outstanding at beginning of year                                              
                       215,692    $ 6.26  164,492  $ 5.91     -        -
Granted                   210,100    $ 5.82   51,500  $ 7.39 164,992  $ 5.91  
Exercised                  (6,500)   $ 5.69     (300) $ 6.25     -        -   
Forfeited                (118,100)   $ 6.26     -        -      (500) $ 5.75  
Outstanding at end of year                                                    
                        300,792    $ 5.85   215,692 $ 6.26  164,492 $ 5.91

Weighted average fair value                                                     
of options granted to                                                       
employees during the year   $ 3.02               $ 3.88          $2.91      

         Options outstanding and exercisable

Number            Weighted average    
 Range of     outstanding at    remaining         Weighted average
exercise prices December 31, 1997  contractual life  exercise price     

$5.00 - $5.99      209,600            4.2 years            $ 5.48       
$6.00 - $6.99       78,192            3.8 years            $ 6.61       
$7.00 - $7.99       13,000            4.0 years            $ 7.30       

            300,792            4.1 years            $ 5.85

(14)    Commitments and Contingencies                                           

      On September 14, 1989, the Company entered a royalty agreement relating to
its ROAD WHIZ product.  After 20,000 ROAD WHIZ units are sold, the agreement  
provides for a 1% royalty payment on net sales of the ROAD WHIZ  product and  
1/2% on the Company's other products which incorporate the ROAD WHIZ          
database.  Royalty payments are made quarterly until September 13, 2009.      
During the years ended December 31, 1997, 1996, and 1995, royalty expense     
totaled $116,480, $55,540 and $66,477, respectively.                          

       On October 17, 1994, the Company entered into a royalty agreement for the
use of a database for its GREENSFINDER product.  The agreement provides for   
an initial payment of $24,000, representing the royalty payment for the       
first 6,000 GREENSFINDER units sold.  After 6,000 units are sold, the         
royalty fee will be 10% of the net sales price as defined in the agreement.   
In addition, the Company will pay a royalty fee of 20% of the net sales       
price as defined in the agreement for GREENSFINDER upgrades.  The agreement   
is valid for five years. The Company is amortizing the initial payment on a   
pro rata basis over 6,000 units sold, not to exceed five years. During the    
years ended December 31, 1997, 1996, and 1995, royalty expense totaling       
$9,665, $9,317, and $16,352, respectively were recognized.                    

(15)    Related-party Transactions                                              

    On May 23, 1994, the POIS joint venture agreement was modified, resulting in
an 81% ownership for the Company.  In addition to his salary, Mr. Kenig will  
receive a commission from POIS equal to 5% of the first $1 million of POIS's  
net sales, 2% of its next $9 million of net sales, and 4% of its net          
earnings in excess of $250,000.  Commissions of $25,583 and $14,073 were      
paid to Mr. Kenig during 1997 and 1996 respectively.  No commissions were     
paid to Mr. Kenig during 1995.  As of December 31, 1997 the Company acquired  
the remaining 19% of POIS, Inc.                                               

(16)    Significant Customer                                                    

    For the year ended December 31, 1997, the company relied on one customer for
approximately 52.1% of consumer product sales. Accounts receivable from that  
customer totaled $335,198 at December 31, 1997.                               

For the year ended December 31, 1996, the Company relied on one customer for  
approximately 21% of consumer product sales.  Accounts receivable from that   
customer totaled $1,657,571 at December 31, 1996.                             

    For the year ended December 31, 1995, the Company relied on one customer for
approximately 47% of consumer product sales.  Accounts receivable from that   
customer totaled $2,007,388 at December 31, 1995.                             

(17)    Disclosure About the Fair Value of Financial Instruments                

    For cash and cash equivalents, marketable securities, trade accounts
receivable, costs and estimated earnings on long-term contracts, prepaid      
expenses and other current assets, accounts payable, and accrued expenses     
and other liabilities, the carrying amount approximates fair value because    
of the short-term maturity of these instruments.                              

(18)    Subsequent Event                                                        

On March 23, 1997 the Company acquired an 18.9% share in the ownership of     
Talon Research Development, Ltd. of New Zealand (Talon) and 70% of a new      
U.S. based company dedicated to the marketing of GPS (Global Positioning      
Satellite) applications.                                                      

Talon is an international electronics company and manufacturer of GPS         
receivers, including those used in the Travel(Star product recently           
introduced by the Company.                                                    

The Company paid approximately $300,000 (US) for the 18.9% stake in Talon,    
and has options through mid-1999 to acquire up to 100% of Talon.              

(19)   Quarterly Financial Information (Unaudited)                            

                                       First             Second     Third Fourth
                                      quarter           quarter  quarter quarter
(Dollars in thousands, except per share amounts)                                

1997:                                                           
                Net sales                               $2,929 3,821 3,220 3,847
                Gross profit                             1,785 2,222 1,909 2,244
                Net income (loss)                                25 265 106 (59)
Earnings (loss) per share  -                    
                        basic and diluted                   $ .01 . 08 .03 (.02)

1996:                                                           
                Net sales                                $ 859 1,747 1,451 5,036
                Gross profit                                    47 946 784 3,016
                Net income (loss)                           (294) (73) (118) 693
Earnings (loss) per share  -                    
          basic                               $  (.12)     (.03)       (.05) .28
          diluted                                       (.10)    (.03) (.05) .26

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.                                                              

Ultradata Systems, Incorporated                                                 
By:                                             

/s/ Monte Ross                                  
__________________________                      
Monte Ross, President, Chief                                                    
Executive Officer and Chairman                  
of the Board                                    

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.                                                          

March 24, 1998                                                                  
               /s/ Monte Ross                     ____________________________
    Monte Ross
                           President,Chief Executive Officer
                   and Chairman of the Board

March 24, 1998                                                                  
                /s/ Mark L. Peterson            ________________________________
           Mark L. Peterson,
                        Vice President of Engineering,
                Secretary and Director

March 24, 1998                                                                  
                /s/Ernest Clarke                 _______________________________
        Ernest Clarke,
                                Vice President of Government Programs,
  Director

March 24, 1998                                                                  
                /s/ Steven H. Akre      ________________________________________
         Steven H. Akre,
  Director

March 24, 1998                                                                  
                /s/ Bruce L. Miller     ________________________________________
          Bruce L. Miller,
  Director

March 24, 1998                                                                  
                /s/ John J. Clancy      ________________________________________
         John J. Clancy,
  Director

_PAGE  _16_                                                                     

Dates Referenced Herein   and   Documents Incorporated by Reference

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