M                                SCHEDULE 14A
                                 (Rule 14a-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934

Filed by the Registrant  [X]
Filed by a Party other than the Registrant  [   ]

Check the appropriate box:
[X]  Preliminary Proxy Statement       [   ]  Confidential, for Use of the
                                              Commission Only
                                              (as permitted by rule 14a-6(e)(2))

[   ]  Definitive Proxy Statement
[   ]  Definitive Additional Materials
[   ]  Soliciting Material Pursuant to Rule 14a-12

                           SANDATA TECHNOLOGIES, INC.
    -----------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

    -----------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

         [   ]  No fee required.

         [X  ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (1)
and 0-11.

         (1) Title of each class of securities to which transaction applies:
Sandata Technologies, Inc. Common Stock, par value $.001 per share
--------------------------------------------------------------------

         (2) Aggregate number of securities to which transaction applies:
2,481,806 shares of Sandata Technologies, Inc. Common Stock, par value $.001 per
share
-----------------------------------------------------------------------

         (3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined): The filing fee was determined
based upon the sum of (a) the product of 665,208 shares of common stock and the
merger consideration of $2.21 per share and (b) the product of options to
purchase 20,000 shares of common stock and $1.21 (which is the difference
between the merger consideration of $2.21 per share of common stock and the
exercise price of $1.00 per share of common stock of each of the 20,000 shares
covered by the outstanding options) . In accordance with Rule 0-11 under the
Securities Exchange Act of 1934, as amended, the filing fee represents one-50th
of one percent of the total transaction fee.

         (4) Proposed maximum aggregate value of transaction: $1,494,310

--------------------------------------------------------------------------

        (5) Total fee paid: $299

---------------------------------------------------------------------------

         [ ] Fee paid previously with preliminary materials.

----------------------------------------------------------------------------

         [X] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount previously paid: 258

----------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.: Schedule 14A

-----------------------------------------------------------------------------

(3) Filing Party: Sandata Technologies, Inc.

-----------------------------------------------------------------------------

(4) Date Filed: November 15, 2002

-----------------------------------------------------------------------------










                                                     ________________, 2003



Sandata Technologies, Inc.
26 Harbor Park Drive
Port Washington, NY  11050

Dear Stockholder:

     You are cordially  invited to attend a special meeting of the  stockholders
of Sandata Technologies,  Inc. ("Sandata") to be held at 10:00 a.m., local time,
on  __________,  2003,  at our  corporate  offices,  26 Harbor Park Drive,  Port
Washington, New York 11050.

     As described in the enclosed proxy statement,  at the special meeting,  you
will be asked to consider and vote on a proposal to adopt an Agreement  and Plan
of Merger, dated as of October 28, 2002, by and among Sandata Acquisition Corp.,
a Delaware corporation,  Bert E. Brodsky, Hugh Freund, Gary Stoller and Sandata,
as amended by a First Amendment to the Agreement and Plan of Merger, dated as of
January 27, 2003 (the  "Merger  Agreement").  Pursuant to the Merger  Agreement,
prior to the effective time of the merger, Messrs.  Brodsky,  Freund and Stoller
and  members  of  their  immediate  families  (the  "Acquisition   Group")  will
contribute  all of the shares of Sandata common stock owned by them into Sandata
Acquisition Corp. and at the effective time of the merger,  Sandata  Acquisition
Corp.  will  merge  with and into  Sandata,  with  Sandata  being the  surviving
corporation.  If the merger and Merger  Agreement are adopted,  at the effective
time,  each share of Sandata  common  stock issued and  outstanding  immediately
prior to the merger (excluding shares  contemplated to be contributed to Sandata
Acquisition  Corp.  by the members of the  Acquisition  Group and shares held by
stockholders  who perfect  their  appraisal  rights under  Delaware law) will be
converted  into  the  right to  receive  $2.21  in  cash.  A copy of the  Merger
Agreement  is  attached  as  Appendices  A-1 and A-2 to the  accompanying  proxy
statement, and we urge you to read it carefully.

     A special committee of the Board of Directors of Sandata, consisting of two
non-management  directors who are not materially  interested in the merger,  was
formed to consider,  evaluate and negotiate the merger and the Merger Agreement.
The special  committee  unanimously  recommended  to the Board of  Directors  of
Sandata that the Board adopt the Merger Agreement. Based upon the recommendation
of the special committee,  the Board of Directors has unanimously concluded that
the merger  consideration  is fair to, and the Merger Agreement is advisable and
in the  best  interests  of,  the  unaffiliated  stockholders  of  Sandata,  and
therefore,  the Board  recommends  that you vote  "FOR"  adoption  of the Merger
Agreement.

     Details of the merger and other important  information are described in the
accompanying  notice of special  meeting and proxy  statement.  You are urged to
read these important documents carefully before casting your vote.

     Whether  or not you plan to  attend  the  special  meeting,  we urge you to
complete, sign, date and promptly return the enclosed proxy card.

     We thank you for your prompt  attention to this matter and appreciate  your
support.

                                                  Very truly yours,



                                                  Hugh Freund
                                                  Secretary


Port Washington, New York






                           SANDATA TECHNOLOGIES, INC.
                              26 Harbor Park Drive
                            Port Washington, NY 11050

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                        TO BE HELD ON ____________, 2003


To the Stockholders of
SANDATA TECHNOLOGIES, INC.:

     NOTICE IS HEREBY GIVEN that a special  meeting of  stockholders  of SANDATA
TECHNOLOGIES,  INC.  ("Sandata" or the "Company") will be held on  ____________,
2003 beginning at 10:00 a.m.,  local time, at our corporate  offices,  26 Harbor
Park Drive, Port Washington,  New York 11050, to consider and vote on a proposal
to approve an Agreement and Plan of Merger, dated as of October 28, 2002, by and
among Sandata Acquisition Corp., a Delaware  corporation,  Bert E. Brodsky, Hugh
Freund,  Gary  Stoller  and  Sandata,  as  amended by a First  Amendment  to the
Agreement  and Plan of  Merger,  dated  as of  January  27,  2003  (the  "Merger
Agreement").  Pursuant to the Merger  Agreement,  prior to the  effective  time,
Messrs. Brodsky, Freund and Stoller and members of their immediate families (the
"Acquisition  Group") will  contribute all of the shares of Sandata common stock
owned by them into Sandata  Acquisition  Corp., and at the effective time of the
merger, Sandata Acquisition Corp. will merge with and into Sandata, with Sandata
being the surviving corporation. If the merger and Merger Agreement are adopted,
at the effective  time of the merger,  each share of Sandata  common stock,  par
value $.001 per share,  issued and outstanding  immediately  prior to the merger
(excluding shares contemplated to be contributed to Sandata Acquisition Corp. by
the members of the Acquisition Group and shares held by stockholders who perfect
their  appraisal  rights under Delaware law) will be converted into the right to
receive  $2.21 in cash. A copy of the Merger  Agreement is attached to the proxy
statement as Appendices  A-1 and A-2 and is  incorporated  in the attached proxy
statement by reference.

     Any stockholder who does not vote in favor of adopting the Merger Agreement
and who properly  demands  appraisal  under  Delaware law will have the right to
have the fair value of his shares  determined  by a  Delaware  court.  A copy of
Section 262 of the Delaware General  Corporation Law is included in the attached
proxy  statement  as  Appendix  D.  Appraisal  rights are subject to a number of
restrictions  and  technical   requirements  described  in  the  attached  proxy
statement.

     Only  stockholders  of record as of the close of business on  ____________,
2003 are  entitled to notice of the  special  meeting and to vote at the special
meeting and any  adjournment of this meeting.  Any  stockholder  will be able to
examine a list of stockholders of record, for any purpose germane to the special
meeting,  for ten (10) days prior to the special meeting and continuing  through
the meeting and any  adjournment  of the meeting.  The list will be available at
our corporate headquarters located at 26 Harbor Park Drive, Port Washington, New
York 11050, during ordinary business hours.

     Adoption of the Merger  Agreement  requires the approval by the affirmative
vote of a majority of the  outstanding  shares of our common  stock  entitled to
vote at the special meeting.  Approval of the merger is not subject to a vote of
a majority of the  unaffiliated  stockholders of Sandata The number of shares of
Sandata common stock contemplated to be contributed to Sandata Acquisition Corp.
by the Acquisition Group is sufficient to obtain such approval. Under the Merger
Agreement,  Messrs.  Brodsky, Freund and Stoller agreed to vote, and they agreed
to cause Sandata  Acquisition Corp. and the members of their immediate  families
to vote, all shares of Sandata owned by them and by Sandata Acquisition Corp. at
the effective time, in favor of the merger.

                                            By Order of the Board of Directors,



                                            Hugh Freund
                                            Secretary


Port Washington, New York

______________,2003


     EACH  STOCKHOLDER IS URGED TO COMPLETE,  SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED,  WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A STOCKHOLDER  DECIDES TO ATTEND THE SPECIAL MEETING,  HE, SHE
OR IT MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.

     PLEASE DO NOT SEND IN ANY  CERTIFICATES FOR YOUR COMMON STOCK AT THIS TIME.
AFTER THE MEETING, IF THE MERGER IS APPROVED, STOCKHOLDERS WILL RECEIVE A LETTER
OF TRANSMITTAL AND RELATED INSTRUCTIONS.



                              [PRELIMINARY COPIES]

                           SANDATA TECHNOLOGIES, INC.
                              26 Harbor Park Drive
                         Port Washington, New York 11050

                                 PROXY STATEMENT
                                       FOR
                         SPECIAL MEETING OF STOCKHOLDERS

                        TO BE HELD ON _____________, 2003


     This proxy statement is being furnished to the holders of common stock, par
value $.001 per share, of Sandata Technologies,  Inc. ("Sandata"), in connection
with the  solicitation  of  proxies  by our  Board of  Directors  for use at the
special meeting of stockholders to be held at our corporate  offices,  26 Harbor
Park Drive, Port Washington, New York 11050, on ____________,  2003 beginning at
10:00 a.m., local time. The special meeting has been called to consider and vote
on a proposal to approve an  Agreement  and Plan of Merger,  dated as of October
28, 2002, by and among Sandata Acquisition Corp., a Delaware  corporation,  Bert
E.  Brodsky,  Hugh  Freund,  Gary  Stoller  and  Sandata,  as amended by a First
Amendment to the Agreement and Plan of Merger, dated as of January 27, 2003 (the
"Merger  Agreement").  Pursuant to the Merger Agreement,  prior to the effective
time of the  merger,  Messrs.  Brodsky,  Freund and Stoller and members of their
immediate  families (the "Acquisition  Group") will contribute all of the shares
of Sandata common stock owned by them into Sandata  Acquisition Corp. and at the
effective time of the merger, Sandata Acquisition Corp. will merge with and into
Sandata, with Sandata being the surviving corporation.  If the merger and Merger
Agreement  are  adopted,  at the  effective  time of the  merger,  each share of
Sandata  common  stock,  par  value  $.001 per  share,  issued  and  outstanding
immediately prior to the merger (excluding shares contemplated to be contributed
to Sandata  Acquisition Corp. by the members of the Acquisition Group and shares
held by stockholders who perfect their appraisal rights under Delaware law) will
be  converted  into the right to  receive  $2.21 in cash.  A copy of the  Merger
Agreement is attached as Appendices  A-1 and A-2 and is  incorporated  herein by
reference.

     Only  stockholders  of record on  ________,  2003 are  entitled  to receive
notice of and vote at the meeting.  On that record date,  there were ___________
shares of our common stock outstanding (including the shares owned by members of
the Acquisition  Group) held by  approximately  ___________  record holders,  of
which  shares  approximately  ___________  will be  converted  into the right to
receive the merger consideration.

     Each  share of our  common  stock  is  entitled  to one  vote.  The  Merger
Agreement provides that the merger must be approved by the affirmative vote of a
majority of the  outstanding  shares of our common stock entitled to vote at the
special  meeting.  Approval of the merger is not subject to a vote of a majority
of the unaffiliated stockholders of Sandata. Under the Merger Agreement, Messrs.
Brodsky,  Freund and Stoller  agreed to vote,  and they agreed to cause  Sandata
Acquisition  Corp.  and the members of their  immediate  families  to vote,  all
shares of Sandata owned by them and Sandata  Acquisition  Corp. at the effective
time, in favor of the merger. The number of shares of Sandata common stock owned
by the Acquisition Group is sufficient to obtain approval of the merger.

     A quorum for the special meeting requires that holders of a majority of the
outstanding shares of our common stock must be present in person or by proxy.

     The Board of  Directors  recommends  that you vote  "FOR"  approval  of the
Merger Agreement.

     Proxies will be voted in the manner you specify in the proxy card. You must
sign and date your  proxy.  If you return  your proxy but do not  specify how it
should be voted, your shares will be voted FOR approval of the Merger Agreement.

     If your stock is held by a broker or other custodian in "street name," your
shares  will not be voted  ("broker  non-votes")  unless  you  provide  specific
instructions  to the  broker or  custodian.  Proxies  submitted  by  brokers  or
custodians  who have not received  voting  instructions  will be counted for the
purposes of determining a quorum,  but will not be voted for or against adoption
of the Merger Agreement. The failure to submit a proxy card, the abstention from
voting by a stockholder,  broker non-votes,  or the failure to vote in person at
the special  meeting,  will result in your vote not being counted  either for or
against adoption of the merger and the Merger Agreement.  Abstentions and broker
non-votes will be counted as present at the special meeting for quorum purposes.
Since  the  Merger  Agreement  requires  the  approval  of  a  majority  of  the
outstanding common stock of Sandata,  abstentions and broker non-votes will have
the effect of a negative  vote.  You are urged to complete and return your proxy
or, if your shares are held in street name, to provide  voting  instructions  in
accordance with the materials you receive from your broker or other custodian.

     This  proxy  statement  and  the  accompanying  form  of  proxy  are  dated
_________,  2003  and  are  first  being  mailed  to  stockholders  on or  about
__________, 2003.

     No  person  has  been  authorized  to give  any  information  or  make  any
representation other than those contained in this proxy statement, and, if given
or made, such  information or  representation  must not be relied upon as having
been  authorized.  This proxy  statement does not constitute a solicitation of a
proxy in any jurisdiction from any person to whom it is unlawful to make a proxy
solicitation in such  jurisdiction.  The information in this proxy statement may
only be accurate on the date of this proxy statement.


     THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE  COMMISSION,  NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF THE  TRANSACTION  NOR  UPON  THE  ACCURACY  OR  ADEQUACY  OF THE  INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.





                                TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MERGER........................................6
--------------------------------------
SUMMARY TERM SHEET............................................................9
------------------
   The Special Meeting........................................................9
   -------------------
      Date, Time, Place and Matters to be Considered..........................9
      ----------------------------------------------
      Record Date for Voting..................................................9
      ----------------------
      Procedures Relating to Your Vote at the Special Meeting................10
      -------------------------------------------------------
   Parties to the Transaction................................................10
   --------------------------
      Sandata Technologies, Inc..............................................10
      --------------------------
      Sandata Acquisition Corp...............................................11
      -------------------------
      The Acquisition Group..................................................11
      ---------------------
   The Merger Agreement......................................................12
   --------------------
   Effective Time of Merger..................................................13
   ------------------------
   Stockholder Litigation....................................................13
   ----------------------
   Opinion of Brean Murray & Co., Inc........................................14
   -----------------------------------
   Recommendations of the Special Committee and Our Board of Directors.......14
   -------------------------------------------------------------------
   Reasons for Engaging in the Transaction...................................15
   ---------------------------------------
   Effects of the Merger.....................................................16
   ---------------------
   Interests of our Directors and Executive Officers in the Merger...........16
   ---------------------------------------------------------------
   Material United States Federal Income Tax Consequences....................17
   ------------------------------------------------------
   Financing of the Merger...................................................18
   -----------------------
SPECIAL FACTORS..............................................................19
---------------
   Background of the Merger..................................................19
   ------------------------
   Opinion of Brean Murray...................................................33
   -----------------------
   Our Forecasts.............................................................38
   -------------
   Stockholder Litigation....................................................45
   ----------------------
   Recommendation of the Special Committee and the Board of Directors;
     Fairness of the Merger..................................................46
   -------------------------------------------------------------------
   Reasons for the Recommendation of the Special Committee...................47
   -------------------------------------------------------
   Reasons for the Recommendation of the Board of Directors..................51
   --------------------------------------------------------
   Sandata Acquisition Corp.'s and the Acquisition Group's
   Position as to the Fairness of the Merger.................................55
   -------------------------------------------------------
   Purpose and Structure of the Merger; Certain Effects of the Merger;
   Plans or Proposals After the Merger.......................................59
   -------------------------------------------------------------------

   Interests of the Members of the Acquisition Group in the Merger...........63
   ---------------------------------------------------------------
   Interests of Executive Officers and Directors in the Merger...............64
   -----------------------------------------------------------
      Director and Executive Officer Stock Options...........................64
      --------------------------------------------
      Security Ownership of Certain Beneficial Owners and Management.........64
      --------------------------------------------------------------
      Transactions in Common Stock by Certain Persons........................66
      -----------------------------------------------
      Employment Agreements..................................................66
      ---------------------
      Special Committee......................................................66
      -----------------
      Indemnification; Directors' and Officers' Insurance....................67
      ---------------------------------------------------
   Certain Relationships Between Sandata, Sandata Acquisition Corp and
    Members of the Acquisition Group.........................................68
   --------------------------------------------------------------------
      IDA/SBA Financing......................................................69
      -----------------
      Revolving Credit Agreement.............................................70
      --------------------------
      Non-Recourse Promissory Notes..........................................71
      -----------------------------
      National Medical Health Card Systems, Inc..............................71
      ------------------------------------------
      Leases.................................................................72
      ------
      Medical Arts Office Services, Inc......................................72
      ----------------------------------
   Material United States Federal Income Tax Consequences of the
    Merger to our Stockholders...............................................72
   -------------------------------------------------------------
      Non-continuing Stockholders............................................73
      ---------------------------
      Continuing Stockholders................................................74
      -----------------------
      Sandata and Sandata Acquisition Corp...................................74
      -------------------------------------
FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE..............................75
-----------------------------------------------
SPECIAL MEETING..............................................................76
---------------
   Introduction..............................................................76
   ------------
   Proposal to be Considered at the Special Meeting..........................76
   ------------------------------------------------
   Voting Rights; Vote Required for Approval.................................77
   -----------------------------------------
   Voting and Revocation of Proxies..........................................78
   --------------------------------
   Solicitation of Proxies...................................................79
   -----------------------
   Trading Market and Price; Dividends; Stock Repurchases....................79
   ------------------------------------------------------
THE MERGER...................................................................81
----------
   Effective Time of the Merger..............................................81
   ----------------------------
   Payment of Merger Consideration and Surrender of Stock Certificates.......82
   -------------------------------------------------------------------
   Financing of the Merger; Fees and Expenses of the Merger..................83
   --------------------------------------------------------
   Appraisal Rights..........................................................84
   ----------------
   Regulatory Approvals......................................................88
   --------------------
THE MERGER AGREEMENT.........................................................88
--------------------
   General...................................................................88
   -------
   Consideration to be Received by the Stockholders..........................88
   ------------------------------------------------
   Stock Options.............................................................88
   -------------
   Representations and Warranties............................................89
   ------------------------------
   Covenants.................................................................91
   ---------
   Indemnification; Directors' and Officers' Insurance.......................92
   ---------------------------------------------------
   Conditions to the Merger..................................................92
   ------------------------
   Termination of the Merger Agreement.......................................94
   -----------------------------------
   Effect of Termination; Expenses...........................................95
   -------------------------------
   Amendment to the Merger Agreement.........................................95
   ---------------------------------
OTHER MATTERS................................................................96
-------------
   Other Matters for Action at the Special Meeting...........................96
   -----------------------------------------------
   Proposals by Holder of Shares of Common Stock.............................96
   ---------------------------------------------
   Expenses of Solicitation..................................................96
   ------------------------
   Independent Auditors......................................................97
   --------------------
   Available Information.....................................................97
   ---------------------
   Information Incorporated by Reference.....................................98
   -------------------------------------
   Financial Disclosure......................................................99
   --------------------

Appendix A-1   Agreement and Plan of Merger,  dated as of October 28, 2002,
               by and among Sandata  Technologies,  Inc., Sandata
               Acquisition Corp., Bert E. Brodsky, Hugh Freund
               and Gary Stoller...........................................  A-1

Appendix A-2   First  Amendment  to the  Agreement  and Plan of Merger,
               dated as of January 27, 2003...............................  A-2

Appendix B     Opinion of Brean Murray, dated October 28, 2002..............B-1

Appendix C-1   Presentation of Brean Murray to the Special Committee,
               dated October 28, 2002.......................................C-1

Appendix C-2 -  Presentation  of Brean Murray to the Special  Committee,
                dated August 27, 2002.......................................C-2

Appendix C-3 -  Presentation  of Brean Murray to the Special  Committee,
                 dated August 20, 2002......................................C-3

Appendix D - Section 262 Delaware General Corporation Law...................D-1

Appendix E - Sandata Annual Report on Form 10-KSB for the fiscal year
              ended May 31, 2002 ("Form 10-KSB") ...........................E-1

Appendix F - Amendment Number 1 to Sandata's Form 10-KSB....................F-1

Appendix G - Amendment Number 2 to Sandata's Form 10-KSB ...................G-1

Appendix H - Sandata  Quarterly  Report on Form 10-QSB for the
              Quarter ended  November 30, 2002..............................H-1

Appendix I - Amendment Number 1 to Sandata's Quarterly  Report on
              Form 10-QSB for the Quarter ended  November 30, 2002..........I-1





                     QUESTIONS AND ANSWERS ABOUT THE MERGER

     The following  questions and answers,  together with the Summary Term Sheet
that follows, briefly describe material terms of the merger. These questions and
answers  may  not  address  all  questions  that  may be  important  to you as a
stockholder.  Please refer to the more detailed information  contained elsewhere
in this proxy statement,  the annexes to this proxy statement, and the documents
referred to or incorporated by reference in this proxy statement.  In this proxy
statement, "we", "us" and "our" refer to Sandata.

What is the proposed transaction?

     Our Board of Directors is asking you to vote to approve a Merger  Agreement
which provides that Sandata  Acquisition Corp. will merge with and into Sandata,
with  Sandata  being the  surviving  corporation.  If the  Merger  Agreement  is
adopted, each share of our common stock issued and outstanding immediately prior
to the  merger  (excluding  shares  contemplated  to be  contributed  to Sandata
Acquisition  Corp. by Messrs.  Brodsky,  Freund and Stoller and members of their
immediate families (the "Acquisition Group") and shares held by stockholders who
perfect their  appraisal  rights under  Delaware law) will be converted into the
right to receive $2.21 in cash. At the effective time of the merger, each issued
and  outstanding  share  of  Sandata  Acquisition  Corp.  common  stock  will be
converted into one fully paid and  non-assessable  share of Sandata common stock
as the surviving  corporation.  See "Special  Factors - Purpose and Structure of
the Merger; Certain Effects of the Merger; Plans or Proposals After the Merger,"
"Special  Factors -  Interests  of the Members of the  Acquisition  Group in the
Merger"  and  "Special  Meeting  -  Proposal  to be  Considered  at the  Special
Meeting."

What does our Board of Directors recommend?

     Our Board of  Directors  recommends  that you vote  "FOR"  adoption  of the
Merger  Agreement.  In the  opinion  of  the  Board  of  Directors,  the  merger
consideration  of $2.21 per share of common  stock in cash,  is fair to, and the
Merger  Agreement is advisable and in the best  interests  of, the  unaffiliated
stockholders of Sandata.  All references  throughout this proxy statement to the
unaffiliated  stockholders of Sandata means all of our  stockholders  other than
Sandata Acquisition Corp. and the members of the Acquisition Group. See "Special
Factors -  Recommendation  of the Special  Committee and the Board of Directors;
Fairness of the Merger,"  "Special Factors - Reasons for the  Recommendation  of
the Special  Committee" and "Special Factors - Reasons for the Recommendation of
the Board of Directors."

What vote is required to approve the Merger Agreement?

     Under  Delaware  law and our  bylaws,  the merger  must be  approved by the
affirmative vote of the holders of at least a majority of the outstanding shares
of common stock entitled to vote at the special meeting.  Approval of the merger
is not  subject  to a vote of a majority  of the  unaffiliated  stockholders  of
Sandata. On the record date, _______ shares of our common stock were outstanding
of which  approximately  ______________  will be  converted  into  the  right to
receive  the  merger  consideration  and  approximately  ___%  are  owned by the
Acquisition  Group, all of which will contributed to Sandata  Acquisition  Corp.
prior to the effective time of the merger.  Under the Merger Agreement,  Messrs.
Brodsky,  Freund and Stoller  agreed to vote,  and they agreed to cause  Sandata
Acquisition  Corp.  and the members of their  immediate  families  to vote,  all
shares of Sandata owned by them and Sandata  Acquisition  Corp. at the effective
time in favor of the merger.  The Acquisition  Group owns a sufficient number of
shares of our common stock to approve the Merger Agreement. See "Special Meeting
- Voting Rights; Vote Required for Approval."

If my shares are held in "Street Name" by my broker, will my broker vote my
shares for me?

     Your broker will vote your shares ONLY if you  instruct  your broker how to
vote.  You should fill out,  sign,  date and return the proxy card and otherwise
follow the directions provided by your broker regarding how to vote your shares.
See "Special  Meeting - Voting Rights;  Vote Required for Approval" and "Special
Meeting - Voting and Revocation of Proxies."

What do I need to do now?

     Please  mark  your vote on,  sign,  date and mail  your  proxy  card in the
enclosed  return  envelope  as soon as  possible,  so that  your  shares  may be
represented at the special meeting.

May I change my vote after I have mailed my signed proxy card?

     Yes,  your vote can be changed at any time before the proxy is voted at the
special meeting. This can be done by (i) sending a written revocation or another
signed proxy card with a later date to our Corporate Secretary at 26 Harbor Park
Drive,  Port  Washington,  New York 11050;  it must be received by us before the
special  meeting,  (ii) attending the special  meeting and voting in person,  as
long as you, and not your  broker,  are a record  holder of our stock,  or (iii)
delivering a notice of revocation  of the proxy at the special  meeting prior to
the vote on the Merger  Agreement.  See "Special Meeting - Voting and Revocation
of Proxies."

Should I send my stock certificates now?

     No.  After the  merger is  completed,  our  exchange  agent will send you a
transmittal   form  and  written   instructions   for   exchanging   your  stock
certificates. See "The Merger - Payment of Merger Consideration and Surrender of
Stock Certificates."

What rights do I have if I oppose the Merger?

     You may  oppose the  merger  and seek  appraisal  of the fair value of your
Sandata  shares,  but only if you comply with all of the Delaware law procedures
explained in this proxy statement. In order to qualify for appraisal rights, you
must not vote in favor of the merger. In addition, you must deliver to Sandata a
written  demand for  appraisal  of your  shares  prior to the vote on the Merger
Agreement and continue to hold such shares until the consummation of the merger.
See "The Merger - Appraisal Rights" and Appendix D.

When do you expect the merger to be completed?

     We hope to  complete  the  merger as soon as  possible.  For the  merger to
occur, it must be approved by our  stockholders.  If our stockholders  adopt the
Merger Agreement, we expect to complete the merger on or about _________, 2003.

Who can help answer my questions?

     If you have more questions about the merger or would like additional copies
of this proxy  statement,  you should  contact our  in-house  counsel,  Jonathan
Friedman, Esq., at (516) 484-4400.





                               SUMMARY TERM SHEET

     The  following  summary,  together  with the  previous  Question and Answer
section,  briefly describes material terms of the merger as more fully discussed
in this proxy and  presented in the documents  annexed to this proxy  statement.
This summary is qualified by the more detailed  information  contained elsewhere
in this proxy statement, the annexes and the documents we refer to in this proxy
statement, all of which we urge you to review carefully.

The Special Meeting

         Date, Time, Place and Matters to be Considered

               o       The   special   meeting   of   stockholders   of  Sandata
               Technologies, Inc. will be held on ______________,  2003 at 10:00
               a.m., local time, at our corporate offices, 26 Harbor Park Drive,
               Port  Washington,   New  York  11050.  At  the  special  meeting,
               stockholders  will be asked to consider  and vote upon a proposal
               to adopt an Agreement and Plan of Merger, dated as of October 28,
               2002,  by  and  among  Sandata   Acquisition  Corp.,  a  Delaware
               corporation,  Bert E.  Brodsky,  Hugh  Freund,  Gary  Stoller and
               Sandata,  as amended by a First  Amendment to the  Agreement  and
               Plan of  Merger,  dated  as of  January  27,  2003  (the  "Merger
               Agreement"),  pursuant to which Sandata  Acquisition  Corp.  will
               merge with and into  Sandata,  with Sandata  being the  surviving
               corporation.  Pursuant  to the  Merger  Agreement,  prior  to the
               effective  time of the  merger,  the  members of the  Acquisition
               Group will  contribute  all of the shares of Sandata common stock
               owned by them to Sandata  Acquisition  Corp. A copy of the Merger
               Agreement  is  attached as  Appendices  A-1 and A-2 to this proxy
               statement. For additional information regarding the matters to be
               considered  at  the  special  meeting,  see  "Special  Meeting  -
               Proposal to be Considered at the Special Meeting."

         Record Date for Voting

               o      Only stockholders of record as of the close of business on
               ___________,  2003 are  entitled  to notice of and to vote at the
               special meeting. On that date,  ____________ shares of our common
               stock  were  outstanding  held  by  approximately  ______  record
               holders,  of  which  shares  approximately  ____________  will be
               converted into the right to receive the merger  consideration and
               approximately ___% are owned by the Acquisition  Group.  Pursuant
               to the Merger Agreement, all shares of Sandata common stock owned
               by  the   Acquisition   Group  will  be  contributed  to  Sandata
               Acquisition Corp. prior to the effective time of the merger.  For
               additional  information  regarding the record date for voting see
               "Special Meeting - Voting Rights; Vote Required for Approval."


         Procedures Relating to Your Vote at the Special Meeting

               o      Adoption of the Merger Agreement  requires the affirmative
               vote of the  holders of a majority of all  outstanding  shares of
               common stock of Sandata. Approval of the merger is not subject to
               a vote of a majority of the unaffiliated stockholders of Sandata.
               Each share of common  stock  entitles the holder to cast one vote
               at the special  meeting.  Abstentions  and broker  non-votes will
               result in your  shares  not being  voted  either  for or  against
               adoption  of  the  Merger   Agreement.   Abstentions  and  broker
               non-votes  will be counted as present at the special  meeting for
               quorum purposes. Since the Merger Agreement requires the approval
               of a  majority  of  the  outstanding  common  stock  of  Sandata,
               abstentions  and  broker  non-votes  will  have the  effect  of a
               negative vote.

               o      The  presence,  in  person  or by  proxy,  at the  special
               meeting of the  holders  of at least a majority  of the shares of
               our common stock  entitled to vote is  necessary to  constitute a
               quorum for the transaction of business.

               o      Proxy cards that are  properly  signed and  received at or
               prior to the special  meeting will result in the voting of shares
               represented thereby in accordance with the instructions indicated
               on the proxy  card.  Proxy  cards that are  received  without any
               instructions  will  result in a vote  "FOR" the  adoption  of the
               Merger Agreement.

               o      A proxy may be  revoked  by  delivering  to our  secretary
               prior to the special meeting a later dated,  signed proxy card or
               a written  revocation of your proxy; or by delivering a notice of
               revocation of the proxy at the special  meeting prior to the vote
               on the Merger  Agreement;  or by attending the special meeting in
               person and voting your stock,  provided you, not your broker, are
               the  record  holder of such  stock.  For  additional  information
               regarding  the  procedures  relating  to your vote at the special
               meeting, see "Special Meeting - Voting and Revocation of Proxies"
               and "Special Meeting - Solicitation of Proxies."

Parties to the Transaction

         Sandata Technologies, Inc.

     Sandata  Technologies,  Inc. is a Delaware  corporation  with its principal
business address at 26 Harbor Park Drive,  Port Washington,  New York 11050. Its
business  telephone  is  (516)  484-4400.  The  principal  business  of  Sandata
Technologies,  Inc. is providing  technology  services to its  customers.  These
services  include  either the  utilization  of software  products that have been
developed, acquired or licensed by Sandata or the leveraging of technology-based
core  competencies  that Sandata has developed in formulating and delivering its
software  services.  Sandata's core competencies  principally refer to its SHARP
(Sandsport Home Attendant  Reporting  Program)  product which provides  computer
services, including payroll and billing, to the home health care industry.

     Services  that  leverage  Sandata's  core  competencies  are  driven by its
information  technology  support  services.  These services  include  facilities
outsourcing for database and operating  system support,  technology  consulting,
custom software  development and support,  resale and implementation of software
written and distributed by others,  website  development and hosting,  help desk
services, and hardware maintenance and related administrative services.

     Applications of Sandata's  software include an automated payroll processing
and Medicaid  billing  service  delivered via leased lines or over the internet,
computerized preparation of management reports,  telephone-based data collection
services, and automated database-driven outbound telephone notification.

         Sandata Acquisition Corp.

     Sandata Acquisition Corp. is a Delaware corporation which has its principal
business address at 26 Harbor Park Drive,  Port Washington,  New York 11050. Its
business  telephone is (516)  484-4400.  Sandata  Acquisition  Corp.  was formed
solely for the purpose of effecting the transactions  contemplated by the merger
and has not  engaged in any  business  except in  furtherance  of this  purpose.
Pursuant to the Merger  Agreement,  prior to the effective  time, the members of
the  Acquisition  Group will contribute all shares of Sandata common stock owned
by them to Sandata  Acquisition  Corp. The Merger Agreement  contemplates  that,
prior to the effective time of the merger, the Acquisition Group will own all of
the outstanding  common stock of Sandata  Acquisition Corp. and at the effective
time of the merger,  each issued and  outstanding  share of Sandata  Acquisition
Corp.  common  stock will be  converted  into one fully paid and  non-assessable
share  of  Sandata  common  stock  as  the  surviving  corporation.   After  the
contribution  of  Sandata  common  stock  to  Sandata   Acquisition  Corp.,  the
Acquisition  Group will have common ownership and voting control of both Sandata
and Sandata Acquisition Corp.

         The Acquisition Group

     The Acquisition  Group is comprised of Bert E. Brodsky,  Hugh Freund,  Gary
Stoller,  Jessica Brodsky Miller,  David C. Brodsky,  Jeffrey H. Brodsky, Lee J.
Brodsky,  Muriel M. Brodsky, Emily Freund, Leland Freund, Gertrude Kay, the Bert
E. Brodsky  Revocable  Trust,  Gary Stoller and Susan Stoller as Custodians  for
Joseph  Bailey under the New York Uniform  Transfer to Minors Act,  Gary Stoller
and Susan Stoller as Custodians for Jennifer  Stoller under the New York Uniform
Transfer to Minors Act. Prior to the effective  time of the merger,  the members
of the Acquisition  Group, who hold  approximately 72% of the outstanding shares
of Sandata common stock in the aggregate,  will contribute all shares of Sandata
common stock owned by them to Sandata  Acquisition  Corp. in exchange for shares
of Sandata  Acquisition Corp. The Merger Agreement  contemplates  that, prior to
the  effective  time of the merger,  the  Acquisition  Group will own all of the
outstanding common stock of Sandata  Acquisition Corp. and at the effective time
of the merger,  each issued and outstanding  share of Sandata  Acquisition Corp.
common stock will be converted into one fully paid and  non-assessable  share of
Sandata  common  stock  as  the  surviving  corporation.   The  members  of  the
Acquisition Group have interests that are different from, or in addition to, the
interests of the unaffiliated stockholders of Sandata, generally. For additional
information regarding the members of the Acquisition Group, see "Special Factors
- Purpose and Structure of the Merger;  Certain Effects of the Merger;  Plans or
Proposals  After the Merger" and "Special  Factors - Interests of the Members of
the Acquisition Group in the Merger."

The Merger Agreement

     Sandata,  Sandata Acquisition Corp. and Messrs. Brodsky, Freund and Stoller
have  entered  into  the  Merger  Agreement,  a copy of  which  is  attached  as
Appendices A-1 and A-2 to this proxy statement. In general, the Merger Agreement
provides  that,  subject  to  the  approval  of  Sandata  stockholders  and  the
satisfaction of other conditions to the merger,  Sandata  Acquisition Corp. will
merge with and into Sandata, with Sandata being the surviving corporation. Under
the Merger Agreement,  Messrs.  Brodsky,  Freund and Stoller agreed to vote, and
they  agreed  to  cause  Sandata  Acquisition  Corp.  and the  members  of their
immediate  families  to vote,  all shares of Sandata  owned by them and  Sandata
Acquisition  Corp. at the effective time in favor of the merger.  For additional
information  regarding the terms of the Merger Agreement,  see "The Merger - The
Merger Agreement."

Effective Time of Merger

     The merger will become  effective  upon the filing with, and acceptance by,
the Secretary of State of Delaware of a duly executed  certificate of merger. At
the  effective  time of the  merger,  each  share of Sandata  (excluding  shares
contemplated  to be contributed to Sandata  Acquisition  Corp. by the members of
the  Acquisition  Group  and  shares  held by  stockholders  who  perfect  their
appraisal rights under Delaware law) will be converted into the right to receive
$2.21 in cash and each issued and outstanding share of Sandata Acquisition Corp.
common stock held by members of the Acquisition Group will be converted into one
fully paid and  non-assessable  share of Sandata  common stock as the  surviving
corporation.  For  additional  information  regarding the effective  time of the
merger,  see "Special  Factors - Purpose and  Structure  of the Merger;  Certain
Effects of the Merger;  Plans or Proposals After the Merger," "Special Factors -
Interests of the Members of the Acquisition Group in the Merger" and "The Merger
- Effective Time of the Merger."

Stockholder Litigation

     In early  and  mid-September,  two  stockholders  filed  separate  lawsuits
against  Sandata and the  members of the Board of  Directors  alleging  that the
defendants  breached their fiduciary  duties to Sandata and its  stockholders in
connection with the merger,  that the members of the special  committee were not
independent and that the merger consideration was inadequate.  In October, these
actions were consolidated by the Delaware Chancery Court. In late December,  the
parties to the  consolidated  actions  executed a  Memorandum  of  Understanding
pursuant  to which  Sandata  Acquisition  Corp.  agreed to  increase  the merger
consideration  from  $1.91 to $2.21 per share of  Sandata  common  stock and the
plaintiffs  agreed to  dismiss  the  lawsuits,  subject  to the  execution  of a
Stipulation of Settlement.  On January 27, 2003, a Stipulation of Settlement was
executed by the parties to the lawsuits  which  formalized  the agreement of the
parties as set forth in the  Memorandum of  Understanding.  The  Stipulation  of
Settlement  is subject to,  among other  things,  the  approval of the  Delaware
Chancery  Court.  Pursuant to the  Stipulation of Settlement,  Sandata,  Sandata
Acquisition  Corp. and Messrs.  Brodsky,  Freund and Stoller  amended the Merger
Agreement  to increase  the merger  consideration  to $2.21 per share of Sandata
common  stock and the  defendants  have agreed to dismiss the  lawsuits  against
Sandata and the members of the Board of Directors.  For  additional  information
regarding the litigation and  settlement,  see "Special  Factors - Background of
the Merger" and "Special Factors - Stockholder Litigation."

Opinion of Brean Murray & Co., Inc.

     The special committee retained Brean Murray & Co., Inc. ("Brean Murray") as
its financial  advisor  regarding the value of the merger  consideration  and to
opine as to the fairness of the merger  consideration  from a financial point of
view. On October 28, 2002,  Brean Murray  delivered  its written  opinion to the
special committee that, as of the date of the opinion,  and based on and subject
to the assumptions,  limitations and  qualifications  contained in that opinion,
the merger  consideration  of $1.91 that each of our public  stockholders  would
have had the right to receive under the Merger  Agreement prior to the amendment
increasing the merger consideration, is fair, from a financial point of view, to
such  stockholders.  Brean  Murray  has not  withdrawn  its  opinion  since  the
amendment to the Merger  Agreement was executed,  which amendment  increased the
merger  consideration to $2.21 per share of Sandata common stock. For additional
information  regarding  the  Opinion of Brean  Murray,  see  "Special  Factors -
Opinion of Brean Murray."

     A copy of Brean Murray's written fairness opinion is attached to this proxy
statement as Appendix B. We urge you to read Brean Murray's opinion carefully.

Recommendations of the Special Committee and Our Board of Directors

     A  special  committee  of  our  Board  of  Directors,   consisting  of  two
non-management  directors of Sandata who are not  materially  interested  in the
merger, was formed to consider, evaluate and negotiate the merger and the Merger
Agreement.  On October 28, 2002, the special  committee  unanimously  determined
that the merger consideration of $1.91 in cash per share contained in the Merger
Agreement,  prior to the amendment increasing the merger consideration,  is fair
to the  unaffiliated  stockholders  of Sandata,  and recommended to our Board of
Directors that it approve the Merger Agreement and recommend to the unaffiliated
stockholders  of Sandata  that they  approve the Merger  Agreement.  On the same
date,  the Board of  Directors,  based upon this  recommendation  of the special
committee, unanimously determined that the merger consideration of $1.91 in cash
per share contained in the Merger Agreement,  prior to the amendment  increasing
the merger  consideration,  is fair to, and the merger is  advisable  and in the
best interests of, Sandata and the  unaffiliated  stockholders of Sandata.  As a
result of the stockholder  lawsuits against Sandata and the members of its Board
of Directors,  the parties to the litigation  engaged in arms-length  settlement
negotiations  which  resulted in the  execution of a  Stipulation  of Settlement
pursuant  to which  Sandata  Acquisition  Corp.  agreed to  increase  the merger
consideration  from  $1.91 to $2.21 per share of  Sandata  common  stock and the
plaintiffs agreed to dismiss the lawsuits against Sandata and the members of the
Board of Directors.  The  Stipulation of Settlement is subject to final approval
of the  settlement  by the  Delaware  Chancery  Court of which  there  can be no
assurances. On January 16, 2003, the special committee unanimously determined to
recommend that the Board of Directors  enter into the Stipulation of Settlement,
which provides for an increase in the merger consideration to $2.21 per share of
Sandata common stock. The special committee also unanimously determined that the
amended merger  consideration of $2.21 is fair to the unaffiliated  stockholders
of Sandata,  and  recommended  to our Board of  Directors  that,  subject to the
execution of the  Stipulation  of  Settlement,  it approve the  amendment to the
Merger Agreement and recommend to the unaffiliated  stockholders of Sandata that
they  approve  such  amendment.  On  the  same  date,  the  Board  of  Directors
unanimously determined that the Stipulation of Settlement be executed by Sandata
and that,  subject to its  execution  by all  parties,  the Merger  Agreement be
amended  to  increase  the  merger  consideration  to $2.21 per share of Sandata
common stock and that the  increased  merger  consideration  is fair to, and the
merger is advisable and in the best interests of,  Sandata and the  unaffiliated
stockholders  of Sandata.  Accordingly,  our Board of Directors has approved the
Merger Agreement and unanimously  recommends that you vote "FOR" the proposal to
adopt it. For additional  information  regarding the material factors considered
by  the  special  committee  and  the  Board  of  Directors  in  reaching  their
conclusions and the reasons why the special committee and the Board of Directors
determined that the merger is fair to the unaffiliated  stockholders of Sandata,
see  "Special   Factors  -  Background  of  the  Merger,"   "Special  Factors  -
Recommendations of the Special Committee and the Board of Directors; Fairness of
the Merger,"  "Special Factors - Reasons for the  Recommendation  of the Special
Committee" and "Special Factors - Reasons for the Recommendation of the Board of
Directors."

Reasons for Engaging in the Transaction

     The  principal  purposes  of this  merger are to enable the  members of the
Acquisition  Group to acquire all of the equity interests in Sandata not already
owned by them through Sandata Acquisition Corp., and to provide the unaffiliated
stockholders  of  Sandata,  the  opportunity  to  receive a cash price for their
shares at a significant  premium over the market price at which the common stock
traded  prior to the public  announcement  of their  proposal  to acquire all of
Sandata's  outstanding stock.  Additionally,  the Acquisition Group is presently
engaging  in this  transaction  because  the  members of the  Acquisition  Group
believe that Sandata has good potential business prospects and that Sandata will
have  greater  operating  flexibility  to focus on long-term  value  without the
constraint of the public market's emphasis on quarterly results.  For additional
information regarding the reasons for engaging in this transaction, see "Special
Factors - Background of the Merger" and "Special Factors - Purpose and Structure
of the Merger;  Certain  Effects of the  Merger;  Plans or  Proposals  After the
Merger."

Effects of the Merger

     After the merger is  effective,  shares of Sandata will no longer be traded
on the Nasdaq  SmallCap  Market  and the  registration  of the shares  under the
Securities  and Exchange Act of 1934 will be  terminated.  Following the merger,
there  will be no  publicly  traded  common  stock of Sandata  outstanding.  For
additional information regarding the effects of the merger, see "Special Factors
- Purpose and Structure of the Merger;  Certain Effects of the Merger;  Plans or
Proposals After the Merger."

Interests of our Directors and Executive Officers in the Merger

     You should be aware that, in addition to the matters  discussed  above, our
executive  officers  and some  members of our Board of  Directors  have  various
interests  in the  merger  that are in  addition  to,  or  different  from,  the
interests of the  unaffiliated  stockholders  generally and that such  interests
create potential conflicts of interest.

     Pursuant to the Merger Agreement,  prior to the effective time, the members
of the  Acquisition  Group will  contribute  all shares of Sandata  common stock
owned by them to Sandata  Acquisition  Corp.  and, at the effective  time of the
merger,  each outstanding  share of Sandata  Acquisition Corp. will be converted
into one  share  of  common  stock  of the  surviving  corporation.  The  Merger
Agreement  contemplates  that,  prior to the effective  time of the merger,  the
Acquisition  Group  will own all of the  outstanding  common  stock  of  Sandata
Acquisition Corp. and that at the effective time of the merger,  each issued and
outstanding  share of Sandata  Acquisition  Corp. common stock will be converted
into one fully  paid and  non-assessable  share of Sandata  common  stock as the
surviving  corporation.  The  Acquisition  Group will have common  ownership and
voting control of both Sandata and Sandata  Acquisition Corp. Since Sandata will
be the  surviving  corporation,  it is  contemplated  that  the  members  of the
Acquisition Group will continue as the owners of Sandata as a private company.

     Certain  of our  executive  officers  and  directors  also have  options to
purchase  1,016,500 shares of common stock of Sandata.  At the effective time of
the merger, all outstanding  options to purchase common stock of Sandata will be
cancelled  in  exchange  for the right to  receive a cash  payment  equal to the
product of the number of shares of Sandata subject to the options and the excess
of the merger  consideration,  if any, over the exercise price per share related
to such  options  (excluding  options  held by the  members  of the  Acquisition
Group). Pursuant to the Merger Agreement, at the effective time, options held by
the members of the  Acquisition  Group will be cancelled and the holders of such
options will not be entitled to receive any of the merger consideration.

     Messrs.  Fish and Bernard each hold  options to purchase  shares of Sandata
common  stock,  all of which  will be  cancelled  in  exchange  for the right to
receive a cash  payment  equal to the product of the number of shares of Sandata
subject  to the  options  and the excess of the  merger  consideration  over the
exercise price per share related to such options. Accordingly, it is anticipated
that each of Messrs.  Fish and Bernard will each receive a cash payment equal to
$12,100 in exchange for the cancellation of their options.

     The members of the special committee are being paid $1,000 per day for each
day of work related  solely to serving on the special  committee,  pro-rated for
partial days.

     Mr. Bernard,  a member of the special  committee,  is a sales executive for
The Rampart Group Insurance Associates,  an insurance company from which Sandata
purchases  insurance  policies  through  Mr.  Bernard.  The  Board of  Directors
determined  that the  economic  benefits  received by The Rampart  Group and Mr.
Bernard with respect to these policies are not material to either of them.

     Indemnification   arrangements  and  directors'  and  officers'   liability
insurance for our present and former directors and officers will be continued by
the surviving corporation after the merger.

     For  additional  information  regarding  interests  of  our  directors  and
executive  officers  in the merger,  see  "Special  Factors -  Interests  of the
Members of the Acquisition Group in the Merger" and "Special Factors - Interests
of Executive Officers and Directors in the Merger."

Material United States Federal Income Tax Consequences

     The receipt of $2.21 in cash for each share of common stock pursuant to the
merger will be a taxable transaction to the unaffiliated stockholders of Sandata
for United  States  Federal  income tax  purposes  and under most state,  local,
foreign and other tax laws. For United States Federal income tax purposes,  each
of the unaffiliated  stockholders of Sandata generally will realize taxable gain
or loss as a result of the merger  measured by the difference,  if any,  between
the tax  basis  per  share  of our  common  stock  owned  by  such  unaffiliated
stockholder  of  Sandata  and $2.21.  Each  holder of a  compensatory  option to
acquire our common  stock who receives a cash  payment  equal to the  difference
between $2.21 and the exercise price per share of such option will have ordinary
income  to  the  extent  of the  cash  received.  Neither  Sandata  nor  Sandata
Acquisition  Corp.  will realize any gain or loss in the merger.  For additional
information  regarding material United States Federal income tax consequences of
the merger to the unaffiliated  stockholders of Sandata,  see "Special Factors -
Material  United States  Federal  Income Tax  Consequences  of the Merger to our
Stockholders."

Financing of the Merger

     The total  amount of funds  required  to  consummate  the merger and to pay
related fees and expenses is estimated to be approximately $_________.  Pursuant
to the Merger Agreement,  at the effective time of the merger, Messrs.  Brodsky,
Freund and Stoller will cause the necessary  funds to be  contributed to Sandata
Acquisition  Corp. and, at the effective time,  Sandata  Acquisition  Corp. will
have the funds  necessary  to pay the  purchase  price and all related  fees and
expenses in cash. The funds required to consummate the merger  transaction  will
be contributed to Sandata Acquisition Corp. by Jessica Brodsky Miller,  David C.
Brodsky,  Jeffrey H.  Brodsky  and Lee J.  Brodsky,  members of the  Acquisition
Group, from their personal funds. The merger is not conditioned on any financing
arrangements,   nor  will  any  of  the  funds   required  to  fund  the  merger
consideration be borrowed funds.

     For  additional  information  regarding  the  financing of the merger,  see
"Special  Factors - Purpose and Structure of the Merger;  Certain Effects of the
Merger; Plans or Proposals After the Merger," "Special Factors - Interest of the
Members of the  Acquisition  Group in the Merger" and "The Merger - Financing of
the Merger; Fees and Expenses of the Merger."


                                 SPECIAL FACTORS

Background of the Merger

     During the months of January and  February  of 2002,  when  Sandata  common
stock traded at an average price of $1.31 on average daily volume of 971 shares,
Mr. Brodsky began to consider a transaction  in which he could,  either alone or
with others,  obtain private ownership of Sandata. Mr. Brodsky considered taking
Sandata  private due to the fact that (i)  Sandata's  low market  capitalization
made  it  difficult  to  use  Sandata  stock  as  consideration   for  potential
acquisitions, (ii) Sandata continued to incur substantial expenses in connection
with being a publicly traded company and (iii) Sandata's current stock price did
not fully reflect  Sandata's  value and any growth in the business  would not be
reflected in Sandata's  market price  because of the lack of trading  volume and
analyst  coverage.  On April 5, 2002,  a letter was sent to Sandata on behalf of
Mr.  Brodsky by his legal counsel  proposing a "going  private"  transaction  in
which he and a group of investors would purchase all of the outstanding  Sandata
common  stock not  owned by them for $1.50 per  share.  During  this  time,  Mr.
Brodsky  contemplated  that he could  engage in this  transaction  with  Messrs.
Freund and Stoller,  the other original founders of Sandata,  along with members
of  each  of  their  families  in  order  to  continue  Sandata  as  a  private,
family-owned,  company;  however,  no  discussions  took place at this time. Mr.
Brodsky's  valuation  of $1.50 per share of Sandata  common stock was based upon
his  financial  analysis  of  Sandata's  balance  sheets,   debt,  earnings  and
capitalized  software  at the time the  offer  was made.  The  closing  price of
Sandata's  common  stock as reported on the Nasdaq  SmallCap  Market on April 5,
2002 was $0.91.  Mr.  Brodsky's April 5 letter outlined the following terms of a
potential  transaction:  the  investment  group would  offer to purchase  all of
Sandata's  outstanding  common stock not owned by them for a cash price equal to
$1.50 per share; a new company  formed and owned by the  investment  group would
purchase  Sandata's  stock  pursuant  to  an  agreement  incorporating  standard
provisions;  the stock purchase  would be funded through the working  capital of
the  newly  formed  company;  and  the  proposal  was  subject  to  satisfactory
completion of legal and financial due diligence.  The letter also indicated that
the offer would expire on April 12, 2002.

     At a special  meeting  of our Board of  Directors  on April 17,  2002,  Mr.
Brodsky  directed the attention of the Board to his April 5, 2002 letter sent to
Sandata  on  behalf  of Mr.  Brodsky  and the  investment  group  which had been
distributed  to the members of the Board at this  meeting.  The closing price of
Sandata's  common stock as reported on the Nasdaq  SmallCap  Market on April 17,
2002 was $1.00.

     The Board engaged in a discussion  regarding its fiduciary  obligations  to
the  Company  and its  stockholders  and the  possibility  of  forming a special
committee  to consider and  negotiate  the proposal on behalf of Sandata and its
unaffiliated  stockholders.  The Board also discussed the  responsibilities  and
course of conduct of the special  committee.  The Board agreed that, in order to
ensure fairness of the transaction to the unaffiliated  stockholders of Sandata,
Messrs.  Fish and Bernard  (being  Sandata's  two board  members not employed by
Sandata), would be appointed to the special committee,  subject to an additional
inquiry  to ensure  that  neither  of them  were  materially  interested  in the
proposed   transaction.   The  additional   inquiry  focused  primarily  on  the
relationships  between  Sandata and its officers and  management  directors with
Messrs.  Fish and Bernard to determine  the extent,  if any, that either of them
are  affiliated  with Sandata,  its officers or directors or any of its or their
affiliates.  The Board  considered  the  commissions  received by Mr. Bernard in
connection with Sandata's  insurance policies and determined that the receipt of
the  commissions and the business  relationship  between Mr. Bernard and Sandata
would not prevent him from providing independent advice on behalf of Sandata and
the unaffiliated  stockholders in connection with the proposed transaction.  The
Board of Directors determined that the economic benefits received by The Rampart
Group and Mr.  Bernard with respect to these policies are not material to either
of them.  The Board also  considered  the common stock owned by Mr. Fish and the
options held by each of Messrs. Fish and Bernard and determined that their stock
ownership would not prevent either of them from providing  independent advice on
behalf of Sandata and the  unaffiliated  stockholders.  The members of the Board
also agreed that the special committee should meet a soon as possible to discuss
the  proposal,  to retain  its own  legal and  financial  advisors,  to  analyze
information  relative to the proposal and to negotiate the transaction  with the
investment  group.  The  Board  agreed  to grant  the  special  committee  broad
authority to conduct its inquiry and to consider and  negotiate  the proposal on
behalf of Sandata and its  unaffiliated  stockholders,  including  the power and
authority to entertain offers from unaffiliated  third parties and to reject Mr.
Brodsky's proposal.  The Board placed no restrictions on the authority and power
of the special  committee.  The Board also considered  obtaining approval of the
"going  private"  offer  from a majority  of the  unaffiliated  stockholders  of
Sandata,  but this was rejected by the Board as  impractical.  Given the lack of
investor  interest in Sandata's  stock,  as indicated by its low trading volume,
among other  things,  it would be unlikely  that a majority of the  unaffiliated
stockholders would vote with respect to the proposed transaction. The Board also
discussed  waiving  any  conflicts  of  interest  that  would  exist  during any
potential legal  representation  of the special  committee by Certilman,  Balin,
Adler & Hyman, LLP  ("Certilman") as a result of Certilman's  representation  of
Sandata and certain of its affiliates  from time to time.  The Board  determined
that  the  economic   benefits   received  by  Certilman  with  respect  to  its
representation  of Sandata and  certain of its  affiliates  are not  material to
Certilman.

     After an additional  discussion in which Mr. Brodsky clarified the terms of
the proposal,  Mr. Brodsky  indicated  that the expiration  date of the proposal
would be  extended  indefinitely,  subject to the right to fix a new  expiration
date  upon  reasonable  notice  to the  Board,  and that the  transaction  would
probably be a cash-out merger, not a stock purchase.

         The Board then adopted the following resolutions:

         -  to form the  special  committee  for the purpose of  evaluating  the
     proposal and inquiring  into,  considering and negotiating a "going private
     transaction";

          - to appoint  Messrs.  Fish and  Bernard  as  members  of the  special
     committee;

          - to grant the special  committee all of the necessary powers to carry
     on such an inquiry,  including, but not limited to, the power to reject Mr.
     Brodsky's  proposal  and the power to  negotiate  and  accept  offers  from
     unaffiliated third-parties;

          - that the special  committee keep the president and the Board advised
     regarding  the progress of the inquiries  and  negotiations  of the special
     committee;

          - that the  "going  private"  proposal  be  submitted  to the  special
     committee for such inquiry,  consideration  and  negotiation as the special
     committee may determine;

          - the special committee specifically consider, among other things, the
     fairness of the proposed transaction to the public stockholders of Sandata;

          - that the special  committee  take all  necessary  action in order to
     assess the proposal,  including the  expenditure of funds,  retention of an
     investment banker to prepare a fairness opinion, retention of legal counsel
     to represent the special committee, and the negotiation of the terms of the
     "going private" transaction with the group of investors;

          - that  Sandata  waives all  conflicts  of  interest  that would exist
     during any  potential  legal  representation  of the special  committee  by
     Certilman in connection with the "going private" transaction; and

          - that,  provided  the  special  committee  deems it to be in the best
     interests  of Sandata,  the Board has no  objections  to the  retention  of
     Certilman as legal advisor to the special committee.

     On the same day,  the special  committee  met to discuss  the process  they
would  undertake  to  evaluate  the  "going  private"  proposal,  including  the
selection of a financial  advisor and  retention of legal  counsel.  The special
committee  identified  several  potential  financial  advisors to  contact.  The
members of the special  committee  also  discussed  compensation  and  obtaining
officer and director  insurance.  After a discussion  with a  representative  of
Certilman  regarding  potential  conflicts of interest if the special  committee
retained  Certilman  as its legal  advisor,  the special  committee  resolved to
retain  Certilman as its legal  advisor in connection  with the "going  private"
transaction.

     On April 24, 2002,  at a meeting of the special  committee,  the members of
the  committee  interviewed   representatives  of  several  potential  financial
advisors,  including Ladenburg Thalmann & Co., Inc.; Brooks, Houghton & Company,
Inc.;  Fahnestock  & Co.,  Inc.;  and  Capitalink,  L.C.  The special  committee
discussed with representatives of each of the potential financial advisors their
experience in rendering fairness opinions to companies similar in size, business
and structure to Sandata,  and in  transactions  similar to the proposed  merger
transaction. The special committee also discussed the process such advisors used
and their fee  structure,  in the event one of them was chosen to represent  the
special  committee.  Based upon the  interviews  and  materials  presented,  the
special committee  preliminarily  identified  Fahnestock & Co. and Capitalink as
potential  financial  advisors,  but expressed  concerns that the fees quoted by
Fahnestock  & Co. were  significantly  higher than had been  anticipated  by the
special   committee  and  that  Capitalink  was  currently  engaged  by  certain
affiliates of Mr. Brodsky in potential economically significant transactions and
that its  representative  had been a member of  Sandata's  placement  agent with
respect to Sandata's 1995 private placement.

     The special committee met again on April 30, 2002 and further discussed its
concerns  about  Fahnestock  & Co.'s  fees and  Capitalink's  relationship  with
affiliates of Mr. Brodsky.  The special committee decided to schedule additional
meetings with potential  financial advisors and to advise the Board of Directors
of the status of the special  committee's  deliberations and to further consider
the matter of investment advisors.

     On May 10, 2002,  the Board of  Directors  of Sandata  convened for another
special meeting at the request of the special committee to discuss the selection
of its financial  advisor.  Legal counsel to the special committee  informed the
Board that the special committee had researched a number of financial  advisors,
including Brooks, Houghton;  Capitalink;  Fahnestock; and Ladenburg Thalmann. Of
the potential  financial  advisors the special committee  initially narrowed the
selection to Capitalink and Fahnestock, but decided against retaining Capitalink
due to its ongoing relationship with National Medical Health Card Systems, Inc.,
an affiliate of Mr. Brodsky. The special committee's counsel also indicated that
Fahnestock's  fee was the highest of the  financial  advisors  interviewed.  The
members  of the  special  committee  informed  the  Board  that the fees for the
fairness  opinion  that  will  be  incurred  in  connection  with  the  proposed
transaction could be considerable and that they were aware that the payment of a
large amount of fees might affect Mr.  Brodsky's  willingness  to consummate the
transaction.  The members of the special  committee also informed the Board that
it was not comfortable  retaining a financial advisor for such a high fee in the
context of the size of the proposed  transaction and indicated that they thought
they should continue researching additional investment firms to find a financial
advisor at the lower or middle end of the cost  spectrum and the Board raised no
objections.  The special committee's legal counsel also informed the Board that,
based on the interviews  with potential  financial  advisors held by the special
committee  to date,  the fee  structure  of these  financial  advisors  would be
bifurcated,  with a lower initial payment regarding an analysis of the structure
of an offer and a higher payment upon the issuance of a fairness opinion because
of the risk associated with the issuance of an opinion.

     At this meeting,  the members of the special  committee  informed the Board
that it wanted  Sandata to enter into  indemnification  agreements  with each of
them and that, in consideration for the extra work being done in connection with
the "going  private"  transaction,  they each  wanted to receive an hourly  cash
stipend.  The Board agreed to  compensate  the members of the special  committee
$1,000 per day,  pro-rated for partial days, in light of the significant  amount
of time and attention that would be required for them to fulfill their duties to
Sandata and the unaffiliated stockholders as members of the special committee.

         The Board then adopted the following resolution:

          - that in consideration for the services to be rendered by the members
     of  the  special   committee  in  connection   with  the  "going   private"
     transaction,  such members each be paid a fee of $1,000 per day,  pro-rated
     for  the  actual  number  of  hours  devoted  to the  work  of the  special
     committee.

     On May 20, 2002, the special committee,  Sandata and Mr. Brodsky received a
letter  from  Certilman  indicating  that it has  represented  in the past,  and
currently represents,  each of Sandata and Mr. Brodsky. The letter requests that
each party  confirm its waiver of any and all  conflicts of interest  that arise
during the course and as a result of Certilman's  representation  of the special
committee in the proposed transaction.  This letter was executed by Mr. Brodsky,
Sandata and the special committee on the same day.

     On June 4, 2002, the special  committee met again with  representatives  of
potential  financial advisors,  including,  Ladenburg Thalmann & Co., Inc.; T.M.
Capital Corp.; Duff & Phelps,  LLC; and Brooks,  Houghton & Company,  Inc. After
interviewing each of the potential  advisors,  the special committee  identified
T.M.  Capital Corp. as a potential  financial  advisor and decided to advise the
full Board of Directors of its decision.

     On June 6, 2002, another special meeting of the Board of Directors was held
to further  discuss the  recommendation  of a  financial  advisor by the special
committee.  Legal counsel for the special committee  informed the Board that the
special  committee  had  preliminarily  chosen T.M.  Capital Corp. to act as its
financial  advisor,  subject  to the  successful  negotiation  of an  engagement
letter.  Counsel to the special committee also informed the Board that following
the special  committee's  meeting with T.M.  Capital Corp.,  T.M.  Capital Corp.
advised the special  committee of its fees if the special  committee  decided to
engage T.M. Capital Corp. The special  committee's legal counsel indicated that,
while the special  committee felt the fee was still somewhat  higher than it had
anticipated,  if T.M.  Capital Corp.  would agree to include its expenses in the
amount quoted,  the special committee would be more comfortable  retaining it as
financial advisor to the special committee.  The special committee then informed
the Board that it was still interviewing other potential financial advisors.

     On June 18, 2002,  the special  committee  met to discuss the status of its
discussions with T.M. Capital Corp. The special committee's legal counsel stated
that T.M. Capital Corp. would not agree to the special  committee's  comments to
its engagement  letter and therefore  declined the  representation.  The special
committee's primary comment to T.M. Capital Corp.'s engagement letter focused on
the fact that T.M.  Capital  Corp wanted to be  compensated  for its expenses in
addition to its fee for rendering a fairness opinion, the ultimate cost of which
the  special  committee  felt was  unreasonable.  At this  meeting,  the special
committee also met with  representatives of ValueMetrics and Brean Murray & Co.,
Inc. ("Brean Murray"), other potential financial advisors.  During this meeting,
the special committee  identified Brean Murray as a potential  financial advisor
and  decided  to  inform  the  full  Board of  Directors  of the  status  of its
deliberations and to consider the matter of retaining an investment advisor.

     On July 15, 2002,  the special  committee met to discuss the  engagement of
Brean Murray as its financial  advisor.  At this meeting,  the special committee
adopted the following resolutions:

          -  that,   subject  to  negotiating  an  engagement  letter  on  terms
     acceptable  to the  special  committee,  Brean  Murray be  selected  as the
     financial advisor to the special committee; and

          - that the form of engagement letter between the special committee and
     Brean Murray presented to the special  committee be authorized and that the
     execution of the same be approved.

     On July 22, 2002, the special  committee  formally  engaged Brean Murray to
provide financial  advisory services and potentially  render a fairness opinion.
The  engagement  consisted of Brean Murray  conducting a due  diligence  review,
reviewing  one  or  more  proposed  going-private  transactions,   developing  a
financial valuation,  assisting with transaction negotiations and other services
related to the proposal to take Sandata private.  The factors  considered by the
special  committee  in selecting  Brean  Murray to render the  fairness  opinion
included,   Brean  Murray's   expertise  and  experience  in  valuing  companies
comparable  in size to  Sandata,  Brean  Murray's  ability  to meet the  special
committee's needs as to time, the lack of any prior  relationship  between Brean
Murray and Sandata or any of its  affiliates,  and the  structure  and amount of
Brean Murray's fee to render the opinion.

     On  August  5,  2002,  Sandata  received  a letter  on  behalf  of  Sandata
Acquisition  Corp., a Delaware  corporation  formed by Mr. Brodsky,  offering to
purchase the shares of Sandata common stock for a cash price of $1.50 per share.
The closing price of Sandata's  common stock as reported on the Nasdaq  SmallCap
Market  on August 5, 2002 was  $0.50.  On the same day,  Sandata  issued a press
release  announcing  that it had  received an offer from a group of investors to
engage in a going  private  transaction  in the form of a merger  with an entity
owned by an investor group to be led by Mr. Brodsky, and that the investor group
offered  Sandata's  stockholders  $1.50 per share of common stock.  Sandata also
disclosed that it had formed a special committee to review the proposal and that
the  proposed  transaction  was subject to (1) the  negotiation,  execution  and
delivery of a  definitive  agreement,  (2)  approval of the  transaction  by the
special committee,  the Board of Directors and Sandata's  stockholders,  (3) the
receipt  of  a  fairness  opinion  by  the  special  committee,  (4)  applicable
regulatory  approval and (5)  obtaining all  necessary  third-party  consents or
waivers.  At this time, Mr. Brodsky still  contemplated  that he could engage in
this  transaction  with  Messrs.  Freund and  Stoller and the members of each of
their families; however, no discussions took place at this time.

     On August 20, 2002,  the special  committee  met with a  representative  of
Brean Murray,  Derek Woodworth,  to receive a presentation  regarding the merger
proposal made by Messrs.  Brodsky,  Freund and Stoller. In providing an overview
of the  proposed  transaction,  the  representative  of Brean  Murray noted that
Sandata  is  ignored  by public  financial  markets,  Sandata's  stock  price is
depressed  and  liquidity  is  nominal,   and  the  ratio  of  Sandata's  market
capitalization  to its  annual  costs  of being a public  company  is  excessive
(representing 20% to 25% of Sandata's  pre-announcement  market capitalization).
In addition,  Brean  Murray's  representative  discussed the fact that Sandata's
stock traded  inefficiently  and explained that in an  inefficient  marketplace,
investors  would never  realize  true  intrinsic  value for their  common  stock
investment.

     Brean Murray's  representative also discussed various valuation models. The
representative indicated that, based on a discounted cash flow analysis, Sandata
had a  discounted  cash  flow  value  of  $2.05  per  share,  assuming  a liquid
marketplace.  The representative  also noted that a terminal  multiplier of more
than four could not be used because of Sandata's inefficient  marketplace (small
size and lack of growth). The representative also felt it appropriate to place a
20% majority  insider-owned discount and a 20% illiquidity discount on the value
of Sandata. Brean Murray indicated that a majority owner discount is appropriate
when one or more institutions or individuals own a substantial percentage of the
outstanding  stock of a company.  Based upon these factors,  the  representative
indicated that the discounted cash flow value of Sandata was $1.23 per share.

     Brean Murray's  representative  also informed the special  committee that a
comparable  company  analysis,  in which eight  companies  that were selected by
Brean Murray  because  they were deemed  relatively  similar to Sandata,  showed
median values of approximately  $1.55 per share. The  representative  noted that
this  valuation  overstated  the value of  Sandata  since all of the  comparable
companies  were larger and enjoyed more  efficient  markets than Sandata.  Brean
Murray's  representative  also  pointed  out that the $1.50 per share  offer,  a
premium  of  approximately  200% over the  pre-announcement  price of  Sandata's
stock,  is substantial and not likely to be matched by another bidder or be made
available  via the public  markets in terms of stock price.  The  representative
noted that other valuation  models,  such as the book value or appraised  value,
were not relevant to Sandata and expressed the opinion that the discounted  cash
flow model was the most relevant model to Sandata.

     Brean Murray's  representative also indicated that the projections provided
by Sandata  were  reasonable.  The members of the special  committee  questioned
Brean Murray's  representative  regarding the  investigation  performed by Brean
Murray in connection with the projections  provided by Sandata  management.  The
special  committee  relied on Brean Murray's  conclusion that these  projections
were  reasonable,  but did not conduct an  independent  inquiry to verify  their
accuracy  and  completeness.  The  special  committee  also  discussed  with the
representative  from Brean  Murray  whether  it should  solicit  indications  of
interest in engaging in a similar  transaction from unaffiliated  third parties.
Brean Murray's  representative  indicated that a market check would not be worth
the time and expense  given that Mr.  Brodsky was not  interested in selling his
shares of Sandata to an  unaffiliated  third party.  Based upon the  information
Brean Murray provided to the special committee,  its representative  advised the
special  committee  that in its  opinion  the $1.50  per share  offer was a fair
price.  The members of the special  committee then engaged in a discussion  with
the Brean Murray  representative  and its legal  counsel about whether it should
try to obtain a higher price per share in the  transaction  although the current
offer of $1.50 was fair to  Sandata's  stockholders  from a  financial  point of
view.  The special  committee  concluded,  at the  suggestion of Brean  Murray's
representative  that it would try and  negotiate for a price closer to $1.75 per
share in order to obtain a higher  price for the  stockholders  of Sandata.  Mr.
Woodworth  agreed to revise Brean Murray's  presentation  so that the members of
the special  committee  could support a negotiation  with the buy-out group at a
higher price. Mr. Woodworth added that any amount the special committee obtained
above $1.50 per share would be inherently fair.

     On August 27,  2002,  the  special  committee  met to discuss a strategy of
negotiating  with the buy-out  group to obtain a higher  price per share.  Brean
Murray's  representative  distributed a  presentation  to the special  committee
supporting an increased  per-share value. The special  committee agreed to begin
negotiations  at $2.00 per share,  but also to accept a counteroffer at $1.75 or
higher.  Brean Murray's  representative  noted to the special committee that, in
its opinion,  the offer of $1.50 should be considered a significant  enhancement
to stockholder value. The special committee noted that Brean Murray's discounted
cash flow analysis presented at this meeting was intentionally inflated by Brean
Murray's  representative  at the  request of the special  committee  in order to
provide the committee with leverage to negotiate with Sandata  Acquisition Corp.
for a higher price per share of Sandata common stock.

     On the same day, a special  meeting of the Board of  Directors  was held at
the  request  of the  special  committee  to  respond  to the  offer by  Sandata
Acquisition  Corp.  to take  Sandata  private.  Legal  counsel  for the  special
committee  informed the Board that the special committee believed that there was
more  stockholder  value in Sandata than was  reflected  in the "going  private"
offer and requested  that Brean Murray  discuss the financial  background to the
special  committee's  conclusion.  A representative  of Brean Murray presented a
brief  overview of the  transaction  and pointed out that  Sandata had no recent
history of growth,  no coverage by  financial  industry  analysts,  and has seen
little  institutional  interest  in  its  current  or  future  performance.  The
representative  also  noted  that  Sandata's   enterprise  value  prior  to  the
announcement of the "going private" offer was approximately $4.1 million.  Brean
Murray's  representative  proceeded  with a summary of the  various  analyses of
Sandata that it had performed.  The first,  the  comparable-companies  analysis,
included the review of publicly available information about eight companies. All
of the  selected  companies  were in the same or similar  lines of  business  as
Sandata,  but were all larger  than  Sandata.  Based upon this  analysis,  Brean
Murray  concluded  that the median price in the range of values  resulting  from
this analysis was $2.40, prior to factoring in an applicable discount due to the
large  percentage  of shares  held by a single  stockholder.  The  Brean  Murray
representative then described differing rates of return that would accrue to the
acquiring  group's members  depending on the per-share price of the transaction.
Based upon a purchase price of $2.00 per share in the transaction,  the investor
group would receive an estimated  internal rate of return of  approximately  27%
over a three-year period.

     The Brean Murray  representative  then described the  discounted  cash flow
analysis,  which relied in part on financial projections prepared by Sandata and
included a  capital-risk  component  which lead to a discounting of the terminal
value  derived by Brean  Murray.  The members of the Board  inquired as to Brean
Murray's  investigation in connection with the financial projections provided by
Sandata  management.  The Board relied on Brean Murray's  conclusion  that these
projections  were reasonable,  but it did not conduct an independent  inquiry to
verify  their  accuracy  and  completeness.  After  applying an  additional  20%
discount  because a large percentage of Sandata common stock is held by a single
stockholder,  Brean Murray  indicated  that the  discounted  cash flow  analysis
yielded a value of $1.91 per share.

     After clarification by the Brean Murray representative and legal counsel to
the special  committee that Brean Murray was not  recommending an offer of $1.91
per share of Sandata common stock,  Mr.  Brodsky  advised the Board that Sandata
Acquisition  Corp.  would increase its offer to $1.91 per share.  Mr.  Brodsky's
decision to increase Sandata  Acquisition  Corp.'s offer to $1.91 was the result
of  negotiations  with the  members of the  special  committee,  Brean  Murray's
presentation,  and the  fact  that  the  increased  price  limited  the  risk of
stockholder  litigation  regarding the fairness of the price. At no point during
this  meeting  did  Brean   Murray's   representative   recommend  that  Sandata
Acquisition  Corp. offer $1.91 per share of Sandata common stock.  After a brief
recess by Messrs. Fish and Bernard, they informed the Board that they considered
the $1.91 per share  offer a fair price and that,  subject  to the  receipt of a
fairness  opinion  from  Brean  Murray  and  the  successful  negotiation  of  a
definitive  agreement,  they would  recommend a transaction at this price to the
Board and Sandata's unaffiliated stockholders.

     On August 30, 2002,  Sandata  announced  that it had accepted an offer from
Sandata  Acquisition  Corp.  to take Sandata  private  pursuant to a transaction
whereby  Sandata  Acquisition  Corp.  would pay $1.91 per share in cash for each
outstanding  share of Sandata common stock. The transaction  remained subject to
the  satisfaction  of the  same  conditions  contained  in  Sandata's  August  5
announcement.

     On  September  2, 2002,  a  stockholder  of Sandata  filed a lawsuit in the
Delaware  Chancery  Court  against  the  Company and the members of its Board of
Directors.  (Eva Seitler v. Sandata Technologies,  Inc., Bert E. Brodsky, Ronald
L. Fish,  Martin  Bernard,  Hugh  Freund,  and Gary  Stoller,  Civil  Action No.
19886-NC).  The plaintiff  alleges that the defendants  breached their fiduciary
duties to Sandata and Sandata's  public  stockholders in connection with Sandata
Acquisition  Corp.'s proposal to acquire all of the outstanding public shares of
Sandata.  The  plaintiffs  also allege,  among other things,  that the directors
serving  on the  special  committee  are not  independent,  and that the  merger
consideration is inadequate.  The complaint seeks certification of the action as
a class action,  both  preliminary and permanent  injunctive  relief against the
proposed  transaction,  and  rescission if it is not enjoined.  On September 18,
another stockholder of Sandata,  Stephen Yetzer, filed a separate lawsuit in the
same  court,  against  the  same  defendants,   making  substantially  identical
allegations  and seeking  substantially  identical  remedies  (Civil  Action No.
19903-NC).  These actions were consolidated by the Delaware Chancery Court in an
order dated October 22, 2002 (Civil Action No. 19886-NC).

     On October 3, 2002,  the special  committee's  legal  counsel at  Certilman
circulated  a  preliminary  draft  Merger  Agreement  on behalf  of the  special
committee to Sandata  Acquisition  Corp. and indicated that Sandata  Acquisition
Corp. and its legal counsel,  Panza,  Maurer & Maynard,  P.A. ("Panza  Maurer"),
should review the agreement and proceed with negotiations. The preliminary draft
Merger  Agreement  generally  provided that at the effective time of the merger,
Sandata  Acquisition Corp. would merge with and into Sandata,  and Sandata would
continue as the surviving  corporation and that each share of Sandata (excluding
shares being  contributed to Sandata  Acquisition Corp. by the Acquisition Group
and owned by holders who validly perfect their  appraisal  rights under Delaware
law) would be converted into the right to receive $1.91 in cash.

     Following  circulation  of the  preliminary  draft  Merger  Agreement,  Mr.
Brodsky  contacted  Messrs.  Freund and  Stoller  and asked each of them if they
would be  interested  in  joining  Mr.  Brodsky  in the  merger  transaction  by
contributing their shares of Sandata common stock into Sandata Acquisition Corp.
prior to the merger.  Messrs.  Freund and Stoller  indicated  that they might be
interested  in pursuing this  transaction  with Mr.  Brodsky,  but would need to
consider the matter further.

     Later in October,  Messrs.  Brodsky,  Freund and Stoller engaged in further
discussions  regarding the  possibility of having the members of their immediate
families who owned Sandata  common stock  participate in the merger as well. Mr.
Brodsky  indicated  that he was going to discuss  this  matter with his wife and
children and thought they might be interested in taking part in the transaction.
Messrs. Freund and Stoller indicated that they would need to discuss this matter
in more detail with certain  memebers of their families.  Over the course of the
next several days, each of Messrs.  Brodsky,  Freund and Stoller  discussed this
matter with certain members of their families.

 On October 16,  Sandata  Acquisition  Corp.'s legal counsel at Panza Maurer
requested that the Merger Agreement be revised in the following respects:

     - to reflect that Sandata  Acquisition Corp. is a corporation  formed under
the laws of the State of Delaware;

     - to reflect  that the merger  consideration  will be paid from the working
capital  of  Sandata  Acquisition  Corp.  and that  there  will be no lenders or
financing conditions;

     - that Sandata make  representations and warranties with respect to (1) its
organization,  standing  and  power;  (2)  its  subsidiaries;  (3)  its  capital
structure; (4) its authority to engage in the transaction; (5) the compliance of
its SEC  filings  during the last three  years with all laws and that all of its
filings were timely;  (6) the accuracy of the information in the proxy statement
and in the Schedule 13e-3;  (7) the impact of any changes or events in operating
its  business;  (8) the  presence of any  litigation  against  Sandata;  (9) the
compliance  with Delaware law of the merger and the Merger  Agreement;  and (10)
the receipt of a fairness opinion from Sandata's financial advisor;

     - that  Sandata  Acquisition  Corp.  will not  close on the  merger  unless
Sandata's  representations and warranties are true and correct as of the closing
date; and

     - that the  representations and warranties of either party under the Merger
Agreement will not survive beyond the effective time.

     On October 23, 2002,  the special  committee's  legal  counsel at Certilman
contacted  Sandata  Acquisition  Corp.'s  legal  counsel  at  Panza  Maurer  and
indicated  that  the  special  committee  did not  agree  to any of the  changes
requested by Sandata  Acquisition  Corp. The special  committee's  legal counsel
further informed Sandata  Acquisition Corp.'s legal counsel at Panza Maurer that
the special  committee  was  requesting  additional  information  regarding  the
organizational  and  capital  structure  of Sandata  Acquisition  Corp.  Between
October  23 and  October  28,  legal  counsel  at  Certilman  and  Panza  Maurer
negotiated the final aspects of the Merger Agreement including, the treatment of
options  held  by the  members  of the  Acquisition  Group,  the  timing  of the
contributions of Sandata common stock and cash to Sandata Acquisition Corp., the
financing  necessary to consummate  the merger and the payment of expenses.  The
Merger  Agreement was ultimately  revised to include  provisions  concerning the
following:

     - the  cancellation  of options to purchase  Sandata  common  stock held by
Messrs. Brodsky, Freund and Stoller and members of their immediate families;

     - the capitalization of Sandata Acquisition Corp. and beneficial  ownership
of Sandata  common stock by Messrs.  Brodsky,  Freund and Stoller and members of
their immediate families;

     - the contribution of Sandata common stock to Sandata  Acquisition Corp. by
Messrs. Brodsky, Freund and Stoller and members of their immediate families;

     - that  Messrs.  Brodsky,  Freund and  Stoller  will  vote,  and will cause
Sandata  Acquisition Corp. and members of their immediate  families to vote, all
of the Sandata  common  stock owned by them and it in favor of the merger,  that
they will not take any action that would prevent Sandata  Acquisition Corp. from
owning  their  Sandata  common stock and that they would  contribute  sufficient
capital to Sandata Acquisition Corp. to pay the merger consideration; and

     - that Messrs.  Brodsky,  Freund and Stoller will pay Sandata's expenses in
connection  with the  merger in the  event the  transaction  is  terminated  for
reasons other than Sandata's failure to satisfy a condition.

     In late  October,  Messrs.  Brodsky,  Freund and Stoller met to discuss the
specific terms of each of their  participation in Sandata  Acquisition Corp. and
the merger transaction in greater detail.  Ultimately,  each of Messrs. Brodsky,
Freund and Stoller  executed the Merger  Agreement,  effective as of October 28,
2002.

     On October  28,  2002,  a meeting of the  special  committee  was held with
representatives  of Brean Murray and Certilman  present.  Counsel to the special
committee  first  discussed the terms of the  indemnification  agreements he had
prepared  on  behalf  of the  members  of the  special  committee.  The  special
committee's  legal counsel also presented the Merger Agreement to the members of
the committee  explaining  its material  terms.  At this  meeting,  Brean Murray
presented  to the special  committee  its  financial  analysis  of the  proposed
transaction  which included a discussion of a discounted  cash flow analysis,  a
comparable  company  analysis and a comparable  transaction  valuation  model of
Sandata.  The special  committee  also  engaged in a  discussion  of a number of
factors  relative to the  proposed  merger.  Based on Brean  Murray's  statement
regarding the fairness of the proposed merger  consideration  and subject to the
terms and conditions of the Merger Agreement,  the special committee unanimously
determined  that  the  $1.91  per  share  merger  consideration  was fair to the
unaffiliated  stockholders  of Sandata,  that the merger is advisable and in the
best interests of Sandata and its  unaffiliated  stockholders,  and to recommend
that the Board of  Directors  and  stockholders  of Sandata  vote to approve the
Merger Agreement.  In reaching this determination,  the special committee relied
on and  expressly  adopted the fairness  opinion of Brean Murray that the merger
consideration to be received by Sandata's stockholders is fair, from a financial
point of view,  and adopted the analyses set forth in the report of Brean Murray
presented  to the special  committee  and attached as Appendix C-1 to this proxy
statement.

     On the same day, a special  meeting of the Board of  Directors  was held at
the request of the special  committee in order for the full board to receive the
recommendation  of the special  committee and to vote upon the Merger Agreement.
Counsel  to  the  special  committee  first  discussed   execution  of  the  new
indemnification  agreements  with  the  members  of the  Board  to  which no one
objected. The special committee's counsel then presented the Merger Agreement to
the full Board, in the form previously  approved by the special  committee.  The
special  committee's  legal counsel  explained the material  terms of the Merger
Agreement to the Board and then indicated that the special committee, based upon
the fairness  opinion from Brean Murray and in light of and subject to the terms
and conditions set forth in the Merger Agreement, had determined that the merger
consideration is fair to the unaffiliated  stockholders of Sandata, and that the
merger is advisable  and in the best  interests of Sandata and its  unaffiliated
stockholders. At this meeting, a representative of Brean Murray presented to the
special  committee its  financial  analysis of the proposed  transaction,  which
included a discussion of a discounted cash flow analysis,  a comparable  company
analysis and a comparable transaction valuation model of Sandata. Following this
presentation,  Brean Murray's representative  delivered to the special committee
its  opinion  that,  as of that date and  based on and  subject  to the  matters
described  in the  opinion,  the  merger  consideration  to be paid  by  Sandata
Acquisition  Corp. in connection with the proposed merger  transaction was fair,
from a financial point of view, to the  stockholders of Sandata.  The members of
the Board also discussed a number of factors  relative to the merger.  After the
discussion the Board of Directors unanimously adopted the following resolutions:

     - that, based on the  recommendation and approval of the special committee,
the merger  consideration  is fair to the holders of the Company's common stock,
other than Sandata Acquisition Corp. and its affiliates;

     - that the merger and the Merger  Agreement  are  advisable and in the best
interests of Sandata and its stockholders,  other than Sandata Acquisition Corp.
and its affiliates; and

     - that  the  Merger  Agreement  is  approved  and that it be  executed  and
submitted  to the  stockholders  of  Sandata  for  their  approval  at a special
meeting.

     In reaching its determination, the Board of Directors expressly relied upon
and adopted the analyses of the special  committee.  The  foregoing  resolutions
were unanimously approved by our Board of Directors,  including by a majority of
our  directors  who are not  employees  of  Sandata  (namely  Messrs.  Fish  and
Bernard).

     On November 4, 2002, the first date on which all of the signature  pages to
the Merger Agreement were delivered,  Sandata issued a press release  announcing
the execution of the Merger Agreement with Sandata Acquisition Corp. and Messrs.
Brodsky, Freund and Stoller.

     In early  November,  Messrs.  Brodsky,  Freund and Stoller met with certain
members of their respective  families to further discuss the terms of the merger
transaction in greater detail. The family members of Messrs. Brodsky, Freund and
Stoller then  indicated  that they would be interested in  participating  in the
merger  transaction as  contemplated  by the Merger  Agreement,  subject to more
definitive discussions regarding their respective obligations.

     Later in November,  the Bayard Firm,  Delaware legal counsel to Sandata and
the members of the special committee, contacted counsel to the plaintiffs in the
consolidated  actions  against  Sandata and the members of the Board regarding a
possible settlement. On November 7, 2002, The Bayard Firm received a letter from
plaintiffs'  counsel,  Beattie & Osborn LLP, indicating that the plaintiffs were
willing to settle the actions if the merger consideration was increased to $2.31
per share,  if the  plaintiffs  were entitled to  confirmatory  discovery and if
reasonable  attorneys' fees were paid to plaintiffs' counsel. In response to the
letter from plaintiffs' counsel, representatives from The Bayard Firm, Certilman
and Greenberg  Traurig LLP, counsel to the members of the Acquisition  Group who
are  directors  of  Sandata,  contacted  Beattie & Osborn  asking them to send a
revised letter lowering their settlement request to $2.21 per share. On November
19,  2002,  Beattie  & Osborn  sent a  revised  letter  to The  Bayard  Firm and
Greenberg Traurig  indicating the plaintiffs'  willingness to settle the actions
if the merger  consideration was increased to $2.21 per share, if the plaintiffs
were entitled to confirmatory  discovery and if reasonable  attorneys' fees were
paid to plaintiffs'  counsel.  Subsequently,  Beattie & Osborn was notified that
Sandata  Acquisition  Corp. had agreed to increase the merger  consideration  to
$2.21 per share, subject to the execution of formal documents.

     On December 23, 2002, a Memorandum of  Understanding  was executed  between
Sandata, Messrs. Brodsky, Freund, Stoller, Fish and Bernard, as defendants,  and
the plaintiffs in the two lawsuits. Pursuant to the Memorandum of Understanding,
Sandata  Acquisition  Corp. agreed to increase its offer set forth in the Merger
Agreement,  to $2.21 for each  outstanding  share of Sandata  common stock.  The
Memorandum of Understanding also provides for the parties to the lawsuits to use
their best efforts to agree upon, execute,  and present to the Delaware Chancery
Court a formal  Stipulation of Settlement in order to obtain the approval of the
Delaware  Chancery  Court of the  settlement  and  release  of the claims in the
consolidated actions. The parties agreed that the Stipulation of Settlement will
provide,  among other things,  (i) that Sandata  Acquisition Corp. will increase
its offer contained in the Merger Agreement to $2.21 per share of Sandata common
stock and (ii) for a complete  release  and  settlement  of all  claims  against
Sandata,  the members of its Board, Sandata Acquisition Corp. and, among others,
their respective predecessors,  successors, assignees, parents and subsidiaries,
which have been, or could have been,  asserted  relating to Sandata  Acquisition
Corp.'s  proposal.  The Memorandum of  Understanding  further  provides that the
parties to the  consolidated  actions will petition the Delaware  Chancery Court
for final certification of a non-opt out class defined as all holders of Sandata
common stock as of August 5, 2002, through and including the closing date of the
Merger Agreement. The settlement contemplated by the Memorandum of Understanding
is  subject  to  the  execution  of a  formal  Stipulation  of  Settlement,  the
consummation of the merger transaction with Sandata  Acquisition Corp. for $2.21
per share of Sandata common stock, final approval of the Delaware Chancery Court
of the settlement,  including  certification  of the class, and the dismissal of
the  consolidated  actions by the Delaware  Chancery  Court.  The  Memorandum of
Understanding  also provides that,  subject to approval of the Delaware Chancery
Court,  none of the  defendants  will object to an  application  by  plaintiff's
counsel for attorneys' fees and expenses in an amount not to exceed $60,000.

     On January 16,  2003,  the special  committee  met to discuss the  proposed
Stipulation of Settlement and amendment to the Merger Agreement.  The members of
the special  committee  discussed  with its legal counsel the  background of the
settlement which led to the execution of the Memorandum of Understanding and the
proposed Stipulation of Settlement, the general provisions of the Stipulation of
Settlement and the amendment to the Merger Agreement. The members of the special
committee  noted that the  plaintiffs  in the lawsuits  against  Sandata and the
members of the Board of Directors were represented by independent  legal counsel
who negotiated for an increase in the merger  consideration  from $1.91 to $2.21
per share of Sandata  common stock.  The members of the special  committee  also
noted that Brean Murray's  fairness  opinion,  that the merger  consideration of
$1.91 per share of Sandata common stock under the Merger Agreement, prior to the
amendment increasing the merger  consideration,  is fair, from a financial point
of view, to the stockholders of Sandata, had not been withdrawn by Brean Murray.
At the end of this  meeting,  the members of the special  committee  unanimously
determined to recommend that the Board of Directors  enter into the  Stipulation
of  Settlement  which  provides for an increase in the merger  consideration  to
$2.21 per share of Sandata common stock. The special  committee also unanimously
determined  that  the  amended  merger  consideration  of  $2.21  is fair to the
unaffiliated  stockholders of Sandata, and recommended to our Board of Directors
that, subject to the execution of the Stipulation of Settlement,  it approve the
amendment and recommend to the  unaffiliated  stockholders  of Sandata that they
approve the amendment.

     On the same date, the Board of Directors met to receive the recommendations
of  the  special   committee.   The  members  of  the  Board,   based  upon  the
recommendations of the special committee that Sandata enter into the Stipulation
of  Settlement  and that the  amendment to the Merger  Agreement to increase the
merger  consideration  to $2.21 per share of Sandata common stock is fair to the
unaffiliated   stockholders   of  Sandata,   unanimously   determined  that  the
Stipulation  of  Settlement  be  executed  by Sandata  and that,  subject to its
execution,  the Merger Agreement be amended to increase the merger consideration
to $2.21 per share of Sandata common stock and that the merger consideration, as
amended,  is fair to, and the merger is advisable and in the best  interests of,
Sandata and the unaffiliated stockholders of Sandata.

     Shortly  after the Board  approved the  amendment to the Merger  Agreement,
Messrs.  Brodsky,  Freund and Stoller met to discuss their obligations under the
Merger  Agreement.  After an  additional  meeting with all of the members of the
Acquisition  Group,  the members of the Acquisition  Group verbally agreed that,
after the effective time of the merger, each of them would own the same pro rata
interest in the surviving  corporation as they owned  immediately prior to their
contribution  of their  Sandata  common stock to Sandata  Acquisition  Corp.  In
addition,  Mr. Brodsky's  children verbally agreed to contribute an aggregate of
$1,494,310  to the  capital  of  Sandata  Acquisition  Corp.,  increasing  their
ownership therein pro rata based upon their additional contributions.

    On January 27, 2003, Sandata, the members of its Board of Directors and the
plaintiffs in the consolidated  actions entered into a Stipulation of Settlement
in connection with this action. The Stipulation of Settlement provides generally
for the dismissal of the  consolidated  action and release of any and all causes
of action or claims,  among other things,  that any of the plaintiffs or members
of the class have against any defendant or their  affiliates,  including,  among
others,  any of their associates,  officers,  directors,  attorneys,  investment
bankers,   investment   advisors  and  valuation   experts,   including  Sandata
Acquisition  Corp.  and Brean Murray,  among  others,  arising out of any of the
proposals  to take  Sandata  private,  the  merger,  the Merger  Agreement,  the
transactions  contemplated  thereby,  the  negotiation  thereof,  and any public
filings or  statements  by the  defendants  contained  in any of the  above.  In
consideration  for the dismissal of the  consolidated  action and release of all
causes of action and claims,  Sandata  Acquisition  Corp. agreed to increase the
merger  consideration from $1.91 to $2.21 per share of Sandata common stock. The
Stipulation of Settlement further provides that the consolidated  action will be
maintained as a class action by the plaintiffs,  without the right of any of the
members of the class to opt out. The parties  agreed to file the  Stipulation of
Settlement  with the Delaware  Chancery  Court as soon as  practicable.  Sandata
agreed to mail  notice to the  members  of the  class who were  stockholders  of
record at any time from  August 5, 2002,  through  the date of the  merger.  The
defendants in the  consolidated  action also agreed not to oppose an application
to the Delaware  Chancery Court for  attorneys'  fees and expenses not to exceed
$60,000.  If the Delaware  Chancery Court approves the  settlement,  the parties
agreed  to move the court for an Order and  Final  Judgment  (i)  approving  the
settlement as fair, reasonable,  adequate and in the best interests of the class
and directing  consummation of the settlement in accordance with its terms, (ii)
formally  certifying the class,  (iii) dismissing the  consolidated  action with
prejudice  as  against  the  plaintiffs  and  all  members  of the  class,  (iv)
permanently  barring and enjoining the members of the class from instituting any
action  or other  proceeding  in any court in any  jurisdiction  that in any way
relates to the settled claims, (v) authorizing  plaintiffs' counsel to execute a
release of settled  claims on behalf of the members of the class,  (vi) awarding
plaintiffs'  counsel such fees and expenses as the court deems  appropriate  and
(vii) reserving jurisdiction over all matters relating to the administration and
consummation  of the  settlement.  The  Stipulation  of Settlement is subject to
final approval of the  settlement by the Delaware  Chancery Court of which there
can be no assurances.

     On January 27, 2003,  Sandata issued a press release announcing that it had
executed the  Stipulation  of  Settlement  and  subsequently  amended the Merger
Agreement to increase the merger  consideration from $1.91 to $2.21 per share of
Sandata common stock.

Opinion of Brean Murray

     In connection with the merger,  the special  committee engaged Brean Murray
as its  financial  advisor to render an opinion as to the fairness to our public
stockholders,  from a financial point of view, of the merger consideration.  The
factors  considered by the special committee in selecting Brean Murray to render
the fairness opinion included Brean Murray's expertise and experience in valuing
companies  comparable  in size to Sandata,  Brean  Murray's  ability to meet the
special committee's needs as to time, the lack of any prior relationship between
Brean Murray and Sandata or any of its affiliates,  and the structure and amount
of Brean  Murray's fee to render the opinion.  According to Brean Murray,  while
the  fairness   opinion  does  not   distinguish   between  the  affiliated  and
unaffiliated  stockholders of Sandata, the opinion does indicate that the merger
consideration is fair to the unaffiliated  stockholders,  from a financial point
of  view,  because  although  the  merger  consideration  is the  same  for  all
stockholders,  the  fairness  opinion  takes into  account  that a  majority  of
Sandata's common stock is beneficially  owned by Sandata  Acquisition  Corp. and
the members of the Acquisition Group.

     Neither we, nor the special committee, imposed any limitations on the scope
of Brean Murray's investigation or the procedures to be followed by Brean Murray
in rendering its opinion.  The Brean Murray  opinion was for the use and benefit
of the special  committee in connection with its consideration of the merger and
was not intended to be and does not  constitute a  recommendation  to any of our
stockholders as to how such stockholder  should vote with respect to the merger.
Brean Murray was not requested to opine as to, and its opinion does not address,
our  underlying  business  decision to effect the merger,  nor did Brean  Murray
recommend the amount of merger  consideration  to be paid in connection with the
merger.  Further,  Brean Murray was not asked to consider,  and its opinion does
not address,  the relative  merits of the merger as compared to any  alternative
business strategy that might exist for us.

     The full text of the written  opinion of Brean  Murray,  dated  October 28,
2002, which sets forth assumptions made,  matters  considered and limitations on
the review undertaken in connection with that opinion, is attached to this proxy
statement  as  Appendix  B and is  incorporated  herein  by  reference.  Sandata
stockholders are urged to, and should,  read the Brean Murray opinion carefully.
The Brean  Murray  opinion  was  provided  for the  information  of the  special
committee in its  evaluation of the merger,  and the Brean Murray opinion is not
intended to be, nor does it constitute, a recommendation as to how any holder of
shares should vote with respect to the merger.

     The following  paragraphs  summarize the financial and comparative analyses
performed by Brean Murray in connection  with its opinion.  The summary does not
represent a complete  description of the analyses  performed by Brean Murray and
is qualified in its entirety by reference to the full text of such opinion.

     In arriving at its opinion,  Brean Murray (a) reviewed  publicly  available
historical financial and operating data concerning Sandata, including the Annual
Reports on Form 10-KSB for the fiscal  years ended May 31,  2000,  May 31, 2001,
and May 31, 2002;  and the Quarterly  Report on Form 10-QSB for the period ended
August 31,  2002;  (b)  reviewed  projected  financial  information  prepared by
Sandata management;  (c) reviewed publicly available information  concerning the
company; (d) conducted discussions with Sandata senior management concerning the
company's  business  prospects and  historical  financial  results and projected
financial information; (e) reviewed the Merger Agreement dated October 28, 2002;
and (f) performed  various  financial  analyses of the company,  as Brean Murray
deemed appropriate.

     In arriving at its opinion, Brean Murray assumed and relied on the accuracy
and  completeness of the financial  information  the company  provided and other
information  used by  Brean  Murray  without  assuming  any  responsibility  for
independent verification of such information. Brean Murray further relied on the
assurances of  management  that they were not aware of any facts that would make
the information provided inaccurate or misleading. With respect to the financial
projections,  Brean Murray  assumed that the  projections  were prepared in good
faith in  accordance  with  industry  practice  on a basis  reflecting  the best
currently  available  estimates  and  judgments  of Sandata's  management  as to
Sandata's future financial performance. In arriving at its opinion, Brean Murray
did not conduct any physical  inspection of the  properties or facilities of the
company,   did  not  make  any  evaluations  or  appraisals  of  the  assets  or
liabilities, and was not presented with any appraisals. The Brean Murray opinion
was necessarily  based on financial,  economic,  market and other  conditions as
they existed on, and could be evaluated as of, its date.

     The   preparation   of  an  opinion  as  to  the  fairness  of  the  merger
consideration,  from a financial point of view, involves various  determinations
as to the most  appropriate  and relevant  methods of financial and  comparative
analysis and the  application of those methods to the particular  circumstances;
therefore, the opinion is not easily summarized. Furthermore, in arriving at its
opinion, Brean Murray did not attribute any particular weight to the analyses or
factors  considered  by it,  but rather  made  qualitative  judgments  as to the
significance  and  relevance  of each  analysis and factor.  Accordingly,  Brean
Murray  believes  that  its  analyses  must be  considered  as a whole  and that
considering any portions of its analyses or any of the factors considered by it,
without  considering  all  analyses and  factors,  could create a misleading  or
incomplete  view of the process  underlying  the Brean  Murray  opinion.  In its
analyses,   Brean  Murray  made  many   assumptions  with  respect  to  industry
performance, general business and economic conditions and other matters, many of
which are beyond our control.  Any estimates contained in these analyses are not
necessarily  indicative  of actual  values or  predictive  of future  results or
values,  which may be significantly more or less favorable than those estimates.
Additionally,  analyses relating to the value of businesses do not purport to be
appraisals  or to reflect the prices at which  businesses  actually may be sold.
Accordingly,  the analyses and estimates are  inherently  subject to substantial
uncertainty.

     The following is a summary of the material financial analyses performed and
presented by Brean Murray to the special committee on October 28, 2002.

     In connection with its opinion,  Brean Murray performed  certain  financial
and comparative  analyses.  Brean Murray considered  several methods to evaluate
the fairness of the merger  consideration.  These methods  included (a) a public
company trading  analysis;  (b) an analysis of premiums paid in this transaction
compared to average  premiums  paid;  and (c) a discounted  cash flow  valuation
analysis.  Brean  Murray  utilized a two-year  financial  forecast  provided  by
management and extrapolated a third projected year with Sandata's  approval (the
"Projections"). These analyses were considered relevant to a financial review of
the terms of the Merger  Agreement and the strategic  alternatives  available to
Sandata. The material analyses and their findings are summarized below.

     PUBLIC  COMPARABLE   COMPANY  ANALYSIS.   Brean  Murray  reviewed  publicly
available  financial  and stock market  information  relating to seven  selected
companies in lines of business believed to be relatively similar to Sandata. The
companies selected were Creative Computer Applications,  Inc., Health Management
Systems,  Inc.,  Intervoice-Brite,  Inc.,  LanVision  System,  Inc.,  Allscripts
Healthcare  Solutions,  Inc., Quality Systems, Inc. and TriZetto Group, Inc. The
companies  selected  were in the  healthcare  software  solutions  business  and
related  industries,  however,  it was noted that there were no public companies
with precisely the same mix of business or financial composition as Sandata. The
following  table  summarizes  selected data  reviewed as part of Brean  Murray's
analysis. Projections for 2002 are based on estimates of First Call Corporation,
a data service that monitors and publishes  compilations  of earnings  estimates
produced  by  selected  research  analysts  regarding  companies  of interest to
investors, for the selected companies and management estimates for Sandata.

                                                                 

                                    High            Low            Median        Sandata
Price / LTM Earnings                27.4 x          7.3 x         21.6 x         16.0 x
Price / 2003 Earnings               23.8 x          8.3 x         18.0 x         11.7 x
Equity Value / Book Value           2.9 x           0.9 x          1.3 x          0.9 x
Enterprise Value / LTM Revenue      2.0 x           0.3 x          0.8 x          0.5 x
Enterprise Value / LTM EBITDA       9.3 x           2.7 x          7.2 x          2.6 x
Enterprise Value / LTM EBIT         10.5 x          4.4 x          8.8 x          9.7 x


Notes:
Enterprise Value = market value of equity plus net debt.
LTM = Last twelve months.
EBITDA = earnings before interest, taxes, depreciation and amortization.
EBIT = earnings before interest and taxes.
2003 Sandata earnings multiple based on the 12 months ended 5/31/03.
Outliers are excluded.

     Applying  the median  multiples  and a Majority  Owner  Discount  of 20% to
Sandata's financial results, Brean Murray derived an equity value range of $2.06
to $2.92 per diluted  share and a median value of $2.10.  Brean  Murray  advised
that the Majority Owner Discount is appropriate when one or more institutions or
individuals  own a  substantial  percentage  of the diluted  shares  outstanding
(typically  greater than 25%). When this occurs,  these owners have  substantial
veto rights to any  unfriendly  or unwanted  purchases  of the company  with the
effect of potentially  blocking higher bids for a company.  Brean Murray advised
that in its experience, it has seen Majority Owner Discounts that range from 10%
to  40%.  Brean  Murray  noted  that  the  merger  consideration  of  $1.91  was
substantially  similar to the median value.  In  particular,  Brean Murray noted
that, due to Sandata's sub-micro  capitalization  status,  Sandata should not be
compared solely against a Public Comparable  Company Analysis as these companies
were in general much larger and traded more  efficiently  than the company,  and
instead  should be compared as a whole  against  all three  analyses  undertaken
herein. In addition,  Brean Murray noted that, although the merger consideration
of $1.91 per share was  substantially  similar to the median value,  a valuation
derived from a mean of multiples from reasonably (but not perfectly)  comparable
companies would likely yield a wide range of values,  the median of which, could
easily not equal the offered consideration.

     GOING  PRIVATE  TRANSACTION  ANALYSIS.  Brean Murray  analyzed the premiums
offered in other going private  transactions  announced  between January 1, 2001
and  September  4, 2002.  Brean  Murray's  analysis  incorporated  11  announced
transactions,  2 of which are still  pending.  Brean  Murray  compared the share
premiums offered in those  transactions  with the closing prices for each target
company's stock prices one day and 4 weeks prior to the deal announcement  date,
respectively.  The following table summarizes  selected data reviewed as part of
Brean Murray's analysis, including the premium offered to Sandata stockholders.

                                                                          

Premium offered over:                               High          Low            Median        Sandata
                                                    ----          ---            ------        -------
 - closing price 1 day prior to deal announcement   150.0%        1.2%           26.1%         282.0%
 - closing price 4 weeks prior to deal announcement 150.0%        11.3%          33.3%         377.5%


     Brean  Murray  noted  that the  premium to be paid to the  stockholders  of
Sandata  in the  merger is  substantially  higher  then  those paid to the other
companies  analyzed  and should be taken as a direct  indicator  of the state of
Sandata as a public entity and that it was not and had not been  receiving  fair
value in the public financial markets.  Additionally, in Brean Murray's opinion,
the public  market was not a true  indicator  of  Sandata's  value and there was
little chance that Sandata would ever realize a value above Sandata  Acquisition
Corp.'s  offer,  which is an important  consideration  in  determining to take a
company private.

     DISCOUNTED  CASH FLOW  ANALYSIS.  Brean Murray  calculated  the diluted per
share  company  value  based  upon  a  discounted  cash  flow  analysis  of  the
Projections.  Brean Murray  calculated  the net present value of the future cash
flows of Sandata and added the net present  value of  Sandata's  terminal  value
based on a range of multiples  of projected  2005  EBITDA.  In  conducting  this
analysis,  Brean Murray applied  various  discount rates and terminal values and
determined  that a  discount  rate  range of 17.5% to 22.5% and  terminal  value
multiples  ranging from 3x to 4x EBITDA were the most appropriate  indicators of
value.  Brean  Murray  advised  that these  discount  rates and  terminal  value
multiples  were  based on  industry  standards  which  are 8% - 12% and 5x - 15x
EBITDA,  respectively,  for large  Blue Chip  companies,  10% - 14% and 5x - 12x
EBITDA, respectively, for mid-sized,  successful companies, and 15% - 30% and 2x
- 4x EBITDA, respectively,  for smaller, profitable,  illiquid companies similar
to Sandata. Additionally,  Brean Murray applied a 20% Majority Owner Discount to
this  value  (for the  reasons  discussed  above).  This  analysis  indicated  a
discounted cash flow valuation range of $1.54 per share to $2.35 per share, with
a median value of $1.91.  Brean Murray  noted that the merger  consideration  of
$1.91 was within the indicated range and equal to the median value.

     Brean  Murray was engaged to render the opinion  referred to above  because
Brean  Murray  regularly  engages  in the  valuation  of  businesses  and  their
securities.   Brean  Murray  is  an  investment  bank  whose  corporate  finance
activities  are  focused  on small- to  middle-market  companies.  Brean  Murray
provides a full range of investment  banking  services to its clients  including
merger  and  acquisition  advice and  services,  equity  underwritings,  private
placements  of debt  and  equity  and  other  financial  advisory  services  and
valuations.

     In connection with advisory services related to the merger and the issuance
of its  opinion,  Brean  Murray has  received a fee of  $50,000,  not  including
expenses.  We agreed to indemnify  Brean Murray in  connection  with any actions
arising  from the  merger,  except  in the event of Brean  Murray's  intentional
misconduct or negligence in the performance of its duties.

     A copy of the written  opinion of Brean Murray is attached as Appendix B to
this proxy statement.  A copy of the materials  prepared by Brean Murray for its
presentations  are  attached  as  Appendices  C-1,  C-2 and  C-3 to  this  proxy
statement.  The opinion is also  available  for  inspection  and copying  during
regular business hours at our principal  executive offices by any stockholder of
ours or the  representative  of any  stockholder  who has been so  designated in
writing.

Our Forecasts

     In connection with the merger,  Sandata's  management provided Brean Murray
and Sandata  Acquisition  Corp. with certain  non-public  business and financial
information.  The financial  information included the financial  projections set
forth below describe all of the material financial information provided to Brean
Murray and Sandata  Acquisition Corp.  Sandata,  as a matter of course, does not
publicly disclose forecasts as to future revenues or earnings and such forecasts
were not prepared  with a view toward  public  disclosure.  In  addition,  these
projections  were prepared  solely for internal use and not for  publication  or
with a view to complying  with the  published  guidelines  of the SEC  regarding
projections  or  with  guidelines  established  by  the  American  Institute  of
Certified  Public  Accountants for  prospective  financial  statements,  and are
included  in this  proxy  statement  only  because  they were  furnished  by our
management  to  Brean  Murray  and  Sandata   Acquisition  Corp.  The  financial
projections   necessarily   make  many  assumptions  with  respect  to  industry
performance,  general  business and economic  conditions,  access to markets and
other matters, all of which are inherently subject to significant  uncertainties
and  contingencies  and many of which are beyond our control.  We cannot predict
whether the  assumptions  made in preparing  the financial  projections  will be
accurate,  and  actual  results  may be  materially  higher or lower  than those
contained in the  projections.  With the  exception of the  examination  of this
prospective  financial information by Sandata Acquisition Corp. and Brean Murray
in connection with its fairness  opinion,  neither our independent  auditors nor
any other independent accountants or financial advisors have compiled,  examined
or  performed  any  procedures  with  respect  to  this  prospective   financial
information,  nor have they  expressed  any opinion or any form of  assurance on
this information or its  achievability,  and assume no  responsibility  for, and
disclaim any association with, the projection of financial information.

     The inclusion of the forecasts  contained  herein should not be regarded as
an  indication  that the special  committee,  the Board of  Directors,  Sandata,
Sandata  Acquisition  Corp.  or  any  of  their  respective  financial  advisors
considered the following Sandata forecasts to be a reliable prediction of future
events  and these  forecasts  should not be relied  upon as such.  To the extent
Sandata  forecasts  represent  management's  best  estimate of  possible  future
performance,  such estimate is made only as of the date of such forecasts and is
not made as of any later date,  and  stockholders  should take this into account
when evaluating any factors or analyses based on the Sandata forecasts. Both the
special  committee and the Board of Directors  inquired as to Brean Murray's due
diligence in connection  with the projections  provided by Sandata's  management
and relied on Brean Murray's  conclusion that these projections were reasonable,
but neither  conducted  an  independent  inquiry to verify  their  accuracy  and
completeness.

                           SANDATA TECHNOLOGIES INC.
                            PROJECTED BALANCE SHEETS

                                   (Unaudited)


                                                                                  
                                                                                    May 31,
                                                                            -----------------------
                                                                               2003        2004
                                                                            ----------- -----------
                          ASSETS

CURRENT ASSETS


  Cash and cash equivalents                                                 $    30      $1,263

  Accounts  receivable                                                        2,010       2,111

  Receivables from affiliates                                                   280         280

  Inventories                                                                    45          45

  Prepaid expenses and other current assets                                     417         417

  Deferred income taxes                                                         383         383
                                                                            --------     -------

TOTAL CURRENT ASSETS                                                          3,165       4,499
                                                                            --------     -------
FIXED ASSETS, NET
                                                                              6,312       5,592

DEFERRED INCOME TAXES                                                            95          95
OTHER ASSETS

  Notes receivable                                                               25          25

  Due from officer                                                            1,569       1,569
  Cash surrender value of officer's life insurance

             security deposits and other assets                               1,106       1,106
                                                                            ----------- ---------

  TOTAL OTHER ASSETS                                                          2,700       2,700
                                                                            ----------- ---------
TOTAL ASSETS                                                                $12,272     $12,886
                                                                            =========== =========

           LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable and accrued expenses                                      $1,606      $1,676

  Deferred/unearned revenue                                                       4           -

  Deferred income                                                                20           -
                                                                           ---------   ---------

TOTAL CURRENT LIABILITIES                                                     1,630       1,676

LONG TERM DEBT                                                                4,500       4,500
                                                                           ---------   ---------
TOTAL LIABILITIES                                                             6,130       6,176
                                                                           ---------   ---------
SHAREHOLDERS' EQUITY

  Common stock                                                                    1           1

  Additional Paid in Capital                                                  5,701       5,701

  Retained Earnings                                                           440         1,008
                                                                           ---------   ---------

TOTAL SHAREHOLDERS' EQUITY                                                    6,142       6,710
                                                                           ---------   ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                           $ 12,272   $  12,886
                                                                           =========   =========

NOTE: All amounts rounded to nearest thousand.






                           SANDATA TECHNOLOGIES INC.

                       PROJECTED STATEMENT OF OPERATIONS
                                   (Unaudited)


                                                                           
                                                                   For the years ended
                                                                -----------------------------

                                                                    May 31,
                                            --------------------------------------------------------
                                                                       2003                    2004
                                            -------------------------------- -----------------------

REVENUES
    Service fees                                                   $ 14,680                $ 15,414
    Other income                                                        283                     317
    Interest income                                                      48                      52
                                            -------------------------------- -----------------------
TOTAL REVENUES                                                       15,011                  15,783
                                            -------------------------------- -----------------------
COST AND EXPENSES
    Operating                                                         7,628                   7,845
    Selling, general and administrative                               4,867                   5,014
    Depreciation and amortization                                     1,828                   2,108
    Interest expense                                                    248                     248
                                            -------------------------------- -----------------------
  TOTAL COSTS AND EXPENSES                                           14,571                  15,215
                                            -------------------------------- -----------------------
  EARNINGS FROM OPERATIONS
        BEFORE INCOME TAXES                                             440                     568
                                            -------------------------------- -----------------------
    Income tax expense                                                    -                       -
                                            -------------------------------- -----------------------
  NET EARNINGS                                                      $   440                 $   568
                                            ================================ =======================



NOTE: All amounts rounded to nearest thousand.








                           SANDATA TECHNOLOGIES INC.
                        PROJECTED STATEMENT OF CASH FLOWS


                                   (Unaudited)


                                                                          

                                                             For the years ended May 31,
                                                            -------------------------------
                                                                         2003         2004
                                                            ------------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES

  Net income                                                             $440         $568
                                                            ------------------ ------------

  Adjustments to reconcile net earnings to net cash
    provided by (used in) operating activities

      Depreciation and amortization                                     1,828        2,108
      (Increase) decrease in assets:

        Accounts  receivable                                             (52)        (101)

        Receivables from affiliates                                         -            -

        Inventories                                                         -            -

        Prepaid expenses and other current assets                           -            -

        Deferred income taxes                                               -            -

        Accounts payable and accrued expenses                         (2,311)           70

        Deferred/unearned revenue                                        (12)          (4)

        Deferred income                                                 (105)         (20)
                                                            ------------------ ------------


  TOTAL ADJUSTMENTS                                                     (652)        2,053
                                                            ------------------ ------------


  NET CASH PROVIDED BY  OPERATING ACTIVITIES                            (212)        2,621
                                                            ------------------ ------------

CASH FLOWS USED IN INVESTING ACTIVITIES

  Purchases of fixed assets                                           (1,388)      (1,388)
                                                            ------------------ ------------


  NET CASH  (USED IN) INVESTING ACTIVITIES                            (1,388)      (1,388)
                                                            ------------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Principal repayments on notes payable                                     -            -
                                                            ------------------ ------------

NET CASH PROVIDED BY (USED IN)  FINANCING

ACTIVITIES                                                                  -            -
                                                            ------------------ ------------

NET INCREASE (DECREASE) IN CASH AND

EQUIVALENTS                                                           (1,600)        1,233


CASH AND CASH EQUIVALENTS - Beginning                                   1,630           30
-------------------------
                                                            ------------------ ------------


CASH AND CASH EQUIVALENTS - Ending                                         30        1,263
-------------------------
                                                            ================== ============




NOTE: All amounts rounded to nearest thousand.







                            SANDATA TECHNOLOGIES INC.

                    PROJECTED FINANCIAL STATEMENT ASSUMPTIONS

                                   (Unaudited)

     The  following  is a  summary  of the  assumptions  made for the  projected
Balance Sheet and the Statement of  Operations  projections  for the fiscal year
ending May 31, 2003:

     1 No revenues or expenses  for  Sandatanet  consulting  are included in the
projection.

     2  Payroll  expense  was  calculated  using  the  month  of  April  02  and
annualizing it.

     3 Prepaid  expenses,  inventories,  deferred  income taxes,  cash surrender
value on officers life insurance will remain relatively flat over the periods.

     4 Capital  expenditures  will be  approximately  $1.388M a year,  including
capitalized software of $1.148M per year.

     5 Fixed assets and capitalized software were depreciated on a straight line
basis using the half year convention over a five year life.

     6 Accounts receivable will be collected in 60 days.

     7 Accounts payable will be paid in 40 days.

     The  following  is a  summary  of the  assumptions  made for the  projected
Balance Sheet and Statement of Operations  projection for the fiscal year ending
May 31, 2004.

  1-7    See above.

   8     Revenues increased 5% per year.

   9     Expenses increased 3% per year, with the exception of telephone
         expenses which increased 2% per year.






Stockholder Litigation

     On  September  2, 2002,  a  stockholder  of Sandata  filed a lawsuit in the
Delaware  Chancery  Court  against  the  Company and the members of its Board of
Directors.  (Eva Seitler v. Sandata Technologies,  Inc., Bert E. Brodsky, Ronald
L. Fish,  Martin  Bernard,  Hugh  Freund,  and Gary  Stoller,  Civil  Action No.
19886-NC).  The plaintiff  alleges that the defendants  breached their fiduciary
duties to Sandata and Sandata's  public  stockholders in connection with Sandata
Acquisition  Corp.'s proposal to acquire all of the outstanding public shares of
Sandata.  The  plaintiffs  also allege,  among other things,  that the directors
serving  on the  special  committee  are not  independent,  and that the  merger
consideration is inadequate.  The complaint seeks certification of the action as
a class action,  both  preliminary and permanent  injunctive  relief against the
proposed  transaction,  and  rescission if it is not enjoined.  On September 18,
another stockholder of Sandata,  Stephen Yetzer, filed a separate lawsuit in the
same  court,  against  the  same  defendants,   making  substantially  identical
allegations  and seeking  substantially  identical  remedies  (Civil  Action No.
19903-NC).  These actions were consolidated by the Delaware Chancery Court in an
order dated October 22, 2002 (Civil Action No. 19886-NC).

     On  December  23,  2002,   the  Company   entered  into  a  Memorandum   of
Understanding  among the Company,  the members of its Board of Directors and the
plaintiffs in these actions.  Pursuant to the  Memorandum,  Sandata  Acquisition
Corp.  agreed to increase  its offer set forth in the Merger  Agreement to $2.21
for each outstanding share of Sandata common stock. The Memorandum also provides
for the  parties  to the  lawsuits  to use their  best  efforts  to agree  upon,
execute, and present to the Court a formal Stipulation of Settlement in order to
obtain the approval of the Court of the  settlement and release of the claims in
the consolidated  actions. The parties agreed that the Stipulation of Settlement
will  provide,  among other  things,  (i) that Sandata  Acquisition  Corp.  will
increase  its offer  contained  in the  Merger  Agreement  to $2.21 per share of
Sandata  common  stock and (ii) for a complete  release  and  settlement  of all
claims against Sandata,  the members of its Board, Sandata Acquisition Corp. and
their respective predecessors,  successors,  assignees,  parents,  subsidiaries,
counsel,  accountants,   attorneys,   affiliates,  agents  and  representatives,
including  without  limitation,  investment banks or bankers or commercial banks
and any past, present, or future officers, directors, or employees of defendants
and their predecessors,  successors, assignees, parents, subsidiaries,  counsel,
accountants, attorneys, affiliates, agents and representatives, which have been,
or could have been,  asserted relating to Sandata  Acquisition Corp.'s proposal.
The Memorandum  further  provides that the parties to the  consolidated  actions
will petition the Court for final  certification  of a non-opt out class defined
as all  holders  of  Sandata  common  stock as of August 5,  2002,  through  and
including the closing date of the Merger Agreement.  The settlement contemplated
by the  Memorandum  is  subject  to the  execution  of a formal  Stipulation  of
Settlement,  the consummation of the merger transaction with Sandata Acquisition
Corp. for $2.21 per share of Sandata  common stock,  final approval of the Court
of the settlement,  including certification of a class, and the dismissal of the
consolidated actions by the Court. The Memorandum also provides that, subject to
approval of the Court,  none of the defendants  will object to an application by
plaintiff's  counsel for attorneys' fees and expenses in an amount not to exceed
$60,000.  Sandata and the  individual  director  defendants  deny  liability and
intend to vigorously defend themselves in the event that the proposed settlement
is not approved.

     On January 27, 2003, Sandata, the members of its Board of Directors and the
plaintiffs in the consolidated  actions entered into a Stipulation of Settlement
in connection with this action. The Stipulation of Settlement provides generally
for the dismissal of the consolidated  actions and release of any and all causes
of action or claims,  among other things,  that any of the plaintiffs or members
of the class have against any defendant or their  affiliates,  including,  among
others,  any of their associates,  officers,  directors,  attorneys,  investment
bankers,   investment   advisors  and  valuation   experts,   including  Sandata
Acquisition  Corp.  and Brean Murray,  among  others,  arising out of any of the
proposals  to take  Sandata  private,  the  merger,  the Merger  Agreement,  the
transactions  contemplated  thereby,  the  negotiation  thereof,  and any public
filings or  statements  by the  defendants  contained  in any of the  above.  In
consideration  for the dismissal of the  consolidated  action and release of all
causes of action and claims,  Sandata  Acquisition  Corp. agreed to increase the
merger  consideration from $1.91 to $2.21 per share of Sandata common stock. The
Stipulation of Settlement further provides that the consolidated  action will be
maintained as a class action by the plaintiffs,  without the right of any of the
members of the class to opt out. The parties  agreed to file the  Stipulation of
Settlement  with the Delaware  Chancery  Court as soon as  practicable.  Sandata
agreed to mail  notice to the  members  of the  class who were  stockholders  of
record at any time from  August 5, 2002,  through  the date of the  merger.  The
defendants to the  consolidated  action also agreed not to oppose an application
by the  plaintiffs  to the  Delaware  Chancery  Court  for  attorneys'  fees and
expenses not to exceed  $60,000.  If the Delaware  Chancery  Court  approves the
settlement, the parties agreed to move the court for an Order and Final Judgment
(i)  approving  the  settlement  as fair,  reasonable,  adequate and in the best
interests  of  the  class  and  directing  consummation  of  the  settlement  in
accordance with its terms, (ii) formally  certifying the class, (iii) dismissing
the consolidated action with prejudice as against the plaintiffs and all members
of the class,  (iv)  permanently  barring and enjoining the members of the class
from instituting any action or other proceeding in any court in any jurisdiction
that in any way  relates to the  settled  claims,  (v)  authorizing  plaintiffs'
counsel to execute a release of settled  claims on behalf of the  members of the
class,  (vi)  awarding  plaintiffs'  counsel such fees and expenses as the court
deems appropriate and (vii) reserving  jurisdiction over all matters relating to
the  administration  and  consummation  of the  settlement.  The  Stipulation of
Settlement  is subject  to final  approval  of the  settlement  by the  Delaware
Chancery Court of which there can be no assurances.

Recommendation of the Special Committee
and the Board of Directors; Fairness of the Merger

     The special  committee  and the Board of Directors  unanimously  determined
that the terms of the merger and the  Merger  Agreement  are fair to, and in the
best  interests  of, the  unaffiliated  stockholders  of  Sandata.  The  special
committee  unanimously  recommended  to the Board of  Directors  that the Merger
Agreement be adopted and  approved.  In making its  recommendation,  the special
committee  considered  a number of factors as more fully  described  above under
"Special  Factors -  Background  of the  Merger"  and as  described  below under
"Special  Factors - Reasons for the  Special  Committee's  Recommendation."  The
Board of Directors,  including a majority of our directors who are not employees
of  Sandata  (namely  Messrs.   Fish  and  Bernard),   acting  in  part  on  the
recommendation of the special committee,  unanimously determined that the merger
and the Merger  Agreement are fair to, and in the best interests of, Sandata and
its unaffiliated stockholders.

Reasons for the Recommendation of the Special Committee

     In recommending  adoption and approval of the Merger Agreement to the Board
of  Directors,  the special  committee  considered  a number of factors  that it
believed supported its  recommendation  that the merger is substantively fair to
the unaffiliated stockholders, including, but not limited to, the following:

          - during the 12-month trading period ended August 30, 2002, the shares
     closed at a high of $1.61 per share (on January 14, 2002),  and at a low of
     $0.31  per  share  (on  July  29,  2002),  which  makes  it  unlikely  that
     stockholders could receive a higher price in the market for their shares;

          - the merger consideration  represents a 138% premium over the average
     price of  Sandata's  common  stock on the  Nasdaq  SmallCap  Market for the
     12-month  period  ended  August 2, 2002 (the last  trading  day  before our
     August 5, 2002  announcement  that we had  received  an offer from  Sandata
     Acquisition  Corp.);  a 342%  premium over the  reported  closing  price of
     Sandata  shares on August 2, 2002;  and a 452.5%  premium over the reported
     closing price approximately four weeks prior to our announcement;

          - the historical  trading  activity of our common stock,  which during
     the  24-month  period  ended  August 2, 2002 closed at an average  price of
     $1.04 per share,  and the fact that the average daily trading volume of our
     common stock for the  12-month  period ended August 31, 2002 was only 1,340
     shares per day,  making it  unlikely  that we can issue new equity  because
     investors would be uninterested  in purchasing  additional  securities in a
     market  in  which  our  existing  securities  trade  on  a  limited  basis.
     Consequently,  it is  unlikely  that  Sandata  could  negotiate a public or
     private equity offering on terms favorable to the Company without impairing
     Sandata's ability to finance future growth;

          - the  market  value of the  public  float  for our  common  stock was
     approximately  $332,604  as of August  2,  2002,  and we have only  limited
     prospects for creating  institutional  interest in our stock or coverage by
     analysts, thereby making it difficult to attract new investor interest;

          - despite its  authority to negotiate  and accept  unaffiliated  third
     party  offers,  since the special  committee  never  received an  alternate
     proposal from an unaffiliated  third-party  either prior to, or after,  the
     August 5, 2002 public  announcement of Sandata Acquisition Corp.'s offer to
     take Sandata  private,  the members of the  committee  believe that such an
     offer was unlikely.  Additionally,  the fact that there were no third party
     offers supports the position that the merger  consideration is fair because
     an unfair price would most likely yield more competitive offers;

          - the oral  presentations  of Brean  Murray  delivered  to the special
     committee  on October  28, 2002 and its written  opinion  delivered  to the
     special  committee on October 28, 2002,  stating that, as of such date, and
     based on and subject to the  assumptions,  limitations  and  qualifications
     contained in that opinion, the merger consideration the public stockholders
     would have had the right to receive  under the Merger  Agreement,  prior to
     the  amendment  increasing  the  merger  consideration,  is  fair,  from  a
     financial point of view, to such stockholders;

          - the discounted cash flow analysis performed by Brean Murray resulted
     in a median price,  or going concern  value,  of $1.91 per share of Sandata
     and the comparable company analysis resulted in a median value of $2.10 per
     share, and Brean Murray concluded that the merger  consideration  under the
     Merger   Agreement,   prior  to  the   amendment   increasing   the  merger
     consideration, was within this range;

          - the Merger Agreement was amended increasing the merger consideration
     to $2.21 per share of  Sandata  common  stock,  a $0.30  increase  over the
     original  merger  consideration  which in the  opinion of Brean  Murray was
     fair,  from a  financial  point of view,  and  which  opinion  has not been
     withdrawn;

          - the merger  consideration  to be paid under the Merger  Agreement is
     not subject to any financing  conditions;  the special  committee  believes
     that Sandata  Acquisition  Corp. will have sufficient  financial  resources
     available to finance the merger;

          - the significant  costs of remaining a public company,  including the
     legal,  accounting  and transfer agent fees and expenses and printing costs
     necessary to satisfy the reporting  obligations of the Securities  Exchange
     Act of 1934, as amended  (which were  approximately  $90,000 in fiscal year
     ended  May  31,  2002),  will be  largely  eliminated  if we are a  private
     company; and

          -  becoming a private  company  would  allow us to focus on  long-term
     strategic initiatives rather than quarter-to-quarter results.

     In  recommending  adoption  and  approval of the Merger  Agreement  and the
merger to the Board of Directors,  the special committee  considered a number of
factors that it believed supported its determination of the procedural  fairness
of the process under which the merger and the Merger  Agreement were  negotiated
and the  procedural  fairness  of the  transaction  itself,  including,  but not
limited to, the following:

          - the Board of Directors established a special committee of the Board,
     consisting  of  two  non-management   directors  of  Sandata  who  are  not
     materially  interested in the merger,  to consider,  evaluate and negotiate
     the Merger Agreement;

          - the  special  committee  was  delegated  powers  from  the  Board of
     Directors  to  conduct an  independent  evaluation  of Sandata  Acquisition
     Corp.'s offer,  including the retention of independent  financial  advisors
     and independent legal advisors;

          - the special  committee was granted  broad  authority to consider and
     negotiate   the  proposed   transaction   on  behalf  of  Sandata  and  its
     unaffiliated  stockholders,  including  the right to  consider  competitive
     proposals from unaffiliated third parties;

          - the special committee  engaged in negotiations with  representatives
     of Sandata  Acquisition Corp. and, as a result of those  negotiations,  the
     special  committee  believed  that it received the highest  price per share
     that Sandata Acquisition Corp. is willing to pay;

          - the judgment of the special committee that the merger  consideration
     is substantively  fair to the unaffiliated  stockholders of Sandata for the
     reasons detailed above;

          - the fact that the plaintiffs in the lawsuits against Sandata and the
     members of its Board of Directors were  represented  by  independent  legal
     counsel who negotiated to increase the merger  consideration  from $1.91 to
     $2.21 per share of Sandata common stock; and

          - the right of any of our public  stockholders  to exercise his or her
     appraisal  rights  under  Delaware  law if he or she does not  believe  the
     merger consideration to be fair.

     The special committee  considered  certain negative factors relating to the
merger, but determined that those factors were outweighed by the benefits of the
factors  supporting the merger.  These negative factors  included,  but were not
limited to, the following:

          - since the members of the  Acquisition  Group do not have an interest
     in selling  their shares of Sandata,  it is unlikely  that an offer from an
     unaffiliated  third party  could be  approved  and since the August 5, 2002
     announcement  of the  proposed  transaction,  Sandata  has not  received  a
     competing proposal from any unaffiliated third parties;

          - while  the  merger  consideration  represents  a  premium  over  our
     historical  trading  price,  which for the 24-month  period ended August 2,
     2002  closed at an  average of $1.04 per  share,  the stock  market has not
     performed  well over the past year,  which may  contribute to the depressed
     trading price of our common stock;

          - the merger is not  subject  to the  approval  of a  majority  of the
     shares held by the unaffiliated stockholders.  In light of this factor, the
     special  committee  did consider the rights of dissenting  stockholders  to
     seek  appraisal of the value of their shares of common stock under Delaware
     law, the right of the special  committee to terminate the Merger  Agreement
     or withdraw its  recommendation to the Board of Directors in order to carry
     out its fiduciary  duties,  and that the plaintiffs in the lawsuits against
     Sandata  and the  members of its Board of  Directors  were  represented  by
     independent  legal  counsel who  successfully  negotiated  to increase  the
     merger consideration;

          - the unaffiliated  stockholders of Sandata will not have the right to
     participate in our future growth, if any; and

          - the special committee  considered the uncertainties  associated with
     any financial analysis,  particularly those involving projections of future
     performance.  The special committee  recognized that these analyses are not
     necessarily  indicative  of actual values or future  results,  which may be
     significantly  more or less favorable than those  suggested by the analyses
     and therefore did not consider them to be material factors.

     In consideration of factors in favor of and against the merger, the special
committee did not view certain  factors to be material in its  consideration  of
the fairness of the merger. These factors included,  but are not limited to, the
following:

          - based on the  advice  of  Brean  Murray,  the net book  value of our
     assets of $2.21 per  share,  because  it did not  believe  that book  value
     represents a fair value of Sandata;

          - the liquidation value of Sandata's assets,  because it believed that
     the value  that could be  obtained  in  liquidation  would be less than the
     value that could be achieved by selling  Sandata as a going concern,  since
     Sandata's  assets consist  primarily of computer  hardware and software and
     goodwill, all of which have little value outside of Sandata's business;

          - the merger may be a taxable event to the  unaffiliated  stockholders
     of Sandata; and

          - Brean  Murray  was not  asked  to opine  to or to  consider  (i) the
     underlying  business  decision to effect the merger,  or (ii) the  relative
     merits of the merger as proposed to any alternative  business strategy that
     might exist for the company.

     In making its determinations, the special committee relied on its knowledge
of  Sandata's  business,  information  provided by Sandata's  officers,  and the
advice of its financial  advisor and legal counsel.  The special  committee also
considered all of the foregoing  factors both for and against  recommending  the
proposal. Except as disclosed in this proxy statement, the special committee did
not consider each factor separately,  assign specific weights to such factors or
make a  determination  as to why any  factor  should  be  assigned  any  weight.
Although a majority  of these  factors  were  generally  believed by the special
committee  to support  its  decision,  certain of such  factors  were  generally
believed  not to support its  decision.  With  respect to certain of the factors
specified,  the special committee expressly relied upon and adopted the analyses
contained in the  presentations  of Brean Murray and  expressly  relied upon and
adopted  its  fairness  opinion  that  the  merger   consideration   the  public
stockholders  would  have had the right to receive  under the Merger  Agreement,
prior to the amendment  increasing  the merger  consideration,  is fair,  from a
financial point of view, to our  stockholders and the fact that Brean Murray has
not  withdrawn  its  opinion   since  the   amendment   increasing   the  merger
consideration.

     The special committee is comprised of non-management directors of the Board
of Directors not affiliated with Sandata  Acquisition Corp. or Messrs.  Brodsky,
Freund,  and Stoller,  and it was authorized to retain its own legal counsel and
an independent  financial  advisor to assist it in negotiating and assessing the
fairness of the  transaction.  In addition,  the special  committee  was granted
broad  authority  to  consider  the  proposal,  including  the right to consider
competing  offers from  unaffiliated  third  parties.  Because of the foregoing,
neither the special committee nor the Board considered it necessary to retain an
outside  party to negotiate on behalf of the  unaffiliated  stockholders,  or to
engage  counsel or an appraiser to represent the  unaffiliated  stockholders  of
Sandata.

     The special  committee  considered  the  possibility  of rejecting  Sandata
Acquisition  Corp.'s proposal and remaining a public company,  however, it opted
against this option because,  in its opinion,  the merger is fair to, and in the
best interests of, Sandata and its  unaffiliated  stockholders.  In light of the
negotiations  between  the  special  committee  and  representatives  of Sandata
Acquisition  Corp., which resulted in an increase in the price per share offered
to the unaffiliated  stockholders of Sandata, along with additional covenants in
the Merger  Agreement,  the  special  committee  did not pursue any  alternative
transactions.  In addition,  because the members of the Acquisition Group had no
interest in selling their shares to a third party in the foreseeable  future and
Brean  Murray's  advice that  soliciting  third party offers would  probably not
result in any  offers  because  of this  fact,  the  special  committee  did not
consider soliciting alternative transactions with third parties.

Reasons for the Recommendation of the Board of Directors

     In recommending that the unaffiliated stockholders of Sandata vote to adopt
and approve the Merger Agreement,  the Board of Directors considered a number of
factors  that it  believed  supported  its  recommendation  that the  merger  is
substantively fair to the unaffiliated stockholders,  including, but not limited
to, the following:

          - during the 12-month trading period ended August 30, 2002, the shares
     closed at a high of $1.61 per share (on January 14, 2002),  and at a low of
     $0.31  per  share  (on  July  29,  2002),  which  makes  it  unlikely  that
     stockholders could receive a higher price in the market for their shares;

          - the merger consideration  represents a 138% premium over the average
     price of  Sandata's  common  stock on the  Nasdaq  SmallCap  Market for the
     12-month  period  ended  August 2, 2002 (the last  trading  day  before our
     August 5, 2002  announcement  that we had  received  an offer from  Sandata
     Acquisition  Corp.);  a 342%  premium over the  reported  closing  price of
     Sandata  shares on August 2, 2002;  and a 452.5%  premium over the reported
     closing price approximately four weeks prior to our announcement;

          - the historical  trading  activity of our common stock,  which during
     the  24-month  period  ended  August 2, 2002 closed at an average  price of
     $1.04 per share,  and the fact that the average daily trading volume of our
     common stock for the  12-month  period ended August 31, 2002 was only 1,340
     shares per day,  making it  unlikely  that we can issue new equity  because
     investors would be uninterested  in purchasing  additional  securities in a
     market  in  which  our  existing  securities  trade  on  a  limited  basis.
     Consequently,  it is  unlikely  that  Sandata  could  negotiate a public or
     private equity offering on terms favorable to the Company without impairing
     Sandata's ability to finance future growth;

          - the  market  value of the  public  float  for our  common  stock was
     approximately  $332,604  as of August  2,  2002,  and we have only  limited
     prospects for creating  institutional  interest in our stock or coverage by
     analysts, thereby making it difficult to attract new investor interest;

          - the special committee retained Brean Murray, an investment bank that
     regularly engages in the valuation of businesses and their  securities,  to
     advise it as to the fairness, from a financial point of view, of the merger
     consideration,   and  Brean   Murray   concluded   that,   subject  to  the
     considerations  and  limitations  set  forth  in its  opinion,  the  merger
     consideration the public  stockholders  would have had the right to receive
     under the Merger  Agreement,  prior to the amendment  increasing the merger
     consideration, is fair, from a financial point of view, to the stockholders
     of Sandata;

          - the discounted cash flow analysis performed by Brean Murray resulted
     in a median price,  or going concern  value,  of $1.91 per share of Sandata
     and the comparable company analysis resulted in a median value of $2.10 per
     share, and Brean Murray concluded that the merger  consideration  under the
     Merger   Agreement,   prior  to  the   amendment   increasing   the  merger
     consideration, was within this range;

          - the Merger Agreement was amended increasing the merger consideration
     to $2.21 per share of  Sandata  common  stock,  a $0.30  increase  over the
     original merger  consideration,  which Brean Murray determined was fair and
     Brean Murray has not withdrawn its opinion;

          - the merger  consideration  to be paid under the Merger  Agreement is
     not subject to any financing  conditions;  the Board  believes that Sandata
     Acquisition  Corp. will have sufficient  financial  resources  available to
     finance the merger;

          - the significant  costs of remaining a public company,  including the
     legal,  accounting  and transfer agent fees and expenses and printing costs
     necessary to satisfy the reporting  obligations of the Securities  Exchange
     Act of 1934, as amended  (which were  approximately  $90,000 in fiscal year
     ended  May  31,  2002),  will be  largely  eliminated  if we are a  private
     company; and

          - becoming a private company would allow Sandata to focus on long-term
     strategic initiatives rather than quarter-to-quarter results.

     In recommending that the unaffiliated stockholders of Sandata vote to adopt
and approve the Merger Agreement,  the Board of Directors considered a number of
factors that it believed supported its determination of the procedural  fairness
of the process under which the merger and the Merger  Agreement were  negotiated
and the  procedural  fairness  of the  transaction  itself,  including,  but not
limited to, the following:

          - the Board of Directors established a special committee of the Board,
     consisting  of  two  non-management   directors  of  Sandata  who  are  not
     materially  interested in the merger,  to consider,  evaluate and negotiate
     the Merger Agreement;

          - the  special  committee  was  delegated  powers  from  the  Board of
     Directors  to  conduct an  independent  evaluation  of Sandata  Acquisition
     Corp.'s offer,  including the retention of independent  financial  advisors
     and independent legal advisors;

          - the special  committee was granted  broad  authority to consider and
     negotiate   the  proposed   transaction   on  behalf  of  Sandata  and  its
     unaffiliated  stockholders,  including  the right to  consider  competitive
     proposals from unaffiliated third parties;

          - the special committee  engaged in negotiations with  representatives
     of Sandata  Acquisition Corp. and, as a result of those  negotiations,  the
     special  committee  believed  that it received the highest  price per share
     that Sandata Acquisition Corp. is willing to pay;

          - the judgment of the special committee that the merger  consideration
     is  fair to the  unaffiliated  stockholders  of  Sandata  for  the  reasons
     detailed above;

          - the fact that the plaintiffs in the lawsuits against Sandata and the
     members of its Board of Directors were  represented  by  independent  legal
     counsel who negotiated to increase the merger  consideration  from $1.91 to
     $2.21 per share of Sandata common stock; and

          - the right of any of our public  stockholders  to exercise his or her
     appraisal  rights  under  Delaware  law if he or she does not  believe  the
     merger consideration to be fair.

     The Board of Directors  considered certain negative factors relating to the
merger, but determined that those factors were outweighed by the benefits of the
factors  supporting the merger.  These negative factors  included,  but were not
limited to, the following:

          - since the members of the  Acquisition  Group do not have an interest
     in selling  their shares of Sandata,  it is unlikely  that an offer from an
     unaffiliated third party could be approved;

          - since the August 5, 2002  announcement of the proposed  transaction,
     Sandata has not received a competing  proposal from any unaffiliated  third
     parties;

          - while  the  merger  consideration  represents  a  premium  over  our
     historical  trading  price,  which for the 24-month  period ended August 2,
     2002 closed at an average  price of $1.04 per share,  the stock  market has
     not  performed  well  over the  past  year,  which  may  contribute  to the
     depressed trading price of our common stock;

          - the merger is not  subject  to the  approval  of a  majority  of the
     shares held by the unaffiliated stockholders.  In light of this factor, the
     special  committee  did consider the rights of dissenting  stockholders  to
     seek  appraisal of the value of their shares of common stock under Delaware
     law, the right of the special  committee to terminate the Merger  Agreement
     or withdraw its  recommendation to the Board of Directors in order to carry
     out its  fiduciary  duties,  and the  plaintiffs  in the  lawsuits  against
     Sandata  and the  members of its Board of  Directors  were  represented  by
     independent  legal  counsel who  successfully  negotiated  to increase  the
     merger consideration; and

          - the unaffiliated  stockholders of Sandata will not have the right to
     participate in our future growth, if any.

     In consideration  of factors in favor of and against the merger,  the Board
of Directors did not view certain factors to be material in its consideration of
the fairness of the merger. These factors included,  but are not limited to, the
following:

          - based on the advice of Brean  Murray to the special  committee,  the
     net book value of our assets of $2.21 per share, because it did not believe
     that book value represents a fair value of Sandata;

          - the liquidation value of Sandata's assets,  because it believed that
     the value  that could be  obtained  in  liquidation  would be less than the
     value that could be achieved by selling  Sandata as a going concern,  since
     Sandata's  assets consist  primarily of computer  hardware and software and
     goodwill, all of which have little value outside of Sandata's business;

          - the merger may be a taxable event to the  unaffiliated  stockholders
     of Sandata; and

          - Brean  Murray  was not  asked  to opine  to or to  consider  (i) the
     underlying  business  decision to effect the merger,  or (ii) the  relative
     merits of the merger as proposed to any alternative  business strategy that
     might exist for the company.

     After considering the foregoing  factors,  the Board of Directors  believes
the merger consideration to be fair to the unaffiliated stockholders of Sandata,
other than Sandata  Acquisition Corp. and the members of the Acquisition Group.,
and that the Merger  Agreement is advisable and in the best interests of Sandata
and its unaffiliated  stockholders.  In making this determination,  the Board of
Directors did not assign specific weights to particular factors,  and considered
all factors as a whole.  None of the factors that the Board considered led it to
believe that the merger was unfair to the unaffiliated  stockholders of Sandata.
In reaching its determination,  the Board of Directors expressly relied upon and
adopted the analyses of the special committee.

     None of the  members  of the  Board  of  Directors  received  any  reports,
opinions  or  appraisals  from any outside  party  relating to the merger or the
fairness  of  the  merger  consideration  to be  received  by  the  unaffiliated
stockholders of Sandata other than those received by the special  committee from
Brean Murray.

Sandata Acquisition Corp.'s and the Acquisition Group's
Position as to the Fairness of the Merger

     Sandata  Acquisition  Corp.  and the  Acquisition  Group  believe  that the
consideration to be received in the merger by the  unaffiliated  stockholders of
Sandata  is  substantively  fair to such  holders.  This  belief is based on the
following factors:

          - the  merger  consideration  of  $2.21  per  share  of  common  stock
     represents a 342% premium over the reported closing price of Sandata shares
     on the last full trading day prior to Sandata Acquisition Corp.'s August 5,
     2002 announcement of the preliminary proposal and a 452.5% premium over the
     reported closing price approximately four weeks prior to such announcement;

          - the merger  consideration  is a substantial  premium over  Sandata's
     historical  trading price, which during the 24-month period ended August 2,
     2002 closed at an average price of $1.04 per share;

          - the merger  consideration  is a premium over median price arrived at
     using the  discounted  cash flow  analysis  performed by Brean Murray which
     resulted in a median price,  or going concern value,  of $1.91 per share of
     Sandata;

          - the  unaffiliated  stockholders of Sandata will no longer be subject
     to  the  risks   associated  with  Sandata   achieving   strong   financial
     performance,  such as general  economic  conditions  in the United  States,
     health care industry pressures such as business  competition and the future
     of health  care and  Medicaid  funding  in the  United  States,  and future
     interest rate  fluctuations  should  Sandata  become more  leveraged in the
     future;

          - the special  committee never received an alternate  proposal from an
     unaffiliated third-party either prior to, or after, the public announcement
     of Sandata  Acquisition Corp.'s offer to take Sandata private for $1.91 per
     share of common stock,  Sandata  Acquisition  Corp.  and the members of the
     Acquisition  Group  believe that such an offer was unlikely  because of the
     majority  ownership  held  by  the  Acquisition  Group,  and  Brean  Murray
     indicated  that a third party offer was  unlikely.  Additionally,  the fact
     that there was no third party offer  indicated that any potential buyer did
     not view the merger  consideration  being  offered  by Sandata  Acquisition
     Corp. as unfair;

          -  the  merger  will  provide   consideration   to  the   unaffiliated
     stockholders  of  Sandata  entirely  in  cash  and  is not  subject  to any
     financing conditions;

          -  the  Merger   Agreement   was  amended  to   increase   the  merger
     consideration  to $2.21 per share of Sandata common stock, a $0.30 increase
     over the original merger  consideration  which Brean Murray  determined was
     fair, and Brean Murray has not withdrawn its opinion; and

          - the forecasts for Sandata provided to Sandata  Acquisition  Corp. by
     Sandata's  management  which, when a range of  price-to-earnings  multiples
     were applied to the estimated earnings in such forecasts, indicate possible
     future values of Sandata as a going concern,  and the risks associated with
     meeting those projections.

     Sandata Acquisition Corp. and the Acquisition Group believe that the merger
is procedurally fair to the unaffiliated stockholders of Sandata. This belief is
based on the following factors:

          - the Board of Directors established a special committee of the Board,
     consisting  of  two  non-management   directors  of  Sandata  who  are  not
     materially  interested in the merger,  to consider,  evaluate and negotiate
     the Merger Agreement;

          - the special  committee was granted  broad  authority to consider and
     negotiate   the  proposal  on  behalf  of  Sandata  and  its   unaffiliated
     stockholders,  including  the right to  consider  and  negotiate  competing
     proposals from unaffiliated third-parties;

          - the  increase  in the merger  consideration  and the other terms and
     conditions  of  the  Merger   Agreement  were  the  result  of  good  faith
     negotiations  between Sandata  Acquisition Corp. and the special committee,
     consisting  of  non-management  directors of Sandata,  who have no material
     interest in the merger, and their respective advisors;

          - the special committee retained Brean Murray, which is not affiliated
     with  Sandata  or Sandata  Acquisition  Corp.  management,  to serve as its
     independent  financial  advisor,  and  the  special  committee  received  a
     fairness  opinion  from Brean  Murray as to the  fairness  from a financial
     point of view of the merger  consideration  the public  stockholders  would
     have had the right to  receive  under the  Merger  Agreement,  prior to the
     amendment increasing the merger consideration;

          - the special  committee engaged Certilman to serve as its independent
     legal advisor;

          - the merger was  recommended to the Board of Directors by the special
     committee  and  was  subsequently  unanimously  approved  by the  Board  of
     Directors of Sandata;

          - the special  committee and its advisors  successfully  negotiated on
     behalf  of  Sandata  and its  unaffiliated  stockholders  to  increase  the
     consideration to be paid to the unaffiliated stockholders of Sandata in the
     merger from $1.50 to $1.91 per share;

          - the  plaintiffs in the lawsuits  against  Sandata and the members of
     its Board of Directors were  represented  by independent  legal counsel who
     negotiated  to increase  the merger  consideration  from $1.91 to $2.21 per
     share of Sandata common stock;

          - the powers delegated to the special committee  included the right to
     consider  and  negotiate  competitive  proposals  from  unaffiliated  third
     parties, although none were received; and

          - the ability of  dissenting  stockholders  to obtain "fair value" for
     their shares if they  exercise  and perfect  their  appraisal  rights under
     Delaware law.

     Sandata   Acquisition  Corp.  and  the  Acquisition  Group  considered  the
following negative factors in their determination to recommend the proposal:

          - since the members of the  Acquisition  Group do not have an interest
     in selling  their shares of Sandata,  it is unlikely  that an offer from an
     unaffiliated third party could be approved;

          - since the August 5, 2002  announcement of the proposed  transaction,
     Sandata has not received a competing  proposal from any unaffiliated  third
     parties;

          - while the merger  consideration  represents a premium over Sandata's
     historical  trading  price,  which for the 24-month  period ended August 2,
     2002 closed at an average  price of $1.04 per share,  the stock  market has
     not  performed  well  over the  past  year,  which  may  contribute  to the
     depressed trading price of its common stock;

          - the merger is not  subject  to the  approval  of a  majority  of the
     unaffiliated  stockholders.  In light of this factor, the special committee
     did consider the rights of dissenting stockholders to seek appraisal of the
     value of their shares of common stock under  Delaware law, the right of the
     special  committee  to  terminate  the Merger  Agreement  or  withdraw  its
     recommendation  to the  Board  of  Directors  in  order  to  carry  out its
     fiduciary  duties,  and that the plaintiffs in the lawsuits against Sandata
     and the members of its Board of Directors  were  represented by independent
     legal   counsel  who   successfully   negotiated  to  increase  the  merger
     consideration;

          - the unaffiliated  stockholders of Sandata will not have the right to
     participate in Sandata's future growth, if any; and

          - there are  uncertainties  associated  with any  financial  analysis,
     particularly those involving projections of future performance and the fact
     that these  analyses are not  necessarily  indicative  of actual  values or
     future  results,  which may be  significantly  more or less  favorable than
     those  suggested by the analyses and  therefore did not consider them to be
     material factors.

     Sandata  Acquisition  Corp.  and the  Acquisition  Group  did not  view the
following  factors to be material in their  consideration of the fairness of the
merger:

          - based on the advice of Brean  Murray to the special  committee,  the
     net book value of Sandata's assets of $2.21 per share, because they did not
     believe that book value represents a fair value of Sandata;

          - the  liquidation  value of Sandata's  assets,  because they believed
     that the value that could be obtained in liquidation would be less than the
     value that could be achieved by selling  Sandata as a going concern,  since
     Sandata's  assets consist  primarily of computer  hardware and software and
     goodwill, all of which have little value outside of Sandata's business;

          - the merger may be a taxable event to the  unaffiliated  stockholders
     of Sandata; and

          - Brean  Murray  was not  asked  to opine  to or to  consider  (i) the
     underlying  business  decision to effect the merger,  or (ii) the  relative
     merits of the merger as proposed to any alternative  business strategy that
     might exist for the company.

     Sandata  Acquisition Corp. and the Acquisition Group considered each of the
foregoing  factors to support  their  determination  as to the  fairness  of the
merger.  Neither Sandata  Acquisition  Corp. nor the Acquisition  Group found it
practicable to assign,  nor did they assign,  relative weights to the individual
factors  considered in reaching their  conclusion as to such  fairness.  Neither
Sandata Acquisition Corp. nor the Acquisition Group considered the book value or
liquidation  value of Sandata to be  material  factors in their  belief that the
merger  consideration  is  fair,  because  they  believe  that  book  value  and
liquidation  value are not true  indications  of the value of Sandata  since the
value  of  Sandata's  assets,  primarily  computer  hardware  and  software  and
goodwill,  are  illiquid  assets  that  have less  value  outside  of  Sandata's
business.  While Brean  Murray  provided the special  committee  with a fairness
opinion with respect to the merger,  Sandata  Acquisition  Corp. did not rely on
the analyses in such opinion since it was specifically  addressed to the special
committee and Brean Murray was not retained by Sandata  Acquisition Corp. or the
Acquisition Group.

     The  foregoing  discussion  of the  information  and factors  considered by
Sandata  Acquisition  Corp.  and the  Acquisition  Group is not  intended  to be
exhaustive but includes all material factors.

     The  members  of the  Acquisition  Group  were  not  part  of,  and did not
participate  in  the  deliberations  of,  the  special  committee;  however,  as
directors of Sandata,  Messrs.  Brodsky,  Freund and  Stoller,  each of whom are
members of the Acquisition Group, participated in the deliberations of the Board
of Directors described under the captions,  "Special Factors - Background of the
Merger" and "Special  Factors - Reasons for the  Recommendation  of the Board of
Directors." Based on its belief regarding the  reasonableness of the conclusions
and  analyses  of  the  special  committee  and  the  Board  of  Directors,  the
Acquisition  Group  adopted  the  analyses  and  conclusions  under the  special
committee's and the Board of Directors' fairness  determination  described above
and  believe  that the  merger  consideration  of $2.21 per share is fair to the
unaffiliated stockholders of Sandata.

Purpose and Structure of the Merger; Certain Effects of the Merger;
Plans or Proposals After the Merger

     The  purpose of the merger is for the members of the  Acquisition  Group to
acquire all of the equity interests in Sandata not already owned by them through
Sandata Acquisition Corp. and to allow the unaffiliated  stockholders of Sandata
to realize a  significant  premium over the market price for their  shares.  The
Board  of  Directors  believes  that  Sandata  has not been  able to fully  take
advantage  of the  benefits  of being a public  company.  The  reasons for their
belief include the limited ability of Sandata's stockholders to sell their stock
quickly at the current market price due to Sandata's low trading volume, limited
market  capitalization,  limited public float,  limited  research  coverage from
securities analysts and inability to generate the type of rapid revenue and unit
growth generally expected by the public markets. Being a public company has also
imposed a number of  limitations  on Sandata and its  management  in  conducting
Sandata's  operations.  These limitations  include the costs and time associated
with  public  company   reporting   obligations  and  the  short-term  focus  on
quarter-to-quarter performance goals to meet expectations of the public markets.
Accordingly,  one of the purposes of the merger is to afford  greater  operating
flexibility,  allowing  management  to  concentrate  on long-term  growth and to
reduce its  attention to the  quarter-to-quarter  performance  and to be able to
pursue  opportunities  that Sandata could not  previously  pursue because of its
duties to the public  stockholders.  Further,  the merger is  intended to enable
Sandata  to use funds  that  would  otherwise  be  expended  in  complying  with
requirements applicable to public companies.

     The members of the  Acquisition  Group are engaging in this  transaction at
this time to take  advantage of the  opportunity to repurchase the stock held by
the unaffiliated  stockholders of Sandata in order to continue operating Sandata
as a private,  family-owned  business  and because  Sandata has not been able to
attract any  interest or  following  of  institutional  investors  and  research
analysts  due to its  failure to  generate  sufficient  growth in  revenues  and
earnings.  The  Acquisition  Group  believes  that  Sandata  has good  potential
business  prospects and that Sandata will have greater operating  flexibility to
focus on long-term value without the constraint of the public markets'  emphasis
on quarterly earnings.

     The following  table sets forth for each member of the  Acquisition  Group,
his or her interest in the net book value as of November 30, 2002 and net income
for the six month period ended  November 30, 2002,  based upon the percentage of
his or her ownership of Sandata common stock as of November 30, 2002:

                                                                                      

===================================  =========================== ======================= ===================
Name                                    Ownership Percentage(1)       Net Book Value(2)       Net Income(3)
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------

-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Bert E. Brodsky                                          21.25%              $1,165,273             $440.30
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Muriel M. Brodsky                                         0.83%                 $45,305              $17.20
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
The Bert E. Brodsky Revocable Trust                       8.06%                $442,000             $167.00
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Jessica Brodsky Miller                                   11.87%                $650,779             $245.95
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
David C. Brodsky                                          0.76%                 $41,510              $15.75
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Jeffrey H. Brodsky                                        7.45%                $408,684             $154.36
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Lee J. Brodsky                                            0.75%                 $41,292              $15.54
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Hugh Freund                                              14.13%                $775,093             $292.77
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Emily Freund                                              0.84%                 $45,818              $17.40
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Leland Freund                                             0.84%                 $45,818              $17.40
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Gertrude Kay                                              0.24%                 $13,620               $4.97
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Gary Stoller                                              5.35%                $293,439             $110.85
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Gary Stoller and Susan Stoller
as Custodians for Joseph Bailey
under the New York Transfer to
Minors Act                                                0.42%                 $23,205               $8.70
-----------------------------------  --------------------------- ----------------------- -------------------
-----------------------------------  --------------------------- ----------------------- -------------------
Gary Stoller and Susan Stoller
as Custodians for Jennifer Stoller
under the New York Transfer to
Minors Act                                                0.42%                 $23,205               $8.70
===================================  =========================== ======================= ===================


     (1)  Calculated  based upon the number of shares of  Sandata  common  stock
issued and  outstanding  which number of shares does not include shares issuable
upon the exercise of stock  options,  whether or not such options were currently
exercisable.

     (2) Based on  Sandata's  stockholders'  equity of $2.21 per share of common
stock as of November 30, 2002.

     (3) Based on  Sandata's  net income of $2,072 for the first two quarters of
fiscal year 2003 ended November 30, 2002.

     The following table sets forth for each member of the Acquisition Group his
or her interest in the net book value and net income of Sandata after the merger
based on his or her  expected  ownership  of  capital  stock of  Sandata  as the
surviving corporation on a fully diluted basis:

                                                                                          

==================================== =========================== ======================= ===================
Name                                       Ownership Percentage       Net Book Value(1)       Net Income(2)
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------

------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Bert E. Brodsky                                          21.15%              $1,160,154             $438.23
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Muriel M. Brodsky                                         0.82%                 $45,106              $16.99
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Bert E. Brodsky Revocable Trust                           8.02%                $440,058             $166.17
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Jessica Brodsky Miller(3)                                11.97%                $656,283             $248.02
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
David C. Brodsky(3)                                      11.97%                $656,315             $248.02
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Jeffrey H. Brodsky(3)                                    11.96%                $656,199             $247.81
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Lee J. Brodsky(3)                                        11.96%                $656,196             $247.81
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Hugh Freund                                              14.07%                $771,689             $291.53
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Emily Freund                                              0.83%                 $45,616              $17.20
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Leland Freund                                             0.83%                 $45,616              $17.20
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Gertrude Kay                                              0.24%                 $13,202               $4.97
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Gary Stoller                                              5.33%                $292,150             $110.44
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Gary Stoller and Susan Stoller
as Custodians for Joseph Bailey
under the New York Transfer to
Minors Act                                                0.42%                 $23,103               $8.70
------------------------------------ --------------------------- ----------------------- -------------------
------------------------------------ --------------------------- ----------------------- -------------------
Gary Stoller and Susan Stoller
as Custodians for Jennifer Stoller
under the New York Transfer to
Minors Act                                                0.42%                 $23,103               $8.70
==================================== =========================== ======================= ===================


     (1) Based on  Sandata's  stockholders'  equity of $2.21 per share of common
stock as of November 30, 2002.

     (2) Based on  Sandata's  net income of $2,072 for the first two quarters of
fiscal year 2003 ended November 30, 2002.

     (3) Each of Jessica  Brodsky Miller,  David C. Brodsky,  Jeffrey H. Brodsky
and Lee J.  Brodsky are  contributing  an  aggregate  of  $1,494,310  in cash to
Sandata  Acquisition  Corp.  in addition to the  contribution  of their  Sandata
common stock.

     The  transaction  has been  structured  as a merger of Sandata  Acquisition
Corp.  into  Sandata  in order to  preserve  Sandata's  identity,  goodwill  and
existing contractual arrangements with third parties.

     If the Merger  Agreement  is approved by our  stockholders  as described in
this proxy  statement,  and the other conditions to the completion of the merger
are satisfied or waived, we and Sandata Acquisition Corp. will close the merger.
At or soon after the closing of the merger:

o             the unaffiliated stockholders of Sandata will cease to have any
              ownership interest in Sandata or rights as holders of our common
              stock, other than holders of Sandata common stock who perfect
              their appraisal rights under Delaware law;

o             as the surviving corporation, Sandata will be owned by the members
              of the Acquisition Group, each of whom will benefit from Sandata's
              future earnings and profits;

o             the unaffiliated stockholders of Sandata will no longer bear the
              risk of any decreases in our financial health, profitability and
              cash flow, and will no longer bear the risk that Sandata will be
              unable to pay the principal of or interest on its debt;

o             the unaffiliated stockholders of Sandata will no longer benefit
              from any increases in our financial health or the payment of
              dividends, if any, on shares of our common stock;

o             Sandata common stock will no longer be traded on the Nasdaq
              SmallCap Market;

o             Sandata  Acquisition  Corp. will cause the company to terminate
              the registration of our common stock under the Securities
              Exchange Act of 1934, as amended, as soon as practicable; and

o             we will no longer be required to file periodic reports with the
              SEC once the registration of the shares has been terminated.

     Following  completion of the merger, the business and operations of Sandata
as the  surviving  corporation  will be  continued as they are  currently  being
conducted.  It is anticipated that after the merger, the surviving corporation's
management will, from time to time,  initiate a review of the assets,  corporate
structure,  capitalization,  operations,  properties  and personnel to determine
what  changes,  if any,  would be  desirable  following  the  merger to  enhance
operations.  Sandata has no present  intentions  of disposing  any of its assets
following the merger, other than in the ordinary course of business,  and except
for the merger  and as  otherwise  described  in this  proxy  statement,  has no
present  plans  or  proposals   that  would  result  in  (i)  an   extraordinary
transaction, such as a merger, reorganization or liquidation, (ii) any purchase,
sale or transfer of a material amount of its assets,  (iii) a material change in
our corporate  structure or business,  or (iv) a material  change in the present
dividend policy, indebtedness or capitalization.

     Under the terms of the Merger  Agreement,  the  directors  and  officers of
Sandata will be the directors and officers of the surviving corporation.

     We have not made any provision for the unaffiliated stockholders of Sandata
to obtain  access to our  corporate  files,  have their own counsel or their own
appraisal.  See  "Special  Factors - The  Special  Committee's  and our Board of
Directors'  Position  as to the  Fairness  of the  Merger  and  Reasons  for the
Merger."

Interests of the Members of the Acquisition Group in the Merger

     Prior to the effective time of the merger,  the members of the  Acquisition
Group will contribute each share of Sandata common stock held by them to Sandata
Acquisition  Corp in exchange for common stock of Sandata  Acquisition  Corp. At
the effective time of the merger,  each issued and outstanding  share of Sandata
Acquisition  Corp.  common  stock  will be  converted  into one  fully  paid and
non-assessable share of Sandata common stock as the surviving corporation.

     The following table sets forth the anticipated number of shares to be owned
and percentage ownership of Sandata as the surviving  corporation of each of the
members of the Acquisition Group:

                                                                                         

===================================== =================================== ===================================
Name of Stockholder                            Number of Shares                         Percentage Ownership
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Bert E. Brodsky                                    14,513                                             21.15%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Muriel M Brodsky                                      564                                              0.82%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Bert E. Brodsky Revocable Trust                     5,505                                              8.02%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Jessica Brodsky Miller(1)                           8,210                                             11.97%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
David C. Brodsky(2)                                 8,210                                             11.97%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Jeffrey H. Brodsky(3)                               8,209                                             11.96%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Lee J. Brodsky(4)                                   8,209                                             11.96%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Hugh Freund                                         9,653                                             14.07%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Emily Freund                                          571                                              0.83%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Leland Freund                                         571                                              0.83%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Gertrude Kay                                          165                                              0.24%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Gary Stoller                                        3,655                                              5.33%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Gary Stoller and Susan Stoller
as Custodians for Joseph Bailey
under the New York Transfer to
Minors Act                                            289                                              0.42%
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------
Gary Stoller and Susan Stoller
as Custodians for Jennifer Stoller
under the New York Transfer to
Minors Act Trust                                      289                                              0.42%
===================================== =================================== ===================================


     (1) Jessica  Brodsky Miller will contribute  $8,400 to Sandata  Acquisition
Corp.  from her personal funds in addition to her Sandata common stock to partly
fund the merger consideration.

     (2) David Brodsky will  contribute  $617,700 to Sandata  Acquisition  Corp.
from his personal  funds in addition to his Sandata  common stock to partly fund
the merger consideration.

     (3) Jeffrey Brodsky will contribute  $250,410 to Sandata  Acquisition Corp.
from his personal  funds in addition to his Sandata  common stock to partly fund
the merger consideration.

     (4) Lee Brodsky will contribute  $617,800 to Sandata Acquisition Corp. from
his  personal  funds in addition to his Sandata  common stock to partly fund the
merger consideration.

Interests of Executive Officers and Directors in the Merger

     In  considering  the merger and the  fairness  of the  consideration  to be
received in the merger,  you should be aware that  certain of our  officers  and
directors  have  interests in the merger,  as a result of certain  relationships
with  Sandata and some of its  affiliates,  that are in addition to or different
from the interests of the  unaffiliated  stockholders  of Sandata  generally and
create  potential  conflicts of  interest.  The details of these  interests  are
described below.

         Director and Executive Officer Stock Options

     At the effective time of the merger,  all  outstanding  options to purchase
common  stock of Sandata  will become fully  vested,  excluding  options held by
members of the Acquisition Group, and converted into the right to receive a cash
payment  equal to the product of the number of shares of Sandata  subject to the
options and the excess of the merger  consideration,  if any,  over the exercise
price per share related to such options.  Pursuant to the Merger  Agreement,  at
the effective  time,  options held by members of the  Acquisition  Group will be
cancelled and the holders of such options will not be entitled to receive any of
the merger consideration.

         Security Ownership of Certain Beneficial Owners and Management

     As of August 31, 2002, the non-management  directors and executive officers
as a  group  beneficially  owned  1,279,456  shares  of our  common  stock  (not
including presently  exercisable options), or 51.6% of our shares. Mr. Brodsky's
adult children own another 21% of the outstanding stock.  Pursuant to the Merger
Agreement,  prior to the effective  time, the members of the  Acquisition  Group
will  contribute  all shares of Sandata  common  stock  owned by them to Sandata
Acquisition  Corp.  At the  effective  time of the merger,  Sandata  Acquisition
Corp., will own approximately 72% of the outstanding shares of our common stock.
Our board was aware of this actual  conflict of interest and considered it along
with the other matters  described under "Special Factors - Recommendation of the
Special Committee and the Board of Directors;  Fairness of the Merger," "Special
Factors - Reasons for the  Recommendation of the Special Committee" and "Special
Factors - Reasons for the Recommendation of the Board of Directors."

     The  following  table  sets forth the  beneficial  share  ownership,  as of
November  30,  2002,  of (i)  each  person  who is known  by  Sandata  to be the
beneficial owner of more than five percent (5%) of Sandata's common stock;  (ii)
each of  Sandata's  current  directors;  and  (iii) all of  Sandata's  executive
officers and  directors as a group.  The  ownership  percentages  indicated  are
calculated,  on a fully-diluted basis, in accordance with Rule 13d-3 promulgated
pursuant to the Securities  Exchange Act of 1934, as amended,  which  attributes
beneficial  ownership of  securities  to a person or entity who holds options or
warrants to purchase such securities.

                                                                                           

============================================== ============================== ======================================
   Name of Management Person and Name and                                            Approximate Percentage
         Address of Beneficial Owner                 Number of Shares                 of Outstanding Shares
---------------------------------------------- ------------------------------ --------------------------------------
Bert E. Brodsky
26 Harbor Park Drive
Port Washington, NY                                    1,426,457 (1)                          45.4%
---------------------------------------------- ------------------------------ --------------------------------------
Hugh Freund
26 Harbor Park Drive
Port Washington, NY                                      487,721 (2)                          18.6%
---------------------------------------------- ------------------------------ --------------------------------------
Gary Stoller
26 Harbor Park Drive
Port Washington, NY                                      297,278 (3)                          11.3%
---------------------------------------------- ------------------------------ --------------------------------------


Ronald L. Fish                                            46,500 (4)                          1.8%
---------------------------------------------- ------------------------------ --------------------------------------
Martin Bernard                                             0 (5)                                *
---------------------------------------------- ------------------------------ --------------------------------------
Jessica Brodsky Miller
26 Harbor Park Drive
Port Washington, NY                                       294,470                             11.9%
---------------------------------------------- ------------------------------ --------------------------------------
Jeffrey Holden Brodsky
26 Harbor Park Drive
Port Washington, NY                                       184,925                             7.5%
---------------------------------------------- ------------------------------ --------------------------------------
All executive officers and directors as a
group (4 persons)                                2,257,956 (1) (2) (3) (4)                    65.3%
============================================== ============================== ======================================


     (1) Includes 18,684 shares of Sandata's common stock owned by Mr. Brodsky's
son living in his household;  includes  20,500 shares of Sandata's  common stock
owned by Mr.  Brodsky's wife;  includes  200,000 shares of common stock owned by
the Bert E. Brodsky Revocable Trust.  Includes presently  exercisable options to
purchase  310,000 shares of common stock at $1.41 per share under the 1995 Stock
Option Plan;  includes presently  exercisable options to purchase 350,000 shares
of common stock at $1.31 per share under the 1998 Stock Option Plan.

     (2) Includes  presently  exercisable  options to purchase 137,000 shares of
common stock at $1.41 per share under the 1995 Plan.  Excludes  47,464 shares of
common stock owned by Mr.  Freund's  adult  children.  Mr. Freund  disclaims any
beneficial interest in, or voting or dispositive control over, such shares.

     (3) Includes  presently  exercisable  options to purchase  20,000 shares of
common  stock at $2.23 per share under the 1995 Plan,  which  options  have been
extended to expire on March 14, 2006; includes presently  exercisable options to
purchase  50,000  shares of common stock at $2.61 per share under the 1995 Plan,
which options have been extended to expire on June 10, 2006;  includes presently
exercisable options to purchase 73,500 shares of common stock at $1.41 per share
under the 1995 Plan.  Includes  21,000  shares of common  stock  owned by trusts
established for the benefit of Mr. Stoller's  children of which Mr. Stoller is a
trustee.

     (4) Includes  presently  exercisable  options to purchase  38,000 shares of
common stock at $3.00 per share under the 1998 Plan.  Includes 3000 shares owned
by RF Retirement  Plan.  Does not include an option to purchase 18,000 shares of
common stock at an exercise price of $3.00 per share under the 1998 Stock Option
Plan,  none of which are  presently  exercisable.  Does not include an option to
purchase  10,000 shares of common stock at an exercise  price of $1.00 per share
under the 2000 Stock Option Plan, none of which are currently exercisable.

     (5) Does not include an option to purchase 10,000 shares of common stock at
$1.00 per share under the 2000 Stock  Option Plan,  none of which are  currently
exercisable.

     *   Less than one percent (1%)

         Transactions in Common Stock by Certain Persons

     Based on our records and on  information  provided to us by our  directors,
executive  officers and  subsidiaries,  neither the company nor any associate or
subsidiary  of the  company  nor,  to the  best  of  our  knowledge,  any of our
directors  or  executive  officers  (who are also the  directors  and  executive
officers of our  subsidiaries),  nor any  associates or affiliates of any of the
foregoing,  have effected any transactions involving Sandata common stock during
the 60 days prior to the date of this proxy statement.

         Employment Agreements

     On February 1, 1997, Sandata entered into an employment  agreement with Mr.
Brodsky.  The  agreement  was  for a  period  of five  years  and  provided  for
compensation  to Mr. Brodsky at an annual rate of $500,000 or a lesser amount if
mutually agreed.  The agreement also provided for the payment of an annual bonus
at the sole discretion of the Board of Directors. Mr. Brodsky agreed to accept a
reduction in  compensation  for the fiscal years ended May 31, 2001 and 2000 and
has signed  waivers  evidencing  his agreement to such  reductions.  On March 1,
2002, the agreement was renewed on identical  terms and Mr. Brodsky again agreed
to accept a reduction in compensation for the fiscal year ended May 31, 2002. At
the effective time of the merger Mr. Brodsky will continue to be employed by the
surviving corporation pursuant to the terms of his employment agreement.

         Special Committee

     Messrs.  Fish and Bernard are  non-management  directors of Sandata who are
not materially  interested in the merger.  Mr. Bernard is a sales  executive for
The Rampart Group Insurance Associates,  an insurance company from which Sandata
purchases  insurance  policies  through  Mr.  Bernard.  The  Board of  Directors
determined  that the economic  benefits  received by Mr. Bernard and The Rampart
Group with respect to these  policies  are not  material to either of them.  Mr.
Bernard owns options to purchase 10,000 shares of Sandata common stock. Pursuant
to the Merger  Agreement,  at the effective  time,  Mr.  Bernard's  options will
automatically vest and he will be entitled to receive an amount in cash equal to
the product of (i) the number of shares of Sandata  common stock  subject to the
options and (ii) the excess of the merger  consideration over the exercise price
per share related to such options, or $12,100. Mr. Fish beneficially owns 46,500
shares of Sandata  common  stock  (calculated  in  accordance  with Rule  13d-3,
promulgated  pursuant to the Securities Exchange Act of 1934, as amended,  which
attributes  beneficial  ownership of  securities to a person or entity who holds
presently  exercisable options or warrants to purchase such securities).  38,000
of Mr.  Fish's shares are covered by presently  exercisable  options to purchase
Sandata common stock; 5,500 shares are owned by Mr. Fish individually; and 3,000
shares  are owned by the RF  Retirement  Plan.  Mr.  Fish also owns  options  to
purchase  20,000  shares of Sandata  common  stock,  none of which are presently
exercisable.  Pursuant to the Merger  Agreement,  at the  effective  time of the
merger (i) Mr.  Fish will be entitled  to receive  the merger  consideration  in
exchange  for his common  stock of Sandata and (ii) all of Mr.  Fish's  options,
vested and unvested,  will be cancelled and converted  into the right to receive
an amount in cash  equal to the  product  of (A) the number of shares of Sandata
common  stock  subject  to  the  options  and  (B)  the  excess  of  the  merger
consideration over the exercise price per share related to such options.  If the
merger is adopted, at the effective time, Mr. Fish will receive $18,785 upon the
exchange of his 8,500  shares of common  stock and $12,100 for his  options.  In
addition to serving as a member of the Board of Directors  of Sandata,  Mr. Fish
is a member of the Board of Directors of National  Medical  Health Card Systems,
Inc., an affiliate of Mr. Brodsky.

     In addition  to the  foregoing,  Messrs.  Fish and  Bernard  each  received
compensation  of $1,000  for each day of work  related  solely to serving on the
special  committee,  pro-rated  for partial  days.  As of the date of this proxy
statement the members of the special  committee have each been paid  $_________.
Sandata  has also  agreed to  indemnify  the  members of the  special  committee
pursuant to the provisions of the indemnification agreements discussed below.

            Indemnification; Directors' and Officers' Insurance

     Pursuant to the Merger Agreement, at the effective time, the certificate of
incorporation and bylaws of the surviving  corporation shall contain  provisions
no less favorable with respect to  indemnification  and exculpation than are set
forth in  Sandata's  certificate  of  incorporation  and/or  bylaws prior to the
effective time,  which  provisions  shall not be amended,  repealed or otherwise
modified  for a period of 6 years from the  effective  time in any  manner  that
would adversely  affect the rights of individuals who at the effective time were
directors,  officers,  employees  or agents of  Sandata.  The  Merger  Agreement
further  provides  that  from and after the  effective  time,  for a period of 6
years, the surviving  corporation  shall indemnify the directors and officers of
Sandata  on  terms  no less  favorable  than  the  provisions  with  respect  to
indemnification  that are set forth in the certificate of  incorporation  and/or
bylaws of Sandata as of the  effective  time.  Sandata and  Sandata  Acquisition
Corp.  agree that the  directors,  officers and employees of Sandata  covered by
these  provisions  are  intended  to  be  third  party  beneficiaries  of  these
provisions  and shall  have the right to  enforce  the  obligations  of  Sandata
Acquisition  Corp.  under these  provisions.  The  surviving  corporation  shall
maintain  in effect,  from the  effective  time until such time as claims  could
legally made against any director or officer of Sandata,  any and all directors'
and officers' liability insurance currently maintained by Sandata.

     On July 31, 2002, Sandata entered into indemnification agreements with each
of Messrs.  Fish and Bernard which provided that Sandata would indemnify each of
them for liabilities  arising out of their service on the special committee.  On
October 28, 2002, after further review by the special committee's legal counsel,
we entered  into new  indemnification  agreements  with each of Mr. Fish and Mr.
Bernard.  Under  each of these  agreements,  Sandata  agrees  to (i)  limit  the
liability of each of Messrs.  Fish and Bernard for breaches of fiduciary duty in
connection  with serving as directors of Sandata,  except in cases involving (A)
breaches of the duty of loyalty,  (B) bad faith acts or omissions,  (C) unlawful
dividend payments, stock purchases or redemptions, or (D) transactions involving
improper personal  benefits and (ii) indemnify each of Messrs.  Fish and Bernard
to the fullest extent provided by law for all expenses and liabilities  that may
arise in connection  with their serving on the Board of Directors,  including in
actions involving  derivative lawsuits brought by Sandata  stockholders.  We are
obligated under the  indemnification  agreements to advance all expenses paid by
Mr. Fish or Mr.  Bernard in connection  with any lawsuit or  proceeding  against
them and to maintain any and all  directors' and officers'  liability  insurance
maintained by Sandata on the date of the agreements. Sandata's obligations under
these agreements continue during the period each of Messrs. Fish and Bernard are
directors  and/or  officers  of Sandata  through  any period that either of them
could be subject to any  proceeding or lawsuit by reason of the fact that either
of them served on the Board of Directors.  The October 28 agreements  state that
the July 31 agreements  shall survive and in the event of any  inconsistency  in
the provisions of the  agreements,  the terms that are more favorable to Messrs.
Fish and Bernard shall control.

Certain Relationships Between Sandata, Sandata Acquisition Corp.
and Members of the Acquisition Group

     Pursuant  to the  Merger  Agreement,  prior  to the  effective  time of the
merger, Messrs.  Brodsky,  Stoller and Freund, who are directors and officers of
Sandata,  and members of their immediate  families,  will exchange the shares of
Sandata common stock owned by them for shares of Sandata Acquisition Corp. Under
the Merger Agreement,  at the effective time of the merger,  Sandata Acquisition
Corp.  will  merge with and into  Sandata,  and  Sandata  will  continue  as the
surviving  corporation and each outstanding  share of Sandata  Acquisition Corp.
common stock will be converted  into one fully paid and  nonassessable  share of
the surviving corporation. Since Sandata will be the surviving corporation, as a
result of this transaction, it is contemplated that after the effective time the
members of the  Acquisition  Group will be the sole owners of  Sandata's  common
stock  and  will  have all of the  rights  and  benefits  associated  with  such
ownership.  In addition,  the Acquisition  Group will have common  ownership and
voting control of both Sandata and Sandata Acquisition Corp.

     Stephen   Silverstein   advised   Sandata  that  he  was   appointed  as  a
representative of Sandata Acquisition Corp. to negotiate the terms of the Merger
Agreement with Sandata. Mr. Silverstein is a consultant to Sandata, although his
duties  in  connection   with  being  a  consultant  are  not  related  to  this
transaction.

         IDA/SBA Financing

     In November 1996,  Sandata entered into an agreement with BFS Realty,  LLC,
successor to BFS Sibling  Realty,  Inc. and an  affiliate  of Mr.  Brodsky;  the
Nassau County Industrial  Development Agency ("NCIDA");  and Marine Midland Bank
(the "Bondholder").  Pursuant to this agreement, BFS Realty, LLC (i) assumed all
of Sandata's rights and obligations  under a lease agreement that was previously
entered into between Sandata and the NCIDA (the "Lease"),  and (ii) entered into
a sublease agreement with Sandata for the premises Sandata occupies. Pursuant to
the  agreement,  BFS Realty,  LLC also obtained the right to become the owner of
the premises  upon  expiration of the Lease.  Under the terms of the  agreement,
Sandata is jointly and separately  liable to the NCIDA for all obligations  owed
by BFS Realty,  LLC to the NCIDA under the Lease;  however,  BFS Realty, LLC has
indemnified  Sandata with respect to certain  obligations  relative to the Lease
and the agreement.  In addition, the agreement provides that Sandata is bound by
all the terms and  conditions  of the  Lease,  and that a security  interest  is
granted to BFS Realty, LLC in all of Sandata's fixtures constituting part of the
premises.

     The  foregoing  transactions  and  agreements  were the last in a series of
transactions  involving Sandata,  BFS Realty, LLC, NCIDA, the Bondholder and the
U.S. Small Business  Administration.  Chief among these was the borrowing by BFS
Realty,  LLC in June 1994 of $3,350,000  in the form of  Industrial  Development
Revenue  Bonds  (the  "Bonds")  to  finance  the  acquisition  of the  facility.
Simultaneously  with the issuance of the Bonds:  (1) NCIDA obtained title to the
facility and leased it to BFS Realty,  LLC, (2) BFS Realty,  LLC  subleased  the
facility to Sandata, (3) the Bondholder bought the Bonds, and (4) the Bondholder
received a mortgage and security  interest in the facility to secure the payment
of the Bonds. BFS Realty,  LLC's  obligations under the Lease were guaranteed by
Mr.  Brodsky,  Sandata,  Sandsport Data Services,  Inc. and others.  BFS Realty,
LLC's obligations  respecting repayment of the Bonds were also guaranteed by Mr.
Brodsky, Sandata, Sandsport Data Services, Inc. and others.

     The Bonds  currently  bear interest at the rate of 9%, and the  outstanding
balance due on the Bonds as of  November  30,  2002 was  $1,357,778.  During the
years  ended May 31,  2002 and 2001,  Sandata  paid rent to BFS  Realty,  LLC of
approximately $408,000 and $615,000, respectively.

     On August 11, 1995, Sandata entered into a $750,000 loan agreement with the
Long Island  Development  Corporation  ("LIDC"),  under a guarantee  by the U.S.
Small  Business  Administration  ("SBA")  (the  "SBA  Loan").  The SBA  Loan was
assigned to BFS Realty, LLC in November 1996; however, repayment of the SBA Loan
is  guaranteed  by Sandata  and  various  subsidiaries  of  Sandata.  The entire
proceeds  were used to repay a portion of the Bonds.  The SBA Loan is payable in
240 monthly  installments of $6,255,  which includes principal and interest at a
rate of  7.015%.  The  balance  of the SBA  Loan as of  November  30,  2002  was
$584,924.

         Revolving Credit Agreement

     On April 18, 1997 Sandsport  Data  Services,  Inc., an affiliate of Sandata
("Sandsport"),   entered  into  a  revolving   credit   agreement  (the  "Credit
Agreement") with HSBC, formerly Marine Midland Bank (the "Bank"),  which allowed
Sandsport  to borrow  amounts  up to  $3,000,000.  Interest  accrues  on amounts
outstanding  under the Credit  Agreement at a rate equal to the London Interbank
Offered Rate plus 2% and will be paid  quarterly  in arrears or, at  Sandsport's
option,  interest  may accrue at the Bank's  prime  rate.  The Credit  Agreement
requires  Sandsport  to pay a fee equal to 1/4% per annum on the unused  average
daily  balance of amounts  under the Credit  Agreement.  In addition,  there are
other fees and  charges  imposed  based  upon  Sandsport's  failure to  maintain
certain  minimum  balances.  The Credit  Agreement  has been  amended by HSBC to
permit  Sandsport  to borrow  amounts  up to  $4,500,000  until  June 14,  2003.
Interest  accrues  at the  same  rate  as the  original  Credit  Agreement.  The
indebtedness  under the  Credit  Agreement  is  guaranteed  by  Sandata  and its
affiliates.  All of the  assets  of  each  guarantor  are  pledged  to  HSBC  as
collateral for amounts due under the Credit  Agreement,  which pledge is secured
by a first lien on all equipment owned by members of the guarantors,  as well as
a collateral  assignment of $2,000,000 of life insurance  payable on the life of
Mr.  Brodsky.  In addition,  Sandata is restricted in its ability to declare and
pay  dividends  pursuant to the Credit  Agreement.  The  guarantees to HSBC were
subsequently  modified to include all indebtedness incurred by Sandata under the
amended Credit Agreement dated August 24, 2001 (see below).

     In addition,  pursuant to the Credit Agreement, the guarantors are required
to maintain  certain  levels of net worth and meet certain  financial  ratios in
addition to various other affirmative and negative  covenants.  At May 31, 2001,
the  guarantors  failed to meet these net worth and financial  ratios,  and HSBC
granted a waiver.  As of  August  24,  2001,  Sandsport,  Sandata  and the other
guarantors,  and HSBC  entered into the Third  Amendment  and Waiver (the "Third
Amendment")  to  the  Credit   Agreement.   Pursuant  to  the  Third  Amendment,
Sandsport's  obligations to maintain a certain net worth and to maintain certain
financial ratios were revised,  on a going-forward  basis, and the noncompliance
with the existing covenants was waived by HSBC. In addition,  in connection with
the Third Amendment, Sandsport and each guarantor executed and delivered to HSBC
a Collective Amended and Restated Security  Agreement,  pursuant to which HSBC's
security  interest  was  extended  to include a security  interest in all of the
personal and fixture property of Sandsport, Sandata and the other guarantors. On
April 11, 2002,  HSBC  approved the  extension  of the  termination  date of the
Credit  Agreement  to June 14, 2003.  There can be no  assurance  that HSBC will
continue  to grant  waivers  if the  guarantors  fail to meet the net  worth and
financial  ratios in the  future.  If such  waivers are not  granted,  any loans
outstanding under the Credit Agreement become immediately due and payable, which
may have an  adverse  effect on  Sandata's  business,  operations  or  financial
condition.  As of May 31, 2002, the outstanding  balance on the Credit Agreement
with HSBC was $4,500,000 and Sandata was in compliance with the covenants.

         Non-Recourse Promissory Notes

     On July 14, 1998,  Mr.  Brodsky,  certain  officers and directors  (Bert E.
Brodsky, Hugh Freund and Gary Stoller) and a former director,  Carol Freund (who
is also the spouse of an officer and an employee of Sandsport),  exercised their
respective  options and warrants to purchase an  aggregate of 921,334  shares of
Sandata  common stock at exercise  prices  ranging from $1.38 to $2.61 per share
for an  aggregate  cost of  $1,608,861.  The  obligors  under  the notes are Mr.
Brodsky, certain officers and directors,  namely, Bert E. Brodsky, Gary Stoller,
and Hugh Freund and a former director and current employee of the company, Carol
Freund.  Payment  for such  shares  was made to  Sandata  in the  amount of $921
representing  the  par  value  of the  shares,  and a  portion  in the  form  of
non-recourse  promissory  notes due in July  2001,  with  interest  at eight and
one-half percent (8-1/2%) per annum, payable annually, and secured by the number
of shares exercised. On July 14, 2001, Sandata agreed to extend the due dates of
such notes for one hundred  twenty days until  November 11, 2001. On November 9,
2001,  Sandata agreed to substitute full recourse  unsecured notes for the notes
it  had  previously  accepted  in  connection  with  these  option  and  warrant
exercises.  Such  notes  will bear  interest  at the rate of eight and  one-half
percent (8 1/2%) per annum, payable annually,  with the principal amount of each
such note, plus any accrued and unpaid interest,  due and payable on November 9,
2004.

     As of December 1, 2001,  the interest  rate on the notes was changed to six
percent (6%) per annum to reflect fair market value,  and the shares and note of
the spouse of the officer were both transferred to the officer.  During the year
ended May 31, 2002,  24,667 shares of common stock were  surrendered by a former
director and an employee in settlement of notes in the amount of $37,962.  As of
November 30, 2002, the outstanding  balance on such notes,  including  principal
and accrued but unpaid interest, was $1,505,646.


         National Medical Health Card Systems, Inc.

     Sandata owed National Medical Health Card Systems, Inc. ("Health Card"), an
affiliate of Mr. Brodsky,  $500,000 pursuant to a promissory note, dated May 31,
2000 and due June 1, 2001, plus interest at the rate of 9-1/2%; interest on such
note was  payable  quarterly.  The Note was paid in May 2001.  On June 9,  2001,
Sandata again issued a promissory note to Health Card in the principal amount of
$500,000,  with interest at the rate of 7%, which was due on June 8, 2002.  This
Note was paid in full on August 15, 2001.

     Until January of 2002 Sandata derived revenue from Health Card for database
and operating  system  support,  hardware  leasing,  and maintenance and related
administrative  services.  The revenues  generated  from Health Card amounted to
approximately $693,000 and $2,458,000 for the years ended May 31, 2002 and 2001,
respectively.  For the years ended May 31, 2002 and 2001, respectively,  Sandata
billed  Health Card  approximately  $126,000 and $821,000 for quality  assurance
testing  and  network  support;  $47,000 and  $561,000  for help desk  services;
$175,000  and  $448,000 for data  processing  center;  $305,000 and $534,000 for
certain computer  equipment leases;  and $40,000 and $95,000 for other services.
In addition, Sandata resells its telephone services to Health Card. The billings
for such telephone services amounted to approximately  $124,000 and $134,000 for
the years ended May 31, 2002 and May 31, 2001 and are recorded as a reduction of
operating expense.  Sandata was owed  approximately  $19,000 from Health Card at
May 31, 2002. Subsequent to May 31, 2002, Sandata received approximately $14,000
from Health Card, representing  substantially complete payment of amounts due as
of that date. As of January 2002,  Sandata ceased  rendering  services to Health
Card.  Health Card  continues to pay its allocable  share of expenses for shared
services, which amounts to approximately $45,000 per month.

         Leases

     Sandata makes  equipment  lease  payments to P.W.  Capital  Corp.  and P.W.
Medical  Management,  Inc.,  both of which are  affiliates of Mr.  Brodsky.  The
payments were $268,011 and $395,989 in fiscal 2002 and 2001,  respectively.  The
payments for the facility  were made to BFS Realty,  LLC, and were  $408,000 and
$615,000 for the years ended May 31, 2002 and 2001,  respectively.  In June 2001
Sandata  entered into a new lease for the facility which was revised in November
2001.

         Medical Arts Office Services, Inc.

     Medical Arts Office Services,  Inc.  ("MAOS"),  of which Mr. Brodsky is the
sole  stockholder,  provided  Sandata  with  accounting,  bookkeeping  and legal
services.  For the fiscal  years ended May 31, 2002 and 2001 the total  payments
made by Sandata to MAOS were $340,869 and $279,894 respectively.

Material United States Federal Income Tax
Consequences of the Merger to our Stockholders

     The  following  summary  of  material  United  States  Federal  income  tax
consequences  relating  to the merger is based upon the United  States  Internal
Revenue  Code  of  1986,  as  amended  ("the  Code"),   regulations  promulgated
thereunder, and judicial and administrative interpretations thereof as currently
in effect. These are subject to change, possibly with retroactive effect, and to
the  possibility  of  differing  interpretations.  This summary may not be fully
applicable   to  persons  in  special  tax   situations,   including   financial
institutions,   insurance  companies,  tax-exempt  entities,  persons  receiving
Sandata stock as compensation, and other persons and entities. This summary does
not address the  application of any foreign tax laws or tax laws of any State or
political subdivision of the United States.

     This summary is not  exhaustive.  Tax matters are  complicated.  You should
consult  your  own  tax  advisor  for a full  understanding  of the  income  tax
consequences of the merger to you under your individual circumstances.

     As described below, the receipt of the merger  consideration  for shares of
Sandata  common  stock in the merger will be a taxable  transaction  for Federal
income tax purposes under the Code.

     For purposes of the  discussion  below of Federal tax  consequences  of the
merger,  the members of the Acquisition  Group are  collectively  referred to as
"Continuing  Stockholders"  and the  unaffiliated  stockholders of Sandata,  are
collectively referred to as "Non-continuing Stockholders."

Non-continuing Stockholders

     For United States Federal income tax purposes, a Non-continuing Stockholder
who  receives  only cash in exchange  for shares of Sandata  common stock in the
merger will generally recognize gain or loss equal to the difference between the
amount  of  cash  received  and  the  stockholder's  tax  basis  in  the  shares
surrendered.  Gain or loss will be capital gain or loss if the shares of Sandata
common  stock  constitute   capital  assets  in  the  hands  of  the  exchanging
stockholder.  The capital gain or loss will be long-term capital gain or loss if
the shares of Sandata common stock  surrendered have been held for more than one
year at the time of the merger. Such capital gain must be recognized for Federal
income tax purposes at the time of the merger.

     Under current law, net long term capital gains  recognized by an individual
are taxable at a maximum marginal Federal rate of 20% and net short term capital
gains for stock  that has been held for one year or less will be  subject to tax
at ordinary  income  rates.  Depending on your  particular  circumstances,  your
ability  to deduct  any loss  recognized  in the  exchange  of shares of Sandata
common  stock for cash may be  limited  or  deferred.  This will  depend on your
individual situation,  stemming from items not related to the merger, including,
for example, capital loss limitations.

     The tax consequences  described in the immediately  preceding paragraph may
not apply to a Non-continuing  Stockholder  that,  immediately after the merger,
owns  directly  or  is  treated  as  owning  constructively,   pursuant  to  the
attribution  rules of Section  318 of the Code,  any  shares of  Sandata  common
stock. Under Section 318,  Non-continuing  Stockholders may be treated as owning
Sandata  stock  that is  actually  owned by  related  parties.  A related  party
includes a person who is a member of a stockholder's  family,  or a legal entity
in which the stockholder or a member of his or her family directly or indirectly
owns an interest.

     If  a   Non-continuing   Stockholder   is  such  a  related   party,   that
Non-continuing  Stockholder  receiving  cash in  exchange  for shares of Sandata
common stock in the merger may be treated as receiving ordinary income. Ordinary
income is  taxable  to  individuals  at a higher  Federal  income  tax rate than
capital gains. A payment of cash to a Non-continuing Stockholder in exchange for
shares of Sandata  common  stock  owned by the  stockholder  may be subject to a
backup withholding tax at a rate of 30.5% if found to constitute compensation, a
dividend  distribution  or  another  type  of  reportable  payment,  unless  the
stockholder  either:  (a) is a corporation  or comes within certain other exempt
categories  or (b)  provides  a correct  taxpayer  identification  number to the
payer,  certifies  as to no loss  of  exemption  from  backup  withholding,  and
otherwise  complies with the applicable  requirements of the backup  withholding
rules.

     Any Non-continuing  Stockholders subject to backup withholding on a payment
of cash in the merger that constitutes compensation,  a dividend distribution or
another  type  of  reportable   payment  will  receive  the  payment  upon  such
stockholder's payment of any required backup withholding. A stockholder who does
not provide a correct taxpayer identification number may be subject to penalties
imposed by the Internal Revenue Service.

     Should a  dissenting  Non-continuing  Stockholder  exercise  its  appraisal
rights  under  Delaware  law and be awarded  consideration  in exchange  for its
Sandata common stock, whether in cash or other property,  such stockholder's tax
treatment  on receipt of such cash or other  property  would be the same as just
discussed for Non-continuing Stockholders approving the merger.

Continuing Stockholders

     The following  discussion  concerning material United States Federal income
tax  consequences  to  Continuing  Stockholders  assumes  that the  value of the
Sandata  Acquisition  Corp.  common stock that is converted  into Sandata common
stock by a Continuing Stockholder is equal to the value of the common stock that
such stock is being converted into by that Continuing Stockholder in the merger,
that  the  Continuing   Stockholders   formed  Sandata   Acquisition   Corp.  by
contributing  Sandata common stock to Sandata  Acquisition Corp. in exchange for
Sandata Acquisition Corp. common stock, and that the Continuing  Stockholders do
not receive any common  stock in any  capacity  other than as a  stockholder.  A
Continuing  Stockholder  generally  will not recognize any gain or loss upon the
conversion of his or her interest in Sandata  Acquisition Corp. into an interest
in Sandata as the surviving corporation.

     The tax consequences  described in the immediately  preceding paragraph may
not apply to a Continuing Stockholder if that Continuing Stockholder has certain
legally  enforceable  obligations  to  any  Non-continuing   Stockholder.   Such
Continuing  Stockholder  may,  in some  circumstances,  be treated as  receiving
ordinary dividend income.

Sandata and Sandata Acquisition Corp.

     The  following  discussion  concerns the United States  Federal  income tax
consequences  of the  merger to  Sandata  and  Sandata  Acquisition  Corp.  This
discussion  assumes that (i) the value of the Sandata  Acquisition  Corp. common
stock that is converted into Sandata common stock by a Continuing Stockholder is
equal to the value of the common stock that such stock is being  converted  into
by that Continuing  Stockholder in the merger,  (ii) the Continuing  Stockholder
formed Sandata Acquisition Corp. by contributing his or its Sandata common stock
to Sandata  Acquisition  Corp. in exchange for Sandata  common stock,  and (iii)
none of the Continuing  Stockholders will receive any common stock in any entity
other than Sandata.  Neither Sandata nor Sandata  Acquisition Corp. will realize
any gain or loss in the merger.

                 FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE

     Certain   information   contained   in  this   proxy   statement   includes
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995, and is subject to the safe harbor created by that
act.  Sandata  cautions  readers that certain  important  factors may affect its
actual  results  and could  cause  such  results to differ  materially  from any
forward-looking  statements  which may be deemed to have been made in this proxy
statement  or which are  otherwise  made by or on behalf  of  Sandata.  For this
purpose,  any  statements  contained  in  this  proxy  statement  that  are  not
statements of historical  fact may be deemed to be  forward-looking  statements.
Without limiting the generality of the foregoing,  words such as "may",  "will",
"expect",  "believe",  or "anticipate",  or the negative  variations thereof, or
comparable  terminology,  are intended to identify  forward-looking  statements.
Factors which may affect Sandata's results include,  but are not limited to, the
risks and  uncertainties  associated with  developments in and regulation of the
health-care industry,  new technology  developments,  competitive bidding, risks
and uncertainties  associated with the Internet and  Internet-related  products,
and other factors.

     Sandata is also  subject to other risks  detailed  herein or detailed  from
time to time in its Securities and Exchange Commission ("SEC") filings.  Readers
are also urged to carefully review and consider the various  disclosures made by
Sandata which attempt to advise  interested  parties of the factors which affect
its business, including, without limitation:

o        the anticipated timing of the completion of the merger;
o        the effects of the merger once completed;
o        the risks and uncertainties associated with development in and
          regulation of the health-care industry;
o        new technology developments;
o        competitive bidding;
o        risks and uncertainties associated with the Internet and
          Internet-related products; and
o        other factors.

     Notwithstanding  the  foregoing,  Sandata  is not  entitled  to rely on the
statutory safe harbor of Section  27A(b)(1)(E) of the Securities Act of 1933 and
Section  21E(b)(1)(E) of the Securities  Exchange Act of 1934 in relation to the
disclosure contained in this proxy statement.

                                 SPECIAL MEETING

Introduction

     This proxy statement is being furnished in connection with the solicitation
of proxies by our Board of Directors for a special meeting of stockholders to be
held on ___________, 2003 at 10:00 a.m., local time, at the corporate offices of
Sandata  Technologies,  Inc., 26 Harbor Park Drive,  Port  Washington,  New York
11050, or at any adjournment of the special meeting. Shares of our common stock,
par value $.001 per share,  represented by properly executed proxies received by
us will be voted at the special  meeting,  or at any  adjournment of the special
meeting, in accordance with the terms of such proxies, unless revoked.

Proposal to be Considered at the Special Meeting

     The purpose of the special meeting is for our  stockholders to consider and
vote upon a proposal to adopt a Merger Agreement,  dated as of October 28, 2002,
by and among Sandata Acquisition Corp., a Delaware corporation, Bert E. Brodsky,
Hugh Freund,  Gary Stoller and Sandata,  as amended by a First  Amendment to the
Agreement  and Plan of Merger,  dated as of January 27,  2003.  Under the Merger
Agreement,  prior to the effective  time, the members of the  Acquisition  Group
will  contribute  all shares of Sandata  common  stock  owned by them to Sandata
Acquisition Corp.

     The Merger Agreement  provides for the merger of Sandata  Acquisition Corp.
with and  into  Sandata.  At the  effective  time of the  merger,  the  separate
corporate  existence of Sandata  Acquisition  Corp.  will cease and Sandata will
continue as the surviving corporation. Pursuant to the merger:

          - each  share of  Sandata  common  stock,  par value  $.001 per share,
     issued  and  outstanding  immediately  prior to the  effective  time of the
     merger  (excluding  shares   contemplated  to  be  contributed  to  Sandata
     Acquisition  Corp. by the Acquisition Group and shares held by stockholders
     who perfect their  appraisal  rights under Delaware law), will be converted
     into the right to receive  an amount in cash,  without  interest,  equal to
     $2.21 per share;

          - each share of Sandata Acquisition Corp. common stock, par value $.01
     per share,  issued and outstanding  immediately prior to the effective time
     will be converted into and become one fully paid and nonassessable share of
     common stock of the surviving corporation; and

          - each outstanding  option to purchase  Sandata common stock,  whether
     vested  or  unvested  (excluding  options  owned  by  the  members  of  the
     Acquisition  Group which will be cancelled for no  consideration),  will be
     cancelled  and each  holder  thereof  will be  entitled  to  receive a cash
     payment equal to the product of the number of shares of Sandata  subject to
     the option and the excess of the  merger  consideration,  if any,  over the
     exercise price per share related to such options.

     Stockholders  who perfect their appraisal rights under Delaware law will be
entitled  to receive a cash  payment  in the amount of the "fair  value" of such
shares,  determined in  accordance  with Delaware law, but after the merger such
shares will not represent any interest in the surviving  corporation  other than
the right to receive such cash payment. If after the effective time a dissenting
stockholder   properly  withdraws  a  demand  for  appraisal,   such  dissenting
stockholder's  shares will be deemed to be converted as of the effective time of
the merger into the right to receive the merger consideration. See "The Merger -
Appraisal Rights."

     Representatives  of Marcum & Kliegman LLP, our  independent  auditors,  are
expected to be present at the special meeting.

     The special  committee and our Board of Directors  have approved the Merger
Agreement and recommend a vote FOR its adoption and approval.  Messrs.  Brodsky,
Freund and Stoller, who, pursuant to the Merger Agreement, with members of their
immediate families,  will own the surviving corporation after the effective time
of the  merger,  took  part in the vote by the Board of  Directors  and voted to
approve the Merger Agreement.  The Merger Agreement was unanimously  approved by
our Board of  Directors,  including by a majority of our  directors  who are not
employees of Sandata (namely Messrs. Fish and Bernard).

Voting Rights; Vote Required for Approval

     Under  Delaware law (the State of our  organization)  and our bylaws,  only
holders of shares of our common  stock on the record  date will be  entitled  to
receive  notice  of and to vote at the  special  meeting.  If you own our  stock
through your broker, you are a beneficial owner of our common stock, but are not
the record owner, and are not entitled to vote in person at the special meeting.
At the close of  business  on  _____,  2003,  the  record  date for the  special
meeting,  there were outstanding and entitled to vote ___________  shares of our
common stock. As of the record date,  there were _________  shares of our common
stock  outstanding  not owned by Sandata  Acquisition  Corp. and the Acquisition
Group which would be entitled to vote on the merger and Merger  Agreement.  Each
holder of record of our common  stock on the record date will be entitled to one
vote for each share held.  The presence,  in person or by proxy,  at the special
meeting of the holders of at least a majority of the shares of our common  stock
entitled to vote (______________ shares) is necessary to constitute a quorum for
the transaction of business.

     Under  Delaware  law and our  bylaws,  the merger  must be  approved by the
affirmative  vote of at least a  majority  of the  outstanding  shares of common
stock  entitled  to vote at the special  meeting.  Approval of the merger is not
subject to the vote of a majority of the  unaffiliated  stockholders of Sandata.
Of the __________ shares of Sandata common stock outstanding, approximately ___%
are owned by the members of the Acquisition Group, all of which, pursuant to the
Merger Agreement,  will be contributed to Sandata Acquisition Corp. prior to the
effective  time of the  merger.  Under the Merger  Agreement,  Messrs.  Brodsky,
Freund and Stoller agreed to vote, and they agreed to cause Sandata  Acquisition
Corp. and the members of their immediate families to vote, all shares of Sandata
owned by them and Sandata  Acquisition  Corp. at the effective  time in favor of
the merger.  The  Acquisition  Group owns a sufficient  number of Sandata common
stock to approve  the  Merger  Agreement.  See  "Special  Factors - Purpose  and
Structure of the Merger; Certain Effects of the Merger; Plans or Proposals After
the  Merger,"  "Special  Factors - Interests  of the Members of the  Acquisition
Group in the Merger" and "Special Factors - Interests of Executive  Officers and
Directors in the Merger."

Voting and Revocation of Proxies

     Shares that are entitled to vote and represented by a proxy properly signed
and received at or prior to the special meeting,  unless  subsequently  properly
revoked, will be voted in accordance with the instructions indicated thereon. If
a proxy is signed and  returned  without  indicating  any  voting  instructions,
shares  represented  by the proxy will be voted FOR the  proposal to approve and
adopt the Merger  Agreement and the merger.  The failure to submit a proxy card,
the abstention from voting by a stockholder, broker non-votes, or the failure to
vote in  person  at the  special  meeting,  will  result  in your vote not being
counted  either for or  against  adoption  of the  merger and Merger  Agreement.
Abstentions  and broker  non-votes  will be  counted  as present at the  special
meeting for quorum purposes. Since the Merger Agreement requires the approval of
a majority of the  outstanding  common stock of Sandata,  abstentions and broker
non-votes will have the effect of a negative vote.

     Any proxy given pursuant to this  solicitation may be revoked by the person
giving it at any time  before the shares  represented  by the proxy are voted at
the special meeting by:

          - delivering to our Corporate  Secretary before the special meeting a
     duly  executed  proxy  relating  to  the  same  shares  and  matters  to be
     considered  at the  special  meeting,  bearing a date  later than the proxy
     previously executed;

          - delivering to our Corporate  Secretary  before the special meeting a
     written notice of revocation;

          - giving  notice of  revocation  of the proxy at the  special  meeting
     before the vote on the Merger Agreement and the merger; or

          -  attending  and voting in person at the  special  meeting so long as
     you, and not your broker, are the record holder of such stock.

     Revocation  of the  proxy  will  not  affect  any  vote  previously  taken.
Attendance at the special  meeting will not in itself  constitute the revocation
of a proxy; you must vote in person at the meeting.

     The Board is not  currently  aware of any  business to be acted upon at the
special  meeting  other  than as  described  in this  proxy  statement.  Persons
appointed as proxies may not exercise discretionary voting authority to vote any
proxy in favor of any adjournments or postponements of the special meeting.

Solicitation of Proxies

     Sandata  will bear the cost of  soliciting  proxies from  stockholders.  In
addition to soliciting  proxies by mail,  some of our officers and directors may
solicit  proxies  by  telephone,  facsimile  or  in  person,  without  receiving
additional compensation.  Arrangements may also be made with brokerage firms and
other custodians,  nominees and fiduciaries to forward solicitation materials to
the  beneficial  owners of shares  held of record by such  persons,  and we will
reimburse  such  brokerage  firms,  custodians,  nominees  and  fiduciaries  for
reasonable  out-of-pocket  expenses  they  incurred.  Sandata  will not  solicit
proxies  via the  Internet.  Sandata has not  retained  or employed  any person,
either directly or indirectly,  for the purpose of soliciting  proxies or making
recommendations in connection with the merger.

     This proxy statement and the accompanying form of proxy are dated ________,
2003 and are first being mailed to stockholders on or about ________, 2003.

Trading Market and Price; Dividends; Stock Repurchases

     Our common  stock  trades on the Nasdaq  SmallCap  Market  under the symbol
"SAND".  The following table shows the quarterly high and low bid prices for the
two most recent  quarters of fiscal  year 2003 ended  November  30, 2002 and the
last two fiscal years ended May 31, 2002 reported by Nasdaq.  The prices reflect
inter-dealer prices, without retail mark-ups,  markdowns or commissions, and may
not necessarily represent actual transactions.

      First and Second Quarter of Fiscal Year 2003, Ended November 30, 2002

                                                 High                      Low
              First Quarter                     $1.50                     $0.31
              Second Quarter                    $1.91                     $1.65

                         Fiscal Year Ended May 31, 2002

                                                  High                      Low
              First Quarter                      $1.35                     $1.07
              Second Quarter                     $1.18                     $0.84
              Third Quarter                      $1.67                     $0.75
              Fourth Quarter                     $1.02                     $0.44

                         Fiscal Year Ended May 31, 2001

                                                  High                      Low
              First Quarter                      $1.88                     $1.25
              Second Quarter                     $1.91                     $0.53
              Third Quarter                      $1.41                     $0.84
              Fourth Quarter                     $1.38                     $0.86

     On ________,  2003, the record date for the special meeting,  we had issued
and outstanding  ____________  shares of our common stock of which approximately
__________ will be converted in the right to receive the merger  consideration..
On that date, there were ____ holders of record of our common stock. This number
includes  stockholders  of record who hold stock for the  benefit of others.  On
August 5, 2002, the last day the shares were traded prior to the announcement of
the merger  proposal,  the  closing  price per share as  reported  on the Nasdaq
SmallCap  Market was $0.50. On  ___________,  2003, the most recent  practicable
trading day prior to the date of this proxy  statement,  the last reported sales
price per share of our common stock on the Nasdaq SmallCap Market was $_______.

     We have not  declared  or paid any  dividends  on the  shares of our common
stock since our  inception.  We do not  anticipate  paying cash dividends in the
foreseeable  future.  We  intend  to  retain  future  earnings  to  finance  our
operations  and to fund the  growth  of the  business.  Any  payment  of  future
dividends  will be at the  discretion  of our Board of Directors and will depend
on, among other things, our earnings, financial condition, capital requirements,
level of indebtedness,  contractual  restrictions with respect to the payment of
dividends and other factors that our Board of Directors deems relevant. Pursuant
to a Guaranty Agreement,  as amended,  made and entered into as of June 1, 1994,
from Brodsky,  Sibling  Realty,  Inc., as lessee,  Sandata,  Sandata Home Health
Systems,  Inc., Sandata Spectrum,  Inc. and Sandata Inteck, Inc., as guarantors,
to Marine Midland Bank, Sandata is restricted from declaring dividends on shares
of its common stock.  Under the provisions of a Revolving Credit  Agreement,  as
amended,  made as of the 18th day of April,  1997, by and among  Sandsport  Data
Services,   Inc.,   Sandata,   Sandata  Home  Health  Systems,   Inc.,   Sandata
Productivity,  Inc., Sandata Spectrum,  Inc.,  Sandata Inteck,  Inc. and Santrax
Systems,  Inc., as guarantors,  and Marine  Midland Bank,  Sandata is restricted
from declaring  dividends on shares of its common stock.  See "Special Factors -
Certain Relationships Between Sandata,  Sandata Acquisition Corp. and Members of
the  Acquisition  Group -  IDA/SBA  Financing"  and  "Special  Factors - Certain
Relationships  Between  Sandata,  Sandata  Acquisition  Corp. and Members of the
Acquisition Group - Revolving Credit Agreement."

     On December 18, 2001,  Sandata  entered into agreements with each of Gerald
Shapiro  and Paul  Konigsburg,  two former  directors  of Sandata,  whereby,  in
exchange  for  the  cancellation  of  promissory  notes,  Messrs.   Shapiro  and
Konigsburg  surrendered  24,667 shares of Sandata common stock in the aggregate.
The value per share of Sandata  common  stock in this  exchange  was $1.54.  The
common stock  surrendered by each of Messrs.  Shapiro and Konigsburg is now held
as Sandata  treasury  stock and will be cancelled at the  effective  time of the
merger.

     Other than the share exchange described above,  during the period September
1, 2000 to August 31, 2002, we have not purchased any shares of our common stock
on the open market or in privately negotiated transactions.

                                   THE MERGER

     This section of the proxy  statement  describes  the material  terms of the
merger, including material provisions of the Merger Agreement.  This description
of the Merger  Agreement is qualified  by reference to the Merger  Agreement,  a
copy of which is attached to this proxy  statement as Appendices A-1 and A-2 and
which is  incorporated  herein by  reference.  You are urged to read the  entire
Merger Agreement carefully.

Effective Time of the Merger

     The  Merger  Agreement  provides  that,  upon the terms and  subject to the
conditions in the Merger Agreement, and in accordance with Delaware law, Sandata
Acquisition  Corp. will merge with and into Sandata.  As a result of the merger,
Sandata  Acquisition  Corp.'s  corporate  existence  will cease and Sandata will
continue as the surviving  corporation.  The merger will become effective at the
time a  certificate  of  merger  is filed  with  and  accepted  by the  Delaware
Secretary of State. The merger is expected to occur as soon as practicable after
all conditions to the merger have been satisfied or waived.

     Prior to the effective time of the merger,  the members of the  Acquisition
Group  will  contribute  all of the  common  stock of  Sandata  owned by them to
Sandata  Acquisition Corp. At the effective time of the merger,  each issued and
outstanding  share of our common stock  (excluding  shares being  contributed to
Sandata  Acquisition  Corp.  by the  Acquisition  Group and owned by holders who
validly  perfect their  appraisal  rights under  Delaware law) will be converted
into the right to receive  $2.21 in cash.  Approximately  ___________  shares of
Sandata  common  stock (less any shares held by holders of Sandata  common stock
who exercise their appraisal rights) will be converted into the right to receive
the merger consideration at the effective time.

     The Merger  Agreement  provides  that (i) the  directors  and  officers  of
Sandata  immediately  prior  to the  effective  time of the  merger  will be the
directors and officers of the surviving  corporation,  (ii) the  certificate  of
incorporation of Sandata as in effect immediately prior to the effective time of
the merger will continue to be the certificate of incorporation of the surviving
corporation   after  the  merger  and  (iii)  Sandata's  bylaws,  as  in  effect
immediately  prior to the effective time of the merger,  will continue to be the
bylaws of the surviving corporation after the merger.

Payment of Merger Consideration and Surrender of Stock Certificates

     Once we and Sandata  Acquisition Corp.  complete the merger,  the following
will occur:

          - each share of our common  stock issued and  outstanding  immediately
     prior to the effective time of the merger, excluding shares contemplated to
     be contributed to Sandata  Acquisition  Corp. by the Acquisition  Group and
     shares held by  stockholders  who validly  perfect their  appraisal  rights
     under  Delaware  law,  will  automatically  be converted  into the right to
     receive $2.21 in cash;

          - each share of Sandata  Acquisition Corp. common stock outstanding at
     the effective  time will be converted into one share of common stock of the
     surviving corporation;

          - each holder of a certificate  formerly  representing  such shares of
     Sandata  common  stock will cease to have any rights  with  respect to such
     shares, except the right to receive the merger consideration;

          - the  exchange  agent will send you a  transmittal  form and  written
     instructions  for  exchanging  your  share   certificates  for  the  merger
     consideration;

          - all shares of our common stock,  including those  contemplated to be
     owned by Sandata  Acquisition Corp., will no longer be outstanding and will
     be deemed cancelled; and

          - our  exchange  agent  will  pay  the  merger  consideration  to  the
     unaffiliated stockholders of Sandata.

     At the  effective  time of the merger,  the  unaffiliated  stockholders  of
Sandata  who have not  exercised  appraisal  rights  will  automatically  become
entitled to receive the merger  consideration.  The actual physical  exchange of
certificates   representing   shares  of  our   common   stock  for  the  merger
consideration will occur after the effective time of the merger.

     North American Transfer Co. will serve as the exchange agent. Shortly after
the  completion of the merger,  the exchange agent will send or cause to be sent
to all of the  unaffiliated  stockholders  of Sandata (other than any dissenting
stockholders who have exercised their appraisal  rights) a letter of transmittal
with  instructions  for  exchanging  shares of our  common  stock for the merger
consideration. Upon surrender of a certificate for cancellation by a stockholder
to the  exchange  agent  along  with an  executed  letter of  transmittal,  such
stockholder  will be entitled to receive the merger  consideration.  Each of our
stock  certificates  outstanding  immediately prior to the merger will be deemed
for all purposes,  after the merger, to evidence the right to receive the merger
consideration, regardless of when the stock certificates are actually exchanged.

     The  unaffiliated   stockholders  of  Sandata  should  not  send  in  their
certificates  for our  common  stock  until  they  have  received  a  letter  of
transmittal and further written instructions after the date of the completion of
the merger.

     Please do not send in your stock certificates with your proxy.

     Stockholders  who  cannot  locate  their  stock  certificates  are urged to
contact the transfer  agent for our common stock (the  "Transfer  Agent") at the
following address:

                        North American Transfer Trust Co.
                              147 West Merrick Road
                            Freeport, New York 11520
                                 (516) 379-8051

     The Transfer  Agent will issue a new stock  certificate to replace the lost
certificate  only if the person who lost his or her stock  certificate  signs an
affidavit  certifying that his or her stock certificate  cannot be located,  and
provides the Transfer Agent with such additional agreements and documentation as
may be  required  by the  Transfer  Agent.  Our  Transfer  Agent may require any
stockholder who lost his or her stock certificate to post a bond.

Financing of the Merger; Fees and Expenses of the Merger

     The total  amount of funds  required  to  consummate  the merger and to pay
related  fees and  expenses  is  estimated  to be  approximately  $____________.
Pursuant to the Merger Agreement, prior to effective time of the merger, Messrs.
Brodsky,  Freund and Stoller will cause the necessary funds to be contributed to
Sandata  Acquisition Corp. and, at the effective time, Sandata Acquisition Corp.
will  have the  funds  necessary  to pay the  purchase  price  and all  payments
required under the Merger Agreement.  These funds will be contributed to Sandata
Acquisition  Corp.  by Jessica  Brodsky  Miller,  David C.  Brodsky,  Jeffrey H.
Brodsky and Lee J. Brodsky,  members of the Acquisition Group. The merger is not
conditioned on any financing  arrangements nor will any of the funds required to
fund the merger consideration be borrowed funds.

     The  following  is an estimate  of  expenses  incurred or to be incurred in
connection with the merger which will be paid by Sandata:

Legal Fees(1)                                                      $__________
Accounting Fees                                                    $__________
Printing, Proxy Solicitation and Mailing Costs                     $__________
Filing Fees                                                        $__________
Financial Advisor Fees                                             $__________
Special Committee                                                  $__________
Miscellaneous                                                      $__________
Total                                                              $__________

     (1) Includes  anticipated legal fees in connection with defending  lawsuits
brought by two  stockholders  of Sandata in  Delaware  against  Sandata  and the
members of its Board of  Directors  alleging  breaches  of  fiduciary  duties to
Sandata and its stockholders.

Appraisal Rights

     Under the Delaware General  Corporation Law ("DGCL"),  holders of shares of
Sandata common stock who do not want to accept the merger consideration, and who
follow the procedures set forth in Section 262 of the DGCL,  will be entitled to
have  their  shares  appraised  by the  Delaware  Chancery  Court and to receive
payment of the "fair value" of these  shares,  exclusive of any element of value
arising from the  accomplishment  or expectation of the merger,  together with a
fair rate of interest, if any, as determined by such court.

     The following discussion is a summary of the material provisions of Section
262 of the DGCL and is qualified in its entirety by the full text of Section 262
that is reprinted in Appendix D. All  references  in Section 262 of the DGCL and
in this summary to a  "stockholder"  or "holder" are to the record holder of the
shares of Sandata  common stock as to which  appraisal  rights are  asserted.  A
person  having a beneficial  interest in shares of Sandata  common stock held of
record in the name of  another  person,  such as a broker or  nominee,  must act
promptly  to cause  the  record  holder to follow  the  steps  summarized  below
properly and in a timely manner to perfect appraisal rights.

     If you wish to exercise your appraisal  rights or you wish to preserve your
right to do so,  you should  review  the  following  discussion  and  Appendix D
carefully,  because  failure to timely and properly  comply with the  procedures
therein specified will result in the loss of appraisal rights under the DGCL.

     Holders of record of Sandata  common  stock who do not vote in favor of the
Merger  Agreement  and  who  otherwise  comply  with  the  applicable  statutory
procedures  will be entitled to appraisal  rights under Section 262 of the DGCL.
Under  Section 262 of the DGCL,  where a proposed  merger is to be submitted for
approval at a meeting of stockholders, Sandata must, not less than 20 days prior
to the meeting,  notify each of its  stockholders  who was such a stockholder on
the record date for such meeting,  that appraisal rights are available for their
shares of  Sandata  common  stock,  and must  include  in such  notice a copy of
Section 262 of the DGCL. This proxy statement constitutes such notice.

     A holder of shares for which  appraisal  rights are available who wishes to
exercise such rights:

o             must not vote in favor of the Merger Agreement or consent thereto
              in writing (including by returning a signed proxy without any
              voting instructions as to the proposal); and

o             must deliver to Sandata, prior to the vote on the Merger Agreement
              at the special meeting, a written demand for appraisal of the
              holder's shares.

     If you sign and return your proxy  without  expressly  directing  that your
shares be voted against the merger  proposal or that an abstention be registered
with respect to your shares in connection with the merger,  you will effectively
have waived your appraisal  rights with respect to those shares because,  in the
absence of express contrary instructions,  your shares will be voted in favor of
the merger.

     This written  demand for appraisal must be in addition to and separate from
any  proxy  abstaining  from  or vote  against  the  merger.  This  demand  must
reasonably  inform  Sandata  of  the  identity  of  the  stockholder  and of the
stockholder's  intent to demand appraisal of his, her or its shares. A holder of
shares  wishing to exercise  such holder's  appraisal  rights must be the record
holder of such shares on the date the written  demand for appraisal is made, and
must  continue  to hold  such  shares  until  the  consummation  of the  merger.
Accordingly,  a holder of shares for which appraisal rights are available who is
the record  holder of shares on the date the  written  demand for  appraisal  is
made, but who  thereafter  transfers  such shares prior to  consummation  of the
merger, will lose any right to appraisal in respect of such shares.

     Only a holder of record of shares for which appraisal  rights are available
is  entitled  to assert  appraisal  rights  for the  shares  registered  in that
holder's name. A demand for appraisal  should be executed by or on behalf of the
holder of record,  fully and  correctly,  as this  holder's name appears on such
holder's  stock  certificates.  If the  shares  for which  appraisal  rights are
available  are  owned of record  in a  fiduciary  capacity,  for  example,  by a
trustee,  guardian or custodian,  execution of the demand should be made in that
capacity,  and if the  shares are owned of record by more than one owner as in a
joint  tenancy  or tenancy in common,  the demand  should be  executed  by or on
behalf of all joint  owners.  An authorized  agent,  including one or more joint
owners,  may execute a demand for appraisal on behalf of a holder of record. The
agent,  however, must identify the record owner or owners and expressly disclose
the fact that,  in  executing  the demand,  the agent is agent for such owner or
owners.  Those  beneficial  owners who wish to exercise  appraisal  rights under
Section  262 of the DGCL are  urged  to  consult  with  their  brokers  or other
nominees to determine the appropriate  procedures for the making of a demand for
appraisal  with  respect to shares held of record by such a nominee.  A proxy or
vote against the merger will not by itself constitute a demand for appraisal.

     All  written  demands  for  appraisal  should be sent or  delivered  to the
surviving corporation at the following address:

                  Sandata Technologies, Inc.
                  26 Harbor Park Drive
                  Port Washington, NY 11050
                  Attention: Corporate Secretary

     Within 10 days after the effective time of the merger,  Sandata will notify
each stockholder (i) that has properly  demanded  appraisal rights under Section
262 of the DGCL,  and (ii) that has not voted in favor of the Merger  Agreement,
of the date the merger became effective.

     Within  120 days after the  effective  time of the  merger,  but not later,
Sandata, as the surviving corporation,  or any stockholder who has complied with
the statutory requirements summarized above, may file a petition in the Delaware
Chancery  Court  demanding  a  determination  of the fair value of all shares of
Sandata common stock that are entitled to appraisal rights.  Sandata is under no
obligation, and has no present intention, to file a petition with respect to the
appraisal  of the  fair  value  of  such  shares.  Accordingly,  it  will be the
obligation of stockholders  wishing to assert  appraisal  rights to initiate all
necessary action to perfect their appraisal rights within the time prescribed in
Section 262 of the DGCL.

     Within 120 days after the  effective  time of the merger,  any  stockholder
that has complied with the requirements for exercise of appraisal rights will be
entitled,  upon written  request,  to receive  from Sandata a statement  setting
forth (i) the  aggregate  number of shares not voted in favor of adoption of the
Merger  Agreement and for which demands for appraisal  have been  received,  and
(ii) the aggregate  number of holders of such shares.  These  statements must be
mailed within 10 days after a written  request has been received by Sandata,  or
within 10 days  after  expiration  of the  period for  delivery  of demands  for
appraisal under Section 262 of the DGCL, whichever is later.

     If a petition for an appraisal is filed on a timely basis,  after a hearing
on such  petition,  of which the  Register  in  Chancery  (if so  ordered by the
Delaware Chancery Court) will give notice to stockholders, the Delaware Chancery
Court will determine the stockholders entitled to appraisal rights. The Delaware
Chancery  Court  will also  appraise  the "fair  value" of the  shares for which
appraisal  rights are available,  exclusive of any element of value arising from
the  accomplishment  or expectation of the merger,  together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.

     Stockholders  considering  seeking  appraisal should be aware that the fair
value of their shares of Sandata common stock as determined under Section 262 of
the DGCL could be more than, the same as, or less than the merger consideration,
and that  investment  banking  opinions as to fairness from a financial point of
view are not  necessarily  opinions  as to fair value  under  Section 262 of the
DGCL. The Delaware  Supreme Court has stated,  however,  that "proof of value by
any  techniques  or methods  that are  generally  considered  acceptable  in the
financial  community and otherwise  admissible in court" should be considered in
the appraisal proceedings.

     The Delaware Chancery Court will determine the amount of interest,  if any,
to be paid upon the  amounts to be received by  stockholders  whose  shares have
been  appraised.  The costs of the  action  may be  determined  by the  Delaware
Chancery  Court and allocated  among the parties as the Delaware  Chancery Court
deems  equitable.  The  Delaware  Chancery  Court may also  order  that all or a
portion of the  expenses  incurred by any  stockholder  in  connection  with the
appraisal proceeding,  including, without limitation, reasonable attorney's fees
and the fees and  expenses of experts,  be charged pro rata against the value of
all of the shares entitled to appraisal.

     Any holder of shares who has duly demanded an appraisal in compliance  with
Section  262 of the DGCL  will not,  after  the  completion  of the  merger,  be
entitled  to vote the shares  subject  to such  demand  for any  purpose,  or be
entitled to the payment of  dividends  or other  distributions  on those  shares
(except  dividends or other  distributions  payable to holders of record as of a
record date prior to the effective time of the merger).

     If any  stockholder  that  properly  demands  appraisal  of his, her or its
shares under Section 262 of the DGCL fails to perfect, or effectively  withdraws
or loses, his, her or its right to appraisal,  as provided in Section 262 of the
DGCL, the shares of this stockholder will be converted into the right to receive
the merger consideration of $2.21 per share. A stockholder will fail to perfect,
or  effectively  lose or withdraw its right to appraisal if, among other things,
no petition for appraisal is filed within 120 days after the  effective  time of
the merger, or if this stockholder  delivers to Sandata a written  withdrawal of
his,  her or its  demand  for  appraisal.  At any time  within 60 days after the
effective time of the merger,  any stockholder  shall have the right to withdraw
such stockholder's  demand for appraisal and to accept the merger  consideration
of $2.21 per share.  Any attempt to withdraw  an  appraisal  demand more than 60
days after the effective time of the merger will require the written approval of
Sandata as the surviving corporation.

     Cash  received  pursuant to the exercise of your  appraisal  rights will be
subject  to income  tax.  We refer  you to the  information  under  the  heading
"Special Factors - Material United States Federal Income Tax Considerations."

     Failure  to  follow  the  steps  required  by  Section  262 of the DGCL for
perfecting  appraisal rights may result in the loss of your rights.  Under those
circumstances,  you will be entitled to receive the $2.21  merger  consideration
with  respect to your  shares of Sandata  common  stock in  accordance  with the
Merger Agreement.

     The foregoing summary of the rights of dissenting public  stockholders does
not  purport to be a complete  statement  of the  procedures  to be  followed by
stockholders   desiring  to  exercise  any  available   appraisal  rights.   The
preservation  and exercise of appraisal  rights require strict  adherence to the
applicable  provisions  of Section 262 of the DGCL,  a copy of which is attached
hereto as Appendix D.

Regulatory Approvals

     We are not aware of any license or other regulatory  permit that appears to
be material to our business that might be adversely  affected by the merger,  or
of  any  approval  or  other  action  by  any  Federal  or  state  governmental,
administrative or regulatory authority or agency that would be required prior to
the merger.  Should any such approval or other action be required,  we will seek
such  approval or action.  There can be no assurance  that any such  approval or
other  action,  if needed,  would be  obtained  without  substantial  effort and
expense or that adverse consequences might not result to our business,  in order
to obtain such  approval or other action or in the event that such  approval was
not obtained or such other action was not taken.

     The   merger   will  not   require   a  filing   or   approval   under  the
Hart-Scott-Rodino Act.

                              THE MERGER AGREEMENT

     The  following  discussion  of material  terms of the Merger  Agreement  is
qualified  in its  entirety  by  reference  to the  complete  text of the Merger
Agreement,  which is included in this proxy  statement as Appendices A-1 and A-2
and is incorporated herein by reference.  As used in this discussion,  the terms
"material" and "material  adverse  effect" have the meanings given in Article XI
of the Merger Agreement.

General

     The Merger Agreement  provides for Sandata  Acquisition Corp. to merge with
and into Sandata,  with Sandata continuing as the surviving  corporation.  Under
the Merger  Agreement,  at the  effective  time of the merger,  the  officers of
Sandata  prior to the  effective  time  will be the  officers  of the  surviving
corporation and the directors of Sandata prior to the effective time will be the
directors of the surviving corporation.  Pursuant to the Merger Agreement, prior
to the effective time of the merger,  the members of the Acquisition  Group will
contribute all Sandata common stock owned by them to Sandata Acquisition Corp.

Consideration to be Received by the Stockholders

     At the effective time of the merger,  each share of Sandata then issued and
outstanding  (excluding shares being contributed to Sandata Acquisition Corp. by
the  Acquisition  Group and shares  owned by holders who validly  perfect  their
appraisal rights under Delaware law) will be converted into the right to receive
$2.21 in cash. At the effective time of the merger,  each issued and outstanding
share of Sandata Acquisition Corp. common stock will be converted into one fully
paid  and  non-assessable  share  of  Sandata  common  stock  as  the  surviving
corporation.

Stock Options

     At the effective time of the merger,  all  outstanding  options to purchase
shares of Sandata common stock, whether they are vested or not vested (excluding
options held by the members of the  Acquisition  Group),  will be cancelled  and
each holder of an option will be entitled to receive a cash payment equal to the
product  of the  number of shares  subject  to the  option,  and the  difference
between the merger consideration and the per share exercise price of the option,
reduced by applicable  withholding tax.  Outstanding options to purchase Sandata
common stock held by the members of the  Acquisition  Group will be cancelled at
the  effective  time,  and the holders of such  options  will not be entitled to
receive any consideration.

Representations and Warranties

     Sandata does not make any  representations  or warranties  under the Merger
Agreement.

     Sandata Acquisition Corp. and Messrs. Brodsky, Stoller and Freund, make the
following representations and warranties to Sandata:

          - Sandata  Acquisition Corp. is a corporation duly organized,  validly
     existing and in good standing under the laws of the State of Delaware,  has
     the power to carry on its business as now  conducted  and to own its assets
     and is not required to be qualified to do business as a foreign corporation
     in any jurisdiction;

          - No consent of any governmental entity or other person is required to
     be  received  by or on the part of  Sandata  Acquisition  Corp.  or Messrs.
     Brodsky, Freund or Stoller to enable it or them to enter into and carry out
     the Merger Agreement and the merger;

          - Sandata  Acquisition  Corp. has the corporate power and authority to
     enter into the Merger Agreement and to carry out its obligations;

          - The Merger Agreement constitutes the valid and binding obligation of
     Sandata Acquisition Corp. and each of Messrs.  Brodsky, Freund and Stoller,
     and is enforceable against it and them in accordance with its terms;

          - The execution and delivery of the Merger Agreement and compliance by
     Sandata Acquisition Corp. with any of the provisions will not:

          |X| violate or  conflict  with any  provision  of its  certificate  of
     incorporation or bylaws;

          |X| violate or conflict with,  result in the breach or termination of,
     the terms of any  contract to which  Sandata  Acquisition  Corp.  or any of
     Messrs. Brodsky, Freund or Stoller is a party;

          |X|  result  in the  creation  of any lien  upon any of the  assets of
     Sandata Acquisition Corp.;

          |X| violate any judgment, order, injunction,  decree or award against,
     or binding upon, Sandata Acquisition Corp. and/or Messrs.  Brodsky,  Freund
     or Stoller or upon any of its or their assets; or

          |X|  violate any law or  regulation  of any  jurisdiction  relating to
     Sandata Acquisition Corp.

          - The authorized capital stock of Sandata Acquisition Corp. is 100,000
     shares  of common  stock of which  none are  outstanding,  and there are no
     derivative  securities  outstanding to purchase the common stock of Sandata
     Acquisition Corp.;

          - The  number of  shares  of  Sandata  common  stock  owned by each of
     Messrs.  Brodsky,  Freund and Stoller  and the  members of their  immediate
     families is as set forth in the Merger Agreement;

          - Except as previously disclosed to Sandata, none of Messrs.  Brodsky,
     Freund or Stoller  nor the  members  of their  immediate  families  own any
     derivative securities entitling them to purchase Sandata common stock;

          - Sandata Acquisition Corp. has not made any material untrue statement
     of fact or omitted any material fact contained in this proxy statement;

          - Sandata  Acquisition  Corp. was  incorporated on April 17, 2002, has
     engaged in no other  business  activities  and has conducted its operations
     only as contemplated by the Merger Agreement;

          - Sandata  Acquisition  Corp. has, or will have at the effective time,
     sufficient funds available to pay all of the merger  consideration  and any
     payments required under the Merger Agreement;

          - There are no pending legal actions  relating to Sandata  Acquisition
     Corp. or any of its assets or business. Sandata Acquisition Corp. is not in
     violation of any law, regulation,  or other requirement of any governmental
     entity or court relating to its assets;

          - Sandata Acquisition Corp. or Messrs. Brodsky, Freund or Stoller have
     not engaged, any broker or other third party to act on its behalf, directly
     or indirectly,  as a broker or finder in connection  with the  transactions
     contemplated by the Merger Agreement;

          - Sandata  Acquisition  Corp.  has not paid any fees which are illegal
     under any law; and

          - No  representation,  warranty or  statement  by Sandata  Acquisition
     Corp.  or  Messrs.  Brodsky,  Freund or  Stoller  in the  Merger  Agreement
     contains  any  untrue  statement  of a material  fact,  or omits to state a
     material fact.

Covenants

     In the Merger Agreement,  Sandata  Acquisition  Corp. and Messrs.  Brodsky,
Freund and Stoller agreed that, among other things:

          - they will not take any  action  that  would  result in any of its or
     Sandata's  representations and warranties set forth in the Merger Agreement
     being  or  becoming  untrue  in  any  material  respect,  or in  any of the
     conditions to the merger not being satisfied;

          - they will cooperate with Sandata in determining  whether any filings
     are  required to be made with,  or  consents,  authorizations  or approvals
     required to be obtained from, any third party or governmental  entity prior
     to the effective  time in connection  with the Merger  Agreement,  and will
     cooperate  in making  any such  filings  promptly  and in seeking to obtain
     timely any such consents, authorizations or approvals;

          - Messrs.  Brodsky,  Freund and Stoller will vote,  and will cause the
     members of their immediate families and Sandata  Acquisition Corp. to vote,
     all shares of Sandata owned by them and Sandata  Acquisition Corp. in favor
     of adopting the Merger Agreement; and

          - Messrs. Brodsky, Freund and Stoller will, and will cause the members
     of their immediate  families to, (i) contribute all shares of Sandata owned
     by them to Sandata  Acquisition Corp. prior to the effective time, (ii) not
     take any action that would prevent  Sandata  Acquisition  Corp. from owning
     the shares of Sandata being  contributed and (iii)  contribute an amount in
     cash  to  Sandata   Acquisition   Corp.   sufficient   to  pay  the  merger
     consideration.

     In the Merger Agreement, Sandata agreed that, among other things:

          - it will prepare and file a proxy or information  statement  relating
     to the  special  meeting  with the SEC and will  use its  best  efforts  to
     respond to the  comments of the SEC and to cause the proxy  statement to be
     mailed to our stockholders;

          - it will jointly  prepare and file with Sandata  Acquisition  Corp. a
     transaction  statement on Schedule 13e-3 under the Securities  Exchange Act
     of 1934, as amended;

          - it will  call a  stockholders'  meeting  to be held as  promptly  as
     practicable  for the  purpose  of voting  upon the  approval  of the Merger
     Agreement and the merger,  and will recommend that our stockholders vote to
     approve the Merger Agreement; and

          - it will adopt  resolutions  canceling all outstanding  stock options
     and entitling  each holder to receive the merger  consideration  payable on
     each option.

     Nothing contained in the Merger Agreement  prohibits Sandata from, prior to
the date of the stockholders'  meeting,  furnishing  information to, or entering
into  discussions  or  negotiations  with,  any person that makes an unsolicited
written, bona fide proposal to Sandata with respect to a transaction which could
reasonably  be expected to result in a competitive  proposal,  if the failure to
take such action would be  inconsistent  with the fiduciary  duties of Sandata's
Board of Directors or the special  committee  to  Sandata's  stockholders  under
applicable law.

Indemnification; Directors' and Officers' Insurance

          At the effective time, the certificate of incorporation  and/or bylaws
     of the surviving  corporation  will have the same  provisions  that are set
     forth in the certificate of incorporation and/or bylaws of Sandata relating
     to the indemnification of our officers and directors,  and these provisions
     will not be amended  for a period of six years from the  effective  time in
     any manner that would adversely affect the rights of these individuals; and

          - the surviving corporation will maintain the directors' and officers'
     liability  insurance  policies  currently  maintained  by Sandata  from the
     effective  time until such period of time during which claims could legally
     be made against any director or officer, in their capacity as such.

Conditions to the Merger

     The obligations of each of Sandata,  Sandata  Acquisition Corp. and Messrs.
Brodsky, Freund and Stoller to effect the merger are subject to the satisfaction
of the following conditions, unless waived by them:

          - The Merger Agreement is approved and adopted by the affirmative vote
     of the holders of a majority of the  outstanding  shares of Sandata  common
     stock entitled to vote;

          -  All   authorizations,   consents,   orders  or  approvals   of,  or
     declarations or filings with, and all expirations or early  terminations of
     waiting periods imposed by, any governmental entity which are necessary for
     the consummation of the merger will have been filed;

          - Sandata  shall have  obtained  all  consents or  approvals  from all
     persons and governmental entities relating to any loan or credit agreement,
     note, mortgage, indenture, lease, license or other agreement to which it is
     a party;

          - No  action,  suit or  proceeding  shall have been  instituted  or be
     pending or threatened seeking to prohibit the consummation of the merger or
     seeking to obtain  damages from Sandata that could be expected to result in
     a material adverse effect;

          - No temporary restraining order,  preliminary or permanent injunction
     or other order issued by any court of competent jurisdiction or other legal
     restraint or prohibition  preventing the consummation of the merger will be
     in effect; and

          -  Dissenting  shares must  constitute  less than 25% of all shares of
     Sandata outstanding immediately prior to the effective time.

     The  conditions  that the Merger  Agreement  is  approved  and adopted by a
majority of the  outstanding  shares of Sandata and that no  restraining  order,
injunction,  court order or other legal prohibition preventing the merger cannot
be waived by either of Sandata or Sandata  Acquisition Corp. Sandata and Sandata
Acquisition Corp. are likely to waive the condition regarding the institution of
legal proceedings seeking to prohibit consummation of the merger or damages from
Sandata,  as the Stipulation of Settlement is pending with the Delaware Chancery
Court with respect to the existing  Delaware  Chancery  Court  lawsuits  against
Sandata and the members of its Board of Directors and because  Sandata,  Sandata
Acquisition  Corp.  and Messrs.  Brodsky,  Freund and Stoller  believe  that the
merger  is fair  and in the  best  interests  of  Sandata  and its  unaffiliated
stockholders.  Sandata does not believe that it has a legal obligation, and does
not intend,  to resolicit proxies to approve the Merger Agreement and the merger
if it waives this condition.

     The obligations of Sandata  Acquisition Corp. and Messrs.  Brodsky,  Freund
and  Stoller  to effect  the  merger  are  subject  to the  satisfaction  of the
following  conditions  unless waived by Sandata  Acquisition  Corp.  and Messrs.
Brodsky, Freund and Stoller:

          - Sandata will have  performed  and complied in all material  respects
     with all obligations  required to be performed or complied with by it under
     the Merger Agreement;

          - Since the date of the Merger  Agreement,  there  shall not have been
     any event that has had, or is reasonably likely to have, a material adverse
     effect on Sandata; and

          - All  proceedings  to be  taken by  Sandata  in  connection  with the
     transactions  contemplated  by  the  Merger  Agreement  and  all  documents
     incident  thereto will be reasonably  satisfactory in form and substance to
     Sandata Acquisition Corp.

     Sandata Acquisition Corp. and Messrs. Brodsky, Freund and Stoller may waive
satisfaction  of the  foregoing  provisions.  If they  determine to waive any of
these  conditions,  Sandata may,  depending  on the  condition  waived,  have to
resolicit proxies to approve the merger.

     The  obligation  of  Sandata  to  effect  the  merger  is  subject  to  the
satisfaction of the following conditions unless waived by Sandata:

          - The  representations and warranties of Sandata Acquisition Corp. are
     true and correct in all respects at of the  effective  time in all material
     respects;

          - Sandata  Acquisition Corp. and Messrs.  Brodsky,  Freund and Stoller
     have performed and complied in all material  respects with all  obligations
     required to be performed by each of them under the Merger Agreement; and

          - The special  committee  will have  received a fairness  opinion from
     Brean Murray as of the effective time of the merger, and such opinion shall
     not have been withdrawn, modified, repealed or revoked.

     Sandata  may waive  satisfaction  of any of the  foregoing  conditions.  If
Sandata  determines to waive any of these conditions,  it may,  depending on the
condition waived, have to resolicit proxies to approve the merger.

Termination of the Merger Agreement

     The Merger  Agreement  may be terminated at any time prior to the effective
time,  whether before or after  approval of the matters  presented in connection
with the merger by the stockholders of Sandata:

          - by mutual  consent  of  Sandata  Acquisition  Corp.  and  Sandata in
     writing, whether or not the merger has been approved by the stockholders of
     Sandata;

          - by either Sandata or Sandata Acquisition Corp. and Messrs.  Brodsky,
     Freund  and  Stoller,  if any of the  conditions  set  forth in the  Merger
     Agreement  would be incapable of being satisfied by April 15, 2003 and such
     conditions shall not have been waived;

          - by either Sandata  Acquisition  Corp. or Sandata if the merger shall
     not have been consummated on or prior to April 15, 2003 (or such later date
     as may be agreed to in writing by Sandata and Sandata Acquisition Corp.);

          - by Sandata  Acquisition Corp., if the special committee or the Board
     of Directors withdraws, modifies, or changes its approval or recommendation
     of the Merger  Agreement or the merger,  or approved or have recommended to
     the stockholders of Sandata a competing proposal;

          - by Sandata Acquisition Corp., if a tender offer or exchange offer or
     a proposal  by a third  party to acquire  Sandata or Sandata  common  stock
     pursuant to a merger, consolidation,  share exchange, business combination,
     tender or exchange  offer or similar  transaction  is commenced or publicly
     proposed  which  contains a  proposal  as to price  (without  regard to the
     specificity   of  such  price   proposal)  and  Sandata  does  not  make  a
     recommendation  to its stockholders to reject such proposal within ten (10)
     business days of its  commencement  or the date such proposal first becomes
     publicly disclosed, if sooner;

          - by Sandata,  if the  special  committee  and the Board of  Directors
     authorize  Sandata  to enter  into a written  agreement  with  respect to a
     competing  proposal  that the special  committee and the Board of Directors
     have determined is superior to the proposal of Sandata  Acquisition  Corp.;
     and

          - by Sandata, in its sole discretion,  if it believes such termination
     is  necessary  to  discharge  the  fiduciary  obligation  of its  Board  of
     Directors and/or special committee.

Effect of Termination; Expenses

     In the event of the  termination of the Merger  Agreement,  by either us or
Sandata  Acquisition  Corp.,  as  provided in the Merger  Agreement,  the Merger
Agreement will become void and have no further effect,  without any liability or
obligation  on the part of either  party,  except  that  nothing  in the  Merger
Agreement relieves any party from liability or damages resulting from any breach
of the Merger Agreement.

     Generally,  each of Sandata and Sandata  Acquisition  Corp. are responsible
for expenses  incurred by them.  Sandata  Acquisition Corp. agreed to pay all of
Sandata's costs and expenses  incurred in connection  with the Merger  Agreement
and the  transactions  under  the  Merger  Agreement  in the  event  the  Merger
Agreement is  terminated,  unless the Merger  Agreement is terminated by (i) the
mutual  consent  of  Sandata  and  Sandata  Acquisition  Corp.  or (ii)  Sandata
Acquisition Corp. and Messrs. Brodsky, Freund and Stoller because Sandata failed
to comply with certain  conditions and such  conditions are not capable of being
complied  with prior to April 15, 2003.  None of these  expenses  will relate to
expenses incurred by Sandata in connection with the preparation and solicitation
of proxies,  including the expenses  disclosed in this proxy statement under the
captions  "The Merger - Financing  the Merger;  Fees and Expenses of the Merger"
and "Other Matters - Expenses of Solicitation."

Amendment to the Merger Agreement

     To the extent  permitted under the Delaware  General  Corporation  Law, the
Merger  Agreement may be amended by Sandata and Sandata  Acquisition  Corp.,  by
action taken or  authorized  by their  respective  boards of  directors  and the
special  committee  of  Sandata's  Board of  Directors,  at any time  before the
effective  time,  regardless of approval of the matters  presented in connection
with the merger by the stockholders of Sandata or of Sandata  Acquisition  Corp.
The Merger  Agreement  may not be  amended  except by an  instrument  in writing
signed on behalf of each of the parties to the Merger Agreement.


                                  OTHER MATTERS

Other Matters for Action at the Special Meeting

     Our Board of  Directors  is not aware of any  matters to be  presented  for
action at the special  meeting  other than those  described  herein and does not
intend to bring any other matters before the special meeting.  However, if other
matters should come before the special meeting,  it is intended that the holders
of proxies solicited by this document will vote thereon in their discretion.

Proposals by Holder of Shares of Common Stock

     If the merger is completed,  we will no longer have public  stockholders or
public participation in any future meetings of our stockholders. However, if the
merger is not completed, our public stockholders will continue to be entitled to
attend and  participate in our  stockholders'  meetings.  Pursuant to Rule 14a-8
under the Securities  Exchange Act of 1934, as amended,  promulgated by the SEC,
any  stockholder  who wishes to present a proposal at the next annual meeting of
stockholders,  in the event the merger is not completed,  and who wishes to have
the  proposal  included  in our  proxy  statement  for that  meeting,  must have
delivered a copy of the proposal to us at 26 Harbor Park Drive, Port Washington,
New York 11050, Attention:  Corporate Secretary, so that it is received no later
than 120 days before the date of our proxy statement released in connection with
our 2002 annual meeting.  Sandata,  however, may hold next year's annual meeting
earlier  in the year than  this  year's  meeting.  Accordingly,  in such  event,
Sandata  suggests that  stockholder  proposals  intended to be presented at next
year's  annual  meeting  be  submitted  well in advance  of July 31,  2003,  the
earliest date upon which  Sandata  anticipates  the proxy  statement and form of
proxy  relating to such  meeting  will be mailed to  stockholders.  In order for
proposals by the  stockholders  not submitted in  accordance  with Rule 14a-8 to
have been  timely  within the  meaning  of Rule  14a-4(c)  under the  Securities
Exchange Act of 1934, as amended,  the proposal must have been submitted so that
it was received  within a reasonable time before we mail our proxy materials for
the 2003 annual meeting.

Expenses of Solicitation

     Sandata  will bear the costs of preparing  and mailing the proxy  statement
and of soliciting proxies in support of the Merger Agreement. In addition to our
solicitations by mail, our directors, officers and regular employees may solicit
proxies personally and by telephone,  facsimile,  for which they will receive no
compensation in addition to their normal compensation. Arrangements will also be
made with brokerage  houses and other  custodians,  nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of common stock
held of record by such persons, and Sandata may reimburse such persons for their
reasonable  transaction and clerical expenses.  Sandata will not solicit proxies
via the  Internet.  Sandata  has not  retained or  employed  any person,  either
directly  or  indirectly,  for the  purpose  of  soliciting  proxies  or  making
recommendations in connection with the merger.

Independent Auditors

     Marcum & Kliegman,  LLP has served as our independent  auditors since 1995.
Our  consolidated  financial  statements  and the  related  financial  statement
schedules  as of May 31,  2002 and 2001 and for each of the two fiscal  years in
the period  ended May 31, 2002 have been  audited by Marcum & Kliegman,  LLP, as
stated in its reports,  which are included and incorporated by reference in this
proxy statement.  It is expected that representatives of Marcum & Kliegman,  LLP
will be present at the special meeting.

Available Information

     We are subject to the informational  filing  requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith,  are required to
file periodic  reports,  proxy  statements  and other  information  with the SEC
relating to our business,  financial condition and other matters. Information as
of particular dates concerning our directors and officers,  their  remuneration,
the  principal  holders of our  securities  and any  material  interest  of such
persons in transactions  with us is required to be disclosed in periodic reports
filed with the SEC. Such reports,  proxy statements and other information should
be available for inspection at the public reference facilities maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
materials  may also be obtained  by mail,  upon  payment of the SEC's  customary
fees, by writing to its principal office at 450 Fifth Street, N.W.,  Washington,
D.C.  20549.  These materials filed by us with the SEC are also available on the
website of the SEC at www.sec.gov.

     Because  the  merger is a "going  private"  transaction,  the  company  and
Sandata  Acquisition  Corp.  have filed  with the SEC a Rule  13e-3  Transaction
Statement  on  Schedule  13e-3 under the  Securities  Exchange  Act of 1934,  as
amended (the "Schedule 13e-3"). This Proxy Statement does not contain all of the
information set forth in the Schedule 13e-3 and the exhibits thereto.  Copies of
the Schedule  13e-3 and the exhibits  thereto are available for  inspection  and
copying at our principal  executive offices during regular business hours by any
of our  stockholders,  or by a  representative  who has  been so  designated  in
writing,  and may be  inspected  and copied,  or  obtained  by mail,  by written
request  directed to the same address given above,  or from the SEC as described
above.

     Upon completion of the merger,  we will seek to terminate the  registration
of our common stock under the Securities Exchange Act of 1934, as amended, which
will relieve us of any  obligation to file reports and forms,  such as an Annual
Report on Form 10-KSB,  with the SEC under the Securities  Exchange Act of 1934,
as amended.

     A copy of the written opinion of Brean Murray, the financial advisor to the
special  committee,  is  attached  as  Appendix B to this proxy  statement.  The
opinion is also available for  inspection  and copying  during regular  business
hours at our principal  executive  offices by any  stockholder of ours or by the
representative of any stockholder who has been so designated in writing.

Information Incorporated by Reference

     The SEC allows us to "incorporate by reference" information into this proxy
statement,  which means that we can disclose important  information by referring
you to another document filed  separately with the SEC. The following  documents
previously  filed by us with the SEC are incorporated by reference in this proxy
statement and are deemed to be a part hereof:

          - our Quarterly Report on Form 10-QSB as filed with the SEC on January
         14, 2003;

          - our Annual  Report on Form  10-KSB for the fiscal year ended May 31,
     2002, filed with the SEC on August 27, 2002;

          - Amendment  Number One to our 2002 Annual Report,  filed with the SEC
     on October 25, 2002;

          - Amendment  Number Two to our 2002 Annual Report,  filed with the SEC
     on January 28, 2003;

          - our Form 8-K filed with the SEC on September 18, 2002;

          - our Form 8-K filed with the SEC on November 4, 2002; and

          - our Form 8-K filed with the SEC on January 3, 2003.

     Specifically,  the information  set forth in the following  sections of our
Annual Report on Form 10-KSB for the fiscal year ended May 31, 2002, as amended,
is  incorporated  by reference in this proxy  statement  and deemed to be a part
hereof:

            Item 1: Business;

            Item 2: Properties;

            Item 3: Legal Proceedings;

            Item 6: Management's Discussions and Analysis or Plan of Operations;

            Item 7: Financial Statements and Supplementary Data; and

            Item 9: Changes in and Disagreement with Accountants on Accounting.

     We also  incorporate  by  reference  all  documents  subsequently  filed by
Sandata  with the SEC  pursuant to Sections  13(a),  13(c),  14, or 15(d) of the
Securities Exchange Act of 1934 prior to the date of the special meeting.


Financial Disclosure

     Our Annual Report on Form 10-KSB for the fiscal year ended May 31, 2002, is
enclosed with this proxy statement.  See Appendix E. Amendment Number One to our
2002 Annual  Report on Form  10-KSB/A  filed with the SEC on October 25, 2002 is
enclosed with this proxy statement.  See Appendix F. Amendment Number Two to our
2002 Annual  Report on Form  10-KSB/A  filed with the SEC on January 28, 2003 is
enclosed with this proxy statement. See Appendix G. Our Quarterly Report on Form
10-QSB for the fiscal  quarter  ended  November  30, 2002 is enclosed  with this
proxy  statement.  See Appendix H. Amendment  Number One to our Quarterly Report
for the period  ended  November 30, 2002 filed with the SEC on Jqanuary 28, 2003
is enclosed with this proxy statement.  See Appendix I. Any statement  contained
in a document  incorporated by reference in this proxy statement shall be deemed
to be modified  or  superseded  for all  purposes to the extent that a statement
contained in this proxy  statement  modifies or supersedes  the  statement.  Any
statement so modified or superseded  shall not be deemed,  except as so modified
or superseded, to constitute part of this proxy statement.

     We undertake to provide by first class mail,  without charge and within two
business days of receipt of any written request, to any person to whom a copy of
this proxy statement has been  delivered,  a copy of any or all of the documents
referred  to above  which  have been  incorporated  by  reference  in this proxy
statement,  other  than  exhibits  to the  documents,  unless the  exhibits  are
specifically  incorporated by reference  therein.  Requests for copies should be
directed to Sandata  Technologies,  Inc., 26 Harbor Park Drive, Port Washington,
New York 11050; Attn: Corporate Secretary.





     NO PERSONS  HAVE BEEN  AUTHORIZED  TO GIVE ANY  INFORMATION  OR TO MAKE ANY
REPRESENTATIONS  OTHER THAN THOSE  CONTAINED,  OR INCORPORATED BY REFERENCE,  IN
THIS PROXY STATEMENT,  AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING  BEEN  AUTHORIZED  BY US OR ANY OTHER  PERSON.
SANDATA HAS SUPPLIED ALL INFORMATION  CONTAINED IN THIS PROXY STATEMENT RELATING
TO SANDATA, AND SANDATA ACQUISITION CORP. HAS SUPPLIED ALL INFORMATION CONTAINED
IN  THIS  PROXY  STATEMENT  RELATING  TO  SANDATA   ACQUISITION  CORP.  AND  ITS
AFFILIATES.

                               By order of the Board of Directors

                               /s/ Hugh Freund
                               -------------------------------
                                   Hugh Freund
                                   Executive Vice President and
                                    Secretary

January 28, 2003






               PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned hereby appoints  [_________] and _____, and either of them,
proxies (each with full power of  substitution)  to vote, as indicated below, at
the special meeting of the stockholders of Sandata Technologies, Inc. to be held
on _________, 2003, at 10:00 a.m., local time, as indicated on the reverse side.

     1. A  proposal  to adopt  the  Agreement  and Plan of  Merger,  dated as of
October 28, 2002, by and among Sandata  Technologies,  Inc., Sandata Acquisition
Corp.,  Bert E.  Brodsky,  Hugh Freund and Gary  Stoller,  as amended by a First
Amendment to the Agreement and Plan of Merger, dated as of January 27, 2003.

                         / / FOR / / AGAINST / / ABSTAIN

         (Continued and to be signed on the reverse side)

      This proxy is solicited on behalf of the board of directors.

     The undersigned  hereby  acknowledges  receipt of the notice of the special
meeting and the proxy statement.

              PLEASE SIGN AND DATE THIS PROXY BELOW.

                                          Date:










                                          Please sign exactly as your name
                                          appears on left.  When signing as
                                          attorney, executor, administrator,
                                          guardian or corporate official, please
                                          give full title.



                                                                   APPENDIX A-1







                          AGREEMENT AND PLAN OF MERGER



                                      AMONG



                            SANDATA ACQUISITION CORP.

                                 BERT E. BRODSKY

                                   HUGH FREUND

                                  GARY STOLLER

                                       AND


                           SANDATA TECHNOLOGIES, INC.




                          Dated as of October 28, 2002







                                TABLE OF CONTENTS

                                    ARTICLE I
                                  DEFINED TERMS

1.1      Defined Terms........................................................2
         -------------

                                   ARTICLE II
                                     MERGER

2.1      Merger and Surviving Corporation.....................................2
         --------------------------------
         (a)      Merger......................................................2
                  ------
         (c)      Certificate of Incorporation................................2
                  ----------------------------
         (d)      By-Laws.....................................................2
                  -------

2.2      Effectiveness of Merger..............................................2
         -----------------------

2.3      Effect on Capital Stock..............................................3
         -----------------------

2.4      Delivery of Merger Consideration.....................................3
         --------------------------------
         (a)      Payment Agent...............................................3
                  -------------
         (b)      Payment Procedures..........................................3
                  ------------------
         (c)      No Further Ownership Rights in the Target Common Stock......4
                  ------------------------------------------------------
         (d)      Termination of Payment Fund.................................4
                  ---------------------------
         (e)      Investment of Payment Fund..................................4
                  --------------------------
         (f)      Withholding Rights..........................................5
                  ------------------

2.5      Treatment of Options......... .......................................5
         --------------------
         (a)      Options Generally...........................................5
                  -----------------
         (b)      Cancellation of Certain Options.............................5
                  -------------------------------
         (c)      Cancellation Procedures........... .........................5
                  -----------------------
         (d)      Effect of Payments..........................................6
                  ------------------

2.6      Effect of Merger.....................................................6
         ----------------
         (a)      Generally...................................................6
                  ---------
         (b)      Certain Rights..............................................6
                  --------------

2.7      Directors of Surviving Corporation...................................7
         ----------------------------------

2.8      Officers of Surviving Corporation....................................7
         ---------------------------------

2.9      Closing..............................................................7
         -------

                                   ARTICLE III
         REPRESENTATIONS AND WARRANTIES OF PURCHASER AND KEY STOCKHOLDERS

3.1      Valid Existence; Qualification.......................................7
         ------------------------------

3.2      Consents.............................................................8
         --------

3.3      Authority; Binding Nature of Agreement...............................8
         --------------------------------------

3.4      No Breach............................................................8
         ---------

3.5      Capitalization.......................................................8
         --------------
         (a)      Purchaser...................................................8
                  ---------
         (b)      Target Shares...............................................9
                  -------------

3.6      Information Supplied.................................................9
         --------------------

3.7      Operations of Purchaser..............................................9
         -----------------------

3.8      No Financing.........................................................9
         ------------

3.9      Litigation; Compliance with Law.....................................10
         -------------------------------

3.10     Brokers.............................................................10
         -------

3.11     Payments............................................................10
         --------

3.12     Untrue or Omitted Facts.............................................10
         -----------------------

                                   ARTICLE IV
                              PRE-CLOSING COVENANTS

4.1      Purchaser Covenants.................................................10
         -------------------
         (a)      Certain Actions............................................10
                  ---------------
         (b)      Government Filings.........................................11
                  ------------------
         (c)      Voting.....................................................11
                  ------
         (d)      Ownership in Target........................................11
                  -------------------

4.2      Competing Transactions..............................................11
         ----------------------

                                    ARTICLE V
                              ADDITIONAL AGREEMENTS

5.1      Preparation of the Proxy Statement and Schedule 13E-3...............12
         -----------------------------------------------------

5.2      Stockholders' Meeting...............................................12
         ---------------------

5.3      Legal Conditions to Merger..........................................13
         --------------------------

5.4      Employee Stock Options; Employee Plans and Benefits.................13
         ---------------------------------------------------
         (a)      Options....................................................13
                  -------
         (b)      Payments in Respect of Options.............................13
                  ------------------------------
         (c)      Time of Payment............................................13
                  ---------------
         (d)      Withholding................................................13
                  -----------
         (e)      Termination of Equity-Based Compensation...................13
                  ----------------------------------------
         (f)      No Right to Employment.....................................14
                  ----------------------

5.5      Indemnification; Exculpation; Directors' and Officers' Insurance....14
         ----------------------------------------------------------------

5.6      Communication to Employees..........................................14
         --------------------------

5.7      Additional Actions..................................................14
         ------------------

                                   ARTICLE VI
                              CONDITIONS PRECEDENT

6.1      Conditions to Each Party's Obligation to Effect the Merger..........15
         ----------------------------------------------------------
         (a)      Stockholder Approval.......................................15
                  --------------------
         (b)      Government Approvals.......................................15
                  --------------------
         (c)      Consents Under Agreements..................................15
                  -------------------------
         (d)      No Action..................................................15
                  ---------
         (e)      No Injunctions or Restraints; Illegality...................15
                  ----------------------------------------
         (f)      Statutes...................................................15
                  --------
         (g)      Dissenting Shares..........................................15
                  -----------------

6.2      Conditions to Obligations of the Key Stockholders and Purchaser.....16
         ---------------------------------------------------------------
         (a)      Performance of Obligations of Target.......................16
                  ------------------------------------
         (b)      Material Adverse Effect....................................16
                  -----------------------
         (c)      Proceedings................................................16
                  -----------

6.3      Conditions to Obligations of Target.................................16
         -----------------------------------
         (a)      Representations and Warranties.............................16
                  ------------------------------
         (b)      Performance of Obligations of the Key
                    Stockholders and Purchaser...............................16
                  ---------------------------------------
         (c)      Fairness Opinion...........................................16
                  ----------------

                                   ARTICLE VII
                            TERMINATION AND AMENDMENT

7.1      Termination.........................................................17
         -----------

7.2      Effect of Termination...............................................18
         ---------------------

7.3      Fees, Expenses and Other Payments...................................18
         ---------------------------------
         (a)      Generally..................................................18
                  ---------
         (b)      Reimbursement..............................................18
                  -------------
         (c)      Payment Obligations........................................18
                  -------------------

7.4      Amendment...........................................................18
         ---------

7.5      Extension; Waiver...................................................18
         -----------------

                                  ARTICLE VIII
                                  DEFINITIONS

8.1      Certain Definitions.................................................19
         -------------------

                                   ARTICLE IX
                               GENERAL PROVISIONS

9.1      Survival of Representations, Warranties and Agreements..............22
         ------------------------------------------------------

9.2      Notices.............................................................22
         -------

9.3      Interpretation......................................................23
         --------------

9.4      Counterparts........................................................23
         ------------

9.5      Entire Agreement; No Third Party Beneficiaries;
          Rights of Ownership................................................23
         -----------------------------------------------

9.6      Governing Law; Consent to Jurisdiction..............................23
         --------------------------------------
         (a)      Governing Law..............................................23
                  -------------
         (b)      Jurisdiction and Venue.....................................23
                  ----------------------

9.7      Severability; No Remedy in Certain Circumstances....................24
         ------------------------------------------------

9.8      Publicity...........................................................24
         ---------

9.9      Assignment..........................................................24
         ----------

9.10     Adjustment..........................................................24
         ----------




     AGREEMENT AND PLAN OF MERGER dated as of October 28, 2002 (the "Agreement")
by and among SANDATA  ACQUISITION CORP., a Delaware  corporation  ("Purchaser"),
BERT E. BRODSKY ("Brodsky"),  HUGH FREUND ("Freund"),  GARY STOLLER ("Stoller"),
(Brodsky,  Freund and Stoller  are  sometimes  collectively  referred to as "Key
Stockholders") and SANDATA TECHNOLOGIES, INC., a Delaware corporation ("Target")
(Purchaser,  Target and the Key Stockholders are sometimes collectively referred
to as the "Parties" and individually as a "Party").

                                    RECITALS:

     WHEREAS, it is the intention of the Parties that Purchaser shall merge with
and into  the  Target  (the  "Merger"),  with the  Target  being  the  surviving
corporation;

     WHEREAS,  a special  committee of the Board of Directors of the Target (the
"Board"),  consisting  entirely of  non-management  directors of the Target (the
"Special Committee"),  was established for, among other purposes, the purpose of
evaluating  the Merger and making a  recommendation  to the Board with regard to
the Merger.

     WHEREAS,  the Special  Committee has received the opinion of Brean Murray &
Co., Inc. (the "Independent  Advisor"),  an independent financial advisor to the
Special  Committee,  that,  as of October  28,  2002,  the  consideration  to be
received by the holders of Target Common Stock (as hereinafter defined) pursuant
to the Merger is fair,  from a financial  point of view,  to such  holders  (the
"Fairness Opinion").

     WHEREAS, the Special Committee has, after consultation with the Independent
Advisor  selected  by the Special  Committee  and in light of and subject to the
terms and  conditions  set forth  herein,  (i)  determined  that (x) the  Merger
Consideration  (as defined  below) is fair to the holders of Target Common Stock
and (y) the Merger is advisable and in the best  interests of the Target and the
holders of Target Common Stock; (ii) approved, and declared the advisability of,
this  Agreement  and  (iii)  determined  to  recommend  that the  Board  and the
stockholders of the Target vote to adopt this Agreement.

     WHEREAS,  the Board, based on the unanimous  recommendation and approval of
the Special Committee,  has, in light of and subject to the terms and conditions
set forth herein,  (i) determined that (x) the Merger  Consideration (as defined
below) is fair to the  holders  of  Target  Common  Stock and (y) the  Merger is
advisable  and in the best  interests  of the Target  and the  holders of Target
Common Stock;  (ii) approved,  and declared the  advisability of, this Agreement
and (iii)  determined to recommend that the  stockholders  of the Target vote to
adopt this Agreement.

     WHEREAS, the Board of Directors and stockholders of Purchaser have approved
this  Agreement  and  the  Merger  and  the  transactions  contemplated  by this
Agreement;

     WHEREAS,  Purchaser  and  the  Key  Stockholders  desire  to  make  certain
representations  and warranties and Purchaser,  the Key  Stockholders and Target
desire to make certain  covenants and  agreements in connection  with the Merger
and also to prescribe certain conditions to the Merger;

     NOW,  THEREFORE,  in  consideration  of the mutual  benefits  to be derived
hereby and the  representations,  warranties,  covenants and  agreements  herein
contained, the Parties agree as follows:

                                    ARTICLE I

                                  DEFINED TERMS

     1.1 Defined Terms.  Capitalized  terms used in this Agreement will have the
meanings  given such terms in Article  VIII hereof or  elsewhere  in the text of
this  Agreement,   and  variants  and  derivatives  of  such  terms  shall  have
correlative meanings.


                                   ARTICLE II

                                     MERGER

2.1      Merger and Surviving Corporation.

     (a)  Merger.  Pursuant  to the  General  Corporation  Law of the  State  of
Delaware (the "Delaware  Statute"),  Purchaser shall merge with and into Target,
and Target shall be the surviving  corporation  after the Effective  Time of the
Merger  (the  "Surviving   Corporation")  and  shall  continue  to  exist  as  a
corporation created and governed by the laws of the State of Delaware.

     (b) Tax Consequences.  For Federal income tax purposes,  the parties intend
the  Merger to be treated as a  tax-free  reorganization  within the  meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.

     (c) Certificate of  Incorporation.  The Certificate of Incorporation of the
Target  as in  effect  immediately  prior  to the  Effective  Time  shall be the
Certificate of  Incorporation  of the Surviving  Corporation  from and after the
Effective Time.

     (d) By-Laws.  The By-Laws of the Target as in effect  immediately  prior to
the Effective  Time shall be the By-Laws of the Surviving  Corporation  from and
after the Effective Time.

     2.2  Effectiveness  of Merger.  If all of the  conditions  precedent to the
obligations of each of the Parties  hereto as  hereinafter  set forth shall have
been satisfied or waived,  a certificate  of merger  relating to the Merger (the
"Certificate  of Merger")  shall be delivered as soon as  practicable  after the
Closing to the Secretary of State of Delaware for filing in accordance  with the
Delaware Statute.  The Merger shall become effective upon the acceptance of such
filing  by the  Secretary  of  State of  Delaware  or at such  later  time as is
specified  in the  Certificate  of  Merger,  which  effective  time shall be the
"Effective Time" of the Merger.

     2.3  Effect on  Capital  Stock.  At the  Effective  Time,  by virtue of the
Merger, and without any action on the part of the holder thereof:

     (i) subject to Section  2.3(iv),  and other than shares of common  stock of
the Target,  par value $.001 ("Target Common Stock"),  owned by Purchaser,  each
share of Target  Common Stock issued and  outstanding  immediately  prior to the
Effective Time,  shall be converted into the right to receive an amount in cash,
without  interest,  equal to $1.91 (the  "Merger  Consideration")  in the manner
provided in Section 2.4 hereof;

     (ii) each share of Target  Common  Stock  issued and held by the  Purchaser
and/or  in the  Target's  treasury  or  held  by any  Subsidiary  of the  Target
immediately prior to the Effective Time,  shall, by virtue of the Merger,  cease
to be  outstanding  and shall be cancelled  and retired  without  payment of any
consideration therefor;

     (iii) each share of common  stock,  par value $.01 per share,  of Purchaser
that is issued and outstanding  immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation; and

     (iv)  notwithstanding  anything in this  Agreement to the contrary,  to the
extent provided by the Delaware Statute,  Purchaser will not make any payment of
Merger  Consideration  with respect to Target Common Stock held by any person (a
"Dissenting  Stockholder")  who elects to demand  appraisal  of such  Dissenting
Stockholder's  shares and duly and timely complies with all of the provisions of
the Delaware  Statute  concerning the right of holders of Target Common Stock to
require  appraisal of their shares  ("Dissenting  Shares"),  but such Dissenting
Stockholders  shall  have the  right to  receive  such  consideration  as may be
determined to be due such  Dissenting  Stockholders  pursuant to the laws of the
State of Delaware.  If,  after the  Effective  Time,  a  Dissenting  Stockholder
withdraws such Dissenting Stockholder's demand for appraisal or fails to perfect
or otherwise loses such Dissenting Stockholder's right of appraisal, in any case
pursuant to the Delaware  Statute,  such Dissenting  Shares will be deemed to be
converted  as of the  Effective  Time  into the  right  to  receive  the  Merger
Consideration pursuant to Section 2.3(i).

2.4      Delivery of Merger Consideration.

     (a) Payment Agent.  As of the Effective Time,  Purchaser shall deposit,  or
shall  cause  to be  deposited,  with a bank  or  trust  company  designated  by
Purchaser and satisfactory to the Special Committee (the "Payment  Agent"),  for
the benefit of the holders of Target  Common  Stock,  for payment in  accordance
with this Article II through the Payment Agent,  the Merger  Consideration to be
paid in  respect of all Target  Common  Stock  (such  funds  deposited  with the
Payment Agent, the "Payment Fund").

     (b)  Payment  Procedures.  As  soon as  reasonably  practicable  after  the
Effective  Time,  the  Payment  Agent  shall mail to each  holder of record of a
certificate  or  certificates  which  immediately  prior to the  Effective  Time
represented Target Common Stock (the  "Certificates"),  the following documents:
(i) a  letter  of  transmittal  (which  shall  specify  that  delivery  shall be
effected,  and risk of loss and title to the Certificates  shall pass, only upon
delivery of the  Certificates to the Payment Agent and shall be in such form and
have such other  provisions  as  Purchaser  may  reasonably  specify);  and (ii)
instructions  for use in effecting the surrender of the Certificates in exchange
for  payment  with  respect  thereto.   Upon  surrender  of  a  Certificate  for
cancellation to the Payment Agent together with such letter of transmittal, duly
executed,  the  holder of such  Certificate  shall be  entitled  to  receive  in
exchange  therefor the Merger  Consideration  payable with respect to the Target
Common Stock represented by such Certificate  pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be cancelled.  In
the event that a holder has lost or  misplaced a  Certificate,  an  affidavit of
loss thereof (together with an appropriate indemnity and/or bond if Purchaser so
requires by notice in writing to the holder of such Certificate) satisfactory in
form and  substance to the Target's  transfer  agent and the Payment Agent shall
accept such letter of transmittal in lieu of the applicable Certificate.  In the
event of a transfer of ownership of Target Common Stock which is not  registered
in the  transfer  records  of the  Target,  payment  of  the  applicable  Merger
Consideration  may be made to a transferee if the Certificate  representing such
Target  Common  Stock is  presented  to the Payment  Agent,  accompanied  by all
documents required to evidence and effect such transfer and by evidence that any
applicable   stock  transfer  taxes  have  been  paid.   Until   surrendered  as
contemplated by this Section 2.4, each  Certificate  shall be deemed at any time
after  the  Effective  Time to  represent  only the right to  receive  upon such
surrender the Merger  Consideration with respect thereto as contemplated by this
Section  2.4. No interest  shall  accrue or be paid to any  beneficial  owner of
Target Common Stock or any holder of any Certificate  with respect to the Merger
Consideration payable upon the surrender of any Certificate.

     (c) No Further  Ownership  Rights in the Target  Common  Stock.  The Merger
Consideration  paid with respect to the  cancellation  of Target Common Stock in
accordance  with the  terms  hereof  shall be  deemed  to have been paid in full
satisfaction  of all rights  pertaining  to such Target  Common  Stock and there
shall be no further registration of transfers on the stock transfer books of the
Surviving  Corporation  of  the  Target  Common  Stock  which  were  outstanding
immediately  prior  to  the  Effective  Time.  If,  after  the  Effective  Time,
Certificates  are presented to the Surviving  Corporation  for any reason,  they
shall be cancelled  and  exchanged  as provided in this  Article II,  subject to
applicable law in the case of Dissenting Shares.

     (d)  Termination  of Payment  Fund.  Any portion of the Payment  Fund which
remains undistributed to the stockholders of the Target for six months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any  stockholders  of the Target  who have not  theretofore  complied  with this
Article II shall  thereafter look only to the Surviving  Corporation for payment
of their claim for the Merger  Consideration.  Upon  termination  of the Payment
Fund pursuant to this subsection and upon delivery to the Surviving  Corporation
of the balance thereof, the Surviving Corporation shall have the right to invest
any such amount delivered to it in its sole discretion.

     (e)  Investment  of Payment  Fund.  The Payment Agent shall invest any cash
included in the Payment Fund as directed by the  Surviving  Corporation,  in (i)
obligations  of or guaranteed by the United  States,  and (ii)  certificates  of
deposit,  bank  repurchase  agreements  and bankers'  acceptances of any bank or
trust company  organized  under federal law or under the law of any state of the
United  States or of the  District of  Columbia  that has  capital,  surplus and
undivided  profits of at least $500  million or in money  market funds which are
invested substantially in such investments,  none of which shall have maturities
of greater  than one year.  Any  interest or other  income  resulting  from such
investments  shall  be  paid  to  the  Surviving   Corporation.   The  Surviving
Corporation  shall  replace any net losses  incurred  by the  Payment  Fund as a
result of investments made pursuant to this Section 2.4(e).

     (f)  Withholding  Rights.  The Surviving  Corporation  or the Payment Agent
shall be entitled to deduct and withhold from the Merger  Consideration  payable
pursuant to this Agreement to any holder of  Certificates or Target Common Stock
represented  thereby such amounts (if any) as the Surviving  Corporation  or the
Payment  Agent is required to deduct and withhold  with respect to the making of
such payment  under the Internal  Revenue Code of 1986, as amended (the "Code"),
or any provision of state,  local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or the Payment Agent, such withheld
amounts shall be treated for all purposes of this  Agreement as having been paid
to the holder of the Target Common Stock in respect of which such  deduction and
withholding was made by the Surviving Corporation or the Payment Agent.

2.5       Treatment of Options.

     (a) Options  Generally.  Prior to the Effective Time, except as provided in
Section  2.5(b)  hereof,  the  Board of  Directors  of the  Target  (and/or,  if
appropriate, the Special Committee) shall adopt appropriate resolutions and take
all other  actions  necessary to provide that each  outstanding  stock option or
warrant (each, an "Option") heretofore granted by the Target,  whether under the
Target's  1995 Stock  Option  Plan,  1998 Stock Option Plan or 2000 Stock Option
Plan (collectively, the "Target Stock Plans"), or otherwise, whether or not then
vested or  exercisable,  shall,  at the Effective  Time, be cancelled,  and each
holder  thereof  shall be  entitled  to receive a payment in cash as provided in
Section 5.3 hereof,  if any (subject to any applicable  withholding  taxes,  the
"Cash Payment").  As provided herein,  unless otherwise determined by Purchaser,
the Target Stock Plans or other plan,  program or arrangement  providing for the
issuance or grant of any other  interest in respect of the capital  stock of the
Target) shall  terminate as of the Effective  Time.  After the date hereof,  the
Target  will not  issue  any  Options  or other  options,  warrants,  rights  or
agreements  which would  entitle any person to acquire any capital  stock of the
Target or,  except as otherwise  provided in this  Section  2.5(a) or in Section
5.3, to receive any payment in respect thereof.

     (b) Cancellation of Certain Options.  At the Effective Time, any and all of
the Options held by Bert E. Brodsky, Hugh Freund, Gary Stoller, or any member of
the  immediate  family  of any of them  and/or  trusts  for their  benefit  (the
"Purchaser  Group"),  whether or not exercisable at such time, shall without any
action on part of the holder thereof be cancelled.

     (c) Cancellation  Procedures.  As soon as reasonably  practicable after the
Effective  Time, the Surviving  Corporation  shall mail or otherwise cause to be
delivered to each record Option  holder  (other than the Purchaser  Group) as of
the Effective  Time, a form of letter of  transmittal  (which shall specify that
delivery shall be effected, and risk of loss and title to the Option shall pass,
only  upon  receipt  of any  originally-executed  copy of the  Option  Agreement
between the  Optionholder and the Target which evidences the Option (the "Option
Agreement")  )  and   instructions  for  use  in  effecting  the  surrender  for
cancellation  by the Surviving  Corporation  of the  originally-executed  Option
Agreement  for payment  therefor,  all of which  shall be in form and  substance
reasonably   satisfactory  to  the  Target.  Upon  surrender  to  the  Surviving
Corporation for cancellation of an Option  Agreement,  together with such letter
of  transmittal  duly  executed  and any other  necessary  documents  reasonably
required by the Surviving Corporation,  such Option Agreement shall forthwith be
cancelled.  Payment with respect to each Option shall be made only to the person
in whose name the Option  Agreement is registered.  No interest shall be paid or
accrued on the cash payable upon the  surrender of the Option  Agreement.  Until
surrender,  in accordance with the provisions of this Section 2.5(c), the Option
Agreement which  immediately  prior to the Effective Time evidenced  outstanding
Options  (except  for  Option  Agreements  held by the  Purchaser  Group)  shall
represent for all purposes the right to receive cash as herein provided.  If any
holder of an Option shall not surrender to the Surviving  Corporation his Option
Agreement on or before the fourth  anniversary  of the Effective  Date, he shall
forfeit his  interest in payment as provided in this  Agreement  which  interest
shall revert to the Surviving Corporation.

     (d) Effect of Payments.  All payments made in accordance  with the terms of
this  Section 2.5 and Section 5.3 in respect of Options  shall be deemed to have
been made in full satisfaction of all rights pertaining to such Option.

2.6      Effect of Merger.

     (a)  Generally.  Except as herein  otherwise  specifically  set forth,  the
identity,  existence,  purposes,  powers,  franchises,  rights and immunities of
Target shall continue unaffected and unimpaired by the Merger, and the corporate
identity,  existence,  purposes,  powers, franchises and immunities of Purchaser
shall be merged into Target, and Target, as the Surviving Corporation,  shall be
fully vested therewith at the Effective Time.

     (b)  Certain Rights. At the Effective Time:

     (i) All  rights,  privileges,  goodwill,  franchises  and  property,  real,
personal and mixed,  and all debts due on whatever  account and all other things
in action,  belonging  to  Purchaser  shall be, and they hereby are,  bargained,
conveyed, granted, confirmed,  transferred,  assigned and set over to and vested
in Target, as the Surviving Corporation, by operation of law and without further
act or deed,  and all property and rights,  and all and every other  interest of
Purchaser  shall  be the  property,  rights  and  interests  of  Target,  as the
Surviving Corporation, as they were of Purchaser;

     (ii) No Action or  proceeding,  whether  civil or criminal,  pending at the
Effective Time by or against  either  Purchaser or Target,  or any  stockholder,
officer or director thereof,  shall abate or be discontinued by the Merger,  but
may be enforced,  prosecuted,  settled or  compromised  as if the Merger had not
occurred,  or the Surviving  Corporation  may be  substituted  in such Action or
proceeding in place of Purchaser; and

     (iii) All rights of employees and  creditors and all Liens (as  hereinafter
defined) upon the property of Purchaser shall be preserved  unimpaired,  limited
to the property affected by such Liens at the Effective Time, and all the debts,
liabilities  and duties of  Purchaser  shall  attach to Target as the  Surviving
Corporation  and shall be enforceable  against the Surviving  Corporation to the
same extent as if all such debts,  liabilities  and duties had been  incurred or
contracted by it.

     2.7 Directors of Surviving Corporation. The persons comprising the Board of
Directors of the Purchaser  immediately prior to the Effective Time shall be the
Board of Directors of the Surviving Corporation,  who shall hold office from the
Effective  Time in accordance  with its By-Laws until the next annual meeting of
stockholders and until their  respective  successors shall have been elected and
shall have qualified, subject to the terms hereof.

     2.8  Officers of  Surviving  Corporation.  The  officers  of the  Purchaser
immediately  prior to the Effective  Time shall be the Board of Directors of the
Surviving  Corporation,  who  shall  hold  office  from  the  Effective  Time in
accordance with its By-Laws until the next annual meeting of directors and until
their respective  successors shall have been elected or appointed and shall have
qualified, subject to the terms hereof.

     2.9 Closing.  Unless this Agreement shall have been terminated  pursuant to
Article  VII and subject to the  satisfaction  or waiver of the  conditions  set
forth in Article VI, the closing of the Merger (the  "Closing")  will take place
as  promptly  as  practicable  (and in any  event  within  five  business  days)
following  satisfaction or waiver of the conditions set forth in Article VI (the
"Closing  Date"),  but in no event later than April 15, 2003,  at the offices of
Certilman  Balin Adler & Hyman,  LLP, 90 Merrick Avenue,  East Meadow,  New York
11554,  unless  another  date,  time or place is  agreed  to in  writing  by the
Parties.

                                   ARTICLE III

        REPRESENTATIONS AND WARRANTIES OF PURCHASER AND KEY STOCKHOLDERS

     Purchaser  and  the Key  Stockholders,  jointly  and  severally,  make  the
following  representations  and  warranties  to Target,  each of which  shall be
deemed  Material,  and Target in executing,  delivering  and  consummating  this
Agreement,  has relied upon the  correctness and  completeness,  in all Material
respects, of each of such representations and warranties:

     3.1  Valid  Existence;  Qualification.  Purchaser  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.  Purchaser has the power to carry on its business as now conducted and
to own its assets. Purchaser is not required to be qualified in any jurisdiction
in order to own its assets or carry on its business as now conducted,  and there
has not been any claim by any other jurisdiction to the effect that Purchaser is
required  to qualify or  otherwise  be  authorized  to do  business as a foreign
corporation therein. The copies of Purchaser's Certificate of Incorporation,  as
amended to date,  certified by the  Secretary of State of the State of Delaware,
and By-Laws, as amended to date (certified by the Secretary of Purchaser), which
have been delivered to Target,  are true and complete  copies of those documents
as in effect on the date hereof.

     3.2  Consents.  No  consent,   approval,  order  or  authorization  of,  or
registration,  declaration  or filing  with,  any  Governmental  Entity or other
Person is  required to be  received  by or on the part of  Purchaser  or any Key
Stockholder to enable  Purchaser  and/or such Key  Stockholder to enter into and
carry out this Agreement and/or Purchaser to consummate the Merger.

     3.3  Authority;  Binding  Nature of Agreement.  Purchaser has the corporate
power and authority to enter into this  Agreement and carry out its  obligations
hereunder.  The execution and delivery of this Agreement and the consummation of
the transactions  contemplated  hereby have been duly authorized by the board of
directors and stockholders of Purchaser,  and no other corporate  proceedings on
the part of Purchaser  are  necessary to authorize the execution and delivery of
this Agreement and the  consummation of the  transactions  contemplated  hereby.
This  Agreement  constitutes  the valid and binding  obligation of Purchaser and
each Key Stockholder and is enforceable against it in accordance with its terms.

     3.4 No Breach.  Neither the  execution  and delivery of this  Agreement nor
compliance by Purchaser  and/or any Key  Stockholder  with any of the provisions
hereof nor the consummation of the transactions contemplated hereby will:

     (i)  violate  or  conflict  with  any  provision  of  the   Certificate  of
Incorporation or By-Laws of Purchaser;

     (ii)  violate or conflict  with,  or alone or with notice or the passage of
time, or both,  result in the breach or  termination  of, or otherwise  give any
party the right to  terminate,  or  declare  a Default  under,  the terms of any
Contract to which Purchaser and/or any Key Stockholder is a party or by which it
or he may be bound;

     (iii)  result  in the  creation  of any  Lien  upon  any of the  assets  of
Purchaser;

     (iv) violate any judgment,  order, injunction,  decree or award against, or
binding upon,  Purchaser  and/or any Key  Stockholder  or upon any of its or his
assets; or

     (v) violate any law or regulation of any jurisdiction relating to Purchaser
and/or any Key Stockholder.

3.5  Capitalization.

     (a)  Purchaser.  The  authorized  capital  stock of  Purchaser  consists of
100,000  shares of Common  Stock,  $.01 par value per share  ("Purchaser  Common
Stock"), of which no shares are issued and outstanding.  At or prior to Closing,
Purchaser shall deliver to Target a true and complete list of the record holders
of such  shares.  At the time such  shares are  issued,  all of such  issued and
outstanding  shares of Purchaser Common Stock shall be duly authorized,  validly
issued,  fully  paid and  nonassessable.  There  are no  outstanding  Derivative
Securities  of  Purchaser  that are  convertible  into or  exchangeable  for any
securities of Purchaser  and there are no  outstanding  subscriptions,  options,
warrants,  rights, calls or other commitment or agreements to which Purchaser or
any Key  Stockholder or member of the Purchaser  Group is a party or by which it
or he is bound calling for the issuance,  transfer,  sale or  disposition of any
securities of Purchaser or Derivative Securities of Purchaser.

     (b) Target Shares. Each of the members of the Purchaser Group,  directly or
indirectly,  Beneficially  Owns the number of shares of Target  Common Stock set
forth  opposite  his or her name  below  (in each  case,  the  "Purchaser  Group
Shares"):

         Name                                     Number of Shares

         Bert E. Brodsky                             747,773
         Jessica Heather Brodsky                     294,470
         David Craig Brodsky                          18,783
         Jeffrey Holden Brodsky                      184,925
         Lee Jared Brodsky                            18,684
         Hugh Freund                                 350,721
         Emily Freund                                 20,732
         Leland Freund                                20,732
         Gertrude Kay                                  6,000
         Gary Stoller                                153,778

     Except for the Options to be cancelled  pursuant to Section  2.5(b),  there
are no outstanding  Derivative Securities of Target that are convertible into or
exchangeable  for  any  securities  of  Target  and  there  are  no  outstanding
subscriptions,   options,   warrants,  rights,  calls  or  other  commitment  or
agreements to which any member of the Purchaser  Group is a party or by which it
or he is bound calling for the issuance,  transfer,  sale or  disposition of any
securities of Target or Derivative Securities of Target.

     3.6  Information  Supplied.  None  of the  information  concerning  the Key
Stockholders  or  Purchaser  provided  by or on behalf  of the Key  Stockholders
and/or Purchaser specifically for inclusion or incorporation by reference in the
Proxy  Statement  or  the  Schedule  13E-3  will,  at the  date  of  mailing  to
stockholders  and at the times of the  meetings  of  stockholders  to be held in
connection with the Merger,  contain any untrue  statement of a Material fact or
omit to state any Material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading.

     3.7 Operations of Purchaser.  Purchaser was  incorporated on April 17, 2002
has engaged in no business  activities and has conducted its operations  only as
contemplated hereby.


     3.8 No Financing. Purchaser has, or will as of the Closing have, sufficient
funds  available in the  aggregate  amount  sufficient  to pay all of the Merger
Consideration and any payments required under this Agreement.  Immediately after
giving effect to the transactions contemplated hereby, Purchaser will not (i) be
insolvent  (either  because its financial  condition is such that the sum of its
debts is greater  than the fair value of its assets or because the fair  salable
value  of its  assets  is less  than the  amount  required  to pay its  probable
liability on its existing debts as they mature),  (ii) have  unreasonably  small
capital  with  which to engage in its  business,  or (iii) have  incurred  debts
beyond its ability to pay as they come due.

     3.9  Litigation;  Compliance  with Law.  There are no Actions  relating  to
Purchaser  or any of its assets or  business,  pending or, to the  knowledge  of
Purchaser,  threatened,  or any order,  injunction,  award or decree outstanding
against  Purchaser or against or relating to any of its assets or business;  and
to the  knowledge of Purchaser and the Key  Stockholders,  there exists no basis
for any such Action.  The Purchaser is not in violation of any law,  regulation,
ordinance,  order,  injunction,  decree,  award,  or  other  requirement  of any
Governmental Entity or court or arbitrator relating to its assets.

     3.10  Brokers.  Neither  Purchaser  nor any Key  Stockholder  has  engaged,
consented to, or authorized any broker, finder, investment banker or other third
party to act on its or his behalf, directly or indirectly, as a broker or finder
in connection with the transactions contemplated hereby.

     3.11 Payments.  Purchaser has not directly or indirectly  paid or delivered
any  fee,  commission  or  other  sum of  money  or  item or  property,  however
characterized,  to any finder,  agent, client,  customer,  supplier,  government
official or other Person,  in the United States or any other  country,  which is
illegal under any federal,  state or local laws of the United States (including,
without  limitation,  the U.S.  Foreign  Corrupt  Practices  Act) or such  other
country.

     3.12 Untrue or Omitted Facts. No  representation,  warranty or statement by
Purchaser  and/or any Key  Stockholder  in this  Agreement  contains  any untrue
statement of a Material  fact,  or omits to state a Material  fact  necessary in
order to make such  representations,  warranties or statements  not  misleading.
Without  limiting the  generality  of the  foregoing,  there is no fact known to
Purchaser  and/or any Key  Stockholder  that has had, or which may be reasonably
expected to have, a Material  Adverse Effect that has not been disclosed in this
Agreement.

                                   ARTICLE IV

                              PRE-CLOSING COVENANTS

     4.1  Purchaser  Covenants.   Except  as  expressly   contemplated  by  this
Agreement,  after the date hereof and prior to the Effective  Time,  without the
prior written consent of the Target:

     (a) Certain  Actions.  The  Purchaser  shall not (and the Key  Stockholders
shall not authorize or permit Purchaser to) take any action that would, or might
reasonably be expected to, result in any of its or the Target's  representations
and  warranties  set forth in this  Agreement  being or  becoming  untrue in any
Material respect, or in any of the conditions to the Merger set forth in Article
VI not being  satisfied,  or which would adversely  affect the ability of any of
them or of the Target to obtain any of the Requisite Regulatory Approvals.

     (b) Government  Filings.  Purchaser shall (and the Key  Stockholders  shall
cause the  Purchaser to) cooperate  with the Target in  determining  whether any
filings  are  required to be made with,  or  consents,  authorizations,  orders,
approvals  required to be obtained from, any third party or Governmental  Entity
prior  to  the  Effective  Time  in  connection   with  this  Agreement  or  the
transactions contemplated hereby, and shall cooperate in making any such filings
promptly  and in seeking to obtain  timely  any such  consents,  authorizations,
orders and/or approvals.  Purchaser shall (and the Key Stockholders  shall cause
the Purchaser  to) promptly  provide the Target with copies of all other filings
made by the  Purchaser  with any  Governmental  Entity in  connection  with this
Agreement, the Merger or the other transactions contemplated hereby.

     (c) Voting.  The Purchaser shall (and the Key Stockholders  shall cause the
Purchaser to) and the Key Stockholders shall (and shall cause all members of the
Purchaser  Group to) vote all Target Common Stock  standing in their  respective
names on the books of the Target to approve this Agreement and the  transactions
contemplated hereby.

     (d) Ownership in Target.

          (i) Prior to the Effective Time, the Key Stockholders shall (and shall
     cause  the other  members  of the  Purchaser  Group  to)  contribute  their
     Purchaser Group Shares to the Purchaser.

          (ii)  Between  the  date  hereof  and  the  Effective  Time,  the  Key
     Stockholders  shall not take any action that would  prevent  the  Purchaser
     from  owning,  and shall  cause the  Purchaser  to own,  on or prior to the
     Effective  Time, a number of shares of Target Common Stock no less than the
     number of Purchaser Group Shares.

          (iii) Prior to the  Effective  Time,  the Key  Stockholders  shall (or
     shall cause the Purchaser  Group to) contribute to the capital of Purchaser
     an amount of cash sufficient to pay the aggregate Merger  Consideration and
     all reasonably  forseeable claims arising in connection with this Agreement
     and the Merger.

     4.2  Competing  Transactions.  Nothing  contained in this  Agreement  shall
prohibit the Target from, prior to the date of the  Stockholders'  Meeting,  (i)
furnishing  information to, or entering into  discussions or negotiations  with,
any person that makes an unsolicited  written,  bona fide proposal to the Target
with respect to a Competing  Transaction  which could  reasonably be expected to
result in a Superior Proposal,  if, (A) the failure to take such action would be
inconsistent  with the Board's and the Special  Committee's  fiduciary duties to
the Target's stockholders under applicable law, and (B) prior to furnishing such
information to, or entering into discussions or negotiations  with, such person,
the Target (x) provides  reasonable notice to Purchaser to the effect that it is
furnishing  information to, or entering into  discussions or negotiations  with,
such person and (y) receives from such person a fully  executed  confidentiality
agreement, (ii) complying with the rules and regulations promulgated by the SEC,
including,  without  limitation,  Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer, or (iii) failing to make
or  withdrawing or modifying its  recommendation  referred to in Section 5.2, or
recommending  an  unsolicited,  bona fide  proposal  with respect to a Competing
Transaction which could reasonably be expected to result in a Superior Proposal,
following  the  receipt of such a  proposal,  if the failure to take such action
would be  inconsistent  with the Board's and the Special  Committee's  fiduciary
duties to the Target's stockholders under applicable law.

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS


5.1     Preparation of the Proxy Statement and Schedule 13E-3.

     (i) The Target shall as promptly as practicable prepare and file a proxy or
information  statement relating to the Stockholders'  Meeting (together with all
amendments,  supplements and exhibits thereto,  the "Proxy  Statement") with the
SEC and will use its best  efforts to respond to the  comments of the SEC and to
cause the Proxy  Statement  to be mailed  to the  Target's  stockholders  at the
earliest  practical  time.  The Target  will  notify  Purchaser  promptly of the
receipt of any comments  from the SEC or its staff and of any request by the SEC
or its  staff for  amendments  or  supplements  to the  Proxy  Statement  or for
additional   information   and  will  supply   Purchaser   with  copies  of  all
correspondence  between  the  Target or any of its  representatives,  on the one
hand,  and the SEC or its staff,  on the other hand,  with  respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders' Meeting there
shall occur any event that should be set forth in an amendment or  supplement to
the  Proxy  Statement,  the  Target  will  promptly  prepare  and  mail  to  its
stockholders such an amendment or supplement. The Target will not mail any Proxy
Statement, or any amendment or supplement thereto, to which Purchaser reasonably
objects.  The Target hereby  consents to the inclusion in the Proxy Statement of
the  recommendation  of the Board  described  in  Section  5.2,  subject  to any
modification,   amendment  or  withdrawal  thereof,   and  represents  that  the
Independent  Advisor has, subject to the terms of its engagement letter with the
Target,  consented to the inclusion of references to the Fairness Opinion in the
Proxy Statement.

     (ii) The Target and Purchaser shall together prepare and file a Transaction
Statement on Schedule 13E-3 (together with all amendments and exhibits  thereto,
the "Schedule  13E-3") under the Exchange Act. Each of the Key  Stockholders and
Purchaser  shall furnish all  information  concerning it, its Affiliates and the
holders of its capital stock  required to be included in the Schedule 13E-3 and,
after  consultation with each other, shall respond promptly to any comments made
by the SEC with respect to the Schedule 13E-3. All such information  shall be in
accordance with and subject to Section 3.5 of this Agreement.

     5.2 Stockholders'  Meeting. The Target shall call the Stockholders' Meeting
to be held as  promptly  as  practicable  for the  purpose  of  voting  upon the
approval of this Agreement,  the Merger and the other transactions  contemplated
hereby. The Target will, through its Board and the Special Committee,  recommend
to its stockholders  approval of such matters,  unless the taking of such action
would be  inconsistent  with the Board's and the Special  Committee's  fiduciary
duties to  stockholders  under  applicable  laws.  The Target shall solicit from
Target  stockholders  entitled to vote at the  Stockholders'  Meeting proxies in
favor of such  approval and shall take all other action  necessary or helpful to
secure the vote or consent of such holders  required by the Delaware  Statute or
this Agreement to effect the Merger.  The Target shall (and the Key Stockholders
shall cause the Target to)  coordinate and cooperate with Purchaser with respect
to the timing of such meeting.

     5.3 Legal  Conditions to Merger.  Each of the Target,  the Key Stockholders
and  Purchaser  shall use all  reasonable  best efforts to take,  or cause to be
taken, all actions necessary (i) to comply promptly with all legal  requirements
which may be imposed on such party with respect to the Merger and to  consummate
the  transactions  contemplated  by this  Agreement,  subject to the approval of
stockholders of the Company described in Section 5.2, and (ii) to obtain (and to
cooperate with the other party to obtain) any consent,  authorization,  order or
approval  of, or any  exemption  by,  any  Governmental  Entity and of any other
public or private  third  party which is required to be obtained or made by such
party in connection  with the Merger and the  transactions  contemplated by this
Agreement.

     5.4 Employee Stock Options; Employee Plans and Benefits.

     (a) Options.  Prior to the  Effective  Time,  the Board of Directors of the
Target (or, if appropriate, the Special Committee or any committee administering
the Target Stock Option Plans) shall adopt such  resolutions  or take such other
actions as are required to effect the  transactions  contemplated by Section 2.5
in respect of all outstanding  Options, and thereafter the Board of Directors of
the Target (or any such committee)  shall adopt any such additional  resolutions
and  take  such  additional  actions  as  are  required  in  furtherance  of the
foregoing.

     (b)  Payments in Respect of  Options.  Each  Option  cancelled  pursuant to
Section 2.5(a) shall, upon cancellation,  be converted into the right to receive
an amount in cash  equal to the  product  of (i) the  number of shares of Target
Common Stock subject to such Option,  whether or not then exercisable,  and (ii)
the excess,  if any, of the Merger  Consideration  over the  exercise  price per
share subject or related to such Option (the "Option Consideration").

     (c) Time of Payment.  The cash amount  described in  paragraph  (b) of this
Section  5.4 shall be paid as  promptly as is  practicable  after the  Effective
Time.

     (d)  Withholding.  All  amounts  payable  pursuant  to  Section  2.5(a) and
Sections  5.4(b) and (c) shall be subject to any required  withholding  of taxes
and shall be paid without interest.  Payment shall, at Purchaser's  request,  be
withheld in respect of any Option until  Purchaser  has  received  documentation
that  evidences  such payment is in full  satisfaction  of all rights under such
Option.

     (e) Termination of Equity-Based Compensation.  No stock options or warrants
will be issued under the Target  Stock Option Plans or otherwise  after the date
hereof.  Unless  otherwise  determined by Purchaser,  any provision in any other
Benefit Plan  providing  for the  potential  issuance,  transfer or grant of any
capital  stock of the Target or any  interest,  or release of  restrictions,  in
respect  of any  capital  stock  of the  Target  shall be  terminated  as of the
Effective Time. The Target shall ensure that, as of the Effective  Time,  unless
otherwise determined by Purchaser,  no holder of an Option,  restricted stock or
Derivative Security or any participant in the Target Stock Option Plans or other
Benefit Plan or otherwise shall have any right thereunder to acquire any capital
stock of the Target or the  Surviving  Corporation,  other than shares of Target
Common  Stock issued or issuable  upon  exercise of Options that were issued and
outstanding  on the date  hereof.  Holders of Options  shall not be  entitled to
receive  any payment or benefit  except as  provided in Section  2.5(a) and this
Section 5.4.

     (f) No Right to Employment. Other than as specifically contemplated in this
Agreement, nothing contained in this Agreement shall confer upon any employee of
the Target or any ERISA  Affiliate  any right  with  respect  to  employment  by
Purchaser,  the  Surviving  Corporation  or  any of its  Affiliates,  nor  shall
anything herein  interfere with any or create any additional right of Purchaser,
the Surviving  Corporation  or any of its Affiliates to terminate the employment
of any such employee at any time, with or without cause, or restrict  Purchaser,
the Surviving  Corporation or any of  Purchaser's  Affiliates in the exercise of
their independent  business judgment in modifying any other terms and conditions
of the employment of any such employee.

5.5      Indemnification;  Exculpation;  Directors' and Officers' Insurance.

     (i) As of the Effective Time, the certificate of incorporation  and by-laws
of the Surviving  Corporation  shall contain  provisions no less  favorable with
respect  to   indemnification   and  exculpation  than  are  set  forth  in  the
certification  of incorporation  and/or by-laws of the Target,  which provisions
shall not be amended,  repealed or otherwise  modified for a period of six years
from the  Effective  Time in any manner that would  adversely  affect the rights
thereunder of individuals  who at the Effective Time were  directors,  officers,
employees  or agents of the Target.  From and after the  Effective  Time,  for a
period of six  years,  Purchaser  and the  Surviving  Corporation,  jointly  and
severally,  shall indemnify the directors and officers of the Target on terms no
less favorable than the provisions with respect to indemnification  that are set
forth in the certificate of incorporation and/or by-laws of the Target as of the
Effective Time. Purchaser and the Target agree that the directors,  officers and
employees  of  the  Target  covered  thereby  are  intended  to be  third  party
beneficiaries  under this  Section  5.5 and shall have the right to enforce  the
obligations of the Surviving Corporation and the Purchaser.

     (ii) The Surviving Corporation shall maintain in effect, from the Effective
Time until such period of time during which claims could legally be made against
any director or officer of the Target,  in their  capacity as such,  any and all
directors' and officers' liability insurance currently maintained by the Target.

     5.6  Communication  to Employees.  The Target and Purchaser  will cooperate
with each other with  respect to, and endeavor in good faith to agree in advance
upon the method and content of, all written or oral communications or disclosure
to employees of the Target or any of its Subsidiaries with respect to the Merger
and any other  transactions  contemplated  by this  Agreement.  Upon  reasonable
notice,  the Target shall (and the Key  Stockholders  shall cause the Target to)
provide  Purchaser  access to the Target's and its  Subsidiaries'  employees and
facilities.

     5.7  Additional  Actions.  Subject  to the  terms  and  conditions  of this
Agreement,  each of the parties hereto agrees to use all  reasonable  efforts to
take,  or cause  to be  taken,  all  actions  reasonably  necessary,  proper  or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     6.1  Conditions  to Each  Party's  Obligation  to Effect  the  Merger.  The
respective obligation of each Party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions unless waived
by both Purchaser and Target:

     (a)  Stockholder  Approval.  This  Agreement  shall have been  approved and
adopted by the affirmative  vote of the holders of a majority of the outstanding
shares of Target Common Stock entitled to vote thereon.

     (b) Government Approvals. All authorizations, consents, orders or approvals
of, or declarations  or filings with, and all expirations or early  terminations
of waiting periods imposed by, any  Governmental  Entity which are necessary for
the consummation of the Merger shall have been filed,  occurred or been obtained
(all such  permits,  approvals,  filings and  consents and the lapse of all such
waiting periods being referred to as the "Requisite  Regulatory  Approvals") and
all such Requisite Regulatory Approvals shall be in full force and effect.

     (c) Consents Under  Agreements.  The Target shall have obtained the consent
or approval of all persons  and  Governmental  Entities  relating to any loan or
credit agreement, note, mortgage,  indenture, lease, license or other agreement,
Contract or instrument to which it or any of its subsidiaries is a party.

     (d) No Action. No Action, suit or proceeding shall have been instituted, or
shall be pending or threatened  (i) seeking to restrain in any Material  respect
or prohibit  the  consummation  of the Merger,  (ii)  seeking to obtain from the
Target, any of its directors, or Purchaser any damages which would reasonably be
expected to result in a Material Adverse Effect,  or (iii) seeking to impose the
restrictions, prohibitions or limitations on the Merger.

     (e) No  Injunctions  or Restraints;  Illegality.  No temporary  restraining
order, preliminary or permanent injunction or other order issued by any court of
competent  jurisdiction or other legal  restraint or prohibition  preventing the
consummation  of the Merger shall be in effect,  nor shall any proceeding by any
Governmental Entity seeking any of the foregoing be pending.

     (f) Statutes. No statute,  rule,  regulation,  executive order or decree or
order of any kind shall have been enacted by any Governmental Entity which would
make the consummation of the Merger illegal.

     (g) Dissenting Shares.  Dissenting Shares shall constitute less than 25% of
all shares of Target Common Stock outstanding immediately prior to the Effective
Time.

     6.2 Conditions to Obligations of the Key  Stockholders  and Purchaser.  The
obligations  of the Key  Stockholders  and  Purchaser  to effect  the Merger are
subject to the satisfaction of the following conditions unless waived by the Key
Stockholders and Purchaser:

     (a)  Performance of Obligations of Target.  The Target shall have performed
and  complied  in all  Material  respects  with all  obligations  required to be
performed or complied with by it under this Agreement at or prior to the Closing
Date,  and Purchaser  shall have received a certificate  signed on behalf of the
Target by the  President  and Chief  Executive  Officer of the Target and by the
Chief Financial Officer of the Target to such effect.

     (b) Material Adverse Effect. Since the date of this Agreement,  there shall
not have occurred any Material  Adverse Effect with respect to the Target and no
facts or  circumstances  arising  after the date of this  Agreement  shall  have
occurred which,  individually or in the aggregate,  could reasonably be expected
to have a Material Adverse Effect with respect to the Target.

     (c)  Proceedings.  All proceedings to be taken on the part of the Target in
connection  with  the  transactions  contemplated  by  this  Agreement  and  all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to  Purchaser,  and Purchaser  shall have received  copies of all such
documents and other  evidences as Purchaser may  reasonably  request in order to
establish  the  consummation  of  such   transactions  and  the  taking  of  all
proceedings in connection therewith.

     6.3 Conditions to  Obligations  of Target.  The obligation of the Target to
effect the Merger is subject to the  satisfaction  of the  following  conditions
unless waived by the Target:

     (a) Representations  and Warranties.  The representations and warranties of
the Purchaser and the Key Stockholders set forth in this Agreement shall be true
and correct in all respects as of the Effective  Time as though made on or as of
such time  (ignoring  for  purposes of this  determination  any  materiality  or
Material Adverse Effect qualifiers  contained within individual  representations
and  warranties),  except  for (i) those  representations  and  warranties  that
address  matters only as of a particular date or only with respect to a specific
period  of time  which  need  only be true and  correct  as of such date or with
respect to such  period and (ii) such  failures  to be true and correct as would
not,  individually  or in the  aggregate,  reasonably be expected to result in a
Material Adverse Effect on Purchaser.

     (b) Performance of Obligations of the Key Stockholders  and Purchaser.  The
Key Stockholders and Purchaser shall have performed and complied in all Material
respects  with all  obligations  required  to be  performed  by them  under this
Agreement at or prior to the Closing Date,  and the Target shall have received a
certificate  signed on behalf of Purchaser by the President and Chief  Executive
Officer of Purchaser and by the Chief Financial Officer of Purchaser and by each
Key Stockholder to such effect.

     (c)  Fairness  Opinion.  The  Special  Committee  shall have  received  the
Fairness  Opinion of the  Independent  Advisor as of the Effective  Time and the
Fairness  Opinion  of the  Independent  Advisor  shall not have been  withdrawn,
modified, repealed or revoked.

                                   ARTICLE VII

                            TERMINATION AND AMENDMENT


     7.1 Termination.  This Agreement may be terminated at any time prior to the
Effective  Time,  whether before or after  approval of the matters  presented in
connection with the Merger by the stockholders of the Target:

     (i) by mutual consent of Purchaser and the Target in a written  instrument,
whether or not the Merger has been approved by the stockholders of the Target;

     (ii) by the Target,  if any of the  conditions  set forth in  Sections  6.1
and/or 6.3 would be incapable of being satisfied by April 15, 2003 and shall not
have been waived;

     (iii) By the Purchaser and Key  Stockholders,  if any of the conditions set
forth in Sections 6.1 and/or 6.2 would be incapable of being  satisfied by April
15, 2003, in each case,  except as such shall have been the result of any action
or inaction by Purchaser or any Key Stockholder,  and shall not have been waived
by Target;

     (iv) by either  Purchaser  or the Target if the Merger  shall not have been
consummated  on or prior to April 15,  2003 (or such later date as may be agreed
to in writing by the Target and Purchaser) (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations  under this
Agreement required to be performed at or prior to the Effective Time);

     (v) by  Purchaser,  if the  Special  Committee  or the Board shall have (i)
withdrawn, modified or changed its approval or recommendation of this Agreement,
the Merger or any of the other  transactions  contemplated  herein in any manner
which is adverse to Purchaser  or shall have  resolved to do the  foregoing;  or
(ii) approved or have  recommended to the stockholders of the Target a Competing
Transaction or a Superior Proposal,  entered into an agreement with respect to a
Competing  Transaction  or Superior  Proposal  or shall have  resolved to do the
foregoing;

     (vi) by Purchaser, if (i) a tender offer or exchange offer or a proposal by
a third party to acquire  the Target or the Target  Common  Stock  pursuant to a
merger, consolidation,  share exchange, business combination, tender or exchange
offer or similar  transaction  shall have been  commenced  or publicly  proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Target shall not have made a recommendation  to the
stockholders of the Target to reject such proposal within ten (10) business days
of its commencement or the date such proposal first becomes publicly  disclosed,
if sooner;

     (vii) by the Target,  if the Special  Committee and the Board authorize the
Target to enter into a written agreement with respect to a Competing Transaction
that the Special Committee and the Board have determined is a Superior Proposal;
and

     (viii) by Target, in its sole discretion,  which shall be final, conclusive
and  binding,  to the  extent it  believes  such  termination  to be  reasonably
necessary to discharge the fiduciary obligation of its Board of Directors and/or
Special Committee under applicable law.

     7.2 Effect of  Termination.  In the event of  termination of this Agreement
and  abandonment  of the Merger by either the Target or Purchaser as provided in
Section 7.1,  this  Agreement  shall  forthwith  terminate and there shall be no
liability or obligation on the part of Purchaser,  the Key  Stockholders  or the
Target or their respective officers or directors except with respect to Sections
5.5 and 7.3; provided,  however, that, subject to the provisions of Section 9.7,
nothing  herein  shall  relieve any party of  liability  for any breach  hereof,
except that in the event of a termination of this Agreement, no party shall have
any right to the recovery of expenses except as provided in Section 7.3.

     7.3 Fees, Expenses and Other Payments.

     (a) Generally. Except as otherwise provided in this Section 7.3, whether or
not the Merger is  consummated,  all costs and expenses  incurred in  connection
with this Agreement and the transactions contemplated hereby (including, without
limitation,   fees  and  disbursements  of  counsel,   financial   advisors  and
accountants)  shall be borne solely and entirely by the party which has incurred
such costs and expenses (with respect to such party, its "Expenses").

     (b)  Reimbursement.  Purchaser and the Key Stockholders  agree that if this
Agreement shall be terminated  pursuant to Sections 7.1(ii),  7.1(iii) (but only
with respect to the failure of a condition set forth in 6.1) or 7.1(iv)  through
(viii)  then they shall pay to the  Target an amount  equal to  Target's  actual
Expenses.

     (c) Payment  Obligations.  Any payment required to be made pursuant to this
Section  7.3 shall be made as promptly  as  practicable  but not later than five
business  days after  termination  of this  Agreement  and shall be made by wire
transfer of immediately available funds to an account designated by Target.

     7.4  Amendment.  To the extent  permitted  by the  Delaware  Statute,  this
Agreement may be amended by the parties hereto, by action taken or authorized by
their  respective  Boards of Directors  and the Special  Committee,  at any time
before the Effective  Time,  regardless of approval of the matters  presented in
connection  with the Merger by the  stockholders  of the Target or of Purchaser.
This  Agreement may not be amended  except by an instrument in writing signed on
behalf of each of the Parties hereto.

     7.5 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto,  by action taken or authorized by their  respective  Boards of Directors
and the Special  Committee,  may, to the extent legally allowed,  (i) extend the
time for the  performance  of any of the  obligations or other acts of the other
parties  hereto,   (ii)  waive  any  inaccuracies  in  the  representations  and
warranties  contained  herein or in any document  delivered  pursuant hereto and
(iii)  waive  compliance  with any of the  agreements  or  conditions  contained
herein.  Any  agreement on the part of a party  hereto to any such  extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.

                                  ARTICLE VIII

                                   DEFINITIONS


     8.1 Certain Definitions. For purposes of this Agreement:

     (a)  "Action"  shall mean any  action,  claim,  suit,  demand,  litigation,
governmental or other proceeding,  labor dispute, arbitral action,  governmental
audit, inquiry,  investigation,  criminal  prosecution,  investigation or unfair
labor practice charge or complaint.

     (b) an  "Affiliate"  of any  person or entity  means  another  person  that
directly  or  indirectly,  through  one or  more  intermediaries,  controls,  is
controlled by, or is under common control with, such first person or entity.

     (c)  "Beneficially  Own" or  "Beneficial  Ownership"  with  respect  to any
securities, means having "beneficial ownership" of such securities in accordance
with the  provisions of Rule 13d-3 under the Exchange Act.  Without  duplicative
counting of the same  securities  by the same  holder,  securities  beneficially
owned by a person  include  securities  beneficially  owned by all other persons
with whom such person would constitute a group.

     (d) "Benefit  Plan" shall mean any "employee  benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
including,  but not limited to, employment  Contracts,  bonus,  pension,  profit
sharing, deferred compensation,  incentive compensation,  excess benefit, stock,
stock option  (including the Target Stock Plans),  severance,  termination  pay,
change in control or other  employee  benefit plans,  programs or  arrangements,
including those providing medical,  dental, vision,  disability,  life insurance
and  vacation  benefits  (other than those  required to be  maintained  by law),
whether  written or  unwritten,  qualified or  unqualified,  funded or unfunded,
foreign or domestic,  currently maintained, or contributed to, or required to be
maintained  or  contributed  to, by the  Target or any ERISA  Affiliate  for the
benefit of any current or former employees,  officers or directors of the Target
or any Subsidiary or with respect to which the Target or its  Subsidiaries  have
any liability.

     (e) "Contract" shall mean any agreement, contract, note, lease, evidence of
indebtedness,  purchase order, letter of credit,  indenture,  security or pledge
agreement, franchise agreement, undertaking, covenant not to compete, employment
agreement,  license, instrument,  obligation,  commitment,  course of dealing or
practice,  understanding  or  arrangement,  whether  written or oral, to which a
particular Person is a party or is otherwise bound.

     (f) "Competing Transaction" shall mean any of the following (other than the
transactions  contemplated  by this  Agreement)  involving  the Target:  (i) any
merger,  consolidation,  share exchange,  exchange offer,  business combination,
recapitalization,   liquidation,   dissolution  or  other  similar   transaction
involving the Target resulting in the Target's current  stockholders owning less
than a  majority  of the  capital  stock of the  surviving  corporation  in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets representing 20% or more of the total assets of the Target
and its Subsidiaries,  in a single transaction or series of transactions;  (iii)
any tender  offer or exchange  offer for 20% or more of the  outstanding  Target
Common Stock or the filing of a registration  statement under the Securities Act
in connection therewith; (iv) any person or group acquiring Beneficial Ownership
of 15% or  more,  or such  person  or  group  having  increased  its  Beneficial
Ownership beyond 15%, of the outstanding  Target Common Stock; or (v) any public
announcement of a proposal,  plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.

     (g) "Default" shall mean any breach, default and/or other violation, and/or
the  occurrence  of any event  that with or without  the  passage of time or the
giving of notice or both would constitute a breach,  default or other violation,
under, or give any Person the right to accelerate, terminate or renegotiate, any
Contract.

     (h) "Derivative Securities" shall mean warrants, options, rights, shares of
capital  stock,  evidences  of  indebtedness,  or other  securities,  which  are
convertible, exercisable or exchangeable into shares of common stock.

     (i) "ERISA  Affiliate"  shall mean the Target or any other person or entity
that,  together with the Target,  is treated as a single  employer under Section
414 of the Internal Revenue Code of 1986, as amended.

     (j)  "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended.

     (k) "Governmental  Entity" shall mean a federal,  state,  local, or foreign
governmental body or a political subdivision of such governmental body, or other
regulatory   body,   court,   administrative   agency  or  commission  or  other
governmental authority or instrumentality.

     (l) "Lien" shall mean any claim, lien, pledge, option, charge, restriction,
easement,   security   interest,   deed  of   trust,   mortgage,   right-of-way,
encroachment,   building  or  use  restriction,   conditional  sales  agreement,
encumbrance or other right of third  parties,  whether  voluntarily  incurred or
arising by operation of law, and includes,  without limitation, any agreement to
give any of the foregoing in the future,  and any contingent sale or other title
retention agreement or lease in the nature thereof.

     (m) "Material" with respect to any entity means an event,  change or effect
which is  material  in  relation  to the  condition  (financial  or  otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole.

     (n)  "Material  Adverse  Effect"  means,  with  respect  to the  Target  or
Purchaser,  any change,  event or effect shall have  occurred  that,  when taken
together  with all other adverse  changes,  events or effects that have occurred
would or would  reasonably  be  expected  to (i) be  Materially  adverse  to the
business, assets,  properties,  results of operations or condition (financial or
otherwise) of such party and its Subsidiaries  taken as a whole, or (ii) prevent
or Materially delay the consummation,  or increase the cost to Purchaser, of the
Merger.

     (o) "Person" means an individual,  corporation,  limited liability company,
general  or  limited   partnership   ,  joint   venture,   association,   trust,
unincorporated organization or other legal entity.

     (p) "Securities Act" shall mean the Exchange Act of 1933, as amended.

     (q) "SEC" means the United States Securities and Exchange Commission.

     (r) a  "Subsidiary"  of any person means another  person,  an amount of the
voting  securities,  other voting ownership or voting  partnership  interests of
which is  sufficient  to elect at least a majority of its Board of  Directors or
other governing body (or, if there are no such voting interests,  50% or more of
the equity  interests of which) is owned  directly or  indirectly  by such first
person.

     (s) "Superior  Proposal"  means any bona fide written  proposal to acquire,
directly or indirectly,  for consideration consisting of cash and/or securities,
all  of  the  shares  of  Target  Common  Stock  then   outstanding  or  all  or
substantially  all of the  assets  of  the  Target  and  the  assumption  of the
liabilities  and  obligations  of  the  Target  to be  followed  by a  pro  rata
distribution of the sale proceeds to stockholders of the Target, that (i) is not
subject to any financing  conditions or contingencies,  (ii) provides holders of
Target  Common  Stock with per share  consideration  that the Special  Committee
determines in good faith, after receipt of advice of its Independent Advisor, is
more  favorable  from a  financial  point of view than the  consideration  to be
received by holders of Target Common Stock in the Merger, (iii) is determined by
the Special Committee in its good faith judgment, after receipt of advice of its
Independent  Advisor and outside legal counsel,  to be likely of being completed
(taking into account all legal,  financial,  regulatory and other aspects of the
proposal, the Person making the proposal and the expected timing to complete the
proposal),  and (iv) does not,  in the  definitive  agreement,  contain any "due
diligence" conditions.

                                   ARTICLE IX

                               GENERAL PROVISIONS


     9.1  Survival  of   Representations,   Warranties   and   Agreements.   The
representations  and warranties made by the Parties  contained in this Agreement
and any other  agreement  delivered  pursuant hereto or made in writing by or on
behalf of the Parties shall not survive beyond the Effective Time.

     9.2 Notices.  All notices and other  communications  hereunder  shall be in
writing and shall be deemed  given if  delivered  personally,  telecopied  (with
confirmation)  or  mailed  by  registered  or  certified  mail  (return  receipt
requested) to the parties at the  following  addresses (or at such other address
for a party as shall be specified by like notice):

     (a) if to the Key Stockholders and Purchaser, to:

               Sandata Acquisition Corp.
               26 Harbor Park Drive
               Port Washington, New York 11050
               Attention: Bert E. Brodsky
               Facsimile: (516) 484-3290

               With a copy to:

               Panza, Maurer & Maynard, P.A.
               Third Floor, Bank of America Building
               3600 North Federal Highway
               Fort Lauderdale, Florida 33308
               Attention:  Linda C. Frazier, Esq.
               Facsimile:  (954) 390-7991

     (b) if to the Target, to:

               Sandata Technologies, Inc.
               26 Harbor Park Drive
               Port Washington, New York 11050
               Attention: Jonathan Friedman, Esq.
               Facsimile: (516) 605-6989

               With copies to:

               Certilman Balin Adler & Hyman, LLP
               90 Merrick Avenue, 9th Floor
               East Meadow, New York 11554
               Attention: Steven J. Kuperschmid, Esq.
               Facsimile: (516) 296-7111


     9.3 Interpretation. When a reference is made in this Agreement to Sections,
such  reference  shall  be to a  Section  of  this  Agreement  unless  otherwise
indicated.  The recitals  hereto  constitute an integral part of this Agreement.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this  Agreement,  they shall be deemed to be followed  by the words  "without
limitation".  The phrase "made  available" in this Agreement shall mean that the
information  referred to has been made  available  if  requested by the party to
whom such  information  is to be made  available.  The phrases "the date of this
Agreement",  "the date hereof" and terms of similar  import,  unless the context
otherwise requires, shall be deemed to refer to October 28, 2002.

     9.4   Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other  parties,  it being  understood  that all
parties need not sign the same counterpart.

     9.5 Entire Agreement;  No Third Party  Beneficiaries;  Rights of Ownership.
This Agreement  (including the documents and the instruments referred to herein)
(i)  constitutes  the entire  agreement and supersedes all prior  agreements and
understandings,  both  written and oral,  among the parties  with respect to the
subject matter hereof; and (ii) except as provided in Sections 2.4, 2.5, 5.3 and
5.5, is not intended to confer upon any person other than the parties hereto any
rights or remedies  hereunder.  The parties hereby  acknowledge  that, except as
hereinafter  agreed to in  writing,  no party shall have the right to acquire or
shall be deemed to have  acquired  shares  of  common  stock of the other  party
pursuant to the Merger until consummation thereof.

     9.6 Governing Law; Consent to Jurisdiction.

     (a)  Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with  the  laws of the  State  of  Delaware  without  regard  to the
principles of conflicts of laws thereof.

     (b)  Jurisdiction  and Venue.  Each of the parties  hereto (A)  consents to
submit itself to the exclusive  personal  jurisdiction and venue of any Delaware
state court or any federal  court  located in the State of Delaware in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this  Agreement  and (B) agrees  that it shall not  attempt to deny or defeat
such  personal  jurisdiction  or venue by motion or other request for leave from
any such court.

     9.7 Severability; No Remedy in Certain Circumstances. Any term or provision
of this  Agreement  that is invalid or  unenforceable  in any  situation  in any
jurisdiction  shall not affect the validity or  enforceability  of the remaining
terms and provisions  hereof or the validity or  enforceability of the offending
term or provision in any other  situation or in any other  jurisdiction.  If the
final  judgment of a court of competent  jurisdiction  declares that any term or
provision hereof is invalid or  unenforceable,  the parties agree that the court
making the determination of invalidity or unenforceability  shall have the power
to reduce  the  scope,  duration,  or area of the term or  provision,  to delete
specific words or phrases,  or to replace any invalid or  unenforceable  term or
provision with a term or provision that is valid and  enforceable and that comes
closest to  expressing  the  intention of the invalid or  unenforceable  term or
provision,  and this  Agreement  shall be  enforceable  as so modified after the
expiration  of the time within which the  judgment  may be  appealed.  Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent  herewith or failed to take action consistent herewith or
required  hereby  pursuant to an order or judgment of a court or other competent
authority,  such party shall incur no liability or obligation  unless such party
did not in good faith seek to resist or object to the  imposition or entering of
such order or judgment.

     9.8 Publicity.  Except as otherwise required by any applicable law or rules
or regulations promulgated thereunder, including, without limitation, any public
disclosure  obligations  of  Target,  so long as this  Agreement  is in  effect,
neither the Target,  the Key Stockholders nor Purchaser shall issue or cause the
publication  of any press release or other public  announcement  with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.

     9.9 Assignment.  Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise)  without the prior  written  consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable  by the parties and their  respective
successors and assigns.

     9.10  Adjustment.  All dollar  amounts and share  numbers set forth herein,
including  without  limitation  the  Merger  Consideration,  shall be subject to
equitable  adjustment in the event of any stock split,  stock dividend,  reverse
stock split or similar event affecting the Target Common Stock, between the date
of this Agreement and the Effective Time, to the extent appropriate.

     The  Remainder of this Page is  Intentionally  Left Blank.  Signature  page
follows.

     IN WITNESS  WHEREOF,  Purchaser,  the Key  Stockholders and the Target have
caused this Agreement,  to be signed by their respective officers thereunto duly
authorized or individually, as the case may be, all as of the date hereof.

                                                  SANDATA ACQUISITION CORP.

                                                  By: /s/Jessica Brodsky Miller
                                                      -------------------------
                                                  Name: Jessica Brodsky Miller
                                                  Title: President


                                                  SANDATA TECHNOLOGIES, INC.

                                                  By:/s/ Bert E. Brodsky
                                                     --------------------
                                                  Name: Bert E. Brodsky
                                                  Title: President


                                                     /s/Bert E. Brodsky
                                                     ------------------
                                                     Bert E. Brodsky


                                                     /s/Hugh Freund
                                                     ------------------
                                                     Hugh Freund


                                                     /s/Gary Stoller
                                                     ------------------
                                                     Gary Stoller



                                                                    APPENDIX A-2




                 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER

     FIRST  AMENDMENT (this  "Amendment"),  dated as of January 27, 2003, by and
among Sandata Acquisition Corp.,  Delaware  corporation  ("Purchaser"),  Bert E.
Brodsky  ("Brodsky"),  Hugh Freund  ("Freund"),  Gary  Stoller  ("Stoller")  and
Sandata Technologies, Inc. ("Target").

     WHERAS,  Purchaser,  Brodsky,  Freund,  Stoller  and Target are party to an
Agreement and Plan of Merger (the "Merger  Agreement"),  dated as of October 28,
2002;

     WHEREAS,  Target,  Brodsky,  Freund,  Stoller and the other  members of the
Board of Directors (the "Board") of Target are  defendants in two  substantially
similar  class  actions  which  have  been  consolidated  into one  action  (the
"Action") alleging breach of fiduciary duties by the members of the Board to the
stockholders  of Target in  connection  with the Merger  Agreement  and  seeking
injunctive relief and damages in connection therewith;

     WHEREAS,  after  negotiations  between  counsel for the defendants and lead
counsel for the  plaintiffs' in the Action,  and after  concluding  with its own
financial  advisor  that it would be in the best  interests  of Target's  public
stockholders  to do so, on November 19,  2002,  plaintiffs'  counsel  offered to
settle the Action if the Merger  Agreement were modified so that Target's public
stockholders  would receive $2.21 per share,  subject to confirmatory  discovery
and agreement on reasonable attorneys' fees to be paid to plaintiffs' counsel;

     WHEREAS,  the  defendants  accepted   plaintiffs'   settlement  offer,  and
Purchaser  verbally  increased  its offer set forth in the Merger  Agreement  to
$2.21 per share;

     WHEREAS,  on December  23,  2002,  counsel for  plaintiffs  and counsel for
defendants  finalized  and executed a Memorandum  of  Understanding  (the "MOU")
memorializing  the terms of the  proposed  settlement  and  setting  forth their
agreement  to use their best  efforts to execute  and seek court  approval  of a
definitive  settlement  (the  "Settlement"),  without any admission of breach of
fiduciary duty or other wrongdoing by Defendants;

     WHEREAS, the existence and prosecution of the Actions was a material factor
considered by Purchaser in determining  to increase the per share  consideration
to be paid to holders of Target's  outstanding  minority  shares pursuant to the
Merger Agreement from $1.91 to $2.21 per share;

     WHEREAS,  the  parties to the Action have  entered  into a  Stipulation  of
Settlement (the "Stipulation")  which formalizes the agreement of the parties to
the Action set forth in the MOU; and

     WHEREAS,  Purchaser,  Target, Brodsky, Freund and Stoller now wish to amend
the Merger Agreement to increase the per share merger  consideration  from $1.91
per share of Target's common stock to $2.21 per share.

     NOW THEREFORE,  in  consideration of the mutual benefits being conferred by
the Merger  Agreement,  the MOU, the  Stipulation  and this  Amendment,  and the
representations,  warranties,  covenants  and  agreements  contained  herein and
therein, the parties to the Merger Agreement agree as follows:

     1. Section 2.3(i) of the Merger Agreement,  titled Effect on Capital Stock,
is hereby  amended  by  deleting  $1.91 and  inserting  $2.21 so that the Merger
Consideration, as defined in the Merger Agreement, is $2.21.

     2. Other than as set forth in Section 1 of this  Amendment,  the provisions
of the Merger Agreement shall remain in full force and effect.

     3. This Amendment may be executed in two or more counterparts, all of which
shall be considered on and the same  agreement and shall become  effective  when
two or more  counterparts  have been signed by each of the parties and delivered
to the other  parties,  it being  understood  that all parties need not sign the
same counterpart.

     IN WITNESS WHEREOF,  Purchaser,  Target,  Brodsky,  Freund and Stoller have
caused this Amendment to be signed by their respective  officers  thereunto duly
authorized or  individually,  as the case may be, all as of the date first above
written.

                                              SANDATA ACQUISITION CORP.


                                               By: /s/ Jessica Brodsky Miller
                                               Name: Jessica Brodsky Miller
                                               Title: President


                                              SANDATA TECHNOLOGIES, INC.


                                              By: /s/ Bert E. Brodsky
                                              Name: Bert E. Brodsky
                                              Title:  Chairman,
                                                       Chief Executive Officer

                                                     /s/ Bert E. Brodsky
                                                         Bert E. Brodsky


                                                     /s/ Hugh Freund
                                                         Hugh Freund


                                                     /s/ Gary Stoller
                                                         Gary Stoller




                                                                   APPENDIX B

                                                      BREAN MURRAY & CO., INC.
                                                      570 Lexington Avenue
                                                      New York, NY 10022-6822
                                                      212/702-6500
                                                      www.bmur.com


October 28, 2002

Board of Directors
Sandata Technologies, Inc.
26 Harbor Park Drive
Port Washington, NY 11050

Dear Sirs:

     We  understand  that Sandata  Technologies,  Inc.,  a Delaware  corporation
("Sandata"),   intends  to  enter  into  an   Agreement   and  Plan  of  Merger,
substantially in the form of the draft dated October 25, 2002 (the "Agreement"),
among Sandata  Acquisition Corp.  ("SAC"),  Bert E. Brodsky,  Hugh Freund,  Gary
Stoller,  and Sandata,  a copy of which has been  provided to us. The  Agreement
provides, among other things, for the merger (the "Proposed Transaction") of SAC
with and into Sandata, with Sandata continuing as the surviving corporation.

     The Agreement  provides,  among other things,  that at the "Effective Time"
(as such term is defined in the  Agreement),  each  outstanding  share of Common
Stock of Sandata, par value $.001 per share (the "Sandata Common Stock"),  other
than the shares of Sandata Common Stock held in the treasury of Sandata,  by any
of its  subsidiaries,  or by stockholders  validly  exercising their dissenter's
rights,  will be converted  into the right to receive $1.91 in cash (the "Merger
Consideration").  The terms of the  Proposed  Transaction  are set forth in more
detail in the Agreement.

     You have requested our opinion,  as investment  bankers, as to the fairness
from a financial  point of view,  to the  stockholders  of Sandata of the Merger
Consideration  to be paid by SAC for the Sandata  Common  Stock in the  Proposed
Transaction.  Our opinion addresses only the fairness, from a financial point of
view, of the Merger Consideration to be paid by SAC for the Sandata Common Stock
in the Proposed Transaction,  and we do not express any views on any other terms
of the Proposed Transaction.  Specifically,  we have not been requested to opine
as to, and our opinion does not in any manner  address,  the relative  merits of
the Proposed  Transaction as compared to any alternative  business strategy that
might exist for Sandata. We have been advised, and have taken into account, that
a majority of the outstanding  common stock of Sandata is beneficially  owned by
the  principals  of SAC,  who are  three of  Sandata's  directors  and the adult
children of one of its directors.

         In arriving at our opinion, we have:

     - reviewed  publicly  available  historical  financial and  operating  data
concerning Sandata,  including,  without limitation,  the Annual Reports on Form
10-KSB for the fiscal years ended May 31, 2000, May 31, 2001, and May 31, 2002;

     - reviewed projected financial information prepared by Sandata management;

     - reviewed publicly available  information  concerning Sandata; o conducted
discussions  with Sandata  senior  management  concerning  Sandata's  historical
financial results, business prospects and projected financial information;

     - reviewed the draft dated  October 25, 2002,  of the Agreement and related
documents; for the purposes of this opinion, we have assumed that the final form
thereof will not differ in any material respect from such draft; and

     -  performed  various  financial  analyses  of  Sandata,  as we have deemed
appropriate,  including a discounted  cash flow analysis;  a comparable  company
analysis, and an internal rate of return to equity analysis.

     In arriving at our  opinion,  we have  assumed and relied upon the accuracy
and  completeness  of the  financial  and other  information  used by us without
assuming  any   responsibility   for  the   independent   verification  of  such
information,  and we have further  relied upon the assurances of Sandata that it
is not aware of any facts or  circumstances  that  would  make such  information
inaccurate or  misleading.  We have also assumed that  obtaining all  regulatory
approvals and third party consents required for the consummation of the Proposed
Transaction  will not have an adverse  impact on  Sandata or on the  anticipated
benefits  of  the  Proposed  Transaction.  We  have  further  assumed  that  the
transactions  described in the Agreement  will be consummated in a timely manner
without  waiver  or  modification  of any of the  material  terms or  conditions
contained  therein.  In  arriving  at our  opinion,  we have not  conducted  any
physical inspection of Sandata's properties or facilities,  and we have not made
or obtained any evaluation or appraisal of the assets or liabilities of Sandata.
Our  opinion  set forth  herein is  necessarily  based upon  financial,  market,
economic  and other  conditions  and  circumstances  as they exist and have been
disclosed on, and can be evaluated as of, the date hereof. We are not expressing
any  opinion  herein as to the  price at which the  Sandata  Common  Stock  will
actually trade at any time.

                                      B-1

     We have acted as financial advisor to the Special Independent  Committee of
the Board of Directors of Sandata in  connection  with the Proposed  Transaction
and will receive a fee for such  services and for  rendering  this  opinion.  In
addition,  Sandata has agreed to indemnify us for certain  liabilities  that may
arise  out of the  rendering  of this  opinion.  In the  ordinary  course of our
business, we may actively trade the debt or equity securities of Sandata for our
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.

     Our opinion is provided  for the use and benefit of the Board of  Directors
of Sandata and is  rendered to the Board of  Directors  in  connection  with the
Proposed  Transaction.  This opinion is not  intended and does not  constitute a
recommendation to any stockholder of Sandata as to how a stockholder should vote
with respect to the Proposed  Transaction.  This opinion is not to be reprinted,
reproduced or disseminated  without our prior written consent,  and is not to be
quoted or referred  to, in whole or in part,  in  connection  with the  Proposed
Transaction  or any other matter;  provided that we understand and agree that if
this opinion is required pursuant to any applicable  statute or regulation to be
included  in  any  materials  to be  filed  with  the  Securities  and  Exchange
Commission  or mailed to the  shareholders  of  Sandata in  connection  with the
Proposed  Transaction,  the opinion may be reproduced in such  materials only in
its entirety,  and any  description of or reference to us or any summary of this
opinion in such  materials  must be in a form  acceptable to and consented to in
advance by us, such consent not to be unreasonably withheld.

     Based upon and subject to the foregoing, including the various assumptions,
limitations, and qualifications set forth hErein, we are of the opinion that, as
of the date hereof,  the Merger  Consideration  to be paid by SAC in  connection
with the Proposed  Transaction is fair,  from a financial  point of view, to the
stockholders of Sandata.

                                                     Respectfully submitted,

                                                     /s/Brean Murray & Co., Inc.

                                                     Brean Murray & Co., Inc.



                                                                    APPENDIX C-1

                     PRESENTATION TO THE BOARD OF DIRECTORS

                           SANDATA TECHNOLOGIES, INC.

                                OCTOBER 28, 2002

                                  BREAN MURRAY




Privileged & Confidential

     In preparing the attached  discussion  materials,  Brean Murray & Co., Inc.
("BMCI")  has assumed  and relied  upon the  accuracy  and  completeness  of the
financial and other  information used by it without assuming any  responsibility
for the independent verification of such information and has further relied upon
the assurances of Sandata  Technologies,  Inc.  ("SAND") that it is not aware of
any facts or  circumstances  that  would  make such  information  inaccurate  or
misleading.  BMCI has also assumed that obtaining all  regulatory  approvals and
third party consents  required for the consummation of the proposed  transaction
will not have an adverse  impact on SAND or on the  anticipated  benefits of the
proposed transaction, and BMCI has assumed that the transaction described in the
proposed agreement will be consummated  without waiver or modification of any of
the material terms or conditions contained therein by any party thereto.

     In  preparing  the  attached  discussion  materials,  BMCI  has not made or
obtained any evaluations or appraisals of the assets or liabilities of SAND. The
discussion  materials  set forth herein are  necessarily  based upon  financial,
market,  economic and other conditions and  circumstances as they exist and have
been disclosed on, and can be evaluated as of, the date of on which BMCI renders
its opinion. It should be understood that developments subsequent to the date of
the attached  materials may affect such conditions and/or the analyses set forth
herein.  BMCI  hereby  disclaims  any  obligation  to update its  opinion or the
enclosed materials for any developments occurring after the date such opinion is
rendered.  The discussion  materials enclosed herewith do not purport to express
any view as to the price at which the SAND common stock will  actually  trade at
any time.

     It is understood that the attached discussion  materials have been prepared
exclusively  for the information of the Board of Directors of SAND only, and may
not be otherwise used without BMCI's prior written  consent,  except as outlined
in the engagement letter dated July 22, 2002 between SAND and BMCI.

     The  attached  discussion  materials  provide  a  summary  of the  material
financial  analyses used by BMCI in connection with providing its opinion to the
SAND  Board of  Directors.  BMCI  believes  that the  preparation  of a fairness
opinion  is a complex  process  involving  the  making of  judgments  and is not
susceptible to partial analysis. Selecting portions of the analyses conducted by
BMCI,  without  considering the analyses as a whole,  could create an incomplete
view of the  processes  underlying  BMCI's  opinion  and  lead  to a  misleading
conclusion.  Capitalized  terms not otherwise  defined herein are defined as set
forth in the Agreement and Plan of Merger.




                                                       Privileged & Confidential

                           Sandata Technologies, Inc.


                                Table of Contents
                                                                         Section

Valuation based on Discounted Cash Flow Analysis.............................1
Valuation based on Comparable Company Analysis...............................2
Going Private Transaction Analysis...........................................3

Exhibits
A. Historical and Projected Income Statements
B. Two Year Stock / Volume Analysis
C. Trading Frequency Distribution Analysis
D. Draft Form of Fairness Opinion






                                                     Privileged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                          Valuation Analysis of Equity
                     Based on Discounted Cash Flow Analysis
                     ($ in thousands, except per share data)

                                                                                              

                                                  Net Present Value of Equity per Share of Common Stock (1), (2)
                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $1.640        $2.394       $3.149      $3.904     $4.659
17.5%                                                         $1.515        $2.225       $2.935      $3.645     $4.355
20.0%                                                         $1.399        $2.068       $2.737      $3.406     $4.075
22.5%                                                         $1.293        $1.924       $2.555      $3.186     $3.817
25.0%                                                         $1.194        $1.789       $2.385      $2.981     $3.577


                                                 Net Present Value of Equity per Share of Common Stock (1), (2)
                                                                           DISCOUNTED 20% FOR MAJORITY OWNER

                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $1.312        $1.915       $2.519      $3.123     $3.727
17.5%                                                         $1.212        $1.780       $2.348      $2.916     $3.484
20.0%                                                         $1.119        $1.655       $2.190      $2.725     $3.260
22.5%                                                         $1.034        $1.539       $2.044      $2.549     $3.053
25.0%                                                         $0.955        $1.432       $1.908      $2.385     $2.862




(1) Represents NPV of cashflows plus NPV of the Terminal Value less net debt
     of $1.588 million.  NPV values as of August  1, 2002.
(2) Based on 2,689,216 shares outstanding, Treasury Stock Method.



                                                     Privileged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                     Pro-Forma Projected Net Free Cash Flow
                                   Statements
                                ($ in thousands)


                                                                                                  

                                                                        Projected for Year Ending May 31,
                                                                    2003                  2004                 2005

             EBIT                                                   $640                  $764                 $803
             Income Taxes on EBIT (0% due to loss carryforward)        0                     0                    0
                                                                   -----                  ----                 ----
             Tax Effected EBIT                                       640                   764                  803

             Depreciation                                          1,828                 2,108                2,213
             Decrease (Increase) in working capital accounts      (1,188)                  (55)                (251)
                                                                  ------                ------               ------
             Cash Flow From Operating Activities                   1,281                 2,817                2,765

             Capital Expenditures                                 (1,388)               (1,388)              (1,388)
                                                                  ------                ------               ------
             Net Free Cash Flow                                    ($107)               $1,429               $1,377
                                                                  ======                ======               ======



Notes:
2003 and 2004 projections prepared by Sandata, 2005 projected
by Brean Murray & Co., Inc.






                                                     Privileged and Confidential



                     Valuation of Sandata Technologies, Inc.
                      Based on Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        



                                                              Sandata LTM    ($1.91)   Implied Median  Implied Median  20% Majority
                                   Comparable Companies      & Projected      Deal      Equity Value    Equity Value        Owner
                                    Low  Median  High            Results    Multiples     of Sandata     per Share        Discount
                                    ---  ------  ----        ------------   ---------   ------------   --------------  ------------

  Equity Value as a multiple of:

  LTM Net Income                  7.3x   27.4x   21.6x           $321          16.0 x        $6,922(1)      $2.57      $2.06

  2003 Net Income (3)             8.3x   23.8x   18.0x           $440          11.7 x        $7,908(1)      $2.94      $2.35

  Book Value                      0.9x    2.9x    1.3x          5,486           0.9 x        $7,168(1)      $2.67      $2.13



  Enterprise Value as a multiple of:


  LTM EBIT                        4.4x   10.5x    8.8x           $695           9.7 x        $4,509(1)(2)    NM         NM

  LTM EBITDA                      2.7x    9.3x    7.2x         $2,607           2.6 x       $17,087(1)(2)  *$6.35    *$5.08

  LTM Revenue                     0.3x    2.0x    0.8x        $14,747           0.5 x        $9,800(1)(2)   $3.64     $2.92



                                                                                        High                       $2.92

                                                                                        Low                        $2.06

                                                                                        Median                     $2.10




LTM = Last Twelve Months
* = excluded as outlier
(1) Equals median multiple * LTM and projected results
(2) Values are adjusted for net debt of $1.6 million.
(3) Comparable company multiples based on calendar year 2003 EPS, Sandata net
     income amount projected for period ending May 31, 2003.





                                                    Priviledged and Confidential

                           Comparable Company Analysis
                           ($ in thousands, except per
                                   share data)


                                                                                                    

                                                               VALUATION
       Com-               Price            EPS(1)           CY   CY                                   Income Statement Data (1)
       pany              52 Week    %of          CY   CY   LTM  2002 2003  EV/    EV/   EV/  Price/   LTM     LTM     LTM    LTM
Ticker Name     10/21/02 Hi    Lo   high  LTM   2002 2003  P/E  P/E  P/E Revenue EBITDA EBIT  Book  Revenue  EBITDA   EBIT    NI

CAP  Creative
     Computer
     Applica-
     tions, Inc.$ 0.95  $1.75 $0.35 54.3% $0.13 $0.04 NA   7.3x 23.8x   NA  0.3x  2.7x  4.4x 0.9x   $7,462   $ 898   $  562   $ 413
     Inc.

HMSY Health
     Management
     Systems, Inc.3.99  5.55 1.61  71.9% (1.16)  NA   NA    NM    NA    NA  0.8x   NM   NM   1.5x   62,202 (16,438) (18,732)(20,801)

INTV Intervoice-
     Brite, Inc.  1.54 18.35 0.88   8.4% (2.72)(0.24) NA    NM    NM    NA  0.3x   NM   NM   1.3x  159,670 (50,719) (72,414)(63,427)

LANV LanVision
     System,
     Inc.         2.74  4.98 1.07  55.0% 0.10  0.06  NA  *27.4x *45.7x  NA  2.0x 7.1x 8.8x  *7.6x   12,433   3,535    2,866     978

MDRX Allscripts
     Healthcare
     Solutions,
     Inc.         3.08  6.67 1.60  46.2%(0.23) 0.37 0.08   NM    8.3x 38.5x 1.1x  NM    NM   1.3x   73,849 (29,139) (56,669) (8,970)

QSII Quality
     Systems,
      Inc.       19.42 19.65 10.95 98.8% 0.90  1.01 1.20 21.6x  19.2x 16.2x 2.0x 9.3x 10.5x  2.9x   45,820   9,660    8,614   5,636


TZIX TriZetto
     Group,
     Inc.         5.35  14.35 3.92 37.3%(0.56) 0.32 0.32   NM   16.7x 16.7x 0.7x 7.2x   NM   0.9x  245,289  25,315  (35,743)(26,811)



                  High            98.8%                 21.6x  19.2x 16.7x  2.0x 9.3x  10.5x  2.9x

                  Low              8.4%                  7.3x   8.3x 16.2x  0.3x 2.7x   4.4x  0.9x

                  Mean            53.1%                 14.4x  14.8x 16.5x  1.0x 6.6x   7.9x  1.5x

                  Median          54.3%                 14.4x  16.7x 16.5x  0.8x 7.2x   8.8x  1.3x





-----------------------------------
LTM = last twelve months,
NTM = next twelve months,
EV = enterprise value (market capitalization plus net debt)
NA = not available;
NM = not meaningful
*  Excluded as outlier (1) Excludes non-recurring and extraordinary items






                                                   Priviledged and Confidential

                           Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        

                                               Balance Sheet Data
                                 LT Debt  Shares     Book    Mkt Value    Net   Enterprise                    Margins
Ticker  Company Name           % Equity    Out.      Value   of Equity    Debt    Value       Gross   EBITDA    EBIT     NI


CAP    Creative Computer          0.00%   3,266     $ 3,639   $ 3,103    $ (641) $ 2,462      52.6%    12.0%     7.5%    5.5%
       Applications, Inc.

HMSY   Health Management
        Systems, Inc.             0.00%  18,295      47,792    72,996   (24,964)  48,032        NA       NM       NM      NM


INTV   Intervoice-Brite, Inc.    44.39%  34,077      40,075    52,479     3,166   55,645      28.7%      NM       NM      NM


LANV   LanVision Systems, Inc.   28.70%   8,945       3,245    24,519       618   25,137      63.3%    28.4%    23.1%    7.9%

MDRX   Allscripts
       Solutions, Inc.            0.00%  38,424      90,766   118,347   (38,528)  79,819      13.7%     NM       NM      NM


QSII   Quality Systems, Inc.      0.00%   6,123      41,713   118,908   (28,862)  90,046      54.9%    21.1%    18.8%   12.3%


TZIX   TriZetto Group, Inc.      11.87%  45,743     275,045   244,724   (62,044) 182,680      34.0%    10.3%     NM       NM


                                                                               High           63.3%    28.4%    23.1%    12.3%

                                                                                Low           13.7%    10.3%     7.5%     5.5%

                                                                                Mean          41.2%    18.0%    16.5%     8.6%

                                                                                Median        43.3%    16.6%    18.8%     7.9%


 
                                                    Priviledged and Confidential

                         Comparable Transaction Summary
                           Going Private Transactions
                        ($ in millions, except per share
                                      data)

                                                                                                        
                                                                                                Deal
                                                                                                Multiples       Deal Premiums
                                                                                                (LTM)          ---------------
                                                                          % of         Price   -----------              4 weeks
 Date       Date                                                         Shares  Deal   Per                1 day prior  prior to
Announced  Effective    Target         Acquiror       Deal Synopsis       Acq.   Size  Share   EPS  EBITDA  to announc. announc.
---------  ---------  -------------  --------------  ---------------     ------- ----  ------  ---  ------ -----------  --------
05/22/01   12/21/01   Quizno's Corp  Investor Group A management-led      32.0% $ 12.5 $ 8.50  NM    6.5x     14.9%       15.2%
                                                    investor group
                                                    acquired the
                                                    remaining 32% stake
                                                    that they did not
                                                    already own

05/30/01   09/06/01   Bacou USA Inc   Bacou SA      Bacou SA of France    29.0%  160.3  28.50 16.8x  7.9x      21.8%       11.3%
                                                    acquired the remain-
                                                    ing 29% stake in
                                                    Bacou USA Inc.


06/06/01   12/13/01   Liberty        Liberty Mutual Liberty Mutual        30.0%  536.0  33.70 16.3x 1.3x      24.8%        40.4%
                      Financial      Insurance Co.  acquired the remain-
                      Cos Inc                       ing 30% interest that
                                                    it did not already
                                                    own in Liberty
                                                    Financial Cos. Inc.

07/03/01   12/31/01   Electronic     Investor       A management-led      48.3%   2.7   0.26   NM    NM
                      Retailing Sys    Group        investor group
                      Intl                          acquired the
                                                    remaining 48.296%
                                                    stake thatit did
                                                    not already own.

08/01/01   01/18/02  National Home  Dwain Neumann   Dwain Neumann         36.5%   3.7  1.40  10.0x  6.5x    26.1%         33.3%
                     Centers Inc                    acquired the
                                                    remaining 36.51%
                                                    stake he did not
                                                    already own in
                                                    National Home
                                                    Centers Inc.

10/01/01   02/13/02  NCH Corp       Investor Group  An investor group     43.0% 121.5 52.50  12.7x  6.1x   34.0%          18.8%
                                                    acquired the
                                                    remaining 43% stake
                                                    that it did not
                                                    already own in NCH.

11/16/01   03/04/02 Ugly Duckling    Ernest C.      Ernest C. Garcia II   39.2%  17.0 3.53    NM    NM     41.8%          45.9%
                    Corp             Garcia II      acquired the
                                                    remaining 39.2%
                                                    interest, or 4.792
                                                    mil common shares,
                                                    that he did not
                                                    already own, in
                                                    Ugly Duckling Corp.

04/05/02  05/07/02 Century Builders New Century     New Century            9.5%   3.5 0.90  18.0x 28.6x
                   Group Inc.       Homebuilders    Builders Group Inc,
                                    Inc.            a unit of Century
                                                    Partners Group,
                                                    acquired the
                                                    remaining 9.5% stake
                                                    which it did not
                                                    already own in Century
                                                    Builders Group Inc.

04/18/02           Partsbase Inc    Investor Group  A management led      35.8%  6.9 1.41   NM     NM     28.2%           83.1%
                                                    investor group
                                                    definitively agreed
                                                    to acquire the
                                                    remaining 35.77%
                                                    interest that it
                                                    did not already own


05/16/02   08/19/02 Balanced Care    IPC Advisors   IPC Advisors SARL      6.7%  4.0  0.25   NM    NM     150.0%          150.0%
                     Corp             SARL          acquired the
                                                    remaining 46.706% stake
                                                    which it did not
                                                    already own in
                                                    Balanced Care Corp.


07/26/02            International     Samuel J.     The chairman of       20.0% 133.6 10.00   NM  7.4x     1.2%           29.9%
                    Specialty Prods   Heyman        International
                                                    Specialty
                                                    Products Inc.
                                                    made an unsolicited
                                                    bid to acquire the
                                                    remaining 20% stake
                                                    that he does
                                                    not already own.

                                                                                    High   18.0x 28.6x 150.0%  150.0%
                                                                                    Low    10.0x 1.3x    1.2%   11.3%
                                                                                    Mean   14.8x 9.2x   38.1%   47.5%
                                                                                    Median  0.0x 6.1x   26.1%   33.3%


08/05/02          Sandata           Investor Group  A management-led      26.8% $ 4.7 $ 1.91  16.0x  2.6x   282.0%      377.5%
                  Technologies, Inc                 investor group
                                                    agreed to acquire
                                                    the remaining 40%
                                                    interest that
                                                    it did not
                                                    already own.





                                                   Priviledged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                   Historical and Projected Income Statements
                     ($ in thousands, except per share data)




                                                                                  

                                                             For Year Ending May 31,        Projected for the Year Ending May 31,
                                                          2000       2001         2002        2003          2004         2005


 Sharp (Computerized information processing)             $5,629     $5,960       $5,963     $6,045         $6,347       $6,664
 Santrax (Telephone-based data collection)                7,366      7,562        7,691      8,183          8,592        9,022
 Outsource (Telephone infrastructure & outsourcing)       2,635      2,071          737        120            126          132
 Hardware / Software (Information technology)             2,358      2,170        2,837        332            349          366
 Other                                                      432        374          532        283            317          333
  Total Revenue                                         $18,420    $18,138      $17,760    $14,963        $15,731      $16,518
  Revenue Growth                                                      (1.5%)      (2.1%)     (15.7%)          5.1%         5.0%


 EBIT                                                     $269         $12          $375      $640           $764         $803
  EBIT margin                                              1.5%        0.1%          2.1%      4.3%           4.9%         4.9%

 EBITDA                                                 $2,654      $2,761        $2,215    $2,468         $2,872       $3,016
  EBITDA margin                                           14.4%       15.2%         12.5%     16.5%          18.3%        18.3%

 FCF (EBITDA less CAPEX)                               ($3,047)   ($1,034)         ($336)   $1,080         $1,484       $1,628
  FCF margin                                                NA         NA            NA       7.2%            9.4%         9.9%

 Net Income                                                $14         $5           $153     $440            $568         $605
  Net Income margin                                        0.1%       0.0%           0.9%     2.9%            3.6%         3.7%

 Diluted EPS                                             $0.01       $0.00         $0.06    $0.18           $0.23        $0.24




Notes:
2001 EBIT, EBITDA, NI and EPS exclude impairment of development
software and goodwill of $3.3 million and $0.2 million, respectively.
NI and EPS adjusted for tax effect of 37%

2003 and 2004 projections prepared by Sandata, 2005 projected by
Brean Murray & Co., Inc.


                                                       Privileged & Confidential

                           SANDATA TECHNOLOGIES, INC.
                      Two Year Stock Price/Volume Analysis
                             As of October 21, 2002

Date              High        Low         Volume
10/21/2002        1.801       1.8         500
10/18/2002        1.804       1.8         0
10/17/2002        1.804       1.8         600
10/16/2002        1.8         1.8         0
10/15/2002        1.8         1.8         0
10/14/2002        1.8         1.8         0
10/11/2002        1.8         1.8         6,000
10/10/2002        1.814       1.81        700
10/9/2002         1.8         1.8         0
10/8/2002         1.8         1.8         0
10/7/2002         1.8         1.8         4,000
10/4/2002         1.82        1.8         10,000
10/3/2002         1.8         1.8         10,600
10/2/2002         1.801       1.8         3,400
10/1/2002         1.81        1.8         0
9/30/2002         1.81        1.8         3,900
9/27/2002         1.801       1.801       200
9/26/2002         1.8         1.78        9,800
9/25/2002         1.801       1.8         0
9/24/2002         1.801       1.8         900
9/23/2002         1.801       1.8         0
9/20/2002         1.801       1.8         5,600
9/19/2002         1.8         1.78        0
9/18/2002         1.8         1.78        0
9/17/2002         1.8         1.78        0
9/16/2002         1.8         1.78        0
9/13/2002         1.8         1.78        10,500
9/12/2002         1.8         1.8         12,000
9/11/2002         1.793       1.78        0
9/10/2002         1.793       1.78        2,600
9/9/2002          1.79        1.79        100
9/6/2002          1.781       1.781       100
9/5/2002          1.83        1.72        0
9/4/2002          1.83        1.72        1,100
9/3/2002          1.85        1.71        39,700
8/30/2002         1.27        1.27        0
8/29/2002         1.27        1.27        0
8/28/2002         1.27        1.27        100
8/27/2002         1.271       1.271       0
8/26/2002         1.271       1.271       0
8/23/2002         1.271       1.271       0
8/22/2002         1.271       1.271       0
8/21/2002         1.271       1.271       100
8/20/2002         1.28        1.28        0
8/19/2002         1.28        1.28        2,500
8/16/2002         1.351       1.25        2,500
8/15/2002         1.36        1.35        5,500
8/14/2002         1.36        1.35        8,600
8/13/2002         1.45        1.35        2,300
8/12/2002         1.49        1.38        1,700
8/9/2002          1.45        1.29        2,200
8/8/2002          1.5         1.26        7,500
8/7/2002          1.3         1.24        36,500
8/6/2002          1.5         1.171       24,700
8/5/2002          0.5         0.5         0
8/2/2002          0.5         0.5         700
8/1/2002          0.93        0.47        3,900
7/31/2002         0.311       0.311       0
7/30/2002         0.311       0.311       0
7/29/2002         0.311       0.311       200
7/26/2002         0.37        0.35        200
7/25/2002         0.55        0.55        200
7/24/2002         0.55        0.55        0
7/23/2002         0.55        0.55        0
7/22/2002         0.55        0.55        0
7/19/2002         0.55        0.55        0
7/18/2002         0.55        0.55        0
7/17/2002         0.55        0.55        0
7/16/2002         0.55        0.55        100
7/15/2002         0.799       0.799       0
7/12/2002         0.799       0.799       0
7/11/2002         0.799       0.799       100
7/10/2002         0.4         0.4         200
7/9/2002          0.55        0.4         5,100
7/8/2002          0.53        0.53        0
7/5/2002          0.53        0.53        0
7/3/2002          0.53        0.53        0
7/2/2002          0.53        0.53        0
7/1/2002          0.53        0.53        0
6/28/2002         0.53        0.53        0
6/27/2002         0.53        0.53        200
6/26/2002         0.68        0.55        6,300
6/25/2002         0.68        0.68        0
6/24/2002         0.68        0.68        1,200
6/21/2002         0.68        0.68        0
6/20/2002         0.68        0.68        0
6/19/2002         0.68        0.68        0
6/18/2002         0.68        0.68        0
6/17/2002         0.68        0.68        0
6/14/2002         0.68        0.68        4,600
6/13/2002         0.7         0.7         500
6/12/2002         0.701       0.701       100
6/11/2002         0.95        0.7         0
6/10/2002         0.95        0.7         0
6/7/2002          0.95        0.7         0
6/6/2002          0.95        0.7         400
6/5/2002          0.8         0.7         0
6/4/2002          0.8         0.7         0
6/3/2002          0.8         0.7         0
5/31/2002         0.8         0.7         0
5/30/2002         0.8         0.7         200
5/29/2002         0.65        0.65        0
5/28/2002         0.65        0.65        0
5/24/2002         0.65        0.65        0
5/23/2002         0.65        0.65        0
5/22/2002         0.65        0.65        0
5/21/2002         0.65        0.65        0
5/20/2002         0.65        0.65        0
5/17/2002         0.65        0.65        0
5/16/2002         0.65        0.65        0
5/15/2002         0.65        0.65        0
5/14/2002         0.65        0.65        0
5/13/2002         0.65        0.65        0
5/10/2002         0.65        0.65        0
5/9/2002          0.65        0.65        0
5/8/2002          0.65        0.65        0
5/7/2002          0.65        0.65        0
5/6/2002          0.65        0.65        0
5/3/2002          0.65        0.65        0
5/2/2002          0.65        0.65        100
5/1/2002          0.89        0.44        0
4/30/2002         0.89        0.44        0
4/29/2002         0.89        0.44        0
4/26/2002         0.89        0.44        0
4/25/2002         0.89        0.44        2,700
4/24/2002         1           0.91        2,700
4/23/2002         0.91        0.91        0
4/22/2002         0.91        0.91        200
4/19/2002         0.91        0.91        0
4/18/2002         0.91        0.91        100
4/17/2002         1           0.92        0
4/16/2002         1           0.92        0
4/15/2002         1           0.92        0
4/12/2002         1           0.92        300
4/11/2002         0.91        0.91        0
4/10/2002         0.91        0.91        0
4/9/2002          0.91        0.91        0
4/8/2002          0.91        0.91        0
4/5/2002          0.91        0.91        1,800
4/4/2002          1.01        0.95        0
4/3/2002          1.01        0.95        0
4/2/2002          1.01        0.95        4,400
4/1/2002          1.02        1.02        0
3/28/2002         1.02        1.02        0
3/27/2002         1.02        1.02        0
3/26/2002         1.02        1.02        0
3/25/2002         1.02        1.02        100
3/22/2002         1.019       1.019       100
3/21/2002         1.01        1.01        0
3/20/2002         1.01        1.01        0
3/19/2002         1.01        1.01        0
3/18/2002         1.01        1.01        0
3/15/2002         1.01        1.01        0
3/14/2002         1.01        1.01        0
3/13/2002         1.01        1.01        0
3/12/2002         1.01        1.01        0
3/11/2002         1.01        1.01        0
3/8/2002          1.01        1.01        0
3/7/2002          1.01        1.01        0
3/6/2002          1.01        1.01        0
3/5/2002          1.01        1.01        800
3/4/2002          1.01        1.01        1,100
3/1/2002          1.11        1.11        0
2/28/2002         1.11        1.11        0
2/27/2002         1.11        1.11        0
2/26/2002         1.11        1.11        0
2/25/2002         1.11        1.11        700
2/22/2002         1.01        1.01        500
2/21/2002         1.1         1.1         0
2/20/2002         1.1         1.1         1,500
2/19/2002         1.4         0.8         0
2/15/2002         1.4         0.8         0
2/14/2002         1.4         0.8         8,300
2/13/2002         1.35        0.75        2,500
2/12/2002         1.45        1.45        0
2/11/2002         1.45        1.45        500
2/8/2002          1.36        1.36        0
2/7/2002          1.36        1.36        0
2/6/2002          1.36        1.36        0
2/5/2002          1.36        1.36        0
2/4/2002          1.36        1.36        200
2/1/2002          1.35        1.35        100
1/31/2002         1.51        1.5         0
1/30/2002         1.51        1.5         0
1/29/2002         1.51        1.5         0
1/28/2002         1.51        1.5         0
1/25/2002         1.51        1.5         0
1/24/2002         1.51        1.5         0
1/23/2002         1.51        1.5         0
1/22/2002         1.51        1.5         0
1/18/2002         1.51        1.5         2,400
1/17/2002         1.61        1.61        0
1/16/2002         1.61        1.61        0
1/15/2002         1.61        1.61        0
1/14/2002         1.61        1.61        500
1/11/2002         1.67        1.52        0
1/10/2002         1.67        1.52        3,100
1/9/2002          1.55        1.15        0
1/8/2002          1.55        1.15        0
1/7/2002          1.55        1.15        17,700
1/4/2002          1           1           300
1/3/2002          1           1           0
1/2/2002          1           1           500
12/31/2001        0.89        0.83        4,300
12/28/2001        0.89        0.89        0
12/27/2001        0.89        0.89        0
12/26/2001        0.89        0.89        0
12/24/2001        0.89        0.89        200
12/21/2001        0.9         0.9         2,300
12/20/2001        1           0.95        1,700
12/19/2001        0.92        0.9         1,500
12/18/2001        0.92        0.92        100
12/17/2001        0.92        0.92        500
12/14/2001        0.92        0.92        500
12/13/2001        0.92        0.92        0
12/12/2001        0.92        0.92        0
12/11/2001        0.92        0.92        200
12/10/2001        0.95        0.93        300
12/7/2001         1           0.92        0
12/6/2001         1           0.92        0
12/5/2001         1           0.92        800
12/4/2001         0.91        0.91        0
12/3/2001         0.91        0.91        100
11/30/2001        0.95        0.95        0
11/29/2001        0.95        0.95        700
11/28/2001        0.93        0.93        400
11/27/2001        1           0.9         1,000
11/26/2001        0.86        0.85        1,200
11/23/2001        0.9         0.84        0
11/21/2001        0.9         0.84        2,200
11/20/2001        0.96        0.96        0
11/19/2001        0.96        0.96        0
11/16/2001        0.96        0.96        0
11/15/2001        0.96        0.96        0
11/14/2001        0.96        0.96        0
11/13/2001        0.96        0.96        0
11/12/2001        0.96        0.96        0
11/9/2001         0.96        0.96        0
11/8/2001         0.96        0.96        2,100
11/7/2001         0.89        0.89        0
11/6/2001         0.89        0.89        0
11/5/2001         0.89        0.89        0
11/2/2001         0.89        0.89        0
11/1/2001         0.89        0.89        0
10/31/2001        0.89        0.89        0
10/30/2001        0.89        0.89        0
10/29/2001        0.89        0.89        100
10/26/2001        0.92        0.89        0
10/25/2001        0.92        0.89        108,200
10/24/2001        1.045       0.9         0
10/23/2001        1.045       0.9         0
10/22/2001        1.045       0.9         0
10/19/2001        1.045       0.9         13,100
10/18/2001        0.98        0.98        2,000
10/17/2001        0.92        0.91        0
10/16/2001        0.92        0.91        0
10/15/2001        0.92        0.91        0
10/12/2001        0.92        0.91        0
10/11/2001        0.92        0.91        0
10/10/2001        0.92        0.91        0
10/9/2001         0.92        0.91        0
10/8/2001         0.92        0.91        0
10/5/2001         0.92        0.91        0
10/4/2001         0.92        0.91        0
10/3/2001         0.92        0.91        0
10/2/2001         0.92        0.91        0
10/1/2001         0.92        0.91        2,400
9/28/2001         0.92        0.92        1,500
9/27/2001         0.95        0.93        0
9/26/2001         0.95        0.93        0
9/25/2001         0.95        0.93        0
9/24/2001         0.95        0.93        0
9/21/2001         0.95        0.93        3,000
9/20/2001         0.93        0.91        800
9/19/2001         1.01        0.91        2,000
9/18/2001         1.18        1.05        2,000
9/17/2001         1.18        1.18        400
9/10/2001         1.18        1.18        1,500
9/7/2001          1.18        1.18        0
9/6/2001          1.18        1.18        200
9/5/2001          1.15        1.06        2,000
9/4/2001          1.13        1.13        0
8/31/2001         1.13        1.13        0
8/30/2001         1.13        1.13        0
8/29/2001         1.13        1.13        0
8/28/2001         1.13        1.13        0
8/27/2001         1.13        1.13        0
8/24/2001         1.13        1.13        0
8/23/2001         1.13        1.13        0
8/22/2001         1.13        1.13        0
8/21/2001         1.13        1.13        0
8/20/2001         1.13        1.13        0
8/17/2001         1.13        1.13        500
8/16/2001         1.15        1.1         0
8/15/2001         1.15        1.1         14,700
8/14/2001         1.1         1.1         1,000
8/13/2001         1.13        1.13        0
8/10/2001         1.13        1.13        3,600
8/9/2001          1.07        1.07        0
8/8/2001          1.07        1.07        300
8/7/2001          1.21        1.15        0
8/6/2001          1.21        1.15        0
8/3/2001          1.21        1.15        0
8/2/2001          1.21        1.15        19,200
8/1/2001          1.2         1.2         1,000
7/31/2001         1.16        1.15        1,500
7/30/2001         1.07        1.07        0
7/27/2001         1.07        1.07        0
7/26/2001         1.07        1.07        0
7/25/2001         1.07        1.07        0
7/24/2001         1.07        1.07        0
7/23/2001         1.07        1.07        600
7/20/2001         1.08        1.08        0
7/19/2001         1.08        1.08        0
7/18/2001         1.08        1.08        0
7/17/2001         1.08        1.08        0
7/16/2001         1.08        1.08        100
7/13/2001         1.09        1.09        0
7/12/2001         1.09        1.09        200
7/11/2001         1.09        1.09        0
7/10/2001         1.09        1.09        100
7/9/2001          1.08        1.08        2,500
7/6/2001          1.293       1.23        0
7/5/2001          1.293       1.23        0
7/3/2001          1.293       1.23        0
7/2/2001          1.293       1.23        0
6/29/2001         1.293       1.23        0
6/28/2001         1.293       1.23        0
6/27/2001         1.293       1.23        0
6/26/2001         1.293       1.23        0
6/25/2001         1.293       1.23        0
6/22/2001         1.293       1.23        0
6/21/2001         1.293       1.23        0
6/20/2001         1.293       1.23        6,400
6/19/2001         1.3         1.3         0
6/18/2001         1.3         1.3         1,000
6/15/2001         1.35        1.3         5,000
6/14/2001         1.285       1.25        0
6/13/2001         1.285       1.25        0
6/12/2001         1.285       1.25        0
6/11/2001         1.285       1.25        0
6/8/2001          1.285       1.25        0
6/7/2001          1.285       1.25        0
6/6/2001          1.285       1.25        0
6/5/2001          1.285       1.25        0
6/4/2001          1.285       1.25        10,500
6/1/2001          1.24        1.21        0
5/31/2001         1.24        1.21        0
5/30/2001         1.24        1.21        0
5/29/2001         1.24        1.21        0
5/25/2001         1.24        1.21        0
5/24/2001         1.24        1.21        10,800
5/23/2001         1.2         1.2         500
5/22/2001         1.18        1.18        500
5/21/2001         1.17        1.12        3,900
5/18/2001         1.19        1.1         2,200
5/17/2001         1.07        1.07        1,000
5/16/2001         1.06        1.06        0
5/15/2001         1.06        1.06        0
5/14/2001         1.06        1.06        0
5/11/2001         1.06        1.06        0
5/10/2001         1.06        1.06        0
5/9/2001          1.06        1.06        2,800
5/8/2001          1.06        0.96        9,200
5/7/2001          1.02        1           0
5/4/2001          1.02        1           0
5/3/2001          1.02        1           0
5/2/2001          1.02        1           1,600
5/1/2001          1.09        1.07        400
4/30/2001         1.09        1.09        0
4/27/2001         1.09        1.09        0
4/26/2001         1.09        1.09        0
4/25/2001         1.09        1.09        0
4/24/2001         1.09        1.09        0
4/23/2001         1.09        1.09        1,000
4/20/2001         1.07        1.06        0
4/19/2001         1.07        1.06        0
4/18/2001         1.07        1.06        3,200
4/17/2001         1.15        0.86        6,100
4/16/2001         1.24        1.14        1,700
4/12/2001         1.28        1.2         0
4/11/2001         1.28        1.2         700
4/10/2001         1.188       1.188       0
4/9/2001          1.188       1.188       0
4/6/2001          1.188       1.188       100
4/5/2001          1.188       1.188       2,000
4/4/2001          1.188       1.188       0
4/3/2001          1.188       1.188       0
4/2/2001          1.188       1.188       500
3/30/2001         1.25        1.25        0
3/29/2001         1.25        1.25        0
3/28/2001         1.25        1.25        0
3/27/2001         1.25        1.25        0
3/26/2001         1.25        1.25        300
3/23/2001         1.25        1.25        200
3/22/2001         1.25        1.25        0
3/21/2001         1.25        1.25        0
3/20/2001         1.25        1.25        500
3/19/2001         1.203       1.188       300
3/16/2001         1.188       1.188       0
3/15/2001         1.188       1.188       0
3/14/2001         1.188       1.188       3,100
3/13/2001         1.375       1.188       0
3/12/2001         1.375       1.188       700
3/9/2001          1.188       1.188       0
3/8/2001          1.188       1.188       3,000
3/7/2001          1.188       1.188       0
3/6/2001          1.188       1.188       200
3/5/2001          1.188       1.188       0
3/2/2001          1.188       1.188       0
3/1/2001          1.188       1.188       200
2/28/2001         1.188       1.188       0
2/27/2001         1.188       1.188       1,200
2/26/2001         1.203       1.188       400
2/23/2001         1.313       1.313       0
2/22/2001         1.313       1.313       0
2/21/2001         1.313       1.313       1,000
2/20/2001         1.156       1.156       300
2/16/2001         1.188       1.125       7,000
2/15/2001         1.219       1.156       51,000
2/14/2001         1.094       1.063       0
2/13/2001         1.094       1.063       10,500
2/12/2001         1.063       1.063       1,000
2/9/2001          1.078       1.063       200
2/8/2001          1.313       1           0
2/7/2001          1.313       1           51,800
2/6/2001          1.266       1.156       200
2/5/2001          1.031       1.031       0
2/2/2001          1.031       1.031       3,700
2/1/2001          1.375       1.031       0
1/31/2001         1.375       1.031       0
1/30/2001         1.375       1.031       0
1/29/2001         1.375       1.031       300
1/26/2001         1.375       1.375       0
1/25/2001         1.375       1.375       100
1/24/2001         1           1           0
1/23/2001         1           1           2,000
1/22/2001         1.25        0.938       9,000
1/19/2001         1.063       0.906       10,500
1/18/2001         1.125       1.063       0
1/17/2001         1.125       1.063       0
1/16/2001         1.125       1.063       0
1/12/2001         1.125       1.063       19,000
1/11/2001         1           1           200
1/10/2001         1.031       1.031       0
1/9/2001          1.031       1.031       1,000
1/8/2001          1.063       1.063       100
1/5/2001          1.031       1.031       0
1/4/2001          1.031       1.031       0
1/3/2001          1.031       1.031       0
1/2/2001          1.031       1.031       100
12/29/2000        1.406       1           36,000
12/28/2000        1.016       1           42,300
12/27/2000        1.063       1           72,000
12/26/2000        1.063       1.063       9,500
12/22/2000        1.078       1.063       0
12/21/2000        1.078       1.063       400
12/20/2000        1.063       1.063       11,300
12/19/2000        1.063       1.063       800
12/18/2000        1.078       1.063       4,800
12/15/2000        1.063       1.063       0
12/14/2000        1.063       1.063       6,700
12/13/2000        1.063       1.063       17,200
12/12/2000        1.063       1.063       0
12/11/2000        1.063       1.063       8,300
12/8/2000         1.094       1.063       10,400
12/7/2000         1.016       1.016       600
12/6/2000         1.063       1           2,000
12/5/2000         1.125       0.875       6,500
12/4/2000         0.844       0.844       800
12/1/2000         0.875       0.844       7,800
11/30/2000        0.969       0.531       11,600
11/29/2000        0.875       0.875       0
11/28/2000        0.875       0.875       6,800
11/27/2000        0.984       0.906       18,700
11/24/2000        0.938       0.938       600
11/22/2000        1           1           0
11/21/2000        1           1           0
11/20/2000        1           1           0
11/17/2000        1           1           4,800
11/16/2000        1           1           100
11/15/2000        0.953       0.953       0
11/14/2000        0.953       0.953       0
11/13/2000        0.953       0.953       200
11/10/2000        1.031       1.031       3,100
11/9/2000         1.063       1           0
11/8/2000         1.063       1           1,400
11/7/2000         1.031       1.031       0
11/6/2000         1.031       1.031       0
11/3/2000         1.031       1.031       300
11/2/2000         1.063       1.031       0
11/1/2000         1.063       1.031       3,700
10/31/2000        1.031       1           2,800
10/30/2000        1.125       1.125       700
10/27/2000        1           1           0
10/26/2000        1           1           0
10/25/2000        1           1           0
10/24/2000        1           1           0
10/23/2000        1           1           200






                                                     Privileged and Confidential



                           SANDATA TECHNOLOGIES, INC.
                     Trading Frequency Distribution Analysis
                        Based on Daily Trading Data from
                      October 22, 2000 to October 21, 2002





                                                                                              

                                          1 Year Price / Volume                                    2 Year Price/Volume
  Common Share Prices ($)         October 22, 2001 to October 21, 2002                     October 22, 2000 to October 21, 2002

Greater              But
Than or              Less       Shares                          Cumulative                    Shares              Cumulative
Equal to             Than       Traded                Frequency Frequency                     Traded    Frequency Frequency

0.05                 0.15           0                  0.0%      0.0%                              0      0.0%     0.0%
0.15                 0.25           0                  0.0%      0.0%                              0      0.0%     0.0%
0.25                 0.35         200                  0.0%      0.0%                            200      0.0%     0.0%
0.35                 0.45       5,500                  1.3%      1.4%                          5,500      0.5%     0.5%
0.45                 0.55       4,800                  1.1%      2.5%                          4,800      0.5%     1.0%
0.55                 0.65       6,600                  1.6%      4.1%                         18,200      1.8%     2.8%
0.65                 0.75       7,100                  1.7%      5.8%                          7,100      0.7%     3.4%
0.75                 0.85      17,400                  4.1%      9.9%                         26,000      2.5%     6.0%
0.85                 0.95     122,800                 29.3%     39.2%                        177,800     17.1%    23.1%
0.95                 1.05      14,700                  3.5%     42.7%                        140,100     13.5%    36.6%
1.05                 1.15       2,200                  0.5%     43.2%                        271,800     26.2%    62.7%
1.15                 1.25           0                  0.0%     43.2%                        113,900     11.0%    73.7%
1.25                 1.35      68,600                 16.3%     59.5%                         98,200      9.5%    83.2%
1.35                 1.45      16,700                  4.0%     63.5%                         21,800      2.1%    85.2%
1.45                 1.55      29,800                  7.1%     70.6%                         29,800      2.9%    88.1%
1.55                 1.65       3,600                  0.9%     71.5%                          3,600      0.3%    88.5%
1.65                 1.75           0                  0.0%     71.5%                              0      0.0%    88.5%
1.75                 1.85     119,800                 28.5%    100.0%                        119,800     11.5%   100.0%
1.85                 1.95           0                  0.0%    100.0%                              0      0.0%   100.0%
1.95                 2.05           0                  0.0%    100.0%                              0      0.0%   100.0%
2.05                 2.15           0                  0.0%    100.0%                              0      0.0%   100.0%
2.15                 2.25           0                  0.0%    100.0%                              0      0.0%   100.0%
2.25                 2.35           0                  0.0%    100.0%                              0      0.0%   100.0%
Totals                        419,800                100.0%                                1,038,600    100.0%

Average Shares Outstanding        2,494,175                                                     2,506,475
Total as a % of shares               16.8%                                                         41.4%





                            BREAN MURRAY & CO., INC.
                                  570 Lexington
                                     Avenue
                             New York, NY 10022-6822

                                  212/702-6500
                                  www.bmur.com


October 28, 2002

Board of Directors
Sandata Technologies, Inc.
26 Harbor Park Drive
Port Washington, NY 11050

Dear Sirs:

     We  understand  that Sandata  Technologies,  Inc.,  a Delaware  corporation
("Sandata"),   intends  to  enter  into  an   Agreement   and  Plan  of  Merger,
substantially in the form of the draft dated October 25, 2002 (the "Agreement"),
among Sandata  Acquisition Corp.  ("SAC"),  Bert E. Brodsky,  Hugh Freund,  Gary
Stoller,  and Sandata,  a copy of which has been  provided to us. The  Agreement
provides, among other things, for the merger (the "Proposed Transaction") of SAC
with and into Sandata, with Sandata continuing as the surviving corporation.

     The Agreement  provides,  among other things,  that at the "Effective Time"
(as such term is defined in the  Agreement),  each  outstanding  share of Common
Stock of Sandata, par value $.001 per share (the "Sandata Common Stock"),  other
than the shares of Sandata Common Stock held in the treasury of Sandata,  by any
of its  subsidiaries,  or by stockholders  validly  exercising their dissenter's
rights,  will be converted  into the right to receive $1.91 in cash (the "Merger
Consideration").  The terms of the  Proposed  Transaction  are set forth in more
detail in the Agreement.

     You have requested our opinion,  as investment  bankers, as to the fairness
from a financial  point of view,  to the  stockholders  of Sandata of the Merger
Consideration  to be paid by SAC for the Sandata  Common  Stock in the  Proposed
Transaction.  Our opinion addresses only the fairness, from a financial point of
view, of the Merger Consideration to be paid by SAC for the Sandata Common Stock
in the Proposed Transaction,  and we do not express any views on any other terms
of the Proposed Transaction.  Specifically,  we have not been requested to opine
as to, and our opinion does not in any manner  address,  the relative  merits of
the Proposed  Transaction as compared to any alternative  business strategy that
might exist for Sandata. We have been advised, and have taken into account, that
a majority of the outstanding  common stock of Sandata is beneficially  owned by
the  principals  of SAC,  who are  three of  Sandata's  directors  and the adult
children of one of its directors.

         In arriving at our opinion, we have:

   o reviewed publicly available historical financial and operating data
   concerning Sandata, including, without limitation, the Annual Reports on Form
   10-KSB for the fiscal years ended May 31, 2000, May 31, 2001, and May 31,
   2002;

   o reviewed projected financial information prepared by Sandata management;

   o reviewed publicly available information concerning Sandata;

   o conducted discussions with Sandata senior management concerning Sandata's
   historical financial results, business prospects and projected financial
   information;

   o reviewed the draft dated October 25, 2002, of the Agreement and related
   documents; for the purposes of this opinion, we have assumed that the final
   form thereof will not differ in any material respect from such draft; and

   o performed various financial analyses of Sandata, as we have deemed
   appropriate, including a discounted cash flow analysis; a comparable company
   analysis, and an internal rate of return to equity analysis.

     In arriving at our  opinion,  we have  assumed and relied upon the accuracy
and  completeness  of the  financial  and other  information  used by us without
assuming  any   responsibility   for  the   independent   verification  of  such
information,  and we have further  relied upon the assurances of Sandata that it
is not aware of any facts or  circumstances  that  would  make such  information
inaccurate or  misleading.  We have also assumed that  obtaining all  regulatory
approvals and third party consents required for the consummation of the Proposed
Transaction  will not have an adverse  impact on  Sandata or on the  anticipated
benefits  of  the  Proposed  Transaction.  We  have  further  assumed  that  the
transactions  described in the Agreement  will be consummated in a timely manner
without  waiver  or  modification  of any of the  material  terms or  conditions
contained  therein.  In  arriving  at our  opinion,  we have not  conducted  any
physical inspection of Sandata's properties or facilities,  and we have not made
or obtained any evaluation or appraisal of the assets or liabilities of Sandata.
Our  opinion  set forth  herein is  necessarily  based upon  financial,  market,
economic  and other  conditions  and  circumstances  as they exist and have been
disclosed on, and can be evaluated as of, the date hereof. We are not expressing
any  opinion  herein as to the  price at which the  Sandata  Common  Stock  will
actually trade at any time.

     We have acted as financial advisor to the Special Independent  Committee of
the Board of Directors of Sandata in  connection  with the Proposed  Transaction
and will receive a fee for such  services and for  rendering  this  opinion.  In
addition,  Sandata has agreed to indemnify us for certain  liabilities  that may
arise  out of the  rendering  of this  opinion.  In the  ordinary  course of our
business, we may actively trade the debt or equity securities of Sandata for our
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.

     Our opinion is provided  for the use and benefit of the Board of  Directors
of Sandata and is  rendered to the Board of  Directors  in  connection  with the
Proposed  Transaction.  This opinion is not  intended and does not  constitute a
recommendation to any stockholder of Sandata as to how a stockholder should vote
with respect to the Proposed  Transaction.  This opinion is not to be reprinted,
reproduced or disseminated  without our prior written consent,  and is not to be
quoted or referred  to, in whole or in part,  in  connection  with the  Proposed
Transaction  or any other matter;  provided that we understand and agree that if
this opinion is required pursuant to any applicable  statute or regulation to be
included  in  any  materials  to be  filed  with  the  Securities  and  Exchange
Commission  or mailed to the  shareholders  of  Sandata in  connection  with the
Proposed  Transaction,  the opinion may be reproduced in such  materials only in
its entirety,  and any  description of or reference to us or any summary of this
opinion in such  materials  must be in a form  acceptable to and consented to in
advance by us, such consent not to be unreasonably withheld. (TM) Based upon and
subject to the foregoing,  including the various assumptions,  limitations,  and
qualifications  set forth  herein,  we are of the opinion  that,  as of the date
hereof,  the  Merger  Consideration  to be paid by SAC in  connection  with  the
Proposed   Transaction  is  fair,  from  a  financial  point  of  view,  to  the
stockholders of Sandata.

                                                 Respectfully submitted,





                                                 Brean Murray & Co., Inc.



                                                                  APPENDIX C-2

                     PRESENTATION TO THE BOARD OF DIRECTORS

                           SANDATA TECHNOLOGIES, INC.

                                AUGUST 27, 2002

                                  BREAN MURRAY



                                                       Privileged & Confidential

                           Sandata Technologies, Inc.


                                Table of Contents
                                                                         Section
Summary                                                                      1
 Transation Overview
 Valuation Analysis
 Recommendations
Valuation based on Discounted Cash Flow Analysis.............................2
Valuation based on Comparable Company Analysis...............................3
IRR Analysis (as private company)............................................4

Exhibits
A. Trading Frequency Distribution Analysis





                                     SUMMARY

Transaction Overview

     On  August  5,  2002,  an  Investor  group  led by Bert E.  Brodsky,  Chief
Executive  Officer of  Sandata  ("Investor  Group"),  offered  to  purchase  all
outstanding common shares of the Company at a price of $1.50/share.

Company Situation (pre-announcement):

     -   Company is ignored by public financial markets
     -   Stock price is depressed; liquidity nominal

Shares Outstanding (8/2/02):             $2,481,808
Stock Price (8/2/02):                     $     0.50
                                          ----------
   Equity Value:                          $1,240,904
    + LT Debt (5/31/02)                    4,500,000
    - Cash (5/31/02)                      (1,630,617)
                                          ----------
   Enterprise Value:                      $4,110,287

Company Situation (post-annoucement):

Shares Outstanding (8/2/02)                     2,481,808
Options/warrants "in-the-money"                   747,000
Cash Received from exercise:                     $733,905 (520,500* $1.41)
                                                 $296,715 (226,500 *$1.31)
                                                 ---------
                                               $1,030,620

Shares assumed repurchased at $1.50/share:       (687,080)
  Net new shares:                                  59,920
                                                 --------
Shares outstanding, Treasury Stock Method       2,541,728

Shares owned by Mr. Brodsky
  (per draft 2002 10K)                          1,302,957
Additional shares, Treasury Stock Method           47,290
        Total:                                  1,350,247

Shares available to be repurchased:             1,191,481
        %of oustanding:                             46.9%

Proceeds to Sandata shareholders                $1,787,222 (1,191,481 shares at
                                                                $1.50/share)
Valuation Analysis:
Discounted Cash Flow Analysis (Section 2)

        - Most appropriate company valuation method
        - Discount Rate assumed at 20%.  Derived from:
                - The company's estimated cost of capital; and
                - Its reliance on government funding

        - Terminal Multiple of EBITDA of 4x.  Appropriate multiple due to:
                - Historically slow growth
                - No growth catalysts

                DCF Value: $2.39/share (pre-discount)

                Discounts applied:
                Majority Owner discount: 20%

                DCF Value, Net: $1.91/share

Comparable Company Analysis (Section 3)

        - Selected and analyzed eight (8) companies that we deemed relatively
            similar to the company

        - Compared valuation metrics, applied Majority Owner discount

                Median Results: $2.36/share (post-discount)

RECOMMENDATION

     We believe that a  counteroffer  of $2.00/share  is fair,  appropriate  and
reasonable.

          - At $2.00/share,  the transaction value would increase by $595,740 to
     $2,382,962.

          - This  purchase  price  will allow the  Investor  Group to  receive
     an estimated IRR of 27.1% or more than 2x their investment in 3 years.


                                                     Privileged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                          Valuation Analysis of Equity
                     Based on Discounted Cash Flow Analysis
                     ($ in thousands, except per share data)

                                                                                            

                                                  Net Present Value of Equity per Share of Common Stock (1), (2)
                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $1.230        $2.029       $2.827      $3.626     $4.425
17.5%                                                         $1.098        $1.849       $2.601      $3.352     $4.104
20.0%                                                         $0.976        $1.684       $2.392      $3.100     $3.807
22.5%                                                         $0.863        $1.531       $2.198      $2.866     $3.534
25.0%                                                         $0.758        $1.389       $2.019      $2.650     $3.280


                                                 Net Present Value of Equity per Share of Common Stock (1), (2)
                                                                           DISCOUNTED 20% FOR MAJORITY OWNER

                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $0.984        $1.623       $2.262      $2.901     $3.540
17.5%                                                         $0.878        $1.480       $2.081      $2.682     $3.283
20.0%                                                         $0.781        $1.347       $1.913      $2.480     $3.046
22.5%                                                         $0.690        $1.225       $1.759      $2.293     $2.827
25.0%                                                         $0.607        $1.111       $1.615      $2.120     $2.624




(1) Represents NPV of cashflows plus NPV of the Terminal Value less net long
    term debt of $2.87 million. NPV values as of August 1, 2002.
2)  Based on 2,541,728 shares outstanding, Treasury Stock Method.




                                                   Priviledged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                   Historical and Projected Income Statements
                     ($ in thousands, except per share data)




                                                                                  

                                                             For Year Ending May 31,        Projected for the Year Ending May 31,
                                                          2000       2001         2002        2003          2004         2005


 Sharp (Computerized information processing)             $5,629     $5,960       $5,963     $6,045         $6,347       $6,664
 Santrax (Telephone-based data collection)                7,366      7,562        7,691      8,183          8,592        9,022
 Outsource (Telephone infrastructure & outsourcing)       2,635      2,071          737        120            126          132
 Hardware / Software (Information technology)             2,358      2,170        2,837        332            349          366
 Other                                                      432        374          532        283            317          333
  Total Revenue                                         $18,420    $18,138      $17,760    $14,963        $15,731      $16,518
  Revenue Growth                                                      (1.5%)      (2.1%)     (15.7%)          5.1%         5.0%


 EBIT                                                     $269         $12          $375      $640           $764         $803
  EBIT margin                                              1.5%        0.1%          2.1%      4.3%           4.9%         4.9%

 EBITDA                                                 $2,654      $2,761        $2,215    $2,468         $2,872       $3,016
  EBITDA margin                                           14.4%       15.2%         12.5%     16.5%          18.3%        18.3%

 FCF (EBITDA less CAPEX)                               ($3,047)   ($1,034)         ($336)   $1,080         $1,484       $1,628
  FCF margin                                                NA         NA            NA       7.2%            9.4%         9.9%

 Net Income                                                $14         $5           $153     $440            $568         $605
  Net Income margin                                        0.1%       0.0%           0.9%     2.9%            3.6%         3.7%

 Diluted EPS                                             $0.01       $0.00         $0.06    $0.18           $0.23        $0.24




Notes:
2001 EBIT, EBITDA, NI and EPS exclude impairment of development
software and goodwill of $3.3 million and $0.2 million, respectively.
NI and EPS adjusted for tax effect of 37%

2003 and 2004 projections prepared by Sandata, 2005 projected by
Brean Murray & Co., Inc.


                                                     Privileged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                     Pro-Forma Projected Net Free Cash Flow
                                   Statements
                                ($ in thousands)


                                                                                                  

                                                                        Projected for Year Ending May 31,
                                                                    2003                  2004                 2005

             EBIT                                                   $640                  $764                 $803
             Income Taxes on EBIT (0% due to loss carryforward)        0                     0                    0
                                                                   -----                  ----                 ----
             Tax Effected EBIT                                       640                   764                  803

             Depreciation                                          1,828                 2,108                2,213
             Decrease (Increase) in working capital accounts      (1,188)                  (55)                (251)
                                                                  ------                ------               ------
             Cash Flow From Operating Activities                   1,281                 2,817                2,765

             Capital Expenditures                                 (1,388)               (1,388)              (1,388)
                                                                  ------                ------               ------
             Net Free Cash Flow                                    ($107)               $1,429               $1,377
                                                                  ======                ======               ======



Notes:
2003 and 2004 projections prepared by Sandata, 2005 projected
by Brean Murray & Co., Inc.








                                                     Privileged and Confidential




                     Valuation of Sandata Technologies, Inc.
                      Based on Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        


                                                                                                                             20%
                                                             Sandata LTM    ($1.50)   Implied Median   Implied Median     Majority
                                   Comparable Companies      & Projected      Deal      Equity Value    Equity Value        Owner
                                    Low  High  Median            Results    Multiples     of Sandata     per Share        Discount
                                    ---  ----  ------        ------------   ---------   ------------   --------------  ------------

  Equity Value as a multiple of:

  LTM Net Income                  8.8x   20.4x   19.0x           $153          24.3 x        $2,907(1)      $1.17          $0.94

  2003 Net Income (3)             7.8x   28.8x   19.7x           $440           8.5 x        $8,663(1)      $3.49          $2.79

  Book Value                      1.0x    2.5x    1.1x          5,404           0.7 x        $5,965(1)      $2.40          $1.92



  Enterprise Value as a multiple of:


  LTM EBIT                        5.5x    8.8x    7.4x           $375          21.9 x         ($82)(1)(2)   $0.00          $0.00

  LTM EBITDA                      3.5x    8.9x    7.9x         $2,215           3.7 x       $14,520(1)(2)   $5.85          $4.68

  LTM Revenue                     0.4x    1.7x    1.0x        $17,760           0.5 x       $14,037(1)(2)   $5.66          $4.52



                                                                                        High                       $4.68

                                                                                        Low                        $0.00

                                                                                        Median Value               $2.36




LTM = Last Twelve Months
(1) Equals median multiple * LTM and projected results
(2) Values are adjusted for net debt of $2.87 million.
(3) Comparable company multiples based on calendar year 2003 EPS, Sandata net
     income amount projected for period ending May 31, 2003.





                                                    Priviledged and Confidential

                           Comparable Company Analysis
                           ($ in thousands, except per
                                   share data)


                                                                                                    

                                                               VALUATION
       Com-               Price            EPS(1)                CY   CY                              Income Statement Data (1)
       pany              52 Week    %of          CY   CY   LTM  2002 2003  EV/    EV/   EV/  Price/   LTM     LTM     LTM    LTM
Ticker pany      8/26/02 Hi    Lo   high  LTM   2002 2003  P/E  P/E  P/E Revenue EBITDA EBIT  Book  Revenue  EBITDA   EBIT    NI

CAP  Creative
     Computer
     Applica-
     tions, Inc. $ 1.15 $1.75 $0.35 65.7 $0.13 $0.04  NA   8.8x 28.8x  NA   0.4x 3.5x   5.5x  1.0x $ 7,462 $   898  $   562  $  413
     Inc.

HMSY Health
     Management
     Systems, Inc. 3.03  5.55  0.91 54.6 (1.16)  NA   NA   NM   NA     NA   0.5x   NM   NM    1.2x  62,202 (16,438) (18,732)(20,801)

INTV Intervoice-
     Brite, Inc.   1.66 18.35  0.88  9.0 (1.66)(0.24) NA   NM   NM     NA   0.4x   NM   NM    1.0x 188,546 (28,709) (52,957)(45,430)

KRON Kronos,      28.60 60.40 23.76 47.4  1.40  1.37 1.71 20.4x 20.9x 16.7x 1.6x 8.5x* 13.4x *3.7x 327,516  61,699   39,098  28,257
     Inc.

LANV LanVision
     System,
     Inc.          2.00  4.98  0.85 40.2  0.02  0.06 NA *100.0x*33.3x  NA   1.4x 5.6x   7.4x *5.9x  11,260   2,757    2,077     207

MDRX Allscript
     Healthcare
     Solutions,
     Inc.          2.89  6.67  1.60 43.3 (0.23) 0.37 0.08  NM    7.8x 36.1x 1.0x   NM     NM  1.2x  73,849 (29,139) (56,669) (8,970)

QSII Quality
     Systems,
      Inc.        17.10 18.00 10.10 95.0  0.90  1.01 1.20 19.0x 16.9x 14.3x 1.7x 7.9x   8.8x  2.5x  45,820   9,660    8,614   5,636


TZIX TriZetto
     Group,
     Inc.          6.30 14.35  4.10 43.9 (0.56) 0.32 0.32  NM   19.7x 19.7x 0.9x 8.9x    NM    1.0x 245,289 25,315  (35,743)(26,811)



                  High        95.0%                     20.4x  28.8x 36.1x  1.7x 8.9x   8.8x  2.5x

                  Low          9.0%                      8.8x   7.8x 14.3x  0.4x 3.5x   5.5x  1.0x

                  Mean        49.9%                     16.1x  18.8x 21.7x  1.0x 6.9x   7.3x  1.3x

                  Median      45.6%                     19.0x  19.7x 18.2x  1.0x 7.9x   7.4x  1.1x





-----------------------------------
LTM = last twelve months,
NTM = next twelve months,
EV = enterprise value (market capitalization plus net debt)
NA = not available;
NM = not meaningful
*  Excluded as outlier
(1) Excludes non-recurring and extraordinary items






                                                   Priviledged and Confidential

                           Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        

                                               Balance Sheet Data
                                  LT Debt   Shares    Book    Mkt Value    Net  Enterprise                    Margins
Ticker  Company Name            % Equity     Out.     Value   of Equity    Debt   Value       Gross   EBITDA    EBIT     NI


CAP    Creative Computer          0.00%   3,266     $ 3,639   $ 3,756   $ (641) $ 3,116      52.6%    12.0%     7.5%    5.5%
       Applications, Inc.

HMSY   Health Management
        Systems, Inc.             0.00%  18,295     47,792     55,433  (24,964)  30,469        NA       NM       NM      NM


INTV   Intervoice-Brite, Inc.    47.64%  34,047     55,326     56,518   12,931   69,449      36.1%      NM       NM      NM

KRON   Kronos, Inc.               0.00%  19,680    152,327    562,861  (37,576) 525,285      38.9%    18.8%    11.9%    8.6%


LANV   LanVision Systems, Inc.   25.22%   8,922      3,005     17,845   (2,400)  15,445      60.7%    24.5%    18.5%    1.8%

MDRX   Allscripts
       Solutions, Inc.            0.00%  38,424     90,766    111,046  (38,528)  72,518       13.7%     NM       NM      NM


QSII   Quality Systems, Inc.      0.00%   6,123     41,713    104,702  (28,862)  75,840       54.9%   21.1%   18.8%   12.3%


TZIX   TriZetto Group, Inc.      10.08%  45,743    275,045    288,180  (62,044) 226,136       34.0%   10.3%     NM       NM


                                                                             High             60.7%   24.5%   18.8%   12.3%

                                                                             Low              13.7%   10.3%    7.5%    1.8%

                                                                             Mean             41.6%   17.4%   14.2%    7.1%

                                                                             Median           38.9%   18.8%   15.2%    7.1%


 
                                                    Priviledged and Confidential

                         SANDATA TECHNOLOGIES, INC.
                           IRR - Private Equity Holders
                       (in thousands, except stock price)


                                                                                                        




        Deal Price                           $1.50           $1.75           $2.00           $2.25           $2.50

        Shares Outstanding                   2,542           2,542           2,542           2,542           2,542

        Sandata Equity Value                $3,813          $4,448          $5,083          $5,719          $6,354


Year    Cashflows(1)

2003    Projected net income                 $530            $530             $530            $530            $530

2004    Projected net income                 $658            $658             $658            $658            $658

2005    Projected net income                 $695            $695             $695            $695            $695

2005    Sale of Company(1)                $10,224         $10,224          $10,224         $10,224         $10,224


Internal Rate of Return to Equity (IRR)      38.0%          32.0%             27.1%           22.9%          19.3%


(1) Projected net income includes $90,000 of formerly public company costs.
(2) Sale  assumed at the end of 2005 at 4x  projected  EBITDA of $3.106  million
($3.106  million  plus  public  company  costs  of  $90,000).  Proceeds  reflect
repayment of $2.2 million of net debt. ($4.5 million less projected cash of $2.3
million)




                           SANDATA TECHNOLOGIES, INC.
       Historical and Projected Income Statements - For a Private Company
                    ADD BACK $90,000 OF PUBLIC COMPANY COSTS
                     ($ in thousands, except per share data)




                                                                                  

                                                             For Year Ending May 31,        Projected for the Year Ending May 31,
                                                          2000       2001         2002        2003          2004         2005


 Sharp (Computerized information processing)             $5,629     $5,960       $5,963     $6,045         $6,347       $6,664
 Santrax (Telephone-based data collection)                7,366      7,562        7,691      8,183          8,592        9,022
 Outsource (Telephone infrastructure & outsourcing)       2,635      2,071          737        120            126          132
 Hardware / Software (Information technology)             2,358      2,170        2,837        332            349          366
 Other                                                      432        374          532        283            317          333
  Total Revenue                                         $18,420    $18,138      $17,760    $14,963        $15,731      $16,518
  Revenue Growth                                                      (1.5%)       (2.1%)    (15.7%)          5.1%         5.0%


 EBIT                                                     $359        $102         $465       $730           $854         $893
  EBIT margin                                              2.0%        0.6%         2.6%       4.9%           5.4%         5.4%

 EBITDA                                                 $2,744      $2,851       $2,305     $2,558         $2,962       $3,016
  EBITDA margin                                           14.9%       15.7%        13.0%      17.1%          18.8%        18.8%

 FCF (EBITDA less CAPEX)                               ($2,957)      ($944)       ($246)    $1,170         $1,574       $1,718
  FCF margin                                                NA         NA            NA        7.8%          10.0%        10.4%

 Net Income                                               $104         $62         $243       $530           $658         $695
  Net Income margin                                        0.6%        0.3%         1.4%       3.5%           4.2%         4.2%

 Diluted EPS                                             $0.01       $0.02        $0.06      $0.21          $0.26        $0.28





                                                       APPENDIX C-3

                     PRESENTATION TO THE BOARD OF DIRECTORS

                           SANDATA TECHNOLOGIES, INC.

                                AUGUST 20, 2002

                                  BREAN MURRAY



                                                       Privileged & Confidential

                           Sandata Technologies, Inc.


                                Table of Contents
                                                                         Section
Summary                                                                      1
 Transation Overview
 Valuation Analysis
 Recommendation
Valuation based on Discounted Cash Flow Analysis.............................2
Valuation based on Comparable Company Analysis...............................3

Exhibits
A. Trading Frequency Distribution Analysis





                                     SUMMARY

Transaction Overview

     On  August  5,  2002,  an  Investor  group  led by Bert E.  Brodsky,  Chief
Executive Officer of Sandata,  offered to purchase all outstanding common shares
of the Company at a price of $1.50/share.

Company Situation (pre-announcement):

     -   Company is ignored by public financial markets
     -   Stock price is depressed; liquidity nominal
     -   The ratio of the company's market cap to its "annual public company
          costs" is excessive (represents 20-25% of the company's pre-
          announcement cap)


Shares Outstanding (8/2/02):             $2,481,808
Stock Price (8/2/02):                    $     0.50
                                          ----------
   Equity Value:                         $1,240,904
    + LT Debt (5/31/02)                   4,500,000
    - Cash (5/31/02)                     (1,630,617)
                                          ----------
   Enterprise Value:                     $4,110,287

Company Situation (post-annoucement):

Shares Outstanding (8/2/02)                     2,481,808
Options/warrants "in-the-money":                  747,000
Cash Received from exercise:                     $733,905 (520,500 *$1.41)
                                                 $296,715 (226,500 *$1.31)
                                                 ---------
                                               $1,030,620

Shares assumed repurchased at $1.50/share:       (687,080)
  Net new shares:                                  59,920
                                                 --------
Shares outstanding, Treasury Stock Method       2,541,728

Shares owned by Mr. Brodsky
  (per draft 2002 10K)                          1,302,957
Additional shares, Treasury Stock Method           47,290
        Total:                                  1,350,247

Shares available to be repurchased:             1,191,481
        %of oustanding:                             46.9%

Proceeds to Sandata shareholders                $1,787,222 (1,191,481 shares at
                                                                $1.50/share)
Valuation Analysis:
Discounted Cash Flow Analysis (Section 2):

        - Most appropriate company valuation method
        - Discount Rate assumed at 25%.  Derived from:
                - The company's estimated cost of capital; and
                - Its significant reliance on government funding

        - Terminal Multiple of EBITDA of 4x.  Appropriate multiple due to:
                - Historically slow growth
                - No growth catalysts

                DCF Value: $2.05/share (assumes efficient, liquid marketplace)

                Discounts applied:
                Majority Insider-owned discount: 20%
                Illiquidity discount: 20%

                DCF Value, Net: $1.23/share

Comparable Company Analysis (Section 3):

        - Selected and analyzed eight (8) companies that we deemed relatively
            similar to the company

        - Compared valuation metrics, applied discounts

                Median Results: $1.55/share.

RECOMMENDATION

     We believe that the offer of $1.50/share (200% premium to  pre-announcement
price) is  substantial  and is not  likely  to be  matched  by any other  bidder
(especially  since Mr. Brodsky would have to be bought out) or made available in
via the public markets, in terms of stock price.

     Shareholders  receive value of $1.50, or $1.8 million vs.  pre-announcement
value of $0.50, or $1.2 million.

                           Sandata Technologies, Inc.
                        2 year Stock Price/Volume Chart

Date              High        Low         Volume

8/16/2002         1.351       1.25        2,500
8/15/2002         1.36        1.35        5,500
8/14/2002         1.36        1.35        8,600
8/13/2002         1.45        1.35        2,300
8/12/2002         1.49        1.38        1,700
8/9/2002          1.45        1.29        2,200
8/8/2002          1.5         1.26        7,500
8/7/2002          1.3         1.24        36,500
8/6/2002          1.5         1.171       24,700
8/5/2002          0.5         0.5         0
8/2/2002          0.5         0.5         700
8/1/2002          0.93        0.47        3,900
7/31/2002         0.311       0.311       0
7/30/2002         0.311       0.311       0
7/29/2002         0.311       0.311       200
7/26/2002         0.37        0.35        200
7/25/2002         0.55        0.55        200
7/24/2002         0.55        0.55        0
7/23/2002         0.55        0.55        0
7/22/2002         0.55        0.55        0
7/19/2002         0.55        0.55        0
7/18/2002         0.55        0.55        0
7/17/2002         0.55        0.55        0
7/16/2002         0.55        0.55        100
7/15/2002         0.799       0.799       0
7/12/2002         0.799       0.799       0
7/11/2002         0.799       0.799       100
7/10/2002         0.4         0.4         200
7/9/2002          0.55        0.4         5,100
7/8/2002          0.53        0.53        0
7/5/2002          0.53        0.53        0
7/3/2002          0.53        0.53        0
7/2/2002          0.53        0.53        0
7/1/2002          0.53        0.53        0
6/28/2002         0.53        0.53        0
6/27/2002         0.53        0.53        200
6/26/2002         0.68        0.55        6,300
6/25/2002         0.68        0.68        0
6/24/2002         0.68        0.68        1,200
6/21/2002         0.68        0.68        0
6/20/2002         0.68        0.68        0
6/19/2002         0.68        0.68        0
6/18/2002         0.68        0.68        0
6/17/2002         0.68        0.68        0
6/14/2002         0.68        0.68        4,600
6/13/2002         0.7         0.7         500
6/12/2002         0.701       0.701       100
6/11/2002         0.95        0.7         0
6/10/2002         0.95        0.7         0
6/7/2002          0.95        0.7         0
6/6/2002          0.95        0.7         400
6/5/2002          0.8         0.7         0
6/4/2002          0.8         0.7         0
6/3/2002          0.8         0.7         0
5/31/2002         0.8         0.7         0
5/30/2002         0.8         0.7         200
5/29/2002         0.65        0.65        0
5/28/2002         0.65        0.65        0
5/24/2002         0.65        0.65        0
5/23/2002         0.65        0.65        0
5/22/2002         0.65        0.65        0
5/21/2002         0.65        0.65        0
5/20/2002         0.65        0.65        0
5/17/2002         0.65        0.65        0
5/16/2002         0.65        0.65        0
5/15/2002         0.65        0.65        0
5/14/2002         0.65        0.65        0
5/13/2002         0.65        0.65        0
5/10/2002         0.65        0.65        0
5/9/2002          0.65        0.65        0
5/8/2002          0.65        0.65        0
5/7/2002          0.65        0.65        0
5/6/2002          0.65        0.65        0
5/3/2002          0.65        0.65        0
5/2/2002          0.65        0.65        100
5/1/2002          0.89        0.44        0
4/30/2002         0.89        0.44        0
4/29/2002         0.89        0.44        0
4/26/2002         0.89        0.44        0
4/25/2002         0.89        0.44        2,700
4/24/2002         1           0.91        2,700
4/23/2002         0.91        0.91        0
4/22/2002         0.91        0.91        200
4/19/2002         0.91        0.91        0
4/18/2002         0.91        0.91        100
4/17/2002         1           0.92        0
4/16/2002         1           0.92        0
4/15/2002         1           0.92        0
4/12/2002         1           0.92        300
4/11/2002         0.91        0.91        0
4/10/2002         0.91        0.91        0
4/9/2002          0.91        0.91        0
4/8/2002          0.91        0.91        0
4/5/2002          0.91        0.91        1,800
4/4/2002          1.01        0.95        0
4/3/2002          1.01        0.95        0
4/2/2002          1.01        0.95        4,400
4/1/2002          1.02        1.02        0
3/28/2002         1.02        1.02        0
3/27/2002         1.02        1.02        0
3/26/2002         1.02        1.02        0
3/25/2002         1.02        1.02        100
3/22/2002         1.019       1.019       100
3/21/2002         1.01        1.01        0
3/20/2002         1.01        1.01        0
3/19/2002         1.01        1.01        0
3/18/2002         1.01        1.01        0
3/15/2002         1.01        1.01        0
3/14/2002         1.01        1.01        0
3/13/2002         1.01        1.01        0
3/12/2002         1.01        1.01        0
3/11/2002         1.01        1.01        0
3/8/2002          1.01        1.01        0
3/7/2002          1.01        1.01        0
3/6/2002          1.01        1.01        0
3/5/2002          1.01        1.01        800
3/4/2002          1.01        1.01        1,100
3/1/2002          1.11        1.11        0
2/28/2002         1.11        1.11        0
2/27/2002         1.11        1.11        0
2/26/2002         1.11        1.11        0
2/25/2002         1.11        1.11        700
2/22/2002         1.01        1.01        500
2/21/2002         1.1         1.1         0
2/20/2002         1.1         1.1         1,500
2/19/2002         1.4         0.8         0
2/15/2002         1.4         0.8         0
2/14/2002         1.4         0.8         8,300
2/13/2002         1.35        0.75        2,500
2/12/2002         1.45        1.45        0
2/11/2002         1.45        1.45        500
2/8/2002          1.36        1.36        0
2/7/2002          1.36        1.36        0
2/6/2002          1.36        1.36        0
2/5/2002          1.36        1.36        0
2/4/2002          1.36        1.36        200
2/1/2002          1.35        1.35        100
1/31/2002         1.51        1.5         0
1/30/2002         1.51        1.5         0
1/29/2002         1.51        1.5         0
1/28/2002         1.51        1.5         0
1/25/2002         1.51        1.5         0
1/24/2002         1.51        1.5         0
1/23/2002         1.51        1.5         0
1/22/2002         1.51        1.5         0
1/18/2002         1.51        1.5         2,400
1/17/2002         1.61        1.61        0
1/16/2002         1.61        1.61        0
1/15/2002         1.61        1.61        0
1/14/2002         1.61        1.61        500
1/11/2002         1.67        1.52        0
1/10/2002         1.67        1.52        3,100
1/9/2002          1.55        1.15        0
1/8/2002          1.55        1.15        0
1/7/2002          1.55        1.15        17,700
1/4/2002          1           1           300
1/3/2002          1           1           0
1/2/2002          1           1           500
12/31/2001        0.89        0.83        4,300
12/28/2001        0.89        0.89        0
12/27/2001        0.89        0.89        0
12/26/2001        0.89        0.89        0
12/24/2001        0.89        0.89        200
12/21/2001        0.9         0.9         2,300
12/20/2001        1           0.95        1,700
12/19/2001        0.92        0.9         1,500
12/18/2001        0.92        0.92        100
12/17/2001        0.92        0.92        500
12/14/2001        0.92        0.92        500
12/13/2001        0.92        0.92        0
12/12/2001        0.92        0.92        0
12/11/2001        0.92        0.92        200
12/10/2001        0.95        0.93        300
12/7/2001         1           0.92        0
12/6/2001         1           0.92        0
12/5/2001         1           0.92        800
12/4/2001         0.91        0.91        0
12/3/2001         0.91        0.91        100
11/30/2001        0.95        0.95        0
11/29/2001        0.95        0.95        700
11/28/2001        0.93        0.93        400
11/27/2001        1           0.9         1,000
11/26/2001        0.86        0.85        1,200
11/23/2001        0.9         0.84        0
11/21/2001        0.9         0.84        2,200
11/20/2001        0.96        0.96        0
11/19/2001        0.96        0.96        0
11/16/2001        0.96        0.96        0
11/15/2001        0.96        0.96        0
11/14/2001        0.96        0.96        0
11/13/2001        0.96        0.96        0
11/12/2001        0.96        0.96        0
11/9/2001         0.96        0.96        0
11/8/2001         0.96        0.96        2,100
11/7/2001         0.89        0.89        0
11/6/2001         0.89        0.89        0
11/5/2001         0.89        0.89        0
11/2/2001         0.89        0.89        0
11/1/2001         0.89        0.89        0
10/31/2001        0.89        0.89        0
10/30/2001        0.89        0.89        0
10/29/2001        0.89        0.89        100
10/26/2001        0.92        0.89        0
10/25/2001        0.92        0.89        108,200
10/24/2001        1.045       0.9         0
10/23/2001        1.045       0.9         0
10/22/2001        1.045       0.9         0
10/19/2001        1.045       0.9         13,100
10/18/2001        0.98        0.98        2,000
10/17/2001        0.92        0.91        0
10/16/2001        0.92        0.91        0
10/15/2001        0.92        0.91        0
10/12/2001        0.92        0.91        0
10/11/2001        0.92        0.91        0
10/10/2001        0.92        0.91        0
10/9/2001         0.92        0.91        0
10/8/2001         0.92        0.91        0
10/5/2001         0.92        0.91        0
10/4/2001         0.92        0.91        0
10/3/2001         0.92        0.91        0
10/2/2001         0.92        0.91        0
10/1/2001         0.92        0.91        2,400
9/28/2001         0.92        0.92        1,500
9/27/2001         0.95        0.93        0
9/26/2001         0.95        0.93        0
9/25/2001         0.95        0.93        0
9/24/2001         0.95        0.93        0
9/21/2001         0.95        0.93        3,000
9/20/2001         0.93        0.91        800
9/19/2001         1.01        0.91        2,000
9/18/2001         1.18        1.05        2,000
9/17/2001         1.18        1.18        400
9/10/2001         1.18        1.18        1,500
9/7/2001          1.18        1.18        0
9/6/2001          1.18        1.18        200
9/5/2001          1.15        1.06        2,000
9/4/2001          1.13        1.13        0
8/31/2001         1.13        1.13        0
8/30/2001         1.13        1.13        0
8/29/2001         1.13        1.13        0
8/28/2001         1.13        1.13        0
8/27/2001         1.13        1.13        0
8/24/2001         1.13        1.13        0
8/23/2001         1.13        1.13        0
8/22/2001         1.13        1.13        0
8/21/2001         1.13        1.13        0
8/20/2001         1.13        1.13        0
8/17/2001         1.13        1.13        500
8/16/2001         1.15        1.1         0
8/15/2001         1.15        1.1         14,700
8/14/2001         1.1         1.1         1,000
8/13/2001         1.13        1.13        0
8/10/2001         1.13        1.13        3,600
8/9/2001          1.07        1.07        0
8/8/2001          1.07        1.07        300
8/7/2001          1.21        1.15        0
8/6/2001          1.21        1.15        0
8/3/2001          1.21        1.15        0
8/2/2001          1.21        1.15        19,200
8/1/2001          1.2         1.2         1,000
7/31/2001         1.16        1.15        1,500
7/30/2001         1.07        1.07        0
7/27/2001         1.07        1.07        0
7/26/2001         1.07        1.07        0
7/25/2001         1.07        1.07        0
7/24/2001         1.07        1.07        0
7/23/2001         1.07        1.07        600
7/20/2001         1.08        1.08        0
7/19/2001         1.08        1.08        0
7/18/2001         1.08        1.08        0
7/17/2001         1.08        1.08        0
7/16/2001         1.08        1.08        100
7/13/2001         1.09        1.09        0
7/12/2001         1.09        1.09        200
7/11/2001         1.09        1.09        0
7/10/2001         1.09        1.09        100
7/9/2001          1.08        1.08        2,500
7/6/2001          1.293       1.23        0
7/5/2001          1.293       1.23        0
7/3/2001          1.293       1.23        0
7/2/2001          1.293       1.23        0
6/29/2001         1.293       1.23        0
6/28/2001         1.293       1.23        0
6/27/2001         1.293       1.23        0
6/26/2001         1.293       1.23        0
6/25/2001         1.293       1.23        0
6/22/2001         1.293       1.23        0
6/21/2001         1.293       1.23        0
6/20/2001         1.293       1.23        6,400
6/19/2001         1.3         1.3         0
6/18/2001         1.3         1.3         1,000
6/15/2001         1.35        1.3         5,000
6/14/2001         1.285       1.25        0
6/13/2001         1.285       1.25        0
6/12/2001         1.285       1.25        0
6/11/2001         1.285       1.25        0
6/8/2001          1.285       1.25        0
6/7/2001          1.285       1.25        0
6/6/2001          1.285       1.25        0
6/5/2001          1.285       1.25        0
6/4/2001          1.285       1.25        10,500
6/1/2001          1.24        1.21        0
5/31/2001         1.24        1.21        0
5/30/2001         1.24        1.21        0
5/29/2001         1.24        1.21        0
5/25/2001         1.24        1.21        0
5/24/2001         1.24        1.21        10,800
5/23/2001         1.2         1.2         500
5/22/2001         1.18        1.18        500
5/21/2001         1.17        1.12        3,900
5/18/2001         1.19        1.1         2,200
5/17/2001         1.07        1.07        1,000
5/16/2001         1.06        1.06        0
5/15/2001         1.06        1.06        0
5/14/2001         1.06        1.06        0
5/11/2001         1.06        1.06        0
5/10/2001         1.06        1.06        0
5/9/2001          1.06        1.06        2,800
5/8/2001          1.06        0.96        9,200
5/7/2001          1.02        1           0
5/4/2001          1.02        1           0
5/3/2001          1.02        1           0
5/2/2001          1.02        1           1,600
5/1/2001          1.09        1.07        400
4/30/2001         1.09        1.09        0
4/27/2001         1.09        1.09        0
4/26/2001         1.09        1.09        0
4/25/2001         1.09        1.09        0
4/24/2001         1.09        1.09        0
4/23/2001         1.09        1.09        1,000
4/20/2001         1.07        1.06        0
4/19/2001         1.07        1.06        0
4/18/2001         1.07        1.06        3,200
4/17/2001         1.15        0.86        6,100
4/16/2001         1.24        1.14        1,700
4/12/2001         1.28        1.2         0
4/11/2001         1.28        1.2         700
4/10/2001         1.188       1.188       0
4/9/2001          1.188       1.188       0
4/6/2001          1.188       1.188       100
4/5/2001          1.188       1.188       2,000
4/4/2001          1.188       1.188       0
4/3/2001          1.188       1.188       0
4/2/2001          1.188       1.188       500
3/30/2001         1.25        1.25        0
3/29/2001         1.25        1.25        0
3/28/2001         1.25        1.25        0
3/27/2001         1.25        1.25        0
3/26/2001         1.25        1.25        300
3/23/2001         1.25        1.25        200
3/22/2001         1.25        1.25        0
3/21/2001         1.25        1.25        0
3/20/2001         1.25        1.25        500
3/19/2001         1.203       1.188       300
3/16/2001         1.188       1.188       0
3/15/2001         1.188       1.188       0
3/14/2001         1.188       1.188       3,100
3/13/2001         1.375       1.188       0
3/12/2001         1.375       1.188       700
3/9/2001          1.188       1.188       0
3/8/2001          1.188       1.188       3,000
3/7/2001          1.188       1.188       0
3/6/2001          1.188       1.188       200
3/5/2001          1.188       1.188       0
3/2/2001          1.188       1.188       0
3/1/2001          1.188       1.188       200
2/28/2001         1.188       1.188       0
2/27/2001         1.188       1.188       1,200
2/26/2001         1.203       1.188       400
2/23/2001         1.313       1.313       0
2/22/2001         1.313       1.313       0
2/21/2001         1.313       1.313       1,000
2/20/2001         1.156       1.156       300
2/16/2001         1.188       1.125       7,000
2/15/2001         1.219       1.156       51,000
2/14/2001         1.094       1.063       0
2/13/2001         1.094       1.063       10,500
2/12/2001         1.063       1.063       1,000
2/9/2001          1.078       1.063       200
2/8/2001          1.313       1           0
2/7/2001          1.313       1           51,800
2/6/2001          1.266       1.156       200
2/5/2001          1.031       1.031       0
2/2/2001          1.031       1.031       3,700
2/1/2001          1.375       1.031       0
1/31/2001         1.375       1.031       0
1/30/2001         1.375       1.031       0
1/29/2001         1.375       1.031       300
1/26/2001         1.375       1.375       0
1/25/2001         1.375       1.375       100
1/24/2001         1           1           0
1/23/2001         1           1           2,000
1/22/2001         1.25        0.938       9,000
1/19/2001         1.063       0.906       10,500
1/18/2001         1.125       1.063       0
1/17/2001         1.125       1.063       0
1/16/2001         1.125       1.063       0
1/12/2001         1.125       1.063       19,000
1/11/2001         1           1           200
1/10/2001         1.031       1.031       0
1/9/2001          1.031       1.031       1,000
1/8/2001          1.063       1.063       100
1/5/2001          1.031       1.031       0
1/4/2001          1.031       1.031       0
1/3/2001          1.031       1.031       0
1/2/2001          1.031       1.031       100
12/29/2000        1.406       1           36,000
12/28/2000        1.016       1           42,300
12/27/2000        1.063       1           72,000
12/26/2000        1.063       1.063       9,500
12/22/2000        1.078       1.063       0
12/21/2000        1.078       1.063       400
12/20/2000        1.063       1.063       11,300
12/19/2000        1.063       1.063       800
12/18/2000        1.078       1.063       4,800
12/15/2000        1.063       1.063       0
12/14/2000        1.063       1.063       6,700
12/13/2000        1.063       1.063       17,200
12/12/2000        1.063       1.063       0
12/11/2000        1.063       1.063       8,300
12/8/2000         1.094       1.063       10,400
12/7/2000         1.016       1.016       600
12/6/2000         1.063       1           2,000
12/5/2000         1.125       0.875       6,500
12/4/2000         0.844       0.844       800
12/1/2000         0.875       0.844       7,800
11/30/2000        0.969       0.531       11,600
11/29/2000        0.875       0.875       0
11/28/2000        0.875       0.875       6,800
11/27/2000        0.984       0.906       18,700
11/24/2000        0.938       0.938       600
11/22/2000        1           1           0
11/21/2000        1           1           0
11/20/2000        1           1           0
11/17/2000        1           1           4,800
11/16/2000        1           1           100
11/15/2000        0.953       0.953       0
11/14/2000        0.953       0.953       0
11/13/2000        0.953       0.953       200
11/10/2000        1.031       1.031       3,100
11/9/2000         1.063       1           0
11/8/2000         1.063       1           1,400
11/7/2000         1.031       1.031       0
11/6/2000         1.031       1.031       0
11/3/2000         1.031       1.031       300
11/2/2000         1.063       1.031       0
11/1/2000         1.063       1.031       3,700
10/31/2000        1.031       1           2,800
10/30/2000        1.125       1.125       700
10/27/2000        1           1           0
10/26/2000        1           1           0
10/25/2000        1           1           0
10/24/2000        1           1           0
10/23/2000        1           1           200
10/20/2000        1           1           2,400
10/19/2000        1           0.906       44,000
10/18/2000        1.031       1.031       0
10/17/2000        1.031       1.031       4,000
10/16/2000        1.063       1.063       2,100
10/13/2000        1.031       1.031       0
10/12/2000        1.031       1.031       500
10/11/2000        1           1           500
10/10/2000        1.031       1.031       0
10/9/2000         1.031       1.031       0
10/6/2000         1.031       1.031       200
10/5/2000         1.188       1.125       7,200
10/4/2000         1.375       1.188       4,500
10/3/2000         1.297       1.297       500
10/2/2000         1.25        1.25        0
9/29/2000         1.25        1.25        1,200
9/28/2000         1.313       1.25        0
9/27/2000         1.313       1.25        2,500
9/26/2000         1.313       1.313       0
9/25/2000         1.313       1.313       0
9/22/2000         1.313       1.313       0
9/21/2000         1.313       1.313       0
9/20/2000         1.313       1.313       0
9/19/2000         1.313       1.313       100
9/18/2000         1.438       1.313       0
9/15/2000         1.438       1.313       0
9/14/2000         1.438       1.313       4,200
9/13/2000         1.375       1.375       300
9/12/2000         1.375       1.375       100
9/11/2000         1.5         1.5         1,000
9/8/2000          1.5         1.5         100
9/7/2000          1.5         1.375       3,500
9/6/2000          1.25        1.25        1,300
9/5/2000          1.25        1.25        200
9/1/2000          1.25        1.25        0
8/31/2000         1.25        1.25        0
8/30/2000         1.25        1.25        0
8/29/2000         1.25        1.25        200
8/28/2000         1.25        1.25        3,000
8/25/2000         1.313       1.25        5,400
8/24/2000         1.359       1.359       600
8/23/2000         1.469       1.281       1,300
8/22/2000         1.422       1.281       900
8/21/2000         1.406       1.281       6,100
8/18/2000         1.406       1.406       0
8/17/2000         1.406       1.406       0
8/16/2000         1.406       1.406       400



                                                     Privileged and Confidential


                           SANDATA TECHNOLOGIES, INC.
                          Valuation Analysis of Equity
                     Based on Discounted Cash Flow Analysis
                     ($ in thousands, except per share data)

                                                                                            

                                                                          Net Present Value of Equity (1)
                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $3,236        $5,265       $7,295      $9,325    $11,354
20.0%                                                         $2,576        $4,375       $6,174      $7,973    $ 9,772
25.0%                                                         $2,011        $3,613       $5,216      $6,818    $ 8,421
30.0%                                                         $1,523        $2,957       $4,391      $5,825    $ 7,259
35.0%                                                         $1,101        $2,389       $3,678      $4,967    $ 6,255


                                                 Net Present Value of Equity per Share of Common Stock (1), (2)

                                                                            Terminal Multiple of EBITDA
Discount Rate                                                 2             3            4           5          6
15.0%                                                         $1.273        $2.072       $2.870      $3.669     $4.467
20.0%                                                         $1.013        $1.721       $2.429      $3.137     $3.845
25.0%                                                         $0.791        $1.421       $2.052      $2.682     $3.313
30.0%                                                         $0.599        $1.163       $1.728      $2.292     $2.856
35.0%                                                         $0.433        $0.940       $1.447      $1.954     $2.461




(1) Represents NPV of cashflows plus NPV of the Terminal Value less net long
    term debt of $2.87 million. NPV values as of August 1, 2002.
2)  Based on 2,541,728 shares outstanding, Treasury Stock Method.




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                           SANDATA TECHNOLOGIES, INC.
                   Historical and Projected Income Statements
                     ($ in thousands, except per share data)




                                                                                  

                                                             For Year Ending May 31,        Projected for the Year Ending May 31,
                                                          2000       2001         2002        2003          2004         2005


Revenue (Service fees and other income)                $18,420     $18,138      $17,760    $14,963        $15,731      $16,518
  Revenue Growth                                                      (1.5%)       (2.1%)    (15.7%)          5.1%         5.0%

 EBIT                                                     $269         $12         $375       $640           $764         $802
  EBIT margin                                              1.5%        0.1%         2.1%       4.3%           4.9%         4.9%

 EBITDA                                                 $2,654      $2,761       $2,215     $2,468         $2,872       $3,016
  EBITDA margin                                           14.4%       15.2%        12.5%      16.5%          18.3%        18.3%

 Net Income                                                $14          $5         $153       $440           $568         $596
  Net Income margin                                        0.1%        0.0%         0.9%       2.9%           3.6%         3.6%

 Diluted EPS                                             $0.01       $0.00        $0.06      $0.18          $0.23        $0.24




Notes:
2001 EBIT, EBITDA, NI and EPS exclude impairment of development
software and goodwill of $3.3 million and $0.2 million, respectively.
NI and EPS adjusted for tax effect of 37%

2003 and 2004 projections prepared by Sandata, 2005 projected by
Brean Murray & Co., Inc.


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                           SANDATA TECHNOLOGIES, INC.
                     Pro-Forma Projected Net Free Cash Flow
                                   Statements
                                ($ in thousands)


                                                                                                  

                                                                        Projected for Year Ending May 31,
                                                                    2003                  2004                 2005

             EBIT                                                   $640                  $764                 $802
             Income Taxes on EBIT (0% due to loss carryforward)        0                     0                    0
                                                                   -----                  ----                 ----
             Tax Effected EBIT                                       640                   764                  802

             Depreciation                                          1,828                 2,108                2,213
             Decrease (Increase) in working capital accounts      (1,210)                  (55)                 (58)
                                                                  ------                ------               ------
             Cash Flow From Operating Activities                   1,258                 2,817                2,958

             Capital Expenditures                                 (1,388)               (1,388)              (1,388)
                                                                  ------                ------               ------
             Net Free Cash Flow                                    ($130)               $1,429               $1,570
                                                                  ======                ======               ======



Notes:
2003 and 2004 projections prepared by Sandata, 2005 projected
by Brean Murray & Co., Inc.








                                                     Privileged and Confidential




                     Valuation of Sandata Technologies, Inc.
                      Based on Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        


                                                                                                                     20% Illiquidity
                                                              Sandata LTM    ($1.50)   Implied Median  Implied Median  20% Insider
                                   Comparable Companies      & Projected      Deal      Equity Value    Equity Value      Ownership
                                    Low  High  Median            Results    Multiples     of Sandata     per Share        Discounts
                                    ---  ----  ------        ------------   ---------   ------------   --------------  ------------

  Equity Value as a multiple of:

  LTM Net Income                  9.6x   22.6x   18.1x           $153          24.3 x        $2,764(1)      $1.11          $0.67

  2003 Net Income (3)             5.4x   31.3x   16.8x           $440           8.5 x        $7,370(1)      $2.97          $1.78

  Book Value                      0.8x    2.4x    1.0x         $5,404           0.7 x        $5,441(1)      $2.19          $1.32



  Enterprise Value as a multiple of:


  LTM EBIT                        6.1x    9.5x    8.2x           $375          21.9 x          $208(1)(2)   $0.08          $0.05

  LTM EBITDA                      3.8x    9.5x    7.2x         $2,215           3.7 x       $13,154(1)(2)   $5.30          $3.18

  LTM Revenue                     0.3x    1.8x    0.6x        $17,760           0.5 x       $ 8,425(1)(2)   $3.39          $2.04



                                                                                        High                       $3.18

                                                                                        Low                        $0.05

                                                                                        Median                     $1.55




LTM = Last Twelve Months
(1) Equals median multiple * LTM and projected results
(2) Values are adjusted for net debt of $2.87 million.
(3) Comparable company multiples based on calendar year 2003 EPS, Sandata net
     income amount projected for period ending May 31, 2003.





                                                    Priviledged and Confidential

                           Comparable Company Analysis
                           ($ in thousands, except per
                                   share data)


                                                                                                    

                                                               VALUATION
       Com-               Price            EPS(1)                CY   CY                              Income Statement Data (1)
       pany              52 Week    %of          CY   CY   LTM  2002 2003   EV/    EV/   EV/  Price/   LTM     LTM     LTM    LTM
Ticker Name      8/16/02 Hi    Lo   high  LTM   2002 2003  P/E  P/E  P/E  Revenue EBITDA EBIT  Book  Revenue  EBITDA   EBIT    NI

CAP  Creative
     Computer
     Applica-
     tions, Inc.$ 1.25  $1.75 $0.35 71.4 $0.13 $0.04  NA  9.6x 31.3x NA     0.5x 3.8x  6.1x  1.1x $  7,462 $   898  $   562  $  413

HMSY Health
     Management
     Systems, Inc.3.15  5.55  0.91  56.8 (1.16)  NA   NA   NM   NA   NA     0.5x  NM     NM  1.2x   62,202 (16,438) (18,732)(20,801)

INTV Intervoice-
     Brite, Inc.  1.43 18.35  0.88   7.8 (1.66)(0.24) NA   NM   NM   NA     0.3x  NM     NM  0.9x  188,546 (28,907) (52,957)(45,430)

KRON Kronos,     31.75 60.40 23.76  52.6  1.40  1.37 1.71 22.6x 23.2x 18.6x 1.8x 9.5x *15.0x*3.6x  327,516  61,699   39,098  28,257
     Inc.

LANV LanVision
     System,
     Inc.         2.48  4.98  0.85  49.8   0.02 0.06  NA *124.0x*41.8x  NA  1.8x 7.2x  9.5x *7.4x   11,260   2,757    2,077     207

MDRX Allscripts
     Healthcare
     Solutions,
     Inc.         2.00  6.67  1.60  30.0 (0.23) 0.37 0.08 NM   5.4x 25.0x   0.5x  NM    NM   0.8x   73,849 (29,139) (56,669) (8,970)

QSII Quality
     Systems,
      Inc.       16.26 18.00 10.10  90.3  0.90 1.01  1.20 18.1x 16.1x 13.6x 1.5x 7.3x  8.2x  2.4x   45,820   9,660    8,614   5,636

TZIX TriZetto
     Group,
     Inc.         5.36 14.35  4.10  37.4 (0.56)0.32 0.32  NM   16.8x 16.8x  0.7x 7.2x   NM   0.9x   245,289 25,315  (35,743)(26,811)



                  High              90.3%               22.6x  31.3x 25.0x  1.8x 9.5x   9.5x  2.4x

                  Low                7.8%                9.6x   5.4x 13.6x  0.3x 3.8x   6.1x  0.8x

                  Mean              49.5%               16.8x  18.5x 18.5x  1.0x 7.0x   7.9x  1.2x

                  Median            51.2%               18.1x  16.8x 17.7x  0.6x 7.2x   8.2x  1.0x





-----------------------------------
LTM = last twelve months,
NTM = next twelve months,
EV = enterprise value (market capitalization plus net debt)
NA = not available;
NM = not meaningful *
Excluded as outlier
(1) Excludes non-recurring and extraordinary items






                                                   Priviledged and Confidential

                           Comparable Company Analysis
                     ($ in thousands, except per share data)


                                                                                                        

                                               Balance Sheet Data
                                  LT Debt   Shares    Book    Mkt Value    Net  Enterprise                    Margins
Ticker  Company Name            % Equity     Out.     Value   of Equity    Debt   Value       Gross   EBITDA    EBIT     NI


CAP    Creative Computer          0.00%   3,266    $ 3,639    $ 4,083   $ (641) $ 3,442       52.6%    12.0%     7.5%    5.5%
       Applications, Inc.

HMSY   Health Management
        Systems, Inc.             0.00%  18,295     47,792     57,643  (24,964)  32,679         NA       NM       NM      NM


INTV   Intervoice-Brite, Inc.    55.30%  34,047     55,326     48,688   12,931   61,619       36.1%      NM       NM      NM

KRON   Kronos, Inc.               0.00%  19,680    152,327    624,854  (37,576) 587,278       38.9%    18.8%    11.9%    8.6%

LANV   LanVision Systems, Inc.   20.35%   8,922      3,005     22,118   (2,400)  19,718       60.7%    24.5%    18.5%    1.8%

MDRX   Allscripts
       Solutions, Inc.            0.00%  38,424     90,766     76,849  (38,528)  38,321       13.7%     NM       NM      NM

QSII   Quality Systems, Inc.      0.00%   6,123     41,713     99,565  (28,862)  70,703       54.9%   21.1%     18.8%   12.3%

TZIX   TriZetto Group, Inc.      11.85%  45,743    275,045    245,182  (62,044) 183,138       34.0%   10.3%     NM       NM



                                                                             High             60.7%   24.5%   18.8%   12.3%

                                                                             Low              13.7%   10.3%    7.5%    1.8%

                                                                             Mean             41.6%   17.4%   14.2%    7.1%

                                                                             Median           38.9%   18.8%   15.2%    7.1%


 

                                                     Privileged and Confidential



                           SANDATA TECHNOLOGIES, INC.
                     Trading Frequency Distribution Analysis
                        Based on Daily Trading Data from
                      August 15, 2001 to August 14, 2002





                                                                                              

                                     1 Year Price/Volume                                          2 Year Price/Volume
Common Share Prices ($)         August 15, 2001 to August 14, 2002                          August 15, 2000 to August 14, 2002

Greater              But
Than or              Less       Shares                          Cumulative                    Shares              Cumulative
Equal to             Than       Traded                Frequency Frequency                     Traded    Frequency Frequency

0.05                 0.15           0                  0.0%      0.0%                              0      0.0%     0.0%
0.15                 0.25           0                  0.0%      0.0%                              0      0.0%     0.0%
0.25                 0.35         200                  0.1%      0.1%                            200      0.0%     0.0%
0.35                 0.45       5,500                  1.7%      1.7%                          5,500      0.6%     0.6%
0.45                 0.55       4,800                  1.5%      3.2%                          4,800      0.5%     1.1%
0.55                 0.65       6,600                  2.0%      5.2%                         18,200      1.8%     2.9%
0.65                 0.75       7,100                  2.2%      7.4%                          7,100      0.7%     3.6%
0.75                 0.85      17,400                  5.3%     12.7%                         26,000      2.6%     6.2%
0.85                 0.95     145,600                 44.5%     57.3%                        177,800     17.8%    24.0%
0.95                 1.05      16,700                  5.1%     62.4%                        191,700     19.2%    43.2%
1.05                 1.15      19,400                  5.9%     68.3%                        281,100     28.2%    71.4%
1.15                 1.25       4,100                  1.3%     69.6%                        113,900     11.4%    82.8%
1.25                 1.35      63,400                 19.4%     89.0%                        124,400     12.5%    95.3%
1.35                 1.45       2,700                  0.8%     89.8%                          9,200      0.9%    96.2%
1.45                 1.55      29,800                  9.1%     98.9%                         34,400      3.4%    99.6%
1.55                 1.65       3,600                  1.1%    100.0%                          3,600      0.4%   100.0%
1.65                 1.75           0                  0.0%    100.0%                              0      0.0%   100.0%
1.75                 1.85           0                  0.0%    100.0%                              0      0.0%   100.0%
1.85                 1.95           0                  0.0%    100.0%                              0      0.0%   100.0%
1.95                 2.05           0                  0.0%    100.0%                              0      0.0%   100.0%
2.05                 2.15           0                  0.0%    100.0%                              0      0.0%   100.0%
2.15                 2.25           0                  0.0%    100.0%                              0      0.0%   100.0%
2.25                 2.35           0                  0.0%    100.0%                              0      0.0%   100.0%
Totals                        326,900                100.0%                                  997,900    100.0%

Average Shares Outstanding        2,494,175                                                     2,506,475
Total as a % of shares               13.1%                                                         39.8%




                                                                    APPENDIX D



ss. 262. Appraisal rights.

     (a) Any  stockholder  of a  corporation  of this State who holds  shares of
stock on the date of the making of a demand  pursuant to subsection  (d) of this
section with respect to such shares,  who continuously holds such shares through
the effective date of the merger or  consolidation,  who has otherwise  complied
with  subsection  (d) of this section and who has neither  voted in favor of the
merger or consolidation  nor consented thereto in writing pursuant to ss. 228 of
this title  shall be entitled  to an  appraisal  by the Court of Chancery of the
fair  value  of the  stockholder's  shares  of  stock  under  the  circumstances
described in subsections  (b) and (c) of this section.  As used in this section,
the word "stockholder"  means a holder of record of stock in a stock corporation
and also a member of record of a nonstock  corporation;  the words  "stock"  and
"share"  mean and  include  what is  ordinarily  meant by those  words  and also
membership or membership interest of a member of a nonstock corporation; and the
words  "depository  receipt"  mean a  receipt  or other  instrument  issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation,  which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent  corporation in a merger or  consolidation to be effected
pursuant to ss. 251 (other than a merger effected pursuant to ss. 251(g) of this
title),  ss. 252,  ss. 254,  ss. 257, ss. 258, ss. 263 or ss. 264 of this title:
(1)  Provided,  however,  that no appraisal  rights under this section  shall be
available  for the  shares of any class or series  of  stock,  which  stock,  or
depository  receipts in respect  thereof,  at the record date fixed to determine
the  stockholders  entitled  to receive  notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or  consolidation,  were either
(i) listed on a national  securities exchange or designated as a national market
system security on an interdealer  quotation system by the National  Association
of Securities  Dealers,  Inc. or (ii) held of record by more than 2,000 holders;
and further  provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require  for  its  approval  the  vote  of the  stockholders  of  the  surviving
corporation  as  provided  in  subsection  (f) of ss.  251 of  this  title.  (2)
Notwithstanding  paragraph (1) of this  subsection,  appraisal rights under this
section  shall be available  for the shares of any class or series of stock of a
constituent  corporation if the holders  thereof are required by the terms of an
agreement of merger or consolidation pursuant to ss.ss. 251, 252, 254, 257, 258,
263 and 264 of this title to accept for such stock anything except: a. Shares of
stock  of  the   corporation   surviving  or  resulting   from  such  merger  or
consolidation,  or depository receipts in respect thereof; b. Shares of stock of
any other corporation,  or depository receipts in respect thereof,  which shares
of stock (or depository  receipts in respect thereof) or depository  receipts at
the  effective  date of the  merger or  consolidation  will be either  listed on
national  securities exchange or designated as a national market system security
on an  interdealer  quotation  system by the National  Association of Securities
Dealers,  Inc. or held of record by more than 2,000 holders;  c. Cash in lieu of
fractional shares or fractional  depository  receipts described in the foregoing
subparagraphs  a. and b. of this paragraph;  or d. Any combination of the shares
of  stock,  depository  receipts  and  cash  in  lieu of  fractional  shares  or
fractional  depository receipts described in the foregoing  subparagraphs a., b.
and c. of this  paragraph.  (3) In the event  all of the  stock of a  subsidiary
Delaware  corporation  party to a merger effected under ss. 253 of this title is
not owned by the parent corporation  immediately prior to the merger,  appraisal
rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any  corporation  may  provide  in its  certificate  of  incorporation  that
appraisal  rights  under this section  shall be available  for the shares of any
class or series of its stock as a result of an amendment to its  certificate  of
incorporation,  any  merger  or  consolidation  in which  the  corporation  is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation.  If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this  section,  shall apply as nearly as is  practicable.  (d)  Appraisal
rights shall be perfected as follows:  (1) If a proposed merger or consolidation
for which  appraisal  rights are provided  under this section is to be submitted
for approval at a meeting of  stockholders,  the  corporation,  not less than 20
days prior to the meeting, shall notify each of its stockholders who was such on
the record  date for such  meeting  with  respect to shares for which  appraisal
rights are  available  pursuant to subsection  (b) or (c) hereof that  appraisal
rights  are  available  for  any  or  all  of  the  shares  of  the  constituent
corporations,  and shall  include in such  notice a copy of this  section.  Each
stockholder  electing to demand the appraisal of such stockholder's shares shall
deliver  to the  corporation,  before  the  taking of the vote on the  merger or
consolidation, a written demand for appraisal of such stockholder's shares. Such
demand  will be  sufficient  if it  reasonably  informs the  corporation  of the
identity of the stockholder  and that the stockholder  intends thereby to demand
the appraisal of such  stockholder's  shares. A proxy or vote against the merger
or consolidation  shall not constitute such a demand. A stockholder  electing to
take such action  must do so by a separate  written  demand as herein  provided.
Within 10 days after the  effective  date of such merger or  consolidation,  the
surviving  or  resulting  corporation  shall  notify  each  stockholder  of each
constituent  corporation who has complied with this subsection and has not voted
in favor of or  consented  to the merger or  consolidation  of the date that the
merger or consolidation has become effective; or
                                      D-1

    (2) If the merger or consolidation  was approved pursuant to ss. 228 or ss.
253 of this title,  then either a constituent  corporation  before the effective
date of the merger or  consolidation  or the surviving or resulting  corporation
within 10 days  thereafter  shall  notify  each of the  holders  of any class or
series of stock of such  constituent  corporation  who are entitled to appraisal
rights of the approval of the merger or consolidation  and that appraisal rights
are  available  for any or all  shares of such  class or series of stock of such
constituent  corporation,  and  shall  include  in  such  notice  a copy of this
section.  Such notice may, and, if given on or after the  effective  date of the
merger or  consolidation,  shall, also notify such stockholders of the effective
date of the merger or  consolidation.  Any  stockholder  entitled  to  appraisal
rights  may,  within 20 days after the date of mailing  such  notice,  demand in
writing  from the  surviving  or  resulting  corporation  the  appraisal of such
holder's  shares.  Such demand will be sufficient  if it reasonably  informs the
corporation of the identity of the stockholder and that the stockholder  intends
thereby to demand the appraisal of such holder's shares.  If such notice did not
notify stockholders of the effective date of the merger or consolidation, either
(i) each such  constitutent  [sic] corporation shall send a second notice before
the effective date of the merger or consolidation  notifying each of the holders
of any class or series of stock of such constitutent  [sic] corporation that are
entitled  to  appraisal   rights  of  the  effective   date  of  the  merger  or
consolidation or (ii) the surviving or resulting  corporation  shall send such a
second  notice to all such  holders on or within 10 days  after  such  effective
date;  provided,  however,  that if such second notice is sent more than 20 days
following the sending of the first notice,  such second notice need only be sent
to each  stockholder  who is entitled to  appraisal  rights and who has demanded
appraisal  of such  holder's  shares  in  accordance  with this  subsection.  An
affidavit of the  secretary or assistant  secretary or of the transfer  agent of
the corporation that is required to give either notice that such notice has been
given  shall,  in the  absence of fraud,  be prima  facie  evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constitutent [sic] corporation may fix, in advance, a record
date that  shall be not more than 10 days prior to the date the notice is given,
provided,  that if the  notice  is given on or after the  effective  date of the
merger or  consolidation,  the record date shall be such  effective  date. If no
record date is fixed and the notice is given prior to the  effective  date,  the
record date shall be the close of business on the day next  preceding the day on
which the notice is given.  (e) Within 120 days after the effective  date of the
merger  or  consolidation,   the  surviving  or  resulting  corporation  or  any
stockholder  who has  complied  with  subsections  (a) and (d) hereof and who is
otherwise  entitled  to  appraisal  rights,  may file a petition in the Court of
Chancery  demanding  a  determination  of the  value  of the  stock  of all such
stockholders.  Notwithstanding  the foregoing,  at any time within 60 days after
the effective date of the merger or  consolidation,  any stockholder  shall have
the right to withdraw such stockholder's  demand for appraisal and to accept the
terms  offered  upon the  merger or  consolidation.  Within  120 days  after the
effective date of the merger or consolidation,  any stockholder who has complied
with the  requirements of subsections (a) and (d) hereof,  upon written request,
shall be  entitled  to  receive  from the  corporation  surviving  the merger or
resulting from the  consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation  and with respect to
which  demands for  appraisal  have been  received and the  aggregate  number of
holders  of  such  shares.  Such  written  statement  shall  be  mailed  to  the
stockholder within 10 days after such  stockholder's  written request for such a
statement is received by the  surviving or  resulting  corporation  or within 10
days after  expiration of the period for delivery of demands for appraisal under
subsection  (d)  hereof,  whichever  is later.  (f) Upon the  filing of any such
petition  by a  stockholder,  service of a copy  thereof  shall be made upon the
surviving  or  resulting  corporation,  which  shall  within 20 days  after such
service file in the office of the Register in Chancery in which the petition was
filed  a  duly  verified  list   containing  the  names  and  addresses  of  all
stockholders who have demanded payment for their shares and with whom agreements
as to the  value of their  shares  have not been  reached  by the  surviving  or
resulting  corporation.  If the  petition  shall be filed  by the  surviving  or
resulting corporation, the petition shall be accompanied by such a duly verified
list. The Register in Chancery, if so ordered by the Court, shall give notice of
the  time and  place  fixed  for the  hearing  of such  petition  by  registered
orcertified  [sic] mail to the  surviving  or resulting  corporation  and to the
stockholders  shown on the list at the  addresses  therein  stated.  Such notice
shall also be given by 1 or more  publications at least 1 week before the day of
the  hearing,  in a newspaper  of general  circulation  published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by  publication  shall be approved by the Court,  and
the costs thereof shall be borne by the surviving or resulting corporation.  (g)
At the hearing on such petition,  the Court shall determine the stockholders who
have  complied  with this  section  and who have become  entitled  to  appraisal
rights.  The Court may require the  stockholders  who have demanded an appraisal
for their shares and who hold stock  represented by certificates to submit their
certificates  of stock to the Register in Chancery  for notation  thereon of the
pendency of the appraisal  proceedings;  and if any stockholder  fails to comply
with  such  direction,  the  Court  may  dismiss  the  proceedings  as  to  such
stockholder.  (h) After  determining the stockholders  entitled to an appraisal,
the Court shall appraise the shares,  determining  their fair value exclusive of
any element of value  arising  from the  accomplishment  or  expectation  of the
merger or  consolidation,  together with a fair rate of interest,  if any, to be
paid upon the amount  determined to be the fair value. In determining  such fair
value,  the Court shall take into account all relevant  factors.  In determining
the fair  rate of  interest,  the  Court  may  consider  all  relevant  factors,
including  the rate of interest  which the  surviving or  resulting  corporation
would have had to pay to borrow  money  during the  pendency of the  proceeding.
Upon application by the surviving or resulting corporation or by any stockholder
entitled  to  participate  in the  appraisal  proceeding,  the Court may, in its
discretion,  permit  discovery or other pretrial  proceedings and may proceed to
trial upon the appraisal  prior to the final  determination  of the  stockholder
entitled to an appraisal.  Any stockholder  whose name appears on the list filed
by the surviving or resulting  corporation  pursuant to  subsection  (f) of this
section and who has submitted such  stockholder's  certificates  of stock to the
Register  in  Chancery,  if such  is  required,  may  participate  fully  in all
proceedings until it is finally determined that such stockholder is not entitled
to appraisal  rights under this section.  (i) The Court shall direct the payment
of the  fair  value  of the  shares,  together  with  interest,  if any,  by the
surviving  or  resulting  corporation  to  the  stockholders  entitled  thereto.
Interest may be simple or compound, as the Court may direct. Payment shall be so
made to each such stockholder,  in the case of holders of  uncertificated  stock
forthwith,  and the case of holders of shares  represented by certificates  upon
the surrender to the corporation of the  certificates  representing  such stock.
The Court's decree may be enforced as other decrees in the Court of Chancery may
be enforced, whether such surviving or resulting corporation be a corporation of
this State or of any state. (j) The costs of the proceeding may be determined by
the  Court and taxed  upon the  parties  as the  Court  deems  equitable  in the
circumstances.  Upon application of a stockholder,  the Court may order all or a
portion of the  expenses  incurred by any  stockholder  in  connection  with the
appraisal proceeding,  including, without limitation, reasonable attorney's fees
and the fees and  expenses of experts,  to be charged pro rata against the value
of all the shares  entitled to an  appraisal.  (k) From and after the  effective
date of the merger or consolidation,  no stockholder who has demanded  appraisal
rights as provided in  subsection  (d) of this section shall be entitled to vote
such  stock  for any  purpose  or to  receive  payment  of  dividends  or  other
distributions on the stock (except dividends or other  distributions  payable to
stockholders  of record at a date  which is prior to the  effective  date of the
merger  or  consolidation);  provided,  however,  that  if no  petition  for  an
appraisal  shall be filed  within the time  provided in  subsection  (e) of this
section,  or if such  stockholder  shall  deliver to the  surviving or resulting
corporation a written withdrawal of such  stockholder's  demand for an appraisal
and an  acceptance of the merger or  consolidation,  either within 60 days after
the effective date of the merger or  consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation, then
the right of such stockholder to an appraisal shall cease.  Notwithstanding  the
foregoing,  no appraisal  proceeding in the Court of Chancery shall be dismissed
as to any stockholder  without the approval of the Court,  and such approval may
be  conditioned  upon such terms as the Court deems just.  (l) The shares of the
surviving  or  resulting  corporation  to which  the  shares  of such  objecting
stockholders  would  have been  converted  had they  assented  to the  merger or
consolidation  shall have the status of  authorized  and unissued  shares of the
surviving or resulting  corporation.  (8 Del. C. 1953, ss. 262; 56 Del. Laws, c.
50; 56 Del. Laws, c. 186, ss. 24; 57 Del. Laws, c. 148,  ss.ss.  27-29;  59 Del.
Laws, c. 106, ss. 12; 60 Del.  Laws, c. 371,  ss.ss.  3-12; 63 Del. Laws, c. 25,
ss. 14; 63 Del. Laws, c. 152, ss.ss.  1, 2; 64 Del. Laws, c. 112, ss.ss.  46-54;
66 Del. Laws, c. 136,  ss.ss.  30-32; 66 Del. Laws, c. 352, ss. 9; 67 Del. Laws,
c. 376,  ss.ss.  19, 20; 68 Del. Laws, c. 337, ss.ss. 3, 4; 69 Del. Laws, c. 61,
ss. 10; 69 Del. Laws, c. 262,  ss.ss.  1-9; 70 Del. Laws, c. 79, ss. 16; 70 Del.
Laws, c. 186, ss. 1; 70 Del.  Laws, c. 299,  ss.ss.  2, 3; 70 Del. Laws, c. 349,
ss. 22; 71 Del. Laws, c. 120, ss. 15; 71 Del.  Laws, c. 339,  ss.ss.  49-52;  73
Del. Laws, c. 82, ss. 21.)



                                                                    APPENDIX E



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

                                                                                    


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended May 31, 2002

[  ]  Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from ________ to __________

                         Commission file number 0-14401

                           SANDATA TECHNOLOGIES, INC.
                (Exact name of small business issuer in its charter)

              DELAWARE                            11-2841799
      (State or other jurisdiction of   (I.R.S. Employee Identification No.)
       incorporation or organization)

                26 Harbor Park Drive, Port Washington, NY    11050
                (Address of principal executive offices)   (Zip Code)

         Issuer's telephone number, including area code: (516) 484-4400

         Securities registered under Section 12(b) of the Exchange Act:
                                      None


         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.001 par value
                                (Title of class)


     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been  subject to such  filing  requirements  for the past 90 days.
                                                                Yes X No

                                      E-1





     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     The issuer's revenues for year ended May 31, 2002 were $17,852,710.

     The aggregate market value of the voting and non-voting  common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of August
16, 2002 was $1,536,918.

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

Yes                        No
    ----------------           -------------

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares  outstanding of each of the issuer's classes of common
equity, as of August 16, 2002 was 2,481,808.

         Transitional Small Business Disclosure Format  (check one):

Yes                 No     X
    ------------       ------------

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.







                                      INDEX


                                                                                             

                                                                                                Page No.

Forward Looking Statements

                                     PART I

Item 1.           Description of Business                                                           1

Item 2.           Description of Property                                                           7

Item 3.           Legal Proceedings                                                                 8

Item 4.           Submission of Matters to a Vote of Security Holders                               9

                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters                         10

Item 6.           Management's Discussion and Analysis or Plan of Operation                        11

Item 7.           Financial Statements                                                             18
18

Item 8.           Changes in and Disagreements with Accountants on Accounting
                           and Financial Disclosure                                                18
18

                                    PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                           Compliance with Section 16(a) of the Exchange Act                       19

Item 10.          Executive Compensation                                                           20

Item 11.          Security Ownership of Certain Beneficial Owners and Management
                           and Related Stockholder Matters                                         23

Item 12.          Certain Relationships and Related Transactions                                   25

                                     PART IV

Item 13.          Exhibits, List and Reports on Form 8-K                                           27

Signatures                                                                                         30









     Certain  information  contained  in this Annual  Report on Form 10-KSB (the
"Form 10-KSB") includes  "forward-looking  statements" within the meaning of the
Private  Securities  Litigation  Reform Act of 1995,  and is subject to the safe
harbor created by that act. Sandata Technologies,  Inc. (the "Company") cautions
readers that certain  important  factors may affect the Company's actual results
and could  cause such  results  to differ  materially  from any  forward-looking
statements  which may be  deemed to have been made in this Form  10-KSB or which
are  otherwise  made by or on  behalf  of the  Company.  For this  purpose,  any
statements  contained in this Form 10-KSB that are not  statements of historical
fact may be  deemed  to be  forward-looking  statements.  Without  limiting  the
generality of the foregoing,  words such as "may", "will", "expect",  "believe",
or "anticipate",  or the negative variations thereof, or comparable terminology,
are intended to identify  forward-looking  statements.  Factors which may affect
the  Company's  results  include,   but  are  not  limited  to,  the  risks  and
uncertainties  associated with developments in and regulation of the health-case
industry,   new  technology   developments,   competitive  bidding,   risks  and
uncertainties  associated with the Internet and Internet-related  products,  and
other factors.

     The Company is also subject to other risks detailed herein or detailed from
time to time in its Securities and Exchange Commission ("SEC") filings.  Readers
are also urged to carefully review and consider the various  disclosures made by
the Company  which  attempt to advise  interested  parties of the factors  which
affect the Company's business,  including,  without limitation,  the disclosures
made under the  captions  "Description  of  Business"  in Item 1,  "Management's
Discussion  and  Analysis  or  Plan  of  Operation"  in  Item  6,  and  "Certain
Relationships  and Related  Transactions"  in Item 12, of this Form 10-KSB.  All
references to a fiscal year are to the Company's fiscal year which ends May 31.

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

Business Development

             General

     The  Company,  by itself and  through  its wholly  owned  subsidiaries,  is
engaged in providing technology services to its customers. These services either
a) utilize software products  developed,  acquired or licensed by the Company or
b)  leverage  the  technology-based  core  competencies  that  the  Company  has
developed in formulating and delivering its software services.

     Applications  of the  Company's  software  include:  an  automated  payroll
processing and Medicaid  billing service  delivered via leased lines or over the
Internet,  computerized preparation of management reports,  telephone based data
collection   services,   and  automated   database  driven  outbound   telephone
notification.







     Services that leverage the Company's  core  competencies  are driven by the
Company's Information Technology ("IT") support services. The services currently
offered  include:  facilities  outsourcing  for  database and  operating  system
support, technology consulting,  custom software development and support, resale
and  implementation  of software  written and  distributed  by others,  web site
development  and  hosting,  help desk  services,  and hardware  maintenance  and
related administrative services.

     The  Company's  software  is  written in a variety  of  software  languages
including JAVA, C++, Oracle PL/SQL, CGI, Perl, VB, Foxpro, Access and COBOL.

     The Company  was  incorporated  in the State of New York in June,  1978 and
reincorporated  in the State of Delaware in December 1986. On November 21, 2001,
the Company changed its name from Sandata Inc. to its present name.

Business of Issuer

             Principal Products and Services

     Computerized  Information  Processing  Services.  The Company,  through its
wholly owned subsidiary,  Sandsport Data Services, Inc. ("Sandsport"),  provides
computer  services  to the home health care  industry,  principally  through its
SHARP (Sandsport Home Attendant Reporting Program) product.

     The primary  customers  are vendor  agencies  that provide  home  attendant
services  to the elderly  and infirm in New York City.  The  Federal  Government
offers this program (the "Home Attendant  Program") to participating  states and
municipalities  as an  optional  part  of  its  Medicaid  program.  The  Federal
Government  funds a  substantial  portion of the  program and the New York State
Department of Social Services and New York City fund the balance of the program.
In New York  City,  the Home  Attendant  Program  is  administered  by the Human
Resources  Administration  ("HRA"),  which  sub-contracts  with  proprietary and
not-for-profit  agencies ("Vendor  Agencies") to provide home attendant services
to those in need. HRA refers  patients to Vendor  Agencies  that, in turn,  send
home  attendants to patients'  homes to assist in personal  care chores.  Vendor
Agencies also provide periodic nurse's visits to patients.

     Sandsport processes payroll,  preparing paychecks  indicating  year-to-date
earnings and  deductions,  payroll  journals and payroll  earnings and deduction
summaries.  Sandsport  provides  computerized  information  which permits Vendor
Agencies to prepare  their  Employer's  Quarterly  Federal Tax Return,  New York
State  unemployment   insurance  returns,   deposits  for  Federal  unemployment
insurance and all required New York City tax returns and deposits.

     Annually, Sandsport prepares for each Vendor Agency employee Transmittal of
Income and Tax  Statements,  reconciliation  of state tax  withheld  and Federal
Unemployment  Insurance  Returns.  Sandsport also  furnishes to Vendor  Agencies
employee-earning  ledgers  that  enable  them to review a full  year's  earnings
history for each of their employees.






     Generally,  in providing  software-related  services,  the Company receives
data from its  customers,  processes the data on the Company's  equipment at its
premises, and generates reports based on such data.

     These services are primarily provided through SHARP. Vendor Agencies enlist
Sandsport's  computer services to provide weekly time sheets,  billing,  payroll
processing and management  reports.  For the fiscal years ended May 31, 2002 and
2001,  approximately  $5,433,000 or 32% and $5,445,000 or 31%, respectively,  of
the Company's  total operating  revenues were derived from services  rendered to
Vendor Agencies.

     The Company's  strategy is to diversify and expand its health care customer
base. Its wholly-owned  subsidiary,  Pro-Health  Systems,  Inc.,  ("Pro-Health")
intends to utilize newly  acquired and enhanced  software to provide  additional
payroll and billing  functionality for SHARP users and, by expanding its billing
capabilities,  make the product relevant to home healthcare agencies that cannot
use SHARP in its current form.

     Pro-Health  offers  a  system  which  is  designed  to be  delivered  as an
Application  Service  Provider ("ASP")  solution,  which allows its customers to
access  certain  Pro-Health  software  over the  Internet  without the  customer
needing  sophisticated  hardware at its site to house the  software or store the
data.  This allows the Company's  customers to have access to software  programs
via low-cost  hardware and on a fee per transaction  basis,  and enables them to
utilize the Company's software services without a substantial upfront investment
in either hardware or software.  The software consists of a comprehensive  suite
of  on-line   interactive   modules  that  are  integrated  with  other  Company
applications such as Santrax(R) (see below). The Pro-Health systems' modular and
flexible design makes it adaptable to the changeable needs of a wide spectrum of
health care entities.

     For the fiscal years ended May 31, 2002 and 2001, approximately $530,000 or
3%, and $516,000 or 3% respectively,  of the Company's total operating  revenues
were derived from services rendered to customers using the Pro-Health system.

     Telephone-Based  Data  Collection  Services.  The Company has  developed an
automated  telephony  system  (combining  telephones  and  computers)  known  as
Sandata(R)  SANTRAX(R)  that allows the use of Automated  Number  Identification
("ANI") technology and voice recognition  technology to assist in capturing data
via telephone.  The system  incorporates  telephone  technologies  into the data
reporting process and is currently designed to monitor the arrival and departure
times of off-site  workers who simply call a unique  toll-free  number to record
their arrival and departure.  The system  automatically and immediately confirms
that the assigned  person is at the expected  place at the expected time for the
approved and scheduled  duration,  and produces  real-time  exception reports to
enable its clients to manage their off-site staff.

     In addition to  collecting  the  arrival  and  departure  times of off-site
workers  from the visit  site,  SANTRAX  is also able to collect a wide range of
additional  information.  By collecting  additional  data,  SANTRAX can increase
operational  efficiencies  and enable its  customers to generate  administrative
savings.  The information that can be collected and analyzed by SANTRAX includes
expense-related data such as mileage and supplies, as well as tasks performed by
the  off-site  worker.  This  data is  used to  produce  weekly  payroll  and to
automatically  prepare reimbursement  submissions.  Reports are generated to the
customer based upon its specific requirements.

     For the fiscal years ended May 31, 2002 and 2001,  approximately $7,691,000
or 45% and $7,562,000 or 43%,  respectively,  of the Company's  total  operating
revenues were derived from services rendered relating to SANTRAX.

     The  software  operates  on the ASP  model,  and the  Company  receives  an
aggregate of approximately  620,000 calls per week or 32 million calls per year.
The service is currently utilized  principally by the Company's home health care
clients,  and approximately  seventy-two per cent (72%) of current SANTRAX calls
are Vendor Agencies using the SHARP program.

     Effective June 1, 1998, the Company and MCI Telecommunications  Corporation
("MCI") entered into a License Agreement (the "License  Agreement")  pursuant to
which the Company was granted a license,  under  certain of MCI's  patents (each
individually a "Patent" and collectively the "Patents"), which enables it to use
and sell its SANTRAX time and attendance  verification  product  non-exclusively
nationwide and  exclusively in the home health care  industries for the five New
York boroughs.  The License Agreement remains in effect until the last to expire
of various  patents held by MCI or until  October 19, 2010,  whichever is later.
Pursuant to the License  Agreement,  the Company pays MCI certain royalties on a
per call basis.

     Although no assurances  can be given,  it is  anticipated  that the SANTRAX
product  can  be  utilized  by  other  industry  applications.  The  Company  is
developing  the  product  so that it can be sold  into  the  general  commercial
market,  and the service is currently being modified to meet the needs of a wide
range of businesses wishing to monitor or collect data from off-site employees.

     Technology  Infrastructure and Outsourcing  Services.  The Company supports
specialized  system  applications  for  businesses  based upon its analysis of a
client's particular need and specialized system applications.

     In addition,  the Company develops web sites, runs e-commerce  applications
and resells  telephone  services,  leveraging the favorable rates it receives by
virtue of the  substantial  call volume driven by SANTRAX.  The Company has also
offered  managed  services  in the  security  arena  such  as  security  audits,
enterprise  firewalls  and  network  monitoring,  although it  currently  is not
providing  such   services.   The  Company  plans  to  diversify  the  web  site
development,  e-commerce,  and telephone  services and resell them to businesses
throughout the New York metropolitan area.

     For the fiscal years ended May 31, 2002 and 2001, approximately $737,000 or
4% and  $2,071,000  or  12%,  respectively,  of the  Company's  total  operating
revenues were derived from services rendered for outsourcing services.






     Information  Technology  Services.  The Company,  through its SandataNet(R)
division,  provides IT consulting services for businesses and the public sector.
It  delivers  computer,   communications  and  networking  sales  and  services,
including training, maintenance and repair services, to companies and government
and professional services organizations.

     SandataNet(R)  manages a help desk for the Company's  internal  operations.
This help desk is responsible for desk side support services, including software
support,  hardware  support/break-fix,   LAN  administration  and  configuration
services.

     The  Company  has  installed  critical  software  applications  at a  local
municipal  government  office.  It also provides  custom  programming,  software
development and installation services to this sector.

     For the fiscal years ended May 31, 2002 and 2001  approximately  $2,766,000
or 15% and  $2,170,000 or 12%,  respectively  of the Company's  total  operating
revenues were derived from services rendered relating to SandataNet(R).

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location services.  NAIS had entered bankruptcy  proceedings and,
under the auspices of the Bankruptcy Court, the Company was permitted to "credit
bid" approximately  $124,000 of expenses (including salaries) it had incurred on
behalf of NAIS as the purchase  price for the assets,  and was given 180 days to
exploit the assets it had acquired.  The Company  incurred $77,000 in additional
costs  related to the  acquisition  of these  assets.  The tangible  assets were
determined to have no significant  fair value.  Therefore,  all the expenditures
related to the  acquisition  were  allocated  to  goodwill.  The Company has the
option to abandon the exploitation of these assets within the 180 day period. If
the Company  continues  to use the NAIS assets,  10% of the profits  (defined as
earnings before interest  expense and taxes)  generated by such use must be paid
to the bankruptcy estate for the first three years.

     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the goodwill.  Therefore,  the carrying value of the impaired
goodwill  was written down to its  estimated  fair value,  which was  determined
based on discounted  estimated cash flows. The Company  recognized an impairment
loss and write down of the  goodwill  of  approximately  $201,000.  Considerable
management  judgment is necessary to estimate  fair value;  accordingly,  actual
results could vary significantly from such estimates.

             Seasonality

             The Company's revenues are not subject to seasonal fluctuations.






             Competition

     In the sale of its software products, the Company competes for customers on
the basis of the range, price,  functionality and quality of its software and on
its ability to develop programs tailored to its customers' requirements. Many of
its competitors are companies with directly competitive software products, and a
number have substantially  greater financial resources and substantially  larger
marketing, technical and field organizations.

     With respect to the Company's  SHARP business,  there is added  competitive
pressure and  uncertainty  because the City of New York  requires all  contracts
with City agencies to undergo competitive bidding.  Furthermore,  the success of
the SHARP business rests with a key officer of the Company,  who has established
strong relationships with the Company's SHARP customers over the years. Although
the  Company  has been  awarded  contracts  based on its  bids,  there can be no
assurance that its bids will be accepted in the future.

     The computer services industry is characterized by competition in the areas
of service, quality, price and technical expertise.  Competitors in this segment
vary from small,  local  companies to  multinational  consulting  and accounting
firms.

             Customers

     The  Company's  customer  base is  primarily  drawn  from the  health  care
industry.  During the fiscal years 2002 and 2001, the Company  derived  revenues
from  the  Vendor  Agencies  who  are all  funded  by one  governmental  agency,
amounting to  approximately  $10,549,000 or 61% and  $10,608,000 or 60% of total
operating revenues,  respectively. The Company was owed approximately $1,259,000
and $1,160,000 from these customers at May 31, 2002 and 2001, respectively.  The
Company  also  derived  approximately  $693,000 or 4% and  $2,458,000  or 14% of
revenue in the years 2002 and 2001 from  National  Medical  Health Card Systems,
Inc.  ("Health  Card") for  database  and  operating  system  support,  hardware
leasing,  maintenance  and  related  administrative  services.  Health Card is a
public company engaged in the pharmacy  benefits  management  business;  Bert E.
Brodsky,  Chairman of the Board and Chief Executive  Officer of the Company,  is
also the Chairman of the Board and a principal  shareholder of Health Card. (See
Item 6 - "Management's  Discussion and Analysis or Plan of Operation - Liquidity
and Capital Resources").

        The Company markets its products and services through telemarketing and
sales representatives.

             Proprietary Rights

     The Company filed a United States Trademark  application  which renames its
voice recognition timekeeping system to SANTRAX. The trademark was registered on
September 16, 1997.

     On March 3, 1997 the Company  filed an  application  with the United States
Patent  and  Trademark  Office to  register  its  SandataNet(R)  trademark.  The
trademark was registered on February 24, 1998.

     The Company has not applied  for  Federal  copyright  registration  for its
computer  software  systems now in existence or being  developed.  However,  the
Company believes that its systems are trade secrets and that they, together with
the  documentation,  manuals,  training aids,  instructions  and other materials
supplied  to users,  are  subject to the  proprietary  rights of the Company and
protected by applicable trade secret laws. The Company generally seeks to obtain
trade  secret  protection   pursuant  to  non-disclosure   and   confidentiality
agreements with its employees. Although the Company's customers are advised that
the Company  retains title to all of its  products,  and they agree to safeguard
against  unauthorized  use of such systems,  there can be no assurance  that the
Company  will be able to protect  against  misappropriation  of its  proprietary
rights and trade secrets.

             Research and Development

     The Company  incurred  approximately  $62,000 and $10,000 during the fiscal
years 2002 and 2001,  respectively,  on research  and  development.  The Company
incorporates its research and development into its on-going business activities.
The Company's  employees may develop new software  programs and expand or modify
existing  ones.  After  determining  that a program  has  reached  technological
feasibility,  the subsequent development costs are capitalized.  All other costs
are expensed.

             Employees

     As of  May  31,  2002,  the  Company  and  its  subsidiaries  employed  102
employees,  including  98  full-time  and 4  part-time  employees.  The  Company
believes  that  its  success  will  depend  in part on its  ability  in a highly
competitive   environment  to  attract  and  retain  highly  skilled  technical,
marketing and management personnel.

     On August 8, 2001, the Company  eliminated certain positions and terminated
approximately  thirty (30) employees.  Projected  revenue  reductions and recent
operating losses combined to cause management to re-evaluate staffing needs. The
eliminations and  terminations  from within the Company and its subsidiaries are
expected to generate  approximately  $1,600,000 in reduced expenses on an annual
basis. The Company also incurred approximately $47,000 in severance payments.

     The Company  considers  its  employee  relations  to be  satisfactory.  The
Company is not a party to any collective bargaining agreement.

ITEM 2 - DESCRIPTION OF PROPERTY

     The Company and its  subsidiaries  currently  occupy  approximately  25,188
square feet of office space  located at 26 Harbor Park Drive,  Port  Washington,
New York 11050 (the  "Facility").  The Company  subleases  the Facility from BFS
Realty,  LLC,  successor  to BFS Sibling  Realty,  Inc.  and an affiliate of the
Company's Chairman (the "Affiliate"). The Affiliate leases the Facility from the
Nassau County Industrial  Development Agency (the "NCIDA"),  pursuant to a lease
(the  "Lease"),  which was entered into by that Agency and the Affiliate in July
1994. (Subsequent  assignments and re-assignments of that Lease have, in effect,
returned the parties to their original  positions.).  The Lease expires in March
2005.  The  Affiliate  has the right to become  the owner of the  Facility  upon
expiration of the Lease.  The  Affiliate  subleases a portion of the Facility to
the Company.  The Company  currently pays rent to the Affiliate in the amount of
$22,679 per month.  The Affiliate  also receives rent from other  companies that
occupy space in the Facility,  some of which are  affiliated  with the Company's
Chairman.  The Company  believes  that its  facilities  are adequate for current
purposes.  See  Item 6 -  "Management's  Discussion  and  Analysis  or  Plan  of
Operation  -  IDA/SBA  Financing",  and  Note  6a to  the  Financial  Statements
contained in Item 7 of this Form 10-KSB,  for a discussion of the NCIDA and U.S.
Small  Business  Administration   financing   transactions.   See  also  Note  5
(Commitments and  Contingencies) to the Financial  Statements  comprising Item 7
hereof,  for a  description  of the  lease  entered  into as of June 1, 2001 and
revised in November, 2001.

ITEM 3 - LEGAL PROCEEDINGS

     In August of 1999, the Company's  wholly-owned  subsidiary,  Sandsport Data
Services,  Inc.  ("Sandsport")  was named as a defendant in Greater Bright Light
Home Care Services,  Inc. et al. v. Joseph  Jeffries-El,  El Equity Corporation,
Sandsport  Data Services,  Inc. et al.  (Supreme Court of the State of New York,
Kings  County).  Sandsport's  contractual  obligation  to Greater  Bright  Light
involved the depositing of certain government-issued checks into a specific bank
account.  Upon receiving written notification from the agency issuing the checks
to stop depositing them in that account,  Sandsport ceased  depositing them. The
plaintiff  brought the action against Joseph  Jeffries-El and El Equity,  and El
Equity  counterclaimed  against  the  plaintiff,  each  basing its claims on the
financing   agreement  between  them.  El  Equity  also  cross-claimed   against
Sandsport,  asserting that Sandsport converted the  government-issued  checks to
its own use. Although Sandsport is named as a defendant,  the Complaint seeks no
affirmative  relief  against  Sandsport.   Co-defendant  Citibank  has  asserted
indemnification  claims  against  Sandsport  and  all of the  other  defendants.
Sandsport disputes all liability.  The aggregate amount of the funds at issue is
approximately $262,000.

     On October 19, 1999, the Company and  Pro-Health  brought an action against
Provider  Solutions  Corporation  ("Provider") and others, in Supreme Court, New
York County, based on breach of contract, fraudulent misrepresentation and other
causes of action,  demanding  damages of  approximately  $10,000,000 (the "State
Action").  On October 22, 1999,  Provider brought a federal action in the United
States  District  Court  for the  Eastern  District  of New York  (the  "Federal
Action").  The complaint  demanded relief in the form of a permanent  injunction
and damages  against the Company and Pro-Health  for total amounts  ranging from
$10,000,000 to $15,000,000.  The State Action was consolidated  with the Federal
Action.

     On March 8, 2001 the Company, Pro-Health, Provider and all involved parties
and individuals settled the consolidated Federal Action,  globally resolving all
issues,  claims and disputes.  The  settlement  entailed the exchange of general
releases  between the Company,  Pro-Health,  Provider  and all parties,  and the
payment of $600,000 to Provider,  of which $50,000 was paid by the Company.  The
balance  of the  payment  under  the  settlement  was  funded  by the  Company's
insurers.  The  settlement  did not  have a  material  effect  on the  Company's
financial performance.  The Company has retained its proprietary interest in the
subject software.

     On March 1, 2000, Dataline,  Inc.  ("Dataline") began a lawsuit against MCI
WorldCom Network Services,  Inc. ("MCI") and the Company for alleged trade libel
and  related  counts,  in the  United  States  District  Court for the  Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001, MCI had brought a patent infringement  lawsuit against
Dataline,  alleging that it was  infringing  three MCI patents,  under which the
Company  has an  exclusive  license in New York City.  Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments from either MCI or the Company to Dataline.  In addition,
Sandata and  Dataline  entered  into an  Exclusive  Service  Agreement  by which
Dataline  agreed to use the Company's "call capture  infrastructure"  for all of
Dataline's time and attendance systems,  and to pay royalties to the Company for
such use. The terms of the settlement also included mutual releases. See Note 5c
to the Financial Statements comprising Item 7 hereof.

     An action was  commenced  against  the  Company and Health Card by a former
executive of Health Card, Mary Casale, who alleged that employees of both Health
Card and the Company engaged in sex  discrimination as to Ms. Casale,  and thus,
violated  Title VII of the Civil Rights Act of 1964. In February 2002 the matter
was withdrawn from the Equal Employment Opportunity Commission,  and was settled
without any effect on the business or financial condition of the Company.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

             Not applicable.






                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

     The Company's  Common Stock is traded on the Nasdaq  SmallCap  Market under
the symbol "SAND".

     On July 9, 2002 the Company issued a press release  announcing  that Nasdaq
had informed the Company that its shares would be subject to de-listing from the
SmallCap Market for failure to comply with Nasdaq's  Marketplace Rules regarding
minimum  value of publicly  held  shares and  minimum  bid price per share.  The
Company  requested a hearing on these  matters,  and the  de-listing  was stayed
until the  hearing.  The Company was  informed by Nasdaq on August 21, 2002 that
the  Company  had  regained  compliance  with both  Marketplace  Rules and that,
therefore, the hearing was cancelled and the matter is moot.

     The table below sets forth high and low sale prices of the Common Stock, as
furnished by Nasdaq.

                                                                                                   

                                                                                             Sale Prices
                                                                                       High              Low
                                                                                  ---------------- -----------------
                                                                                  ---------------- -----------------
Fiscal Year Ended
May 31, 2002
First Quarter                                                                           $1.35            $1.07
Second Quarter                                                                          $1.18           $  .84
Third Quarter                                                                           $1.67           $  .75
Fourth Quarter                                                                          $1.02           $  .44

Fiscal Year Ended
May 31, 2001
First Quarter                                                                           $1.88            $1.25
Second Quarter                                                                          $1.50           $  .53
Third Quarter                                                                           $1.41           $  .84
Fourth Quarter                                                                          $1.38           $  .86



Holders

     The Company has been advised by its transfer agent (North American Transfer
Co.) that the number of holders of record of the Company's  Common Stock,  as of
August 16, 2002 was 991.

Dividends

     No cash  dividends have been paid by the Company on its Common Stock and no
such payment is anticipated in the foreseeable future.

     The Company's  ability to declare and pay dividends is restricted  pursuant
to the terms of a Revolving  Credit  Agreement  dated April 18, 1997 between the
Company and HSBC Bank USA,  formerly Marine Midland Bank (the "Bank"),  and also
under the terms of the  Guaranty  Agreement  dated June 1, 1994 by and among the
Company  (as a  guarantor),  the  Affiliate,  and the Bank (among  others).  The
Guarantee  Agreement was entered into in connection  with the IDA/SBA  Financing
discussed  in Item 6 hereof,  "Management's  Discussion  and Analysis or Plan of
Operation".

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


     The Company provides its computerized  information processing services to a
variety of users, although principally to the health care industry.  Many of the
Company's  software  programs are  adaptable  to customers in related  fields of
enterprise.  Thus,  the  components  of the SHARP system for the Home  Attendant
Program - Medicaid reimbursable billing, management reports, payroll processing,
tax reports - are being  developed for  utilization in other  settings,  such as
nursing homes, skilled nursing facilities, and rehabilitation facilities.

     The  Company's  telephone-based  data  collection  services  are  currently
principally used to monitor  off-site  workers in the home healthcare  industry.
The SANTRAX  proprietary  software could be used to monitor  off-site workers in
other industries,  and the Company is currently  exploring  opportunities in the
temporary staffing, security guard and building maintenance industries.

     Technology  infrastructure and outsourcing  services are currently utilized
in-house and within  affiliate  companies.  The Company intends to take the core
competencies  that it has  developed in  supporting  its service  offerings  and
resell them into the business  community in the New York metropolitan  area. The
Company cannot assure its ability to resell such services.

     The Company believes it can leverage its in-house capabilities to develop a
new IT services  business,  and intends  that such IT services  will be marketed
primarily to businesses in the New York metropolitan  area, where it believes it
can support  professional  services with on-site  technical help. In the future,
the Company believes it will have the capability of rolling out such IT services
to a wider  geographical  audience.  The  Company  cannot  assure its ability to
develop a new IT service  business and cannot predict that such services will be
successful.

             Analysis of Operations

             Fiscal Years ended May 31, 2002 compared with May 31, 2001

     Service  fee  revenues  for fiscal  2002 were  $17,173,922  as  compared to
$17,769,069  for the  previous  fiscal  year,  a decrease of $595,147 or 3%. The
decrease is primarily  attributable to decreases in revenues from outsourcing of
approximately   $1,300,000   partially  offset  by  increases  in  revenue  from
SandataNet of approximately $775,000.

     Other  income for the year ended May 31,  2002 was  $514,999 as compared to
$368,502  for the year ended May 31,  2001,  an increase of $146,497 or 40%. The
increase is attributable  to $115,000 in payments  received in connection with a
litigation  settlement,  and the  sale of a  customer  list  for  $79,000.  This
increase  is   partially   offset  by  a  decrease  in  income   recognized   on
sales/leaseback transactions.

              Expenses Related to Services

     Operating  expenses  were  $9,877,651  for the year ended May 31, 2002,  as
compared to $10,372,524  for the year ended May 31, 2001, a decrease of $494,873
or 5%. Decreased payroll expenses (approximately $875,000) due to a reduction in
workforce,  and decreased  equipment rental expenses  (approximately  $373,000),
partially offset by increases in purchases for resale  (approximately  $945,000)
were the primary factors for the decrease in operating expenses.

     Selling,  general and  administrative  expenses  for the year ended May 31,
2002 were $5,502,264  compared to $5,004,255 for the year ended May 31, 2001, an
increase of $498,099 or 9%. The  increases  were  primarily  due to increases in
consulting and legal expenses, and additional insurance premiums.

     Depreciation and  amortization  expenses were $1,839,959 for the year ended
May 31,  2002,  as compared to  $2,748,411  for the year ended May 31,  2001,  a
decrease of $908,452 or 33%.  The  decrease was  primarily  attributable  to the
write off of impaired  software in 2001,  as  described  below under the heading
"Impairment of Developed Software."

     Interest  expense for the year ended May 31, 2002 was  $241,729 as compared
to $189,240 for the year ended May 31, 2001,  an increase of $52,489 or 28%. The
increase  was a result  of  higher  overall  average  daily  balances  under the
Company's revolving credit agreement.

             Impairment of Developed Software

     During the fourth  quarter of the year ended May 31, 2001, the Company shut
down  certain  operating  systems and  hardware  configurations,  which had been
capitalized  in  previous  years.  The  Company  had  determined  that the older
system's  architecture  had become  obsolete and too costly to maintain,  so the
Company  coordinated  placing  several new systems in  production  after running
parallel  with  pre-existing  systems  resulting in the  retirement of the older
systems during the fourth quarter.  The Company further determined that there is
no net realizable value remaining since no future revenue would be recognized in
the retired systems because the architecture was completely  replaced by the new
systems.  As such the Company  recognized  an impairment  loss of  approximately
$3,300,000 for the year ended May 31, 2001.

             Impairment of Goodwill

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location  services for approximately  $201,000.  NAIS had entered
bankruptcy  proceedings  and,  under the auspices of the Bankruptcy  Court,  the
Company  was  permitted  to "credit  bid"  approximately  $124,000  of  expenses
(including salaries) it had incurred on behalf of NAIS as the purchase price for
the assets,  and was given 180 days to exploit the assets it had  acquired.  The
Company  incurred  approximately  $77,000  in  additional  costs  related to the
acquisition  of these  assets.  The tangible  assets were  determined to have no
significant  fair  value.  Therefore,   all  the  expenditures  related  to  the
acquisition  were  allocated to goodwill.  The Company has the option to abandon
the  exploitation  of these  assets  within the 180 day  period.  If the Company
continues to use the NAIS assets, 10% of the profits (defined as earnings before
interest expense and taxes) generated by such use must be paid to the bankruptcy
estate for the first three years.

     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the  goodwill.  As such,  the carrying  value of goodwill was
written  down to its  estimated  fair  value,  which  was  determined  based  on
discounted  estimated cash flows. The Company  recognized an impairment loss and
write down of the goodwill of approximately  $201,000.  Considerable  management
judgment is necessary to estimate fair value; accordingly,  actual results could
vary significantly from such estimates.

             Income Tax Expenses

     Income tax expense  (benefit) was $249,067 and $(1,293,401) for fiscal 2002
and 2001,  respectively.  The  increase  in income tax  expense is due to higher
pretax  income.  The effective tax rates for fiscal 2002 and 2001 were 63.7% and
(37.0%), respectively.

             IDA/SBA Financing

     In November, 1996 the Company entered into an agreement with the Affiliate,
the Nassau County Industrial  Development  Agency ("NCIDA"),  and Marine Midland
Bank (the  "Bondholder")  (the  "Agreement").  Pursuant  to the  Agreement,  the
Affiliate (i) assumed all of the Company's rights and obligations  under a Lease
Agreement that was  previously  between the Company and the NCIDA (the "Lease"),
and (ii) entered into a Sublease Agreement with the Company for the premises the
Company  occupies.  Pursuant to the  Agreement,  the Affiliate also obtained the
right to become the owner of the premises upon  expiration  of the Lease.  Under
the terms of the Agreement,  the Company is jointly and separately liable to the
NCIDA for all  obligations  owed by the  Affiliate to the NCIDA under the Lease;
however,  the  Affiliate  has  indemnified  the Company  with respect to certain
obligations relative to the Lease and the Agreement.  In addition, the Agreement
provides that the Company is bound by all the terms and conditions of the Lease,
and that a security interest is granted to the Affiliate in all of the Company's
fixtures constituting part of the premises.

     The  foregoing  transactions  and  agreements  were the last in a series of
transactions involving the Company, the Affiliate, NCIDA, the Bondholder and the
U.S. Small Business  Administration.  Chief among these was the borrowing by the
Affiliate in June of 1994 of $3,350,000  in the form of  Industrial  Development
Revenue  Bonds  (the  "Bonds")  to  finance  the  acquisition  of the  Facility.
Simultaneously  with the issuance of the Bonds:  (1) NCIDA obtained title to the
Facility  and  leased  it to the  Affiliate,  (2) the  Affiliate  subleased  the
Facility to the Company, (3) the Bondholder bought the Bonds, (4) the Bondholder
received a mortgage and security  interest in the Facility to secure the payment
of the Bonds. The Affiliate's obligations under the Lease were guaranteed by Mr.
Brodsky,  the  Company,   Sandsport  and  others.  The  Affiliate's  obligations
respecting  repayment  of the Bonds were also  guaranteed  by Mr.  Brodsky,  the
Company, Sandsport and others.

     The Bonds  currently  bear interest at the rate of 9%, and the  outstanding
balance  due on the Bonds as of May 31,  2002 was  $1,444,445.  During the years
ended  May 31,  2002  and  2001,  the  Company  paid  rent to the  Affiliate  of
approximately $408,000 and $615,000, respectively.

     On August 11, 1995, the Company entered into a $750,000 loan agreement with
the Long Island Development Corporation ("LIDC"),  under a guarantee by the U.S.
Small  Business  Administration  ("SBA")  (the  "SBA  Loan").  The SBA  Loan was
assigned to the Affiliate in November 1996;  however,  repayment of the SBA Loan
is guaranteed by the Company and various subsidiaries of the Company. The entire
proceeds  were used to repay a portion of the Bonds.  The SBA Loan is payable in
240 monthly  installments of $6,255,  which includes principal and interest at a
rate of 7.015%. The balance of the SBA Loan as of May 31, 2002 was $599,024.

             Liquidity and Capital Resources

     The Company's  working  capital  decreased as of May 31, 2002 to $1,890,988
from $1,956,661 as of May 31, 2001. The primary factors that  contributed to the
decrease  were  increases  in  accounts  payable,  accrued  expenses,  and notes
receivable-officer,  and decreases in receivables  from  affiliates and deferred
income, offset by an increase in cash and cash equivalents.

     The Company has spent  approximately  $2,620,049 for fixed asset additions,
including  software  capitalization  costs in connection with revenue growth and
new  product  development.  The  Company  expects a  reduction  in the levels of
capital expenditures in the future.

     On July 14, 1998 the Chairman, certain officers and directors, and a former
director (who is also the spouse of an officer and an employee of Sandsport Data
Services, Inc. ("Sandsport"), the Company's wholly owned subsidiary),  exercised
their respective options and warrants to purchase an aggregate of 921,334 shares
of Common Stock. The exercise prices ranged from $1.38 to $2.61 per share for an
aggregate cost of $1,608,861. Payment for such shares was made to the Company in
the amount of $921  representing  the par value of the shares,  and a portion in
the form of  non-recourse  promissory  notes due in July 2001,  with interest at
eight and one-half percent (8-1/2%) per annum, payable annually,  and secured by
the number of shares  exercised.  The Company has received  interest payments on
such notes in the amount of $131,994 and $162,110  during the fiscal years ended
May 31, 2002 and 2001. As of May 31, 2002 and 2001, the  outstanding  balance on
such notes,  including principal and accrued but unpaid interest, was $1,669,640
and $1,722,547,  respectively.  (see item 7 "Finacial  Statements" note 12d). On
July 14,  2001,  the  Company  agreed to extend the due dates of the  Promissory
Notes for one hundred  twenty  days.  On  November 9, 2001,  the due date of the
Notes was  extended to November 9, 2004,  and the Company  agreed to  substitute
full  recourse  unsecured  Notes  for  the  Notes  it had  previously  accepted.
Effective December 1, 2001, the interest rate was changed from 8-1/2% to 6%.

     On April 18, 1997 Sandsport, entered into a revolving credit agreement (the
"Credit  Agreement") with the Bank which allowed  Sandsport to borrow amounts up
to  $3,000,000.  Interest  accrues  on  amounts  outstanding  under  the  Credit
Agreement at a rate equal to the London Interbank  Offered Rate plus 2% and will
be paid quarterly in arrears or, at Sandsport's  option,  interest may accrue at
the Bank's  prime rate.  The Credit  Agreement  requires  Sandsport to pay a fee
equal to 1/4% per annum on the unused average daily balance of amounts under the
Credit  Agreement.  In addition,  there are other fees and charges imposed based
upon  Sandsport's  failure to  maintain  certain  minimum  balances.  The Credit
Agreement has been amended by the Bank to permit  Sandsport to borrow amounts up
to  $4,500,000  until June 14,  2003.  Interest  accrues at the same rate as the
original  Credit  Agreement.  The  indebtedness  under the Credit  Agreement  is
guaranteed by the Company and Sandsport's sister subsidiaries (the "Group"). All
of the  Group's  assets are  pledged to the Bank as  collateral  for amounts due
under the  Credit  Agreement,  which  pledge is  secured  by a first lien on all
equipment owned by members of the Group,  as well as a collateral  assignment of
$2,000,000 of life insurance payable on the life of the Company's Chairman.  The
Group's  guaranty  to  the  Bank  was  subsequently   modified  to  include  all
indebtedness  incurred by the Company under the amended Credit  Agreement  dated
August 24, 2001 (see below).

     In  addition,  pursuant to the Credit  Agreement,  the Group is required to
maintain  certain  levels  of net  worth and meet  certain  financial  ratios in
addition to various other  affirmative and negative  covenants.  At May 31, 2001
the Group  failed to meet  these net worth and  financial  ratios,  and the Bank
granted the Group a waiver.  As of August 24, 2001,  Sandsport,  the Company and
the other members of the Group,  and the Bank,  entered into the Third Amendment
and Waiver  (the "Third  Amendment")  to the Credit  Agreement.  Pursuant to the
Third  Amendment,  Sandsport's  covenants  to the Bank to maintain a certain net
worth and to maintain certain financial ratios were revised,  on a going-forward
basis, and the noncompliance with the existing covenants was waived by the Bank.
In addition,  in connection with the Third Amendment,  Sandsport and each member
of the  Group  executed  and  delivered  to the Bank a  Collective  Amended  and
Restated Security Agreement,  pursuant to which the Bank's security interest was
extended  to include a security  interest  in all of the  personal  and  fixture
property of  Sandsport,  the Company and the members of the Group.  On April 11,
2002 the Bank  approved  the  extension  of the  termination  date of the Credit
Agreement  to June 14,  2003.  There  can be no  assurance  that  the Bank  will
continue to grant waivers if the Group fails to meet the net worth and financial
ratios in the future.  If such  waivers are not granted,  any loans  outstanding
under the Credit Agreement become immediately due and payable, which may have an
adverse effect on the Company's business,  operations or financial condition. As
of May 31, 2002, the outstanding  balance on the Credit  Agreement with the Bank
was $4,500,000 and the Company was in compliance with the covenants.

     The  Company is a party to various  sale/leaseback  transactions  involving
certain fixed assets,  principally  computer  hardware,  software and equipment.
Gains on these transactions have been deferred and are being recognized over the
lives of the related leases, each of which is 36 months.  Approximately $297,000
and $344,000 of the deferred gains were recognized in other income for the years
ended May 31, 2002 and 2001,  respectively.  Included  in these  amounts are the
effects of the following sale/leaseback transactions:

     (a) In January 1998, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $515,000, were sold for
$700,000.  The resulting gain of approximately $185,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $36,000
of the deferred gain was recognized  for the year ended May 31, 2001,  which was
the last year of the lease. An  unaffiliated  third party purchased the residual
rights in such lease.

     (b) In January 1999, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $830,000, were sold for
$1,100,000.  The  resulting  gain of  approximately  $270,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $60,000 and $90,000 of deferred gain was recognized for the years
ended May 31, 2002 and 2001, respectively. An unaffiliated third party purchased
the residual rights in such lease.

     (c) In May 1999, the Company entered into a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $896,000  were  sold for
$1,100,000.  The  resulting  gain of  approximately  $204,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $68,000 of  deferred  gain was  recognized  for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     (d) In October 1999, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $895,000, were sold for
$1,115,000.  The  resulting  gain of  approximately  $220,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $73,000 of the deferred gain was recognized for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     (e) In January 2000, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $442,000, were sold for
$561,000.  The resulting gain of approximately $119,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $40,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     (f) In February 2000, the Company entered into a sale/leaseback  of certain
fixed assets which had a net book value of approximately $237,000, were sold for
$277,000.  The resulting gain of approximately  $40,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $14,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     (g) In November 2000, the Company entered into a sale/leaseback  of certain
fixed assets which had a net book value of approximately $421,500, were sold for
$548,300.  The resulting gain of approximately $126,800 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $42,000
and $21,000 of the deferred gain was recognized for the years ended May 31, 2002
and 2001,  respectively.  An  unaffiliated  third party  purchased  the residual
rights in such lease.

     Until  January of 2002,  the Company was leasing  equipment  and  providing
services to Health Card  pursuant to a verbal  agreement,  and was receiving its
allocable  share of  administrative  and  support  services  that were shared by
Health  Card  and  the  Company,  at a cost  to  Health  Card  of  approximately
$81,000/month.  As of January,  2002, the Company ceased  rendering  services to
Health Card.  Health Card  continues to pay its allocable  share of expenses for
shared services, which amounts to approximately $45,000 per month.

     The Company believes the results of its present  operations,  together with
the available  Credit Line,  should be adequate to fund present and  foreseeable
working capital requirements.

Prospects for the Future, Trends and Other Events

     There is added competitive  pressure and uncertainty in the Company's SHARP
business  because the City of New York requires all contracts with City agencies
to undergo competitive bidding.  Furthermore,  the success of its SHARP business
rests  with  a  key  officer  of  the  Company,   who  has  established   strong
relationships  with the Company's SHARP  customers over the years.  Although the
Company has been awarded  contracts based on its bids, there can be no assurance
that its bids will be accepted in the future.

Going Private Transaction

     The  Company  has  received  a  proposal  to  engage  in  a  going  private
transaction.  The proposed  transaction  is  anticipated  to be in the form of a
merger with an entity owned by an investor  group to be led by Bert E.  Brodsky,
the  Company's  Chief  Executive  Officer,  and to include  Hugh Freund and Gary
Stoller,  as well as other  investors (the  "Acquiring  Group")  Pursuant to the
proposal,  the  Company's  shareholders  (other  than Mr.  Brodsky and the other
shareholders  that shall  comprise  part of the  Acquiring  Group) would receive
$1.50 per share of Common  Stock of the Company  (the  "Shares"),  in cash.  The
proposal may be amended, modified or supplemented at any time.

     The Board of Directors has appointed a Special Committee (the "Committee"),
comprised of Ronald Fish and Martin Bernard, to review the proposed transaction.
The  Committee has retained  Brean Murray & Co., Inc. as its financial  advisor,
and has retained its own legal counsel.

     The  proposed  transaction  would result in the  acquisition  of all of the
outstanding Shares of the Company other than the shares owned by Mr. Brodsky and
the other  shareholders  that shall  comprise part of the Acquiring  Group.  The
final  terms  of any  acquisition  will be  based on  negotiations  between  the
Acquiring Group and the Committee.  The proposed acquisition will be subject to,
among other things, (1) the negotiation, execution, and delivery of a definitive
agreement,  (2) approval of the proposed transaction by the Committee,  the full
Board of Directors  and the  Company's  shareholders,  (3) receipt of a fairness
opinion by the Committee,  (4) applicable regulatory approval, and (5) obtaining
any necessary third-party consents or waivers.  There can be no assurance that a
definitive merger agreement will be executed and delivered, or that the proposed
transaction will be consummated.

     Except as  discussed  above,  the Company has no  knowledge of any specific
prospects,  industry or other trends,  events or uncertainties that might have a
material impact on the Company's net sales or revenues or income from continuing
operations,  or that would  increase the value of the shares in the long-term or
the short-term.

ITEM 7 - FINANCIAL STATEMENTS

             (BEGINS ON PAGE F-1 BELOW)

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 persons are the Directors and executive officers of
the Company.

                                                                                                 

      =========================== ========= ========================================================================
                                                                     Positions and Offices
                                                                      Presently Held with
                 Name               Age                                   the Company
      --------------------------- --------- ------------------------------------------------------------------------
      --------------------------- --------- ------------------------------------------------------------------------
      Bert E. Brodsky                59     Chairman and Treasurer, President Pro Tem
      --------------------------- --------- ------------------------------------------------------------------------
      --------------------------- --------- ------------------------------------------------------------------------
      Hugh Freund                    64     Executive Vice President, Secretary and Director
      --------------------------- --------- ------------------------------------------------------------------------
      --------------------------- --------- ------------------------------------------------------------------------
      Gary Stoller                   49     Chief  Technology Officer, Executive Vice President
      --------------------------- --------- ------------------------------------------------------------------------
      --------------------------- --------- ------------------------------------------------------------------------
      Ronald L. Fish                 61     Director
      --------------------------- --------- ------------------------------------------------------------------------
      --------------------------- --------- ------------------------------------------------------------------------
      Martin Bernard                 53     Director
      =========================== ========= ========================================================================


     Bert E. Brodsky has been  Chairman and  Treasurer of the Company since June
1, 1983 and President from December 1989 through  January 2000. From August 1983
through  November 1984,  from December 1988 through  January 1991, from February
1998 to June 1998 and from  December  1998 to  present,  Mr.  Brodsky  served as
Chairman  of Health  Card and from June 1998  through  December  1998  served as
President of Health Card.  From October 1983 through  December 1993, Mr. Brodsky
served as Chairman of Compuflight,  a provider of  computerized  flight planning
services.  Since August 1980, Mr. Brodsky has served as Chairman of P.W. Medical
Management,   Inc.,  which  provides   financial  and  consulting   services  to
physicians. Since 1979, Mr. Brodsky has also served as President of Bert Brodsky
Associates, Inc., which provides consulting services.

     Hugh Freund,  a founder of the Company,  was the Company's  President  from
1978 to November  1986,  and a Director of the Company  since its  formation  in
1978.  Since November 1986, Mr. Freund has served as an Executive Vice President
of the Company  and  Secretary  since  1995.  Mr.  Freund is also  President  of
Sandsport,  the Company's  wholly-owned health care data processing  subsidiary.
Additionally,  Mr.  Freund  has been  serving  as the  President  of  Pro-Health
Systems,  Inc.  since  March 9, 1999.  In addition  to  managing  the  Company's
operations,  Mr. Freund has been  responsible  for the marketing  efforts of the
Company.

     Gary Stoller joined the Company at the time of its formation in 1978 as its
Senior Programmer and Analyst, and has been its Chief Information Officer and an
Executive  Vice  President and a Director of the Company since January 1983. Mr.
Stoller has been responsible for computer design,  programming and operations of
the Company as its Chief Technology  Officer since 1995, and is the architect of
the SHARP and SanTrax systems.






     Ronald L. Fish has served as a Director of the Company since January, 1998.
Since  1975,  Mr.  Fish  served as  Administrator,  Treasurer  and  Director  of
Unlimited  Care  Inc.,  a  nursing  services  firm,  and is a  certified  public
accountant.  Mr. Fish serves on the Company's Audit Committee and on the Special
Committee.

     Martin  Bernard has served as a Director of the Company  since  October 22,
2001.  Since 1970,  Mr.  Bernard has worked in the insurance  industry,  most of
those years  working for The Rampart  Group,  located in Lake  Success,  NY. Mr.
Bernard is a graduate of the New York Institute of Technology,  earning a degree
in Business  Administration and since 1997 has been a Trustee of the North Shore
LIJ Health  Systems.  Mr. Bernard serves on the Company's Audit Committee and on
the Special Committee.

Section 16(a) Beneficial Ownership Reporting Compliance

     To the Company's knowledge,  based solely on a review of copies of Forms 3,
4 and 5 furnished to it and written  representations  that no other reports were
required,  during the fiscal year ended May 31, 2002,  the  Company's  officers,
Directors  and  10%   shareholders   complied  with  all  Section  16(a)  filing
requirements applicable to them except: Mr. Fish failed to timely file 4 reports
relative  to 4  transactions  and Mr.  Bernard  failed to  timely  file 1 report
relative to 1 transaction.

ITEM 10 - EXECUTIVE COMPENSATION

Summary Compensation Table

     The  following  table sets forth certain  information  for the fiscal years
ending  May 31,  2002,  2001 and 2000  concerning  the  compensation  of Bert E.
Brodsky,  the  Chairman  and Chief  Executive  Officer of the  Company;  Stephen
Davies,  President of the Company from February 2000 until August 6, 2001;  Hugh
Freund, Executive Vice President and Secretary; and Gary Stoller, Executive Vice
President and Chief Technology  Officer.  No other executive officer had a total
salary and bonus in excess of $100,000 for the fiscal year ended May 31, 2002.






                                                                                                               

=========================== ======= ======================================== ================================= ==============
                                             Annual Compensation                  Long-Term Compensation
--------------------------- ------- ---------------------------------------- --------------------------------- --------------
--------------------------- ------- ------------ ---------- ---------------- ------------------------ -------- -------------
                                                                                     Awards           Payouts
--------------------------- ------- ------------ ---------- ---------------- ------------------------ -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                                                             Other Annual    Restricted   Securities
                                                               Compensa-        Stock     Underlying  LTIP      All Other
    Name and Principal                Salary       Bonus         tion          Awards     Options/    Payouts  Compensation
         Position            Year       ($)         ($)           ($)            ($)       SARs (#)     ($)        ($)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------

--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
Bert E. Brodsky, Chairman    2002   297,693 (2)     --         27,334(4)         --           --        --      53,785 (5)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2001   310,000 (2)     --         27,918(4)         --           --        --      41,246 (5)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2000   200,000 (2)  113,650      14,013 (4)         --        350,000      --      28,564 (5)
                                                    (3)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
Gary Stoller, Executive      2002     155,769      5,000      14,366 (4)         --           --        --      16,040 (6)
Vice President, Chief
Technology Officer
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2001     150,000      5,800       22,391(4)         --           --        --      16,040 (6)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2000     150,000      5,000      22,391 (4)         --           --        --      16,040 (6)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
Hugh Freund, Executive       2002     171,346     30,500      15,585 (4)         --           --        --      22,670 (7)
Vice President, Secretary                                                                                       17,064 (8)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2001     165,000     37,500      15,585 (4)         --           --        --      22,670 (7)
                                                                                                                17,064 (8)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                                                                                                                22,670 (7)
                            2000      82,789      28,000      15,585 (4)         --           --        --      17,064 (8)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
Stephen Davies, President    2002     139,528       --            --             --           --        --          --
(la)
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                             2001     200,159       --            --             --        150,000      --          --
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
--------------------------- ------- ------------ ---------- ---------------- ------------ ----------- -------- -------------
                            2000      62,307        --            --             --        100,000      --          --
                             (1b)
=========================== ======= ============ ========== ================ ============ =========== ======== =============


     (1a) Mr.  Davies'  employment as President of the Company was terminated on
August 6, 2001. See Note 5 to the Financial Statements comprising Item 7 of this
Annual Report on Form 10-KSB.

     (1b)  Represents  compensation  paid to Mr.  Davies  from  February 1, 2000
through May 31, 2000, of which $12,000 were consultation fees.

     (2) As of May 31,  in each of 2000,  2001 and  2002  Mr.  Brodsky  signed a
waiver wherein he agreed to waive his rights to an additional $300,000, $190,000
and $202,307, respectively, of compensation due to be paid to him for the fiscal
years then  ended,  pursuant to the terms of the  Brodsky  Employment  Agreement
discussed  below under  "Employment  Agreements,  Termination  of Employment and
Change-in-Control Agreements."

     (3)  Represents  25,000  shares of Common Stock  granted to Mr.  Brodsky on
February  4, 2000,  and  $82,000 in bonus paid in the fiscal  year ended May 31,
2000.

     (4)  Represents   compensation   relating  to  the  use  of  Company-leased
automobiles  provided  for business  purposes by an  affiliate of the  Company's
Chairman.

     (5)  Includes  insurance  premiums  paid by the  Company  on  behalf of Mr.
Brodsky,  for life  insurance  policies on his life,  the  benefits of which are
payable to his spouse.

     (6)  Includes  insurance  premiums  paid by the  Company  on  behalf of Mr.
Stoller,  for life  insurance  policies on his life,  the  benefits of which are
payable to his spouse.

     (7)  Includes  insurance  premiums  paid by the  Company  on  behalf of Mr.
Freund,  for life  insurance  policies  on his life,  the  benefits of which are
payable to his spouse.

     (8)  Represents  insurance  premiums  paid by the  Company on behalf of Mr.
Freund  for life  insurance  policies  on his life,  the  benefits  of which are
payable to an insurance trust, of which Mr. Freund is a co-Trustee.

     Option/SAR Grants in Last Fiscal Year

     Not Applicable.

     Aggregated Option/SAR Exercise in Last Fiscal Year and Fiscal Year-End
Option Value Table

     The following table sets forth certain information  concerning the value of
unexercised  options and warrants held by the named  executive  officers for the
fiscal year ended May 31, 2002:

                                                                                                      

===================== ======================= ================= ========================== ==========================
                                                                  Number of Securities       Value of Unexercised
                                                                 Underlying Unexercised    in-the-Money Options and
                                                                 Options and Warrants at      Warrants at May 31,
                        Shares Acquired on     Value Realized        May 31, 2002(#)                2001($)
        Name               Exercise(#)              ($)         Exercisable/Unexercisable  Exercisable/Unexercisable
--------------------- ----------------------- ----------------- -------------------------- --------------------------
--------------------- ----------------------- ----------------- -------------------------- --------------------------
Bert E. Brodsky                 --                   --              536,500/123,500                  0/0
--------------------- ----------------------- ----------------- -------------------------- --------------------------
--------------------- ----------------------- ----------------- -------------------------- --------------------------
Gary Stoller                    --                   --                 143,500/0                     0/0
--------------------- ----------------------- ----------------- -------------------------- --------------------------
--------------------- ----------------------- ----------------- -------------------------- --------------------------
Hugh Freund                     --                   --                 137,000/0                     0/0
===================== ======================= ================= ========================== ==========================



Compensation of Directors

     During the fiscal year ended May 31, 2002 non-qualified options to purchase
up to 10,000  shares of Common Stock,  at an exercise  price of $1.00 per share,
were issued to each of Messrs.  Bernard and Fish.  In  addition,  for the fiscal
year ended May 31, 2002,  the Company paid an aggregate of $4,000 in  Director's
fees.


     Employment  Contracts,  Termination  of  Employment  and  Change-in-Control
Arrangements

     On February 1, 1997 the Company and its Chairman  ("Mr.  Brodsky")  entered
into an  employment  agreement  for a five year term  (the  "Brodsky  Employment
Agreement").  Among other  things,  the Brodsky  Employment  Agreement  provides
compensation  at the annual  rate of  $500,000  or a lesser  amount if  mutually
agreed. The Brodsky Employment  Agreement also provides for payment of an annual
bonus at the sole  discretion of the Board of Directors.  Mr.  Brodsky agreed to
accept a reduction in  compensation  for the fiscal years ended May 31, 2001 and
2000, and has signed waivers  evidencing his agreement to such  reductions.  The
Brodsky Employment  Agreement was renewed, on identical terms, on March 1, 2002,
and Mr.  Brodsky  again  agreed to accept a reduction  in  compensation  for the
fiscal year ended May 31, 2002.






     In  May  1992,  Mr.  Brodsky  and  the  Company  entered  into  a  deferred
compensation  agreement  pursuant  to which  the  Company  would  (i) pay to Mr.
Brodsky a lump sum ranging from $75,000 to $255,000 if he voluntarily terminated
his employment  with the Company after attaining 55 years of age, or (ii) pay to
Mr.  Brodsky's  beneficiary  a lump sum ranging from $200,000 to $450,000 in the
event of Mr. Brodsky's death during the term of his employment with the Company.
This agreement was terminated in October, 2001.

     ITEM 11 - SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT,
AND RELATED STOCKHOLDER MATTERS

     The following table sets forth the beneficial  share  ownership,  as of May
31,  2002 of (i) each  person who is known by the  Company to be the  beneficial
owner of more than five (5%) percent of the Company's Common Stock; (ii) each of
the  Company's  current  Directors  (iii)  each  person  listed  in the  Summary
Compensation Table (except Stephen Davies,  the former President);  and (iv) all
of the  Company's  executive  officers and  Directors as a group.  The ownership
percentages  indicated are calculated,  on a fully-diluted  basis, in accordance
with Rule 13d-3 promulgated  pursuant to the Securities Exchange Act of 1934, as
amended,  which  attributes  beneficial  ownership of  securities to a person or
entity who holds options or warrants to purchase such securities.

                                                                                                      

============================================== ============================== ======================================
   Name of Management Person and Name and                                            Approximate Percentage
         Address of Beneficial Owner                 Number of Shares                 of Outstanding Shares
---------------------------------------------- ------------------------------ --------------------------------------
Bert E. Brodsky
26 Harbor Park Drive
Port Washington, NY                                    1,302,957 (1)                          42.5%
---------------------------------------------- ------------------------------ --------------------------------------
Hugh Freund
26 Harbor Park Drive
Port Washington, NY                                      487,721 (2)                          18.6%
---------------------------------------------- ------------------------------ --------------------------------------
Gary Stoller
26 Harbor Park Drive
Port Washington, NY                                      297,278 (3)                          11.3%
---------------------------------------------- ------------------------------ --------------------------------------
Ronald L. Fish
Unlimited Care Inc.
245 Main Street
White Plains, NY 10601                                    26,500 (4)                          1.7%
---------------------------------------------- ------------------------------ --------------------------------------
Martin Bernard
c/o Rampart Group
1983 Marcus Aveue
Lake Success, NY 11042                                         0 (5)                            *
---------------------------------------------- ------------------------------ --------------------------------------
Jessica Heather Brodsky
26 Harbor Park Drive
Port Washington, NY                                      294,470                              11.8%
---------------------------------------------- ------------------------------ --------------------------------------
Jeffrey Holden Brodsky
26 Harbor Park Drive
Port Washington, NY                                      184,925                              7.4%
---------------------------------------------- ------------------------------ --------------------------------------
All executive officers and Directors as a
group (4 persons)                                2,114,456 (1) (2) (3) (4)                    63.7%
============================================== ============================== ======================================







     (1) Includes 18,684 shares of the Company's Common Stock owned by the trust
established for the benefit of Mr.  Brodsky's minor son;  includes 20,500 shares
of the Company's  Common Stock owned by Mr.  Brodsky's  wife;  includes  200,000
shares of Common Stock owned by the Bert E. Brodsky  Revocable  Trust.  Includes
presently  exercisable  options to purchase  310,000  shares of Common  Stock at
$1.41 per share under the 1995 Stock Option Plan; includes presently exercisable
options to purchase  226,500 shares of common stock at $1.31 per share under the
1998 Stock Option Plan.

     (2) Includes  presently  exercisable  options to purchase 137,000 shares of
Common Stock at $1.41 per share under the 1995 Plan.  Excludes  41,464 shares of
Common Stock owned by Mr.  Freund's  adult  children.  Mr. Freund  disclaims any
beneficial interest in, or voting or dispositive control over, such shares.

     (3) Includes  presently  exercisable  options to purchase  20,000 shares of
Common  Stock at $2.34 per share under the 1995 Plan,  which  options  have been
extended to expire on March 14, 2006; includes presently  exercisable options to
purchase  50,000  shares of Common Stock at $2.61 per share under the 1995 Plan,
which options have been extended to expire on June 10, 2006;  includes presently
exercisable options to purchase 73,500 shares of Common Stock at $1.41 per share
under the 1995 Plan.  Includes  21,000  shares of Common  Stock  owned by trusts
established for the benefit of Mr. Stoller's  children of which Mr. Stoller is a
trustee.

     (4) Includes  presently  exercisable  options to purchase  18,000 shares of
Common Stock at $3.00 per share under the 1998 Plan.  Does not include an option
to  purchase  10,000  shares of common  stock at $1.00 per share  under the 2000
stock option plan, none of which are currently exercisable.

     (5) Does not include an option to purchase 10,000 shares of common stock at
$1.00 per share under the 2000 stock  option plan,  none of which are  currently
exercisable.

*            Less than one percent (1%)


















                                                                                                      



                      EQUITY COMPENSATION PLAN INFORMATION

---------------------------- ------------------------ ----------------------- ---------------------------------------
                                    Number of            Weighted-average         Number of Securities remaining
                                Securities to be       price of outstanding    available for future issuance under
                              issued upon exercise     options warrants and    equity compensation plans (excluding
                                 of outstanding               Rights           securities reflected in column (a))
                              options, warrants and
                                     rights
---------------------------- ------------------------ ----------------------- ---------------------------------------
---------------------------- ------------------------ ----------------------- ---------------------------------------
                                       (a)                     (b)                             (c)
---------------------------- ------------------------ ----------------------- ---------------------------------------
---------------------------- ------------------------ ----------------------- ---------------------------------------

1995  Stock   Option   Plan
(approved    by    security
holders)*                             590,500                   $1.54                          409,500
---------------------------- ------------------------ ----------------------- ---------------------------------------
---------------------------- ------------------------ ----------------------- ---------------------------------------

1998  Stock   Option   Plan
(approved    by    security
holders)*                             775,579                   $2.24                          224,421
---------------------------- ------------------------ ----------------------- ---------------------------------------
---------------------------- ------------------------ ----------------------- ---------------------------------------

2000  Stock   Option   Plan
(approved    by    security
holders)*                              28,340                   $1.59                        1,491,660
---------------------------- ------------------------ ----------------------- ---------------------------------------


     * There are no equity compensation plans not approved by security holders.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Going Private Transaction

     Reference is made to Item 6 - "Management's Discussion and Analysis or Plan
of  Operation  -  Prospects  for the  Future,  Trends  and Other  Events"  for a
description  of a proposal  that the Company  has  received to engage in a going
private  transaction  with a group  of  investors  that  includes  three  of the
Company's  directors.


 IDA/SBA Financing

     Reference is made to Item 6 - "Management's Discussion and Analysis or Plan
of Operation - IDA/SBA Financing" for a discussion of an industrial  development
revenue bond and SBA financing,  pursuant to which the Company pays rent for its
facility to an affiliate of the Company's Chairman.

             Advances and Loans to Affiliates

     During the years ended May 31, 2002 and 2001, the Company paid an aggregate
of $57,285 and $65,894 on behalf of certain  officers  to  companies  affiliated
with the Company's Chairman for payment of automobile leases.

             National Medical Health Card Systems, Inc.

     The Company owed Health Card $500,000  pursuant to a promissory note, dated
May 31, 2000 and due June 1, 2001 plus interest at the rate of 9-1/2%;  interest
on such note was payable  quarterly.  The Note was paid in May, 2001. On June 9,
2001, the Company again issued a promissory note to Health Card in the principal
amount of  $500,000,  with  interest at the rate of 7%, which was due on June 8,
2002. This Note was paid in full on August 15, 2001.






     Until  January of 2002 the Company  derived  revenue from Health Card,  for
database and operating  system support,  hardware  leasing,  and maintenance and
related  administrative  services.  The  revenues  generated  from  Health  Card
amounted to  approximately  $693,000 and  $2,458,000 for the years ended May 31,
2002 and  2001,  respectively.  For the  years  ended  May 31,  2002  and  2001,
respectively, the Company billed Health Card approximately $126,000 and $821,000
for quality assurance testing and network support; $47,000 and $561,000 for help
desk services;  $175,000 and $448,000 for data processing  center;  $305,000 and
$534,000  for certain  computer  equipment  leases;  and $40,000 and $95,000 for
other  services.  In addition,  the Company  resells its  telephone  services to
Health Card. The billings for such telephone  services amounted to approximately
$124,000  and $134,000 for the years ended May 31, 2002 and May 31, 2001 and are
recorded as a reduction of operating expense. The Company was owed approximately
$19,000  from Health  Card at May 31,  2002.  Subsequent  to May 31,  2002,  the
Company   received   approximately   $14,000  from  Health  Card,   representing
substantially  complete  payment of amounts  due as of that date.  As of January
2002,  the  Company  ceased  rendering  services  to Health  Card.  Health  Card
continues  to pay its  allocable  share of expenses for shared  services,  which
amounts to approximately $45,000 per month.

             Leases

     The Company makes equipment  lease payments to P.W.  Capital Corp. and P.W.
Medical  Management,  Inc.,  both  of  which  are  affiliates  of the  Company's
Chairman.  The  payments  were  $268,011and  $395,989  in fiscal  2002 and 2001,
respectively.  The payments for the Facility  were made to BFS Realty,  LLC, and
were  $408,000  and  $615,000  for the  years  ended  May  31,  2002  and  2001,
respectively.  In June  2001,  the  Company  entered  into a new  lease  for the
Facility  which  was  revised  in  November  2001.  (See  Item 7,  Note 5 to the
Financial Statements for details.)

             Medical Arts Office Services, Inc.

     Medical  Arts  Office  Services,  Inc.  ("MAOS"),  of which  the  Company's
Chairman  is  the  sole  shareholder,  provided  the  Company  with  accounting,
bookkeeping and legal services. For the fiscal years ended May 31, 2002 and 2001
the total  payments  made by the  Company  to MAOS were  $340,869  and  $279,894
respectively.





                                     Part IV

ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K

       (a)    Exhibit Index

Exhibit Number                    Document

     3.1              Certificate  of  Incorporation   and  Amendments   thereto
                      including Certificate  of Ownership  and Merger (DE) and
                      Agreement  and Plan of Merger (1)

     3.2              Certificate of Amendment to Certificate  of  Incorporation
                      filed July 27, 1993 (1)

     3.3              Certificate  of Amendment to Certificate of  Incorporation
                      filed May 26, 1995 (1)

     3.4              Certificate of  Amendment to Certificate of Incorporation
                      filed  November 21, 2001

     3.5              By-Laws (1)

     4.1              Nassau County Industrial  Development  Agency  Industrial
                      Development Revenue Bonds(1994 Brodsky Sibling Realty Inc.
                      Project) dated June 1, 1994 (1)

     4.2              Revolving  Credit  Agreement dated as of  April 20, 1995
                      by and among Sandsport Data Services, Inc. and Marine
                      Midland Bank (1)

     4.3              Nassau County Industrial  Development  Agency  Industrial
                      Development Revenue Bonds (1994 Brodsky  Sibling Realty
                      Inc. Project) Assumption and Amendment of Certain
                      Agreements dated July 1, 1995 (1)

     4.4              Loan Agreement dated August 11, 1995 between Sandata, Inc.
                      and Long Island Development Corporation (1)

     4.5              "504" Note  dated  August 11,  1995 from the Long  Island
                       Development Corporation to Sandata, Inc. (1)

     4.6              Nassau County Industrial  Development  Agency  Industrial
                      Development Revenue Bonds (1994 Brodsky Sibling Realty
                      Inc. Project)  Assumption and Amendment of Certain
                      Agreements dated November 1, 1996 (3)







  Exhibit Number      Document

    4.7               Revolving  Credit  Agreement dated as of  April 18, 1997
                      by and among Sandsport Data Services,  Inc., the
                      Registrant,  certain  subsidiaries of the Registrants and
                      Marine Midland Bank (3)

    4.8               Second  Amendment  dated as of February 14, 2000 to
                      Revolving  Credit Agreement by and among Sandsport Data
                      Services,  Inc., the Registrant, certain subsidiaries of
                      the Registrants and HSBC Bank USA (6)

    10.1              Software License Agreement and Distribution  Agreement
                      between Sandata Home Health Systems,  Inc. and Fastrack
                      Healthcare Systems, Inc. dated as of June 15, 1995 (1)

    10.2              Employees' Incentive Stock Option Plan (1)

    10.3              First Amendment to Incentive Stock Option Plan dated
                      April 4, 1989 (1)

    10.4              Second Amendment to Incentive  Stock Option  Plan dated
                      December 18, 1990

    10.5              1986 Non-qualified Stock Option Plan (1)

    10.6              Amendment to 1986 Non-qualified  Stock Option Plan
                      dated April 4, 1989 (1)

    10.7              1995 Stock Option Plan (1)

    10.8              1998 Stock Option Plan (5)

    10.10             Termination  letter dated October 8, 2001,
                      regarding Deferred Compensation  Plan dated
                      May 1, 1992  between the Registrant and Bert E. Brodsky

    10.11             Form of agreement  between  Sandsport Data  Services,
                      Inc. and vendor agency (2)

    10.12             Form of agreement  between  Sandsport Data  Services,
                      Inc. and vendor agency (2)






 Exhibit Number       Document

   10.13              Form of Subscription Agreement dated December 23, 1996
                      (2)

   10.14              Form of Subscription Agreement dated September 12, 1996(2)

   10.18              Employment Agreement dated February 1, 1997 between the
                      Registrant and Bert E. Brodsky (3)

   10.19              Form of Pledge Agreement (4)

   10.20              Form of Non-Negotiable Promissory Note (4)

   10.21              Stock Option  Agreement dated December 10, 1998 between
                      the Registrant and Bert E. Brodsky (6)

   10.22              Stock Option  Agreement  dated February 3, 2000 between
                      the Registrant and Bert E. Brodsky (6)

   10.29              Extension  Agreement  dated July 14, 2001,  between the
                      Registrant and certain shareholders (7)

   10.30              Third Amendment and Waiver dated as of  August 24, 2001
                      to Loan Agreement  dated as of April  18,  1997 by and
                      among  Sandsport  Data Services,   Inc.,  the Registrant,
                      certain subsidiaries of the Registrant, and HSBC Bank,
                      USA (7)

   10.31              Collective  Amended and Restated Security Agreement dated
                      as of August 24, 2001, by and among Sandsport Data
                      Services,  Inc., the Registrant, certain subsidiaries
                      of the Registrant, and HSBC Bank, USA (7)

   10.32              Lease Agreement dated November 1, 2001 between the
                      Registrant and BFS Realty, LLC for premises in Port
                      Washington, NY (8)

   10.33              Recourse Note between Bert E. Brodsky and Registrant dated
                      December 1, 2001, in the amount of $1,091,128.24

   10.34              Recourse Note between Hugh Freund and Registrant dated
                      December 1, 2001, in the amount of $420,419.16

   10.35              Recourse Note between Gary Stoller and Registrant dated
                      December 1, 2001, in the amount of $57,742.20

   21                 Subsidiaries of Registrant (6)






     ---------------------------

     (1) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the fiscal  year  ended May 31,  1995,  and  incorporated  herein by
reference.

     (2) Denotes a document  filed as an Exhibit to Amendment  No. 1 to Form S-3
Registration  Statement as filed with the Securities and Exchange  Commission on
May 27, 1997 and incorporated herein by reference.

     (3) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the fiscal  year  ended May 31,  1997,  and  incorporated  herein by
reference.

     (4) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the fiscal  year  ended May 31,  1998,  and  incorporated  herein by
reference.

     (5) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the fiscal  year  ended May 31,  1999,  and  incorporated  herein by
reference.

     (6) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the  fiscal  year  ended  May 31,  2000 and  incorporated  herein by
reference.

     (7) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-KSB  for the  fiscal  year  ended  May 31,  2001 and  incorporated  herein by
reference.

     (8) Denotes a document filed as an Exhibit to the Company's  Report on Form
10-QSB for the fiscal quarter ended November 30, 2001 and incorporated herein by
reference.

             (b)  Reports on Form 8-K

     (i) On July 9, 2002 the Company  filed an 8-K  containing  a press  release
announcing that Nasdaq had informed the Company that its shares would be subject
to de-listing from the SmallCap Market for failure to comply with certain Nasdaq
Marketplace Rules.The Company was informed by Nasdaq on August 21, 2002 that the
Company had regained compliance with both Marketplace Rules. See Item 5 hereof.

     (ii) On August 6, 2002 the Company filed an 8-K  containing a press release
announcing that the Company had received a proposal to engage in a going private
transaction  with an  investor  group led by Bert E.  Brodsky,  Chief  Executive
Officer of the Company. See Item 6 hereof.

















                           SANDATA TECHNOLOGIES, INC.

     FINANCIAL  STATEMENTS  COMPRISING  ITEM  7 OF  REPORT  ON  FORM  10-KSB  TO
SECURITIES AND EXCHANGE COMMISSION YEAR ENDED MAY 31, 2002








                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                                                      

                                                                                                           Page

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                                                    F-2


Financial Statements

  Consolidated Balance Sheets as of May 31, 2002 and 2001                                                   F-3

  Consolidated Statements of Operations for the years ended
   May 31, 2002 and 2001                                                                                    F-4

  Consolidated Statement of Shareholders' Equity for the years
   ended May 31, 2002 and 2001                                                                              F-5

  Consolidated Statements of Cash Flows for the years ended
   May 31, 2002 and 2001                                                                                    F-6


Notes to Consolidated Financial Statements                                                              F-7 - F-29





















                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



Board of Directors and Shareholders
of Sandata Technologies, Inc. and Subsidiaries

     We have audited the  accompanying  consolidated  balance  sheets of Sandata
Technologies,  Inc. and Subsidiaries (formerly Sandata, Inc.) as of May 31, 2002
and 2001, and the related consolidated  statements of operations,  shareholders'
equity and cash flows for the years then  ended.  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  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  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 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 consolidated financial position of
Sandata Technologies, Inc. and Subsidiaries as of May 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

     As  more  fully  described  in  the  Notes  to the  consolidated  financial
statements,  the Company had certain transactions with companies affiliated with
the Company's Officers and Chairman.

/s/ Marcum & Kliegman LLP

Woodbury, New York
July 26, 2002, except for Note 12c and 12d,
which are dated August 21, 2002
and August 22, 2002, respectively





                 See notes to consolidated financial statements


                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                                                                     

                                                                                                May 31,
                                                                                   2002                   2001
                                                                                   ----                   ----
CURRENT  ASSETS
Cash and cash  equivalents                                                       $1,630,617          $  475,578
Accounts receivable,  net of allowance for doubtful accounts of $202,746
  and  $346,903 at 2002 and 2001,  respectively                                   2,182,963           2,160,675
Receivables from affiliates                                                         280,297             802,787
Inventories                                                                          45,342              35,993
Prepaid expenses and other current assets                                           345,349             416,056
Deferred income taxes                                                               207,595             274,470
                                                                                 ----------          ----------

         Total Current Assets                                                     4,692,163           4,165,559

FIXED ASSETS, NET                                                                 6,820,596           6,036,203
-----------------

DEFERRED INCOME TAXES                                                               171,579             335,773
---------------------

OTHER ASSETS
  Notes receivable                                                                   25,190              29,669
  Cash surrender value of officer's life insurance, security
   deposits and other assets                                                      1,105,502             866,774
                                                                                -----------          ----------

         Total Assets                                                           $12,815,030         $11,433,978
                                                                                ===========         ===========

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                                         $ 2,781,550        $  1,881,269
  Deferred/unearned revenue                                                          16,367              31,069
  Deferred income                                                                   103,258             296,560
                                                                                -----------        ------------

         Total Current Liabilities                                                2,901,175           2,208,898

LONG-TERM DEBT                                                                    4,500,000           3,850,000
--------------

DEFERRED INCOME                                                                      21,142             124,401
---------------                                                                 -----------        ------------

         Total Liabilities                                                        7,422,317           6,183,299
                                                                                -----------        ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Common stock, $.001 par value, 6,000,000 shares
   authorized; 2,481,808 and 2,506,475 shares issued and
   outstanding in 2002 and 2001, respectively                                         2,482              2,506
  Additional paid in capital                                                      5,765,766          5,803,704
  Retained earnings                                                               1,193,755          1,051,721
  Notes receivable - officers                                                    (1,469,290)        (1,607,252)
                                                                                 -----------        -----------

         Total Shareholders' Equity                                               5,492,713          5,250,679
                                                                                -----------         -----------

         Total Liabilities and Shareholders'
           Equity                                                               $12,915,030        $11,433,978
                                                                                ===========        ===========







                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               Years ended May 31,

                                                                                               

                                                                                      2002                2001
                                                                                      ----                ----

REVENUES
  Service fees                                                                     $17,173,922        $17,769,069
  Other income                                                                         514,999            368,502
  Interest income                                                                      163,789            185,311
                                                                                 -------------      -------------

       TOTAL REVENUES                                                               17,852,710         18,322,882
                                                                                   -----------        -----------

COSTS AND EXPENSES
  Operating                                                                          9,877,651         10,372,524
  Selling, general and administrative                                                5,502,264          5,004,255
  Depreciation and amortization                                                      1,839,965          2,748,411
  Interest expense                                                                     241,729            189,240
  Impairment of developed software                                                          --          3,298,872
  Impairment of goodwill                                                                                  201,128
                                                                                  ------------       ------------


         TOTAL COSTS AND EXPENSES                                                   17,461,609         21,814,430
                                                                                   -----------        -----------

         Earnings (loss) before income taxes                                           391,101         (3,491,548)

Income tax expense (benefit)                                                           249,067         (1,293,401)
----------------------------                                                      ------------        -----------

         NET EARNINGS (LOSS)                                                      $    142,034       $ (2,198,147)
                                                                                  ============       ============

PER SHARE INFORMATION

         BASIC AND DILUTED EARNINGS (LOSS) PER
          SHARE                                                                   $        .06       $       (.88)
                                                                                  ============       =============

       WEIGHTED-AVERAGE NUMBER OF
        SHARES OUTSTANDING                                                           2,494,175          2,506,475
                                                                                  ============       =============










                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                        Years ended May 31, 2002 and 2001


                                                                                                               

                                                                Additional                            Notes               Total
                                       Common Stock              Paid-In         Retained           Receivable        Shareholders'
                               Shares            Amount          Capital         Earnings           Officers             Equity
                               -------            ------         --------        ---------          ----------         ------------
Balance at
June 1, 2000                   2,506,475         $2,506      $5,803,704      $ 3,249,868         $(1,607,252)        $ 7,448,826

Net Loss                              --             --              --       (2,198,147)                 --          (2,198,147)
                            ------------    -----------    ------------      -----------         -----------          -----------


Balance at
 May 31, 2001                  2,506,475          2,506       5,803,704        1,051,721          (1,607,252)          5,250,679

Effect of Stock
 Surrender                       (24,667)           (24)        (37,938)              --              37,962                  --

Net Earnings                                         --              --          142,034                  --             142,034
                              -----------       --------     -----------      ----------         ------------        -----------




Balance at
May 31, 2002                   2,481,808         $2,482      $5,765,766      $ 1,193,755         $(1,469,290)        $ 5,492,713
                               =========         ======      ==========      ===========         ===========         ===========








                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               Years ended May 31,


                                                                                                  
                                                                                          2002                2001
                                                                                          ----                ----
Cash flows from operating activities
 Net earnings (loss)                                                                 $   142,034         $(2,198,147)
  Adjustments to reconcile net earnings (loss) to net cash
   provided by operating activities:
    Depreciation and amortization                                                      1,839,965           2,748,411
    (Gain) loss on disposal of fixed assets                                               (4,309)             75,111
    Change in allowance for doubtful accounts                                           (144,157)           (100,879)
    Recognition of deferred income                                                      (296,561)           (343,820)
    Recognition of deferred revenue                                                      (36,121)           (116,702)
    Impairment of developed software                                                          --           3,298,872
    Impairment of goodwill                                                                    --             201,128
    Deferred tax provision                                                               231,069          (1,312,401)
  (Increase) decrease in operating assets
     Accounts receivable                                                                 121,869             249,105
     Receivables from affiliates                                                         522,490            (397,055)
     Inventories                                                                          (9,352)            (18,828)
     Prepaid expenses and other current assets                                            70,708              (2,937)
     Other assets                                                                       (234,247)            (24,827)
  (Decrease) Increase in operating liabilities
     Accounts payable and accrued expenses                                               900,282            (698,874)
     Deferred/unearned revenue                                                            21,418             108,923
     Deferred income                                                                          --             126,850
                                                                                     -----------          ----------

         Net cash provided by operating activities                                     3,125,088           1,593,930
                                                                                     -----------          ----------

Cash flows from investing activities:
  Purchases of fixed assets                                                           (2,620,049)         (3,795,285)
  Proceeds from sale/leaseback transactions                                                   --             548,343
  Acquisition of intangible asset                                                             --            (201,128)
                                                                                     -----------         -----------

         Net cash used in investing activities                                        (2,620,049)         (3,448,070)
                                                                                     -----------         -----------

Cash flows from financing activities
  Principal payments on note payable                                                    (500,000)           (500,000)
  Proceeds from note payable                                                             500,000                  --
  Proceeds from line of credit                                                         3,800,000           2,200,000
  Principal payments on line of credit                                                (3,150,000)           (600,000)
                                                                                     -----------         -----------

         Net cash provided by financing
           activities                                                                    650,000           1,100,000
                                                                                     -----------         -----------

         INCREASE (Decrease) in cash and cash                                          1,155,039            (754,140)
          equivalents

Cash and cash equivalents - beginning                                                    475,578           1,229,718
-------------------------                                                           ------------          ----------

Cash and cash equivalents - ending                                                  $  1,630,617          $  475,578
-------------------------                                                           ============          ==========







                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - Summary of Significant Accounting Policies

       Nature of Business and Economic Dependency

     Sandata Technologies,  Inc. and Subsidiaries (the "Company", formerly known
as  Sandata,  Inc.  )  are  primarily  engaged  in  the  business  of  providing
computerized  data  processing  services  and custom  software  and  programming
services  using  Company-developed  and  licensed  software  principally  to the
healthcare industry. The Company primarily operates in the New York metropolitan
area.  During  fiscal  years ended May 31, 2002 and 2001,  the Company  received
revenues  from a group of  customers  who are all funded by the Human  Resources
Administration  of the  City of New York  ("HRA"),  amounting  to  approximately
$10,549,000 and $10,608,000,  respectively.  The Company was owed  approximately
$1,259,000  and  $1,160,000  from  these  customers  at May 31,  2002 and  2001,
respectively.

       Principles of Consolidation

     The  consolidated  financial  statements  include  the  accounts of Sandata
Technologies,  Inc. and its wholly owned subsidiaries:  Sandsport Data Services,
Inc.,  Sandata  Home Health  Systems,  Inc.,  Sandata  Spectrum,  Inc.,  SANTRAX
Systems,   Inc.,  SANTRAX  Productivity,   Inc.  and  Pro-Health  Systems,  Inc.
("Pro-Health",  formerly known as Sandata Inteck,  Inc.). SANTRAX  Productivity,
Inc.  and Sandata  Spectrum,  Inc. are inactive  subsidiaries.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

       Reclassifications

     Certain  accounts  in  the  prior  year  financial   statements  have  been
reclassified  for comparative  purposes to conform with the  presentation in the
current year financial  statements.  These  reclassifications  have no effect on
previously reported earnings/loss.

       Fixed Assets

     Fixed  assets are  recorded  at cost.  Depreciation  and  amortization  are
computed  principally  by  the  straight-line  method  over  the  lesser  of the
estimated useful lives or lease terms of the related assets.

       Impairment of Long-Lived Assets

     The Company  evaluates  its  long-lived  assets,  including  goodwill,  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying   amount  of  such  assets  or  intangibles  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying  amount of the asset to future net cash flows  expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying  amount of the assets
exceed the fair value of the assets as determined by estimated  discounted  cash
flows. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell.

NOTE 1 - Summary of Significant Accounting Policies, continued

       Income Taxes

     The Company  uses the  liability  method to account for income  taxes.  The
primary  objectives  of  accounting  for income taxes are to (a)  recognize  the
amount of income tax payable for the current year and (b)  recognize  the amount
of deferred tax liability or asset based on  management's  assessment of the tax
consequences  of events  that have been  reflected  in the  Company's  financial
statements or tax returns.  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.  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.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amounts expected to be realized.

       Software Costs

     The Company capitalizes  software  development costs from the point in time
where technological feasibility has been established until the computer software
product is  available to be sold.  The annual  amortization  of the  capitalized
amounts  is the  greater  of the ratio of  current  revenue  to total  projected
revenue for a product, or the straight-line  method, and is applied over periods
ranging up to five years. The Company  performs  periodic reviews to ensure that
unamortized program costs remain recoverable from future revenue.

       Research and Development

     Research and development costs are charged to expense as incurred. Research
and development  expenses amounted to approximately  $62,000 and $10,000 in 2002
and 2001, respectively.

       Inventories

     Inventories,  consisting  of computer  hardware  and  peripherals  held for
resale, are stated at the lower of cost or market;  cost is determined using the
specific identification method.

       Net Earnings Per Common Share

     The Company  computes  earnings per share in accordance  with  Statement of
Financial  Accounting  Standards  ("SFAS") No. 128 "Earnings  per Share".  Basic
earnings per share has been computed using the weighted average number of shares
of common stock outstanding.  Diluted earnings per share has been computed using
the basic  weighted  average  shares of common  stock  issued  adjusted  for the
dilutive  effect of outstanding  stock options.  NOTE 1 - Summary of Significant
Accounting Policies, continued

       Net Earnings Per Common Share, continued

     For the year ended May 31, 2002 options and warrants to purchase  1,374,419
shares of common stock were outstanding and were not included in the computation
of diluted  earnings  per share  because the  exercise  price of the options and
warrants were greater than the average market price of the common stock. For the
year ended May 31, 2001, outstanding stock options, warrants and other potential
stock issuances were not been considered in the computation of diluted  earnings
per  share  amounts  since  the  effect  of  their  inclusion  would  have  been
antidilutive. The Company uses the treasury stock method to calculate the effect
that the  conversion  of the stock  options would have on earnings per share and
the weighted average number of shares of common stock.

       Revenue Recognition

     Computerized   Information   Processing  Services.  The  Company  generates
revenues for its computerized information processing services from its Sandsport
Home Attendant Reporting Program ("SHARP") and Pro-Health software applications.
The SHARP application provides weekly time sheets,  billing,  payroll processing
and management reports for  not-for-profit  agencies that provide home attendant
services to those in need.  Revenues are  recognized  for these  services in the
period they are provided.  The Pro-Health  application is an application service
provider  solution  that  provides  home  health  care  customers  access to the
Company's software over the Internet without needing  sophisticated  hardware at
its site to  house  the  software  or  store  the  data.  Customers  using  this
application  are charged a monthly fee and  revenue is  recognized  on a monthly
basis as the service is provided.

     Telephone-Based  Data Collection  Services.  The Company generates revenues
for its telephone-based  data collection services from its automated  electronic
system knows as Sandata(R)  SANTRAX(R)  ("SANTRAX")  software  application.  The
SANTRAX  application  is  an  automated   electronic  system  that  incorporates
telephone  technologies  into the data reporting  process to monitor the arrival
and departure  times of off-site  workers.  Revenues from this  application  are
recognized  based on a per  call or  visit  basis  in the  period  in which  the
services are provided.

     Technology   Infrastructure   and  Outsourcing   Services.   Revenues  from
technology  infrastructure  and  outsourcing  services such as data  processing,
technology infrastructure consulting,  web site development,  running e-commerce
applications and reselling  telephone  services are recognized based on per hour
or call rates in the period the service is provided.






NOTE 1 - Summary of Significant Accounting Policies, continued

       Revenue Recognition, continued

     Information  Technology  Services.  The  Company  generates  revenues  from
information  technology  services  under  the name of  SandataNet  and  includes
services  such as  software  support,  hardware  support/break-fix,  Local  Area
Network ("LAN")  administration and configuration  services and the reselling of
computer  hardware and third-party  software  systems,  some of the services are
pursuant to long-term contracts. Support revenue is recognized based on per hour
rates in the period the service is provided.  For maintenance  contracts greater
than one  month,  revenue  is  recognized  over the  term of the  contract  on a
straight-line  basis.   Computer  hardware  and  software  resale  revenues  are
recognized when the units are shipped and accepted by the customer.  The Company
does not bundle maintenance with any software sold.

     Long-Term  Contracting.  As discussed above, the Company utilizes long-term
contracts and  recognizes  revenue for financial  statement  purposes  under the
percentage of completion  method and,  therefore,  takes into account the costs,
estimated earnings and revenue-to-date on contracts not yet completed.

     The amount of revenue  recognized  at the financial  statement  date is the
portion of the total contract price that the direct labor costs expended to date
bears to the anticipated total direct labor costs, based on current estimates of
costs to  complete.  Direct  labor  costs  include  all  direct  labor,  related
benefits,  and  subcontract  costs.  This  method  is  used  because  management
considers  direct  labor costs to be the best  available  measure of progress on
these contracts.

     Revisions  in  estimates  of  costs  and  earnings  during  the life of the
contracts are reflected in the accounting  period in which such revisions become
known. At the time a loss on a contract  becomes known, the entire amount of the
estimated loss is recognized in the financial statements.  Billings in excess of
estimated   costs  and  earnings  on  uncompleted   contracts  are  included  in
deferred/unearned revenue.

       Sale/Leaseback

     The Company recognizes gains from sale/leaseback  transactions ratably over
the term of the  underlying  lease.  All such leases are operating  leases.  Any
losses from these transactions are recognized in the period incurred.

       Cash and Cash Equivalents

     The Company considers all short-term  investments with an original maturity
of  three  months  or less  to be cash  equivalents.  Due to the  nature  of its
operations,  the Company  deposits,  on a monthly  basis,  amounts in  financial
institutions for the payment of payroll liabilities for certain customers.  Such
amounts are reduced  when the Company  pays such  liabilities.  Such  reductions
generally  occurs over five to ten business  days. At May 31, 2001,  the Company
had amounts on deposit for these liabilities of approximately $1,300,000.





NOTE 1 - Summary of Significant Accounting Policies, continued

       Concentration of Credit Risk

     The Company is subject to a  concentration  of credit risk with  respect to
its trade receivables,  as disclosed above. The Company performs on-going credit
evaluations  of its  customers and generally  does not require  collateral.  The
Company  maintains  allowances  to cover  potential  or  anticipated  losses for
uncollectible accounts.

     The  Company has cash  balances  in banks in excess of the  maximum  amount
insured by the FDIC as of May 31, 2002.

       Statements of Cash Flows

     The Company  paid  income  taxes of  approximately  $19,000 and $23,000 and
interest of approximately $242,000 and $252,000 for the years ended May 31, 2002
and 2001, respectively.

       Use of Estimates in the Financial Statements

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

       Fair Value of Financial Instruments

     The Company's  short term  financial  instruments  include  cash,  accounts
receivable,  receivable  from  affiliates  and  accounts  payable.  Due  to  the
short-term  nature of these  instruments,  the fair  value of these  instruments
approximates  their recorded value.  The Company has long-term debt  instruments
which it believes are stated at their estimated fair value.

       Stock Options and Similar Equity Instruments

     The Company  accounts  for stock  options and  similar  equity  instruments
(collectively  "Options")  issued to employees and directors in accordance  with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees," rather than the fair value based method of accounting  prescribed by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation."  The exercise price for Options issued to employees and directors
equals or exceeds the fair value of the  Company's  Common  Stock at the date of
grant and, accordingly,  no compensation expense is recorded. Equity instruments
issued to acquire goods and services from  non-employees are accounted for based
on the fair value of the consideration  received or the fair value of the equity
instruments issued, whichever is more readily determinable.  NOTE 1 - Summary of
Significant Accounting Policies, continued

       Comprehensive Income

     The Company adopted SFAS No. 130, "Reporting  Comprehensive  Income".  SFAS
No. 130 establishes standards for reporting and display of comprehensive income,
its  components and  accumulated  balances.  Comprehensive  income is defined to
include all changes in equity except those resulting from  investments by owners
and distributions to owners. Among other disclosures, SFAS No. 130 requires that
all items that are required to be recognized under current accounting  standards
as components of comprehensive  income be reported in a financial statement that
is displayed with the same prominence as other financial statements.

       Business Segments

     The  Company  adopted  SFAS No.  131,  "Disclosures  About  Segments  of an
Enterprise and Related  Information",  which supercedes SFAS No. 14,  "Financial
Reporting  for  Segments  of a Business  Enterprise."  SFAS No. 131  establishes
standards for the way that public enterprises report information about operating
segments in annual  financial  statements  and  requires  reporting  of selected
information about operating segments in interim financial  statements  regarding
products and  services,  geographical  areas and major  customers.  SFAS No. 131
defines  operating  segments as components of an enterprise about which separate
financial  information  is available  that is  evaluated  regularly by the chief
operating  decision maker in deciding how to allocate resources and in assessing
performance.  The Company has determined that its operations are in one segment,
computer services to the health care industry.

       New Accounting Pronouncements

     In October 2001, the Financial  Accounting  Standards Board ("FASB") issued
SFAS No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets".
SFAS No. 144 addresses the accounting model for long-lived assets to be disposed
of by sale and resulting  implementation  issues.  This statement  requires that
those  long-lived  assets be measured  at the lower of  carrying  amount or fair
value  less  cost to sell,  whether  reported  in  continuing  operations  or in
discontinued  operations.  Therefore,  discontinued operations will no longer be
measured at net realizable  value or include  amounts for operating  losses that
have not yet occurred. It also broadens the reporting of discontinued operations
to include all components of an entity with operations that can be distinguished
from the  rest of the  entity  and  that  will be  eliminated  from the  ongoing
operations  of the entity in a disposal  transaction.  SFAS No. 144 is effective
for the  Company in fiscal  2003.  The  Company is  evaluating  the impact  that
implementation  of SFAS No.  144 may  have on the  financial  statements  of the
Company.






NOTE 1 - Summary of Significant Accounting Policies, continued

       New Accounting Pronouncements, continued

     On April 30,  2002,  the FASB  issued  SFAS No.  145,  "Rescission  of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections". SFAS No. 145 eliminates the requirement that gains and losses from
the  extinguishment  of debt be  aggregated  and, if material,  classified as an
extraordinary  item,  net of the  related  income tax effect and  eliminates  an
inconsistency between the accounting for sale-leaseback transactions and certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback   transactions.   Generally,   SFAS  No.  145  is  effective  for
transactions  occurring  after May 15, 2002.  The  adoption of this  standard is
expected to have no impact to the Company.

     SFAS No.  146,  "Accounting  for Costs  Associated  with  Exit or  Disposal
Activities"  ("SFAS 146"),  provides guidance on the recognition and measurement
of  liabilities  for cost  associated  with  exit or  disposal  activities.  The
provisions of this Statement are effective for exit or disposal  activities that
are initiated  after December 31, 2002. The Company is currently  reviewing SFAS
146 to determine the impact upon adoption.


NOTE 2 - Fixed Assets

       Fixed assets consist of the following:

                                                                                                  

                                                                                                May 31,
                                                                     Useful Life            2002               2001
                                                                     -----------            ----               ----
       Computer equipment                                               5 years      $  3,169,445       $  2,883,819
       Software costs                                             Up to 5 years        12,364,224         10,047,618
       Furniture, fixtures and automobiles                            4-7 years           419,274            415,330
       Leasehold improvements                                          10 years         2,823,154          2,809,278
                                                                                     ------------      -------------
                                                                                       18,776,097         16,156,045
       Less:  accumulated depreciation and
                amortization                                                          (11,955,501)       (10,119,842)
                                                                                     ------------       ------------

             Total Fixed Assets, net                                                 $  6,820,596       $  6,036,203
                                                                                     ============       ============


     Depreciation and amortization  expense relating to fixed assets (other than
software   costs)  amounted  to   approximately   $443,000  in  2002  and  2001,
respectively.

     Unamortized  software  costs  amounted  to  approximately   $5,105,000  and
$4,186,000  at May 31,  2002 and 2001,  respectively.  Amortization  expense for
these costs totaled  approximately  $1,397,000  and $2,305,000 in 2002 and 2001,
respectively.






NOTE 2 - Fixed Assets, continued

     During the fourth  quarter of the year ended May 31, 2001, the Company shut
down  certain  operating  systems and  hardware  configurations,  which had been
capitalized in previous years. The Company had determined that the older systems
architecture  had become  obsolete  and too costly to  maintain,  so the Company
coordinated  placing  several new systems in production  after running  parallel
with  pre-existing  systems  resulting in the  retirement  of the older  systems
during the fourth quarter.  The Company further  determined that there is no net
realizable  value  remaining  since no future revenue would be recognized in the
retired  systems  because the  architecture  was completely  replaced by the new
systems.  As such the Company  recognized  an impairment  loss of  approximately
$3,300,000 for the year ended May 31, 2001.


NOTE 3 - Debt

       Credit Agreement

     The  Company's  wholly owned  subsidiary,  Sandsport  Data  Services,  Inc.
("Sandsport"),  has a revolving credit agreement (the "Credit Agreement") with a
Bank which allows  Sandsport to borrow  amounts up to  $4,500,000  and is due on
June 14,  2003.  Interest  accrues  on  amounts  outstanding  under  the  Credit
Agreement at a rate equal to the London Interbank  Offered Rate plus 2% and will
be paid quarterly in arrears or, at Sandsport's  option,  interest may accrue at
the Bank's  prime rate.  The Credit  Agreement  requires  Sandsport to pay a fee
equal to 1/4% per annum on the unused average daily balance of amounts under the
Credit  Agreement.  In addition,  there are other fees and charges imposed based
upon Sandsport's failure to maintain certain minimum balances.  The indebtedness
under the Credit  Agreement is guaranteed by the Company and Sandsport's  sister
subsidiaries (the "Group"). All of the Group's assets are pledged to the Bank as
collateral  for the  amounts  due under the Credit  Agreement,  which  pledge is
secured by a first lien on all equipment  owned by members of the Group, as well
as a collateral  assignment of $2,000,000 of life insurance  payable on the life
of the Company's Chairman. In addition, the Company is restricted in its ability
to declare  and pay  dividends  pursuant  to the Credit  Agreement.  The Group's
guaranty  to the Bank was  subsequently  modified  to include  all  indebtedness
incurred by the Company under the amended Credit Agreement dated August 24, 2001
(see below).

     On August 24,  2001,  Sandsport,  the Company and the other  members of the
Group,  and the Bank,  entered into the Third  Amendment  and Waiver (the "Third
Amendment")  to  the  Credit   Agreement.   Pursuant  to  the  Third  Amendment,
Sandsport's  covenants  to the Bank to  maintain  a certain  net  worth,  and to
maintain certain financial ratios, were revised on a going-forward basis and the
noncompliance  with the existing  covenants was waived by the Bank. In addition,
in connection with the Third  Amendment,  Sandsport and each member of the Group
executed and  delivered to the Bank a Collective  Amended and Restated  Security
Agreement,  pursuant  to which the Bank's  security  interest  was  extended  to
include a security  interest  in all of the  personal  and  fixture  property of
Sandsport,  the  Company  and the  members of the Group.  As of May 31, 2002 and
2001,  the  outstanding  balance  on the  Credit  Agreement  with  the  Bank was
$4,500,000 and $3,850,000, respectively.

NOTE 3 - Debt, continued

       Long Term Debt

     The Company  owed  National  Medical  Health Card  Systems,  Inc.  ("Health
Card"), a company affiliated with the Company's Chairman, $500,000 pursuant to a
promissory  note,  dated May 31, 2000 and due June 1, 2001 plus  interest at the
rate of 9-1/2%;  interest on such note was payable quarterly.  The Note was paid
in May, 2001.

     On June 9, 2001, the Company issued a promissory note to Health Card in the
principal amount of $500,000,  with interest at the rate of 7%, which was due on
June 8, 2002. This Note was paid in full on August 15, 2001.


NOTE 4 - Income Taxes

       The income tax expense (benefit) is comprised of the following:

                                                                                                      

                                                                                            Year Ended May 31,
                                                                                            ------------------
                                                                                           2002             2001
                                                                                           ----             ----
       Current
         Federal                                                                  $          --   $           --
         State                                                                           17,998            19,000
                                                                                       --------     -------------

             Total current                                                               17,998            19,000
                                                                                       --------     -------------

       Deferred
         Federal                                                                        192,761        (1,089,293)
         State                                                                           38,308          (223,108)
                                                                                      ---------      ------------

             Total deferred                                                             231,069        (1,312,401)
                                                                                       --------       -----------

             Income tax expense (benefit)                                              $249,067       $(1,293,401)
                                                                                       ========       ===========


       The Company's effective income tax rate differs from the statutory U.S.
Federal income tax rate as a result of the following:


                                                                                                  

                                                                                          Year Ended May 31,
                                                                                       2002                2001
                                                                                       ----                ----
       Statutory U.S. federal tax rate                                                 34.0%             (34.0%)
       State taxes                                                                      4.6               (5.8)
       Permanent Differences                                                           12.2                1.2
       Other                                                                           12.9                1.6
                                                                                       ----             ------

                                                                                       63.7%             (37.0%)
                                                                                       =====             ======

NOTE 4 - Income Taxes, continued

       The components of deferred tax assets and liabilities consists of the
following:

                                                                                             May 31,
                                                                                       2002                2001
                                                                                       ----                ----
       Deferred Tax Assets-Current portion
         Allowance for Doubtful Accounts                                            $ 81,686           $142,230
         Deferred Income                                                              61,367             43,340
         Accrued Expenses                                                             56,117             79,706
         Other                                                                         8,425              9,194
                                                                                    --------           --------

             Deferred Tax Assets, current                                           $207,595           $274,470
                                                                                    ========           ========

                                                                                             May 31,
                                                                                      2002                2001
                                                                                      ----                ----
       Deferred Tax Assets-Long term portion
         Net Operating Loss Carryforwards                                        $ 1,642,275        $ 1,255,038
         Deferred Income                                                                  --            129,255
         Goodwill                                                                         --             82,872
         Other                                                                           604                615
                                                                                 -----------        -----------

             Deferred Tax Assets, Long-term                                        1,642,879          1,467,780
                                                                                 -----------        -----------

       Deferred Tax Liabilities-Long-term portion
         Depreciation and amortization                                            (1,460,054)        (1,132,007)
         Deferred income                                                             (11,246)                 --
                                                                                 ----------       --------------

             Deferred Tax Liabilities, Long-term                                  (1,471,300)        (1,132,007)
                                                                                 -----------        -----------

             Deferred Tax Assets - Long-term, Net                                    171,579            335,773
                                                                                 -----------        -----------

             Total Deferred Tax Asset, Net                                       $   379,174        $   610,243
                                                                                 ============       ===========



    Management  determined that it was more likely than not that future taxable
income would be  sufficient to enable the Company to realize all of its deferred
tax assets.  Accordingly,  no valuation  allowance  has been recorded at May 31,
2002 and 2001.

     At May 31, 2002, the Company had net operating loss  carryforwards  for tax
purposes of approximately $4,076,000, expiring at various dates through 2022.







NOTE 5- Commitments and Contingencies

       Lease Agreements

     The Company leases office space at 26 Harbor Park Drive,  Port  Washington,
NY 11050 (the "Facility")  from BFS Realty LLC,  successor to BFS Sibling Realty
and an affiliate of the Company's  Chairman (the  "Affiliate") (see Note 6). The
Company paid rent in the amount of $407,834 and  $615,412 to the  Affiliate  for
the years ended May 31, 2002 and 2001, respectively.

     On June 1, 2001 (revised  November,  2001) , the Company entered into a ten
(10) year lease for the  Facility  with the  Affiliate.  The lease  provides for
annual rental  payments of $277,817 for the period June 1, 2002 to May 31, 2003,
with annual 5% increases in each 12-month period thereafter.  The lease is being
expensed on a  straight-line  basis over the lease term. The lease also requires
monthly payments of various types, such as the Company's  proportionate share of
real  estate  taxes  and  common  area  maintenance   charges,   that  aggregate
approximately  $10,000 per month.  In November,  2001,  the lease was revised to
provide  that  the  Company  would  pay its  utility  expenses  directly  to the
respective utility company, not to the Affiliate.

     The Company has  obligations to pay rental  expense in connection  with six
sale/leaseback  transactions.  The rental  expenses  amounted  to  approximately
$1,195,000   and   $1,630,000  for  the  years  ended  May  31,  2002  and  2001
respectively. (See Note 8)

     Total office space and equipment  rental expense under all operating leases
amounted to  approximately  $2,294,000  and  $3,417,000 in fiscal 2002 and 2001,
respectively.

     Future minimum lease payments for all non cancelable operating leases at
May 31, 2002 are as follows:

                              Year Ending May 31,                 Amount
                              -------------------                 ------
                                      2003                      $1,759,640
                                      2004                         969,461
                                      2005                         644,554
                                      2006                         336,390
                                      2007                         330,988
                                   Thereafter                    1,739,257
                                                                ----------

                                     Total                      $5,780,290
                                                                ==========





NOTE 5- Commitments and Contingencies, continued

         Litigation

     a. On October  19,  1999,  the  Company  and  Pro-Health  brought an action
against  Provider  Solutions  Corporation  ("Provider")  and others,  in Supreme
Court,   New   York   County,   based  on   breach   of   contract,   fraudulent
misrepresentation and other causes of action, demanding damages of approximately
$10,000,000  (the "State  Action").  On October  22,  1999,  Provider  brought a
federal action in the United States  District Court for the Eastern  District of
New York (the "Federal Action").  The complaint demanded relief in the form of a
permanent  injunction  and damages  against the Company and Pro-Health for total
amounts  ranging  from   $10,000,000  to  $15,000,000.   The  State  Action  was
consolidated with the Federal Action.

     On March 8, 2001 the Company, Pro-Health, Provider and all involved parties
and individuals settled the consolidated Federal Action,  globally resolving all
issues,  claims and disputes.  The  settlement  entailed the exchange of general
releases  between the Company,  Pro-Health,  Provider  and all parties,  and the
payment of $600,000 to Provider,  of which $50,000 was paid by the Company.  The
balance  of the  payment  under  the  settlement  was  funded  by the  Company's
insurers.  The  settlement  did not  have a  material  effect  on the  Company's
operations.  The Company has  retained its  proprietary  interest in the subject
software.

     b. In August of 1999, the Company's wholly-owned subsidiary,  Sandsport was
named as a defendant in Greater Bright Light Home Care Services,  Inc. et al. v.
Joseph Jeffries-El, El Equity Corporation,  Sandsport Data Services, Inc. et al.
(Supreme Court of the State of New York, Kings County).  Sandsport's contractual
obligation  to  Greater   Bright  Light   involved  the  depositing  of  certain
government-issued  checks into a specific bank account.  Upon receiving  written
notification  from the agency issuing the checks to stop depositing them in that
account,  Sandsport  ceased  depositing  them. The plaintiff  brought the action
against Joseph Jeffries-El and El Equity, and El Equity  counterclaimed  against
the plaintiff,  each basing its claims on the financing  agreement between them.
El  Equity  also  cross-claimed  against  Sandsport,  asserting  that  Sandsport
converted the  government-issued  checks to its own use.  Although  Sandsport is
named  as a  defendant,  the  Complaint  seeks  no  affirmative  relief  against
Sandsport.  Co-defendant  Citibank has asserted  indemnification  claims against
Sandsport and all of the other  defendants.  Sandsport  disputes all  liability.
However,  the  Company is unable to  predict  the  outcome  of these  claims and
accordingly,  no  adjustments  have  been  made  in the  consolidated  financial
statements in response to these claims.

     c. On March 1, 2000,  Dataline,  Inc.  ("Dataline") began a lawsuit against
MCI WorldCom  Network  Services,  Inc. ("MCI") and the Company for alleged trade
libel and related  counts,  in the United States District Court for the Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001 MCI had brought a patent infringement lawsuit against





NOTE 5- Commitments and Contingencies, continued

         Litigation, continued

     Dataline,  alleging that it was infringing  three MCI patents,  under which
the Company has an exclusive license in New York City. Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments  from either MCI or the Company to  Dataline.  As part of
the settlement, Dataline agreed to pay the Company $100,000 in cash and issue an
8%  promissory  note  in the  amount  of  $721,000.  Due to the  uncertainty  of
realization of the note receivable, the Company is recognizing the income on the
note using the installment  method of accounting.  During the year ended May 31,
2002, the Company has recognized  approximately $115,000 of income. In addition,
Sandata and  Dataline  entered  into an  Exclusive  Service  Agreement  by which
Dataline  agreed to use the Company's "call capture  infrastructure"  for all of
Dataline's time and attendance systems,  and to pay royalties to the Company for
such use. The terms of the settlement also included mutual releases.

     d. An action was commenced  against the Company and Health Card by a former
executive of Health Card, Mary Casale, who alleged that employees of both Health
Card and the Company engaged in sex  discrimination as to Ms. Casale,  and thus,
violated  Title VII of the Civil Rights Act of 1964. In February 2002 the matter
was withdrawn from the Equal Employment Opportunity Commission,  and was settled
without any effect on the financial statements of the Company.

 Royalty Agreement

     The Company has been granted a license under certain of MCI's patents which
permits  the  Company  to  continue  to  market  and sell its  SANTRAX  time and
attendance verification product non-exclusively  nationwide,  and exclusively in
the home health care  industries  for the five New York  boroughs,  and that the
Company will pay MCI certain royalties, on a per call basis. The license remains
in  effect  until the last to expire  of  various  patents  held by MCI or until
October 19, 2010, whichever is later.



       Employment and Deferred Compensation Agreements

     On February 1, 1997 the Company and its Chairman  ("Mr.  Brodsky")  entered
into an  employment  agreement  for a five year term  (the  "Brodsky  Employment
Agreement").  Among other  things,  the Brodsky  Employment  Agreement  provides
compensation  at the annual  rate of  $500,000  or a lesser  amount if  mutually
agreed. The Brodsky Employment  Agreement also provides for payment of an annual
bonus at the sole  discretion of the Board of Directors.  Mr.  Brodsky agreed to
accept a reduction  in  compensation  for the fiscal  years ended May 31,  2002,
2001,  and  2000  and  has  signed  waivers  evidencing  his  agreement  to such
reductions. The Brodsky Employment Agreement was renewed, on identical terms, on
March 1, 2002.

     In  May  1992,  Mr.  Brodsky  and  the  Company  entered  into  a  deferred
compensation  agreement  pursuant  to which  the  Company  would  (i) pay to Mr.
Brodsky a lump sum ranging from $75,000 to $255,000 if he voluntarily terminated
his employment  with the Company after attaining 55 years of age, or (ii) pay to
Mr.  Brodsky's  beneficiary  a lump sum ranging from $200,000 to $450,000 in the
event of Mr. Brodsky's death during the term of his employment with the Company.
This  agreement  was  terminated  in  October,  2001.

NOTE 5-  Commitments  and Contingencies, continued

       Employment and Deferred Compensation Agreements, Continued

     On  August  9,  2001  the  Company  announced  that it had  terminated  the
employment  of  Stephen  Davies  as  President  of the  Company,  and  would  be
terminating  approximately 30 other  employees.  Mr. Davies received a severance
payment equal to six (6) months' base salary, or $100,000,  and had 90 days from
the date of  termination to exercise the 66,673 options that were vested on that
date.  None of such  options  were  exercised.  In  addition,  the Company  paid
approximately   $47,000  in  severance   payments  for  approximately  30  other
terminated employees.


NOTE 6 - Related Party Transactions

     a. In  November  1996  the  Company  entered  into an  agreement  with  the
Affiliate, the Nassau County Industrial Development Agency ("NCIDA"), and a Bank
(the "Bondholder") (the "Agreement").  Pursuant to the Agreement,  the Affiliate
(i) assumed all of the Company's rights and obligations  under a Lease Agreement
that was previously  between the Company and the NCIDA (the  "Lease"),  and (ii)
entered into a Sublease  Agreement with the Company for the premises the Company
occupies.  Pursuant to the  Agreement,  the Affiliate also obtained the right to
become the owner of the premises upon  expiration of the Lease.  Under the terms
of the Agreement,  the Company is jointly and separately liable to the NCIDA for
all obligations owed by the Affiliate to the NCIDA under the Lease; however, the
Affiliate  has  indemnified  the  Company  with  respect to certain  obligations
relative to the Lease and the  Agreement.  In addition,  the Agreement  provides
that the Company is bound by all the terms and conditions of the Lease, and that
a security interest is granted to the Affiliate in all of the Company's fixtures
constituting part of the premises.

     The  foregoing  transactions  and  agreements  were the last in a series of
transactions involving the Company, the Affiliate, NCIDA, the Bondholder and the
U.S. Small Business  Administration ("SBA"). Chief among these was the borrowing
by the  Affiliate  in  June  of 1994 of  $3,350,000  in the  form of  Industrial
Development  Revenue  Bonds (the  "Bonds")  to finance  the  acquisition  of the
Facility.  Simultaneously  with the  issuance of the Bonds:  (1) NCIDA  obtained
title  to the  Facility  and  leased  it to the  Affiliate,  (2)  the  Affiliate
subleased the Facility to the Company,  (3) the Bondholder bought the Bonds, (4)
the  Bondholder  received a mortgage  and  security  interest in the Facility to
secure the payment of the Bonds.  The  Affiliate's  obligations  under the Lease
were  guaranteed  by  Mr.  Brodsky,  the  Company,  Sandsport  and  others.  The
Affiliate's  obligations  respecting repayment of the Bonds were also guaranteed
by Mr. Brodsky, the Company, Sandsport and others.


NOTE 6 - Related Party Transactions, CONTINUED

     The Bonds  currently  bear interest at the rate of 9%, and the  outstanding
balance due on the Bonds as of May 31,  2002 was  $1,444,445.  The Company  paid
rent to the  Affiliate of $407,834 and $615,412 for the years ended May 31, 2002
and 2001.

     On August 11, 1995, the Company entered into a $750,000 loan agreement with
the Long Island Development  Corporation ("LIDC"),  under a guarantee by the SBA
(the "SBA Loan").  The SBA Loan was assigned to the Affiliate in November  1996;
however,  repayment  of the SBA loan is  guaranteed  by the  Company and various
subsidiaries of the Company. The entire proceeds were used to repay a portion of
the Bonds. The SBA Loan is payable in 240 monthly  installments of $6,255, which
includes principal and interest at a rate of 7.015%. The balance of the SBA loan
as of May 31, 2002 was $599,024.

     b. Until  January  2002,  the Company  derived  revenue from Health Card, a
company  affiliated with the Company's  Chairman,  principally for data base and
operating   system   support,   hardware   leasing,   maintenance   and  related
administrative  services.  The revenues  generated  from Health Card amounted to
approximately $693,000 and $2,458,000 for the years ended May 31, 2002 and 2001,
respectively. The Company billed Health Card approximately $126,000 and $821,000
for quality assurance testing of software programs  developed by Health Card and
network support,  and $47,000 and $561,000 for help desk services,  $175,000 and
$448,000 for data processing center as well as $305,000 and $534,000 for certain
computer  equipment  leases and other services for $40,000 and $95,000 for years
ended May 31, 2002 and 2001,  respectively.  In addition the Company resells its
telephone  services to Health Card.  The billings  for such  telephone  services
amounted to approximately $124,000 and $134,000 for the years ended May 31, 2002
and May 31, 2001 and are  recorded  as a reduction  of  operating  expense.  The
Company was owed $19,280 from Health Card at May 31, 2002. Subsequent to May 31,
2002, the Company received approximately $14,000 from Health Card,  representing
substantially  complete  payment of amounts due as of that date.  As of January,
2002,  the  Company  ceased  rendering  services  to Health  Card.  Health  Card
continues  to pay its  allocable  share of expenses for shared  services,  which
amounts to approximately $45,000 per month.

     c. The Company makes lease and rent payments to affiliates of the Company's
Chairman.  The payments for leased equipment were made to P.W. Capital Corp. and
P.W.  Medical  Management,  Inc.,  and were  $268,011 and $395,989 for the years
ended May 31, 2002 and 2001,  respectively.  The payments for the Facility  were
made to BFS Realty,  LLC, and were $407,834 and $615,412 for the years ended May
31, 2002 and 2001,  respectively.  In June 2001, the Company  entered into a new
lease for the Facility which was revised in November, 2001. (See Note 5).

NOTE 6 - Related Party Transactions, CONTINUED

     d. Medical Arts Office  Services,  Inc.  ("MAOS"),  of which the  Company's
Chairman  is  the  sole  shareholder,  provided  the  Company  with  accounting,
bookkeeping  and legal  services.  For the years ended May 31, 2002 and 2001 the
total  payments  made  by the  Company  to  MAOS  were  $340,869  and  $279,894,
respectively.

     e.  During  the  years  ended  May 31,  2002 and 2001 the  Company  paid an
aggregate of $57,285 and $65,894,  respectively on behalf of certain officers to
companies  affiliated  with the  Company's  Chairman  for payment of  automobile
leases.


NOTE 7 - SHAREHOLDERS' EQUITY

         Stock Options

         The Company maintains the following stock option plans:

1984 Stock Option Plan

     There had been 2,536 options granted at an exercise price of $1.88 under an
incentive  stock  option  plan  adopted  in October  1984 (the "1984  Plan") and
subsequently  amended.  Options granted under this plan were granted at exercise
prices not less than fair market value on the date of grant.  All of the options
outstanding  under this plan expired in January 2001. No additional  options may
be granted under this plan.

1995 Stock Option Plan

     At May 31, 2002, there were 590,500 incentive  options  outstanding under a
stock option plan adopted in January 1995 (the "1995 Plan"),  which provides for
both incentive and nonqualified  stock options and reserves  1,000,000 shares of
common  stock for grant under the plan.  Of these  options,  520,500 are held by
officers of the Company.  The plan requires that incentive options be granted at
exercise  prices not less than the fair market  value at the date of grant,  and
terminates  in  January  2005.  All  options  outstanding  under  this  plan are
exercisable at May 31, 2002 at prices ranging from $1.41 to $2.61 per share over
a period of five years from date of grant.

     On July 14, 1997,  the Company filed a  Registration  Statement on Form S-8
relative to  reofferings  of shares of Common Stock of the Company  which may be
acquired pursuant to the 1984 and 1995 Plan.

1998 Stock Option Plan

     At May 31, 2002 there were  775,579  incentive  stock  options  outstanding
under a stock  option plan  adopted in October  1998,  (the "1998  Plan")  which
provides  for  both  incentive  and  nonqualified  stock  options  and  reserves
1,000,000  shares of common  stock for grant under the plan.  The plan  requires
that  incentive  options be granted  at  exercise  prices not less than the fair
market value at the date of grant and  terminates in August 2008. Of the options
outstanding  at May 31, 2002,  567,060 were  exercisable  at prices ranging from
$1.31 to $3.00 over three to five years from the date of grant.






NOTE 7 - SHAREHOLDERS' EQUITY, CONTINUED

2000 Stock Option Plan

     At May 31, 2002, there were 28,340 incentive  options  outstanding  under a
stock option plan adopted on November 20, 2000 (the "2000 Plan"), which provides
for both incentive and nonqualified  stock options and reserves 1,500,000 shares
of common stock for grant under the plan. The 2000 Plan  terminates in September
2010.  Options  outstanding  under  the  plan  vest  over  a  seven-year  period
commencing December 31, 2000 and ending December 31, 2007 and are exercisable at
prices  ranging  from  $1.00 per  share to $3.00 per share  over a period of ten
years from the date of grant. At May 31, 2002,  there were no options  currently
exercisable.

       Summary information with respect to the stock option plans follows:

                                                                                                  


                                                                  Range of
                                                                  exercise       Outstanding        Outstanding
                                                                                   options            options
                                                                 prices ($)        granted          exercisable
                                                                 ----------        -------          -----------

       Balance, June 1, 2000                                   1.31 - 3.00        1,523,902           849,871
       Granted                                                     3.00             279,808           269,653
       Cancelled                                                                    (76,118)          (11,146)
                                                                                  ----------      ------------
       Balance, May 31, 2001                                   1.31 - 3.00        1,727,592         1,108,378
       Granted                                                 1.00 - 3.00           40,085           150,895
       Cancelled                                                                   (373,258)         (101,713)
                                                                                 -----------       -----------

       Balance, May 31, 2002                                   1.31 - 3.00        1,394,419         1,157,560
                                                                                  =========         =========


       Stock option grants to certain officers and directors were as follows:

     In October  1998,  the Company  granted  certain  directors  of the Company
non-qualified  stock  options to purchase an aggregate  of 20,000  shares of the
Company's common stock under the 1998 Plan at an exercise price of $1.00.  These
options vested immediately and are exercisable over a five-year period.

     In December 1998, the Company granted 520,500  incentive options to certain
officers  of the Company  under the 1995 Plan at an exercise  price of $1.41 per
share.  These options vested  immediately and are  exercisable  over a five-year
period.

     In February 2000, the Company granted its Chairman  incentive stock options
to purchase an  aggregate  of 350,000  shares under the 1998 Plan at an exercise
price of $1.31. These options vest and are exercisable over a five-year period.

     In April  2000,  the  Company  granted  certain  directors  of the  Company
non-qualified  stock options to purchase an aggregate of 72,000 shares under the
1998 Plan at an exercise price of $3.00.  These options vest and are exercisable
over a six-year period.






NOTE 7 - SHAREHOLDERS' EQUITY, CONTINUED

2000 Stock Option Plan,  Continued

     In April 2000,  the  Company  granted its then  President  incentive  stock
options to purchase an  aggregate  of 100,000  shares  under the 1998 Plan at an
exercise price of $3.00. In October 2000, the Company granted its then President
incentive  stock options to purchase  150,000  shares under the 2000 Plan, at an
exercise price of $3.00 per share. The President's  employment was terminated on
August 6, 2001, at which date the  President  became  entitled to exercise,  for
ninety days,  the options that had already  vested.  Those options  consisted of
33,340 shares under the 1998 Plan, and 33,333 under the 2000 Plan, none of which
were exercised before the right to exercise expired.

     In November  2000,  the Company  granted  certain  directors of the Company
non-qualified  stock  options to purchase an aggregate  of 20,000  shares of the
Company's common stock under the 1998 Plan at an exercise price of $3.00.  These
options  vest over a  three-year  period and are  exercisable  over a  five-year
period.

     During the fiscal year ended May 31, 2002 non-qualified options to purchase
up to 10,000  shares of Common Stock,  at an exercise  price of $1.00 per share,
were issued to each of two Director's.

     On July 14, 1998,  the  Chairman,  certain  officers and  directors,  and a
former  director  (who is also the  spouse  of an  officer  and an  employee  of
Sandsport  Data  Services,  Inc.  ("Sandsport"),   the  Company's  wholly  owned
subsidiary),  exercised  their  respective  options and  warrants to purchase an
aggregate of 921,334  shares of Common  Stock.  The exercise  prices ranged from
$1.38 to $2.61 per share for an aggregate cost of  $1,608,861.  Payment for such
shares was made to the Company in the amount of $921  representing the par value
of the shares, and a portion in the form of non-recourse promissory notes due in
July 2001,  with  interest at eight and  one-half  percent  (8-1/2%)  per annum,
payable annually, and secured by the number of shares exercised. The Company has
received  interest payments on such notes in the amount of $131,994 and $162,110
during the fiscal  years  ended May 31,  2002 and 2001.  As of May 31,  2002 and
2001, the outstanding balance on such notes, including principal and accrued but
unpaid interest, was $1,669,640 and $1,722,547,  respectively (see Note 12d). On
July 14,  2001,  the  Company  agreed to extend the due dates of the  promissory
notes for one hundred  twenty  days.  On  November 9, 2001,  the due date of the
notes was  extended to November 9, 2004,  and the Company  agreed to  substitute
full  recourse  unsecured  notes  for  the  notes  it had  previously  accepted.
Effective  December 1, 2001,  the  interest  rate was changed from 8-1/2% to 6%.
During  the year  ended  May 31,  2002,  24,667  shares  of  common  stock  were
surrendered  by a former  director and an employee in settlement of notes in the
amount of $37,962.

     Pro forma  information  regarding  net  income  and  earnings  per share is
required  by SFAS  No.  123,  and has  been  determined  as if the  Company  had
accounted  for its  employee  stock  option plans under the fair value method of
SFAS No.  123.  The fair value for these  options was  estimated  at the date of
grant   using  a   Black-Scholes   option-pricing   model  with  the   following
weighted-average assumptions for 2002 and 2001.






NOTE 7 - Shareholders' Equity, continued

                                                                                                  

        ASSUMPTIONS
                                                                                         Year Ended May 31,
                                                                                         ------------------
                                                                                 2002                       2001
                                                                                 ----                       ----
        Risk free rate                                                       4.95 - 6.05%               5.25 - 6.04%
        Dividend yield                                                               .00%                       .00%
        Volatility factor of the expected market
         price of the Company's common stock                                          61%                       117%
        Average life                                                              5 years                    5 years



     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded  options which have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly  differently from those of traded options,  and because changes in
the subjective  input  assumptions  can materially  affect the fair market value
estimate,  in  management's  opinion,  the  existing  models do not  necessarily
provide a  reliable  single  measure  of the fair  value of its  employee  stock
options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is  amortized to expense  over the vesting  period of the  options.  The
Company's pro forma loss is as follows:


                                                                                               
                                                                                       Year Ended May 31,
                                                                                      2002               2001
                                                                                      ----               ----
     Pro forma net income (loss)                                                    $78,025       $(2,470,616)
     Pro forma net income (loss) per share                                           $  .03    $         (.99)



     The weighted  average fair value of options  granted during the years ended
May 31, 2002 and 2001 were $1.12 and $.86,  respectively.  The weighted  average
remaining  contractual  life of options  exercisable at May 31, 2002 is 5 years.
The exercisable  prices range from $1.31 to $3.00 for options  outstanding as of
May 31, 2002.

       Restricted Stock Grant Plan

     On September  1, 2000 the Board of  Directors  approved the adoption of the
Company's 2000 Restricted  Stock Grant Plan (the "Stock Grant Plan").  The Stock
Grant Plan was subsequently  adopted by the Shareholders at the Company's Annual
Meeting on November 20, 2000.  The Stock Grant Plan provides for the issuance of
shares that are subject to both standard restrictions on the sale or transfer of
such shares  (e.g.,  the standard  seven year vesting  schedule set forth in the
Stock  Grant  Plan)  and/or  restrictions  that the  Board may  impose,  such as
restrictions  relating to length of  service,  corporate  performance,  or other
restrictions.  As of May 31, 2002, no grants had been made under the Stock Grant
Plan and, therefore,  no shares had vested under it. There are 700,000 shares of
Common  Stock  reserved for  issuance in  connection  with grants made under the
Stock Grant Plan.

NOTE 8 - Sale/Leaseback Transactions

     The  Company is a party to various  sale/leaseback  transactions  involving
certain fixed assets,  principally  computer  hardware,  software and equipment.
Gains on these transactions have been deferred and are being recognized over the
lives of the related leases, each of which is 36 months.  Approximately $297,000
and $344,000 of the deferred gains were recognized in other income for the years
ended May 31, 2002 and 2001,  respectively.  Included  in these  amounts are the
effects of the following sale/leaseback transactions:

     In January 1998, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $515,000,  were sold for
$700,000.  The resulting gain of approximately $185,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $36,000
of the deferred gain was recognized for fiscal 2001,  which was the last year of
the lease.  An  unaffiliated  third party  purchased the residual rights to such
lease.

     In January 1999, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $830,000,  were sold for
$1,100,000.  The  resulting  gain of  approximately  $270,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $60,000 and $90,000 of deferred gain was recognized for the years
ended May 31, 2002 and 2001, respectively. An unaffiliated third party purchased
the residual rights in such lease.

     In May 1999,  the Company  consummated  a  sale/leaseback  of certain fixed
assets  which  had a net book  value of  approximately  $896,000,  were sold for
$1,100,000.  The  resulting  gain of  approximately  $204,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $68,000 of  deferred  gain was  recognized  for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     In October 1999, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $895,000,  were sold for
$1,115,000.  The  resulting  gain of  approximately  $220,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $73,000 of the deferred gain was recognized for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     In January 2000, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $442,000,  were sold for
$561,000.  The resulting gain of approximately $119,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $40,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.





NOTE 8 - Sale/Leaseback Transactions, continued

     In February 2000, the Company consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $237,000,  were sold for
$277,000.  The resulting gain of approximately  $40,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $14,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     In November 2000, the Company consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $421,500,  were sold for
$548,300.  The resulting gain of approximately $126,800 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $42,000
and $21,000 of the deferred gain was recognized for the years ended May 31, 2002
and 2001,  respectively.  An  unaffiliated  third party  purchased  the residual
rights in such lease.


NOTE 9 - Asset Acquisition and Impairment

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location  services for approximately  $201,000.  NAIS had entered
bankruptcy  proceedings  and,  under the auspices of the Bankruptcy  Court,  the
Company  was  permitted  to "credit  bid"  approximately  $124,000  of  expenses
(including salaries) it had incurred on behalf of NAIS as the purchase price for
the assets,  and was given 180 days to exploit the assets it had  acquired.  The
Company  incurred  approximately  $77,000  in  additional  costs  related to the
acquisition  of these  assets.  The tangible  assets were  determined to have no
significant  fair  value.  Therefore,   all  the  expenditures  related  to  the
acquisition  were  allocated to goodwill.  The Company has the option to abandon
the  exploitation  of these  assets  within the 180 day  period.  If the Company
continues to use the NAIS assets, 10% of the profits (defined as earnings before
interest expense and taxes) generated by such use must be paid to the bankruptcy
estate for the first three years.

     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the  goodwill.  As such,  the carrying  value of goodwill was
written  down to its  estimated  fair  value,  which  was  determined  based  on
discounted  estimated cash flows. The Company  recognized an impairment loss and
write down of the goodwill of approximately  $201,000.  Considerable  management
judgment is necessary to estimate fair value; accordingly,  actual results could
vary significantly from such estimates.







NOTE 10 - Retirement Plan

     The Company has a 401(k)  savings plan  covering all eligible  employees in
which the Company matches a portion of the employees'  contribution.  The amount
of  this  match  was  $40,204  and  $38,197  in  fiscal  years  2002  and  2001,
respectively.


NOTE 11 - Revenue by Product Line

     The Company operates in one business segment,  but derives its revenue from
several product lines. The following table provides the service fee revenues for
the product lines earned for the fiscal years ended May 31, 2002 and 2001:


                                                                                                 
                                                                                           Year Ended May 31,
                                                                                       2002                2001
                                                                                       ----                ----
       Computerized information processing                                        $  5,962,880      $   5,960,450
       Telephone-based data collection                                               7,690,852          7,561,852
       Technology infrastructure and outsourcing                                       736,932          2,071,266
       Information technology                                                        2,765,761          2,170,240
       Other                                                                            17,497              5,261
                                                                                --------------    ---------------

             Total                                                                 $17,173,922        $17,769,069
                                                                                   ===========        ===========



NOTE 12 - Subsequent Events


     a. By letter dated June 26, 2002, a former employee of the Company asserted
claims for back wages of $410,000.  The letter,  from the  employee's  attorney,
also contained allegations of age discrimination and retaliatory discharge.  The
letter also  contained an offer of  settlement.  No formal  litigation  has been
started and the Company intends to pursue settlement  negotiations.  A provision
of  $200,000 is included in accrued  expenses  relating to the  asserted  claim,
which represents the Company's best estimate of costs to be incurred. The amount
of the ultimate cost may vary from this estimate.

     b. The  Company  has  received  a  proposal  to engage  in a going  private
transaction.  The proposed  transaction  is  anticipated  to be in the form of a
merger with an entity owned by an investor  group to be led by Bert E.  Brodsky,
the Company's Chief Executive Officer,  and to include Directors Hugh Freund and
Gary Stoller as well as other investors (the "Acquiring Group"). Pursuant to the
proposal,  the  Company's  shareholders  (other  than Mr.  Brodsky and the other
shareholders  that shall  comprise  part of the  Acquiring  Group) would receive
$1.50 per share of Common  Stock of the Company  (the  "Shares"),  in cash.  The
proposal may be amended, modified or supplemented at any time.





NOTE 12 - Subsequent Events, continued

     The Board of Directors has appointed a Special Committee (the "Committee"),
comprised of Ronald Fish and Martin Bernard, to review the proposed transaction.
The  Committee has retained  Brean Murray & Co., Inc. as its financial  advisor,
and has retained its own legal counsel.

     The  proposed  transaction  would result in the  acquisition  of all of the
outstanding  Shares  other than the Shares  owned by Mr.  Brodsky  and the other
shareholders  that shall  comprise the Acquiring  Group.  The final terms of any
acquisition  will be based on  negotiations  between the Acquiring Group and the
Committee.  The proposed acquisition will be subject to, among other things, (1)
the negotiation, execution, and delivery of a definitive agreement, (2) approval
of the proposed  transaction by the  Committee,  the full Board of Directors and
the Company's shareholders,  (3) receipt of a fairness opinion by the Committee,
(4) applicable regulatory approval,  and (5) obtaining any necessary third-party
consents  or  waivers.  There  can  be no  assurance  that a  definitive  merger
agreement will be executed and delivered,  or that the proposed transaction will
be consummated.

     c. On July 9,  2002 the  Company  issued a press  release  announcing  that
Nasdaq had informed  the Company that its shares would be subject to  de-listing
from the Small Cap Market for failure to comply with Nasdaq's  Marketplace Rules
regarding minimum value of publicly held shares and minimum bid price per share.
The Company requested a hearing on these matters,  and the de-listing was stayed
until the  hearing.  The Company was  informed by Nasdaq on August 21, 2002 that
the  Company  had  regained  compliance  with both  Marketplace  Rules and that,
therefore, the hearing was cancelled and the matter is moot.

     d. On August 22, 2002, the Chairman  repaid $100,000 of the note receivable
officer.










                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned,  thereunto duly authorized.

SANDATA TECHNOLOGIES, INC.
      (Registrant)

By     /s/ Bert E. Brodsky
     --------------------------------------------------------------------------
                            Bert E. Brodsky, Chairman
                           (Principal Executive Officer and
                         Principal Financial and Accounting Officer)

Date: August 27, 2002

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

By   /s/ Bert E. Brodsky
     -----------------------------------------------------------------------
         Bert E. Brodsky, Chairman, Treasurer, Director

Date: August  27, 2002


By   /s/ Hugh Freund
     -----------------------------------------------------------------------
         Hugh Freund, Executive Vice President, Secretary, Director

Date: August  27, 2002


By   /s/ Gary Stoller
     -----------------------------------------------------------------------
        Gary Stoller, Executive Vice President, Director

Date: August  27, 2002


By    /s/ Martin Bernard
      ----------------------------------------------------------------------
          Martin Bernard, Director

Date: August  27, 2002

By   /s/ Ronald L. Fish
     -----------------------------------------------------------------------
         Ronald L. Fish, Director

Date: August  27, 2002




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the Annual Report of Sandata  Technologies,  Inc. (the
"Company")  on Form  10-KSB  for the year  ended May 31,  2002 as filed with the
Securities and Exchange  Commission on the date hereof (the  "Report"),  Bert E.
Brodsky,  Chief Executive  Officer and Chief  Financial  Officer of the Company,
certifies, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley  Act of  2002,  that:  (1) The  Report  fully  complies  with the
requirements  of section 13(a) or 15(d) of the Securities  Exchange Act of 1934;
and (2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.

       /s/  Bert E. Brodsky

            Bert E. Brodsky
            Chief Executive Officer and Chief Financial Officer
            August 27, 2002



                                                                    APPENDIX F





                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-KSB/A


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934.
                     For the fiscal year ended May 31, 2002

[  ]  Transition report under Section 13 or 15(d) of the Securities
        Exchange Act of 1934.

For the transition period from         to
                               -------   ---------

                         Commission file number 0-14401

                           SANDATA TECHNOLOGIES, INC.
              (Exact name of small business issuer in its charter)

        DELAWARE                                        11-2841799
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

                              26 Harbor Park Drive,
                               Port Washington, NY
                    (Address of principal executive offices)
                                      11050
                                   (Zip Code)

         Issuer's telephone number, including area code: (516) 484-4400

         Securities registered under Section 12(b) of the Exchange Act:
                                      None


         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.001 par value
                                (Title of class)


     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been  subject to such  filing  requirements  for the past 90 days.
 Yes     X       No
    -----------    --------------


                                      F-1





     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The issuer's revenues for year ended May 31, 2002 were $17,852,710.

     The aggregate market value of the voting and non-voting  common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of August
16, 2002 was $1,536,918.

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

Yes                        No
    ----------------           -------------

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         The number of shares outstanding of each of the issuer's classes of
common equity, as of August 16, 2002 was 2,481,808.

         Transitional Small Business Disclosure Format  (check one):

Yes                 No     X
    ------------       ------------

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.




ITEM 7 - FINANCIAL STATEMENTS

     The  Annual  Report on Form  10-KSB for  Sandata  Technologies,  Inc.  (the
"Company") for the year ended May 31, 2002 is hereby amended to the extent,  and
only to the extent, of amending Item 7 thereof, to correct  typographical errors
in the Consolidated Balance Sheet and the Consolidated Statement of Shareholders
Equity for the year  ended May 31,  2002,  and in the Notes to the  Consolidated
Financial Statements. Item 7 shall read in its entirety as follows:
















                           SANDATA TECHNOLOGIES, INC.

                     FINANCIAL STATEMENTS COMPRISING ITEM 7
                            OF REPORT ON FORM 10-KSB
                      TO SECURITIES AND EXCHANGE COMMISSION
                             YEAR ENDED MAY 31, 2002








                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                                                    
                                                                                                           Page

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                                                    F-2


Financial Statements

  Consolidated Balance Sheets as of May 31, 2002 and 2001                                                   F-3

  Consolidated Statements of Operations for the years ended
   May 31, 2002 and 2001                                                                                    F-4

  Consolidated Statement of Shareholders' Equity for the years
   ended May 31, 2002 and 2001                                                                              F-5

  Consolidated Statements of Cash Flows for the years ended
   May 31, 2002 and 2001                                                                                    F-6


Notes to Consolidated Financial Statements                                                              F-7 - F-29










                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


Board of Directors and Shareholders
of Sandata Technologies, Inc. and Subsidiaries

     We have audited the  accompanying  consolidated  balance  sheets of Sandata
Technologies,  Inc. and Subsidiaries (formerly Sandata, Inc.) as of May 31, 2002
and 2001, and the related consolidated  statements of operations,  shareholders'
equity and cash flows for the years then  ended.  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  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  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 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 consolidated financial position of
Sandata Technologies, Inc. and Subsidiaries as of May 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting  principles generally accepted in the United
States of America.

     As  more  fully  described  in  the  Notes  to the  consolidated  financial
statements,  the Company had certain transactions with companies affiliated with
the Company's Officers and Chairman.

                                                     /s/ Marcum & Kliegman LLP

Woodbury, New York
July 26, 2002, except for Notes 12c and 12d, which are dated August 21, 2002 and
August 22, 2002, respectively

                                       F-2




                      SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS




                                                                                              
                                                                                             May 31,
                                                                                    2002                2001
                                                                                    ----                ----
                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                       $ 1,630,617        $   475,578
  Accounts receivable, net of allowance for doubtful accounts
   of $202,746 and $346,903 at 2002 and 2001, respectively                          2,182,963          2,160,675
  Receivables from affiliates                                                         280,297            802,787
  Notes receivable - officer                                                          100,000                 --
  Inventories                                                                          45,342             35,993
  Prepaid expenses and other current assets                                           345,349            416,056
  Deferred income taxes                                                               207,595            274,470
                                                                                  -----------        -----------

         Total Current Assets                                                       4,792,163          4,165,559

FIXED ASSETS, NET                                                                   6,820,596          6,036,203

DEFERRED INCOME TAXES                                                                 171,579            335,773

OTHER ASSETS
  Notes receivable                                                                     25,190             29,669
  Cash surrender value of officer's life insurance, security
   deposits and other assets                                                        1,105,502            866,774
                                                                                  -----------        -----------

         TOTAL ASSETS                                                             $12,915,030        $11,433,978
                                                                                  ===========        ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                                           $ 2,781,550        $ 1,881,269
  Deferred/unearned revenue                                                            16,367             31,069
  Deferred income                                                                     103,258            296,560
                                                                                  -----------        -----------

         Total Current Liabilities                                                  2,901,175          2,208,898

LONG-TERM DEBT                                                                      4,500,000          3,850,000

DEFERRED INCOME                                                                        21,142            124,401
                                                                                  -----------        -----------

         TOTAL LIABILITIES                                                          7,422,317          6,183,299
                                                                                  -----------        -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Common stock, $.001 par value, 6,000,000 shares
   authorized; 2,481,808 and 2,506,475 shares issued and
   outstanding in 2002 and 2001, respectively                                           2,482              2,506
  Additional paid in capital                                                        5,765,766          5,803,704
  Retained earnings                                                                 1,193,755          1,051,721
  Notes receivable - officers                                                      (1,469,290)        (1,607,252)
                                                                                  -----------        -----------

         TOTAL SHAREHOLDERS' EQUITY                                                 5,492,713          5,250,679
                                                                                  -----------        -----------

         TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY                                $12,915,030        $11,433,978
                                                                                  ===========        ===========

       See notes to consolidated financial statements


                                       F-3
  

                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               Years ended May 31,


                                                                                                    
                                                                                      2002                2001
                                                                                      ----                ----

REVENUES
  Service fees                                                                    $17,173,922        $17,769,069
  Other income                                                                        514,999            368,502
  Interest income                                                                     163,789            185,311
                                                                                  -----------        -----------

       TOTAL REVENUES                                                              17,852,710         18,322,882
                                                                                  -----------        -----------

COSTS AND EXPENSES
  Operating                                                                         9,877,651         10,372,524
  Selling, general and administrative                                               5,502,264          5,004,255
  Depreciation and amortization                                                     1,839,965          2,748,411
  Interest expense                                                                    241,729            189,240
  Impairment of developed software                                                         --          3,298,872
  Impairment of goodwill                                                                   --            201,128
                                                                                  -----------       ------------

         TOTAL COSTS AND EXPENSES                                                  17,461,609         21,814,430
                                                                                  -----------        -----------

         EARNINGS (LOSS) BEFORE INCOME TAXES                                          391,101         (3,491,548)

INCOME TAX EXPENSE (BENEFIT)                                                          249,067         (1,293,401)
                                                                                  -----------        -----------

         NET EARNINGS (LOSS)                                                      $   142,034        $(2,198,147)
                                                                                  ===========        ===========

PER SHARE INFORMATION

         BASIC AND DILUTED EARNINGS (LOSS) PER
          SHARE                                                                   $       .06        $      (.88)
                                                                                  ===========        ===========
       WEIGHTED-AVERAGE NUMBER OF
        SHARES OUTSTANDING                                                          2,494,175          2,506,475
                                                                                  ===========        ===========

    
                 See notes to consolidated financial statements

                                       F-4





                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                        Years ended May 31, 2002 and 2001



                                                                                                           
                                                                Additional                            Notes               Total
                                        Common Stock             Paid-In         Retained           Receivable        Shareholders'
                                 Shares            Amount        Capital         Earnings            Officers             Equity
                                -------            ------      -----------       --------           ----------        ------------
Balance at
June 1, 2000                    2,506,475          $2,506      $5,803,704      $ 3,249,868         $(1,607,252)        $ 7,448,826

Net Loss                               --              --              --       (2,198,147)                 --          (2,198,147)
                                ---------          ------      ----------      -----------         -----------         -----------
Balance at
 May 31, 2001                   2,506,475           2,506       5,803,704        1,051,721          (1,607,252)          5,250,679

Reclassification of notes
receivable officer (re-paid
subsequent to year-end-
Note 12d)                              --              --              --              --              100,000             100,000

Effect of Stock
 Surrender                        (24,667)            (24)        (37,938)              --              37,962                  --

Net Earnings                           --              --              --          142,034                  --             142,034
                                ---------          ------      ----------      -----------         -----------         -----------

Balance at
May 31, 2002                    2,481,808          $2,482      $5,765,766      $ 1,193,755         $(1,469,290)        $ 5,492,713
                                =========          ======      ==========      ===========         ===========         ===========

                 See notes to consolidated financial statements

                                       F-5





                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               Years ended May 31,



                                                                                                  

                                                                                        2002                2001
                                                                                        ----                ----
Cash flows from operating activities:
 Net earnings (loss)                                                             $   142,034         $(2,198,147)
  Adjustments to reconcile net earnings (loss) to net cash
   provided by operating activities:
    Depreciation and amortization                                                  1,839,965           2,748,411
    (Gain) loss on disposal of fixed assets                                           (4,309)             75,111
    Change in allowance for doubtful accounts                                       (144,157)           (100,879)
    Recognition of deferred income                                                  (296,561)           (343,820)
    Recognition of deferred revenue                                                  (36,121)           (116,702)
    Impairment of developed software                                                      --           3,298,872
    Impairment of goodwill                                                                --             201,128
    Deferred tax provision                                                           231,069          (1,312,401)
  (Increase) decrease in operating assets
     Accounts receivable                                                             121,869             249,105
     Receivables from affiliates                                                     522,490            (397,055)
     Inventories                                                                      (9,352)            (18,828)
     Prepaid expenses and other current assets                                        70,708              (2,937)
     Other assets                                                                   (234,247)            (24,827)
  (Decrease) Increase in operating liabilities
     Accounts payable and accrued expenses                                           900,282            (698,874)
     Deferred/unearned revenue                                                        21,418             108,923
     Deferred income                                                                      --             126,850
                                                                                 -----------          ----------

         Net cash provided by operating activities                                 3,125,088           1,593,930
                                                                                 -----------          ----------

Cash flows from investing activities:
  Purchases of fixed assets                                                       (2,620,049)         (3,795,285)
  Proceeds from sale/leaseback transactions                                               --             548,343
  Acquisition of intangible asset                                                         --            (201,128)
                                                                                 -----------          ----------

         Net cash used in investing activities                                    (2,620,049)         (3,448,070)
                                                                                 -----------          ----------

Cash flows from financing activities:
  Principal payments on note payable                                                (500,000)           (500,000)
  Proceeds from note payable                                                         500,000                  --
  Proceeds from line of credit                                                     3,800,000           2,200,000
  Principal payments on line of credit                                            (3,150,000)           (600,000)
                                                                                 -----------          ----------

         Net cash provided by financing
           activities                                                                650,000           1,100,000
                                                                                 -----------         -----------

         INCREASE (Decrease) in cash and cash                                      1,155,039            (754,140)
          equivalents

Cash and cash equivalents - beginning                                                475,578           1,229,718
                                                                                 -----------          ----------

Cash and cash equivalents - ending                                               $ 1,630,617          $  475,578
                                                                                 ===========          ==========



                 See notes to consolidated financial statements

                                       F-6




                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Nature of Business and Economic Dependency

     Sandata Technologies,  Inc. and Subsidiaries (the "Company", formerly known
as  Sandata,  Inc.  )  are  primarily  engaged  in  the  business  of  providing
computerized  data  processing  services  and custom  software  and  programming
services  using  Company-developed  and  licensed  software  principally  to the
healthcare industry. The Company primarily operates in the New York metropolitan
area.  During  fiscal  years ended May 31, 2002 and 2001,  the Company  received
revenues  from a group of  customers  who are all funded by the Human  Resources
Administration  of the  City of New York  ("HRA"),  amounting  to  approximately
$10,549,000 and $10,608,000,  respectively.  The Company was owed  approximately
$1,259,000  and  $1,160,000  from  these  customers  at May 31,  2002 and  2001,
respectively.

       Principles of Consolidation

     The  consolidated  financial  statements  include  the  accounts of Sandata
Technologies,  Inc. and its wholly owned subsidiaries:  Sandsport Data Services,
Inc.,  Sandata  Home Health  Systems,  Inc.,  Sandata  Spectrum,  Inc.,  SANTRAX
Systems,   Inc.,  SANTRAX  Productivity,   Inc.  and  Pro-Health  Systems,  Inc.
("Pro-Health",  formerly known as Sandata Inteck,  Inc.). SANTRAX  Productivity,
Inc.  and Sandata  Spectrum,  Inc. are inactive  subsidiaries.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

       Reclassifications

     Certain  accounts  in  the  prior  year  financial   statements  have  been
reclassified  for comparative  purposes to conform with the  presentation in the
current year financial  statements.  These  reclassifications  have no effect on
previously reported earnings/loss.

       Fixed Assets

     Fixed  assets are  recorded  at cost.  Depreciation  and  amortization  are
computed  principally  by  the  straight-line  method  over  the  lesser  of the
estimated useful lives or lease terms of the related assets.

       Impairment of Long-Lived Assets

     The Company  evaluates  its  long-lived  assets,  including  goodwill,  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying   amount  of  such  assets  or  intangibles  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying  amount of the asset to future net cash flows  expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying  amount of the assets
exceed the fair value of the assets as determined by estimated  discounted  cash
flows. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell.

       Income Taxes

     The Company  uses the  liability  method to account for income  taxes.  The
primary  objectives  of  accounting  for income taxes are to (a)  recognize  the
amount of income tax payable for the current year and (b)  recognize  the amount
of deferred tax liability or asset based on  management's  assessment of the tax
consequences  of events  that have been  reflected  in the  Company's  financial
statements or tax returns.  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.  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.
Valuation  allowances  are  established  when  necessary to reduce  deferred tax
assets to the amounts expected to be realized.

       Software Costs

     The Company capitalizes  software  development costs from the point in time
where technological feasibility has been established until the computer software
product is  available to be sold.  The annual  amortization  of the  capitalized
amounts  is the  greater  of the ratio of  current  revenue  to total  projected
revenue for a product, or the straight-line  method, and is applied over periods
ranging up to five years. The Company  performs  periodic reviews to ensure that
unamortized program costs remain recoverable from future revenue.

       Research and Development

     Research and development costs are charged to expense as incurred. Research
and development  expenses amounted to approximately  $62,000 and $10,000 in 2002
and 2001, respectively.

       Inventories

     Inventories,  consisting  of computer  hardware  and  peripherals  held for
resale, are stated at the lower of cost or market;  cost is determined using the
specific identification method.

       Net Earnings Per Common Share

     The Company  computes  earnings per share in accordance  with  Statement of
Financial  Accounting  Standards  ("SFAS") No. 128 "Earnings  per Share".  Basic
earnings per share has been computed using the weighted average number of shares
of common stock outstanding.  Diluted earnings per share has been computed using
the basic  weighted  average  shares of common  stock  issued  adjusted  for the
dilutive  effect of outstanding  stock options.

     For the year ended May 31, 2002 options and warrants to purchase  1,394,419
shares of common stock were outstanding and were not included in the computation
of diluted  earnings  per share  because the  exercise  price of the options and
warrants were greater than the average market price of the common stock. For the
year ended May 31, 2001, outstanding stock options, warrants and other potential
stock issuances have not been considered in the computation of diluted  earnings
per  share  amounts  since  the  effect  of  their  inclusion  would  have  been
antidilutive. The Company uses the treasury stock method to calculate the effect
that the  conversion  of the stock  options would have on earnings per share and
the weighted average number of shares of common stock.

       Revenue Recognition

     Computerized   Information   Processing  Services.  The  Company  generates
revenues for its computerized information processing services from its Sandsport
Home Attendant Reporting Program ("SHARP") and Pro-Health software applications.
The SHARP application provides weekly time sheets,  billing,  payroll processing
and management reports for  not-for-profit  agencies that provide home attendant
services to those in need.  Revenues are  recognized  for these  services in the
period they are provided.  The Pro-Health  application is an application service
provider  solution  that  provides  home  health  care  customers  access to the
Company's software over the Internet without needing  sophisticated  hardware at
its site to  house  the  software  or  store  the  data.  Customers  using  this
application  are charged a monthly fee and  revenue is  recognized  on a monthly
basis as the service is provided.

     Telephone-Based  Data Collection  Services.  The Company generates revenues
for its telephone-based  data collection services from its automated  electronic
system knows as Sandata(R)  SANTRAX(R)  ("SANTRAX")  software  application.  The
SANTRAX  application  is  an  automated   electronic  system  that  incorporates
telephone  technologies  into the data reporting  process to monitor the arrival
and departure  times of off-site  workers.  Revenues from this  application  are
recognized  based on a per  call or  visit  basis  in the  period  in which  the
services are provided.

     Technology   Infrastructure   and  Outsourcing   Services.   Revenues  from
technology  infrastructure  and  outsourcing  services such as data  processing,
technology infrastructure consulting,  web site development,  running e-commerce
applications and reselling  telephone  services are recognized based on per hour
or call rates in the period the service is provided.

     Information  Technology  Services.  The  Company  generates  revenues  from
information  technology  services  under  the name of  SandataNet  and  includes
services  such as  software  support,  hardware  support/break-fix,  Local  Area
Network ("LAN")  administration and configuration  services and the reselling of
computer  hardware and third-party  software  systems;  some of the services are
pursuant to long-term contracts. Support revenue is recognized based on per hour
rates in the period the service is provided.  For maintenance  contracts greater
than one  month,  revenue  is  recognized  over the  term of the  contract  on a
straight-line  basis.   Computer  hardware  and  software  resale  revenues  are
recognized when the units are shipped and accepted by the customer.  The Company
does not bundle maintenance with any software sold.

     Long-Term  Contracting.  As discussed above, the Company utilizes long-term
contracts and  recognizes  revenue for financial  statement  purposes  under the
percentage of completion  method and,  therefore,  takes into account the costs,
estimated earnings and revenue-to-date on contracts not yet completed.

     The amount of revenue  recognized  at the financial  statement  date is the
portion of the total contract price that the direct labor costs expended to date
bears to the anticipated total direct labor costs, based on current estimates of
costs to  complete.  Direct  labor  costs  include  all  direct  labor,  related
benefits,  and  subcontract  costs.  This  method  is  used  because  management
considers  direct  labor costs to be the best  available  measure of progress on
these contracts.

     Revisions  in  estimates  of  costs  and  earnings  during  the life of the
contracts are reflected in the accounting  period in which such revisions become
known. At the time a loss on a contract  becomes known, the entire amount of the
estimated loss is recognized in the financial statements.  Billings in excess of
estimated   costs  and  earnings  on  uncompleted   contracts  are  included  in
deferred/unearned revenue.

       Sale/Leaseback

     The Company recognizes gains from sale/leaseback  transactions ratably over
the term of the  underlying  lease.  All such leases are operating  leases.  Any
losses from these transactions are recognized in the period incurred.

       Cash and Cash Equivalents

     The Company considers all short-term  investments with an original maturity
of  three  months  or less  to be cash  equivalents.  Due to the  nature  of its
operations,  the Company  deposits,  on a monthly  basis,  amounts in  financial
institutions for the payment of payroll liabilities for certain customers.  Such
amounts  are reduced  when the Company  pays such  liabilities.  Such  reduction
generally  occurs over five to ten business  days. At May 31, 2002,  the Company
had amounts on deposit for these liabilities of approximately $1,300,000.

       Concentration of Credit Risk

     The Company is subject to a  concentration  of credit risk with  respect to
its trade receivables,  as disclosed above. The Company performs on-going credit
evaluations  of its  customers and generally  does not require  collateral.  The
Company  maintains  allowances  to cover  potential  or  anticipated  losses for
uncollectible accounts.

     The  Company has cash  balances  in banks in excess of the  maximum  amount
insured by the FDIC as of May 31, 2002.

       Statements of Cash Flows

     The Company  paid  income  taxes of  approximately  $19,000 and $23,000 and
interest of approximately $242,000 and $252,000 for the years ended May 31, 2002
and 2001, respectively.

       Use of Estimates in the Financial Statements

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

       Fair Value of Financial Instruments

     The Company's  short term  financial  instruments  include  cash,  accounts
receivable,  receivable  from  affiliates  and  accounts  payable.  Due  to  the
short-term  nature of these  instruments,  the fair  value of these  instruments
approximates  their recorded value.  The Company has long-term debt  instruments
which it believes are stated at their estimated fair value.

       Stock Options and Similar Equity Instruments

     The Company  accounts  for stock  options and  similar  equity  instruments
(collectively  "Options")  issued to employees and directors in accordance  with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees," rather than the fair value based method of accounting  prescribed by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation."  The exercise price for Options issued to employees and directors
equals or exceeds the fair value of the  Company's  Common  Stock at the date of
grant and, accordingly,  no compensation expense is recorded. Equity instruments
issued to acquire goods and services from  non-employees are accounted for based
on the fair value of the consideration  received or the fair value of the equity
instruments issued, whichever is more readily determinable.

       Comprehensive Income

     The Company adopted SFAS No. 130, "Reporting  Comprehensive  Income".  SFAS
No. 130 establishes standards for reporting and display of comprehensive income,
its  components and  accumulated  balances.  Comprehensive  income is defined to
include all changes in equity except those resulting from  investments by owners
and distributions to owners. Among other disclosures, SFAS No. 130 requires that
all items that are required to be recognized under current accounting  standards
as components of comprehensive  income be reported in a financial statement that
is displayed with the same prominence as other financial statements.

       Business Segments

     The  Company  adopted  SFAS No.  131,  "Disclosures  About  Segments  of an
Enterprise and Related  Information",  which supercedes SFAS No. 14,  "Financial
Reporting  for  Segments  of a Business  Enterprise."  SFAS No. 131  establishes
standards for the way that public enterprises report information about operating
segments in annual  financial  statements  and  requires  reporting  of selected
information about operating segments in interim financial  statements  regarding
products and  services,  geographical  areas and major  customers.  SFAS No. 131
defines  operating  segments as components of an enterprise about which separate
financial  information  is available  that is  evaluated  regularly by the chief
operating  decision maker in deciding how to allocate resources and in assessing
performance.  The Company has determined that its operations are in one segment,
computer services to the health care industry.

       New Accounting Pronouncements

     In October 2001, the Financial  Accounting  Standards Board ("FASB") issued
SFAS No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets".
SFAS No. 144 addresses the accounting model for long-lived assets to be disposed
of by sale and resulting  implementation  issues.  This statement  requires that
those  long-lived  assets be measured  at the lower of  carrying  amount or fair
value  less  cost to sell,  whether  reported  in  continuing  operations  or in
discontinued  operations.  Therefore,  discontinued operations will no longer be
measured at net realizable  value or include  amounts for operating  losses that
have not yet occurred. It also broadens the reporting of discontinued operations
to include all components of an entity with operations that can be distinguished
from the  rest of the  entity  and  that  will be  eliminated  from the  ongoing
operations  of the entity in a disposal  transaction.  SFAS No. 144 is effective
for the  Company in fiscal  2003.  The  Company is  evaluating  the impact  that
implementation  of SFAS No.  144 may  have on the  financial  statements  of the
Company.

     On April 30,  2002,  the FASB  issued  SFAS No.  145,  "Rescission  of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections". SFAS No. 145 eliminates the requirement that gains and losses from
the  extinguishment  of debt be  aggregated  and, if material,  classified as an
extraordinary  item,  net of the  related  income tax effect and  eliminates  an
inconsistency between the accounting for sale-leaseback transactions and certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback   transactions.   Generally,   SFAS  No.  145  is  effective  for
transactions  occurring  after May 15, 2002.  The  adoption of this  standard is
expected to have no impact to the Company.

     SFAS No.  146,  "Accounting  for Costs  Associated  with  Exit or  Disposal
Activities"  ("SFAS 146"),  provides guidance on the recognition and measurement
of  liabilities  for cost  associated  with  exit or  disposal  activities.  The
provisions of this Statement are effective for exit or disposal  activities that
are initiated  after December 31, 2002. The Company is currently  reviewing SFAS
146 to determine the impact upon adoption.


                                                                                                      

NOTE 2 - Fixed Assets

       Fixed assets consist of the following:

                                                                                          May 31,
                                                                     Useful Life           2002                2001
                                                                     -----------           ----                ----
       Computer equipment                                               5 years      $  3,169,445       $  2,883,819
       Software costs                                             Up to 5 years        12,364,224         10,047,618
       Furniture, fixtures and automobiles                            4-7 years           419,274            415,330
       Leasehold improvements                                          10 years         2,823,154          2,809,278
                                                                                     ------------      -------------
                                                                                       18,776,097         16,156,045
       Less:  accumulated depreciation and
                amortization                                                          (11,955,501)       (10,119,842)
                                                                                     ------------       ------------

             Total Fixed Assets, net                                                 $  6,820,596       $  6,036,203
                                                                                     ============       ============


    Depreciation and amortization  expense relating to fixed assets (other than
software   costs)  amounted  to   approximately   $443,000  in  2002  and  2001,
respectively.

     Unamortized  software  costs  amounted  to  approximately   $5,105,000  and
$4,186,000  at May 31,  2002 and 2001,  respectively.  Amortization  expense for
these costs totaled  approximately  $1,397,000  and $2,305,000 in 2002 and 2001,
respectively.

     During the fourth  quarter of the year ended May 31, 2001, the Company shut
down  certain  operating  systems and  hardware  configurations,  which had been
capitalized in previous years. The Company had determined that the older systems
architecture  had become  obsolete  and too costly to  maintain,  so the Company
coordinated  placing  several new systems in production  after running  parallel
with  pre-existing  systems  resulting in the  retirement  of the older  systems
during the fourth quarter.  The Company further  determined that there is no net
realizable  value  remaining  since no future revenue would be recognized in the
retired  systems  because the  architecture  was completely  replaced by the new
systems.  As such the Company  recognized  an impairment  loss of  approximately
$3,300,000 for the year ended May 31, 2001.


NOTE 3 - Debt

       Credit Agreement

     The  Company's  wholly owned  subsidiary,  Sandsport  Data  Services,  Inc.
("Sandsport"),  has a revolving credit agreement (the "Credit Agreement") with a
Bank which allows  Sandsport to borrow  amounts up to  $4,500,000  and is due on
June 14,  2003.  Interest  accrues  on  amounts  outstanding  under  the  Credit
Agreement at a rate equal to the London Interbank  Offered Rate plus 2% and will
be paid quarterly in arrears or, at Sandsport's  option,  interest may accrue at
the Bank's  prime rate.  The Credit  Agreement  requires  Sandsport to pay a fee
equal to 1/4% per annum on the unused average daily balance of amounts under the
Credit  Agreement.  In addition,  there are other fees and charges imposed based
upon Sandsport's failure to maintain certain minimum balances.  The indebtedness
under the Credit  Agreement is guaranteed by the Company and Sandsport's  sister
subsidiaries (the "Group"). All of the Group's assets are pledged to the Bank as
collateral  for the  amounts  due under the Credit  Agreement,  which  pledge is
secured by a first lien on all equipment  owned by members of the Group, as well
as a collateral  assignment of $2,000,000 of life insurance  payable on the life
of the Company's Chairman. In addition, the Company is restricted in its ability
to declare  and pay  dividends  pursuant  to the Credit  Agreement.  The Group's
guaranty  to the Bank was  subsequently  modified  to include  all  indebtedness
incurred by the Company under the amended Credit Agreement dated August 24, 2001
(see below).

     On August 24,  2001,  Sandsport,  the Company and the other  members of the
Group,  and the Bank,  entered into the Third  Amendment  and Waiver (the "Third
Amendment")  to  the  Credit   Agreement.   Pursuant  to  the  Third  Amendment,
Sandsport's  covenants  to the Bank to  maintain  a certain  net  worth,  and to
maintain certain financial ratios, were revised on a going-forward basis and the
noncompliance  with the existing  covenants was waived by the Bank. In addition,
in connection with the Third  Amendment,  Sandsport and each member of the Group
executed and  delivered to the Bank a Collective  Amended and Restated  Security
Agreement,  pursuant  to which the Bank's  security  interest  was  extended  to
include a security  interest  in all of the  personal  and  fixture  property of
Sandsport,  the  Company  and the  members of the Group.  As of May 31, 2002 and
2001,  the  outstanding  balance  on the  Credit  Agreement  with  the  Bank was
$4,500,000 and $3,850,000, respectively.

       Long Term Debt

     The Company  owed  National  Medical  Health Card  Systems,  Inc.  ("Health
Card"), a company affiliated with the Company's Chairman, $500,000 pursuant to a
promissory  note,  dated May 31, 2000 and due June 1, 2001 plus  interest at the
rate of 9-1/2%;  interest on such note was payable quarterly.  The Note was paid
in May, 2001.

     On June 9, 2001, the Company issued a promissory note to Health Card in the
principal amount of $500,000,  with interest at the rate of 7%, which was due on
June 8, 2002. This Note was paid in full on August 15, 2001.


NOTE 4 - Income Taxes

       The income tax expense (benefit) is comprised of the following:

                                                          Year Ended May 31,
                                                          ------------------
                                                        2002             2001
                                                        ----             ----
       Current
         Federal                                    $     --                --
         State                                        17,998            19,000
                                                    --------          --------

           Total current                              17,998            19,000
                                                    --------          --------

       Deferred
         Federal                                     192,761        (1,089,293)
         State                                        38,308          (223,108)
                                                   ---------        ----------

             Total deferred                          231,069        (1,312,401)
                                                   ---------        ----------

             Income tax expense (benefit)           $249,067       $(1,293,401)
                                                    ========       ===========

      The Company's effective income tax rate differs from the statutory U.S.
Federal income tax rate as a result of the following:

                                                         Year Ended May 31,
                                                      2002                2001
                                                      ----                ----
       Statutory U.S. federal tax rate                34.0%             (34.0%)
       State taxes                                     4.6               (5.8)
       Permanent Differences                          12.2                1.2
       Other                                          12.9                1.6
                                                      ----              -----

                                                      63.7%             (37.0%)
                                                     =====             ======


       The components of deferred tax assets and liabilities consists of the
following:

                                                             May 31,
                                                      2002                2001
                                                      ----                ----
       Deferred Tax Assets-Current portion
         Allowance for Doubtful Accounts            $ 81,686           $142,230
         Deferred Income                              61,367             43,340
         Accrued Expenses                             56,117             79,706
         Other                                         8,425              9,194
                                                    --------           --------

             Deferred Tax Assets, current           $207,595           $274,470
                                                    ========           ========

                                                              May 31,
                                                      2002                2001
                                                      ----                ----
       Deferred Tax Assets-Long term portion
        Net Operating Loss Carryforwards          $1,642,275         $1,255,038
         Deferred Income                                  --            129,255
         Goodwill                                         --             82,872
         Other                                           604                615
                                                  ----------         ----------

             Deferred Tax Assets, Long-term        1,642,879          1,467,780
                                                  ----------         ----------

       Deferred Tax Liabilities-Long-term portion
         Depreciation and amortization            (1,460,054)        (1,132,007)
         Deferred income                             (11,246)                --
                                                  ----------         ----------

         Deferred Tax Liabilities, Long-term      (1,471,300)        (1,132,007)
                                                  ----------         ----------

         Deferred Tax Assets - Long-term, Net        171,579            335,773
                                                  ----------         ----------

             Total Deferred Tax Asset, Net        $  379,174         $  610,243
                                                  ==========         ==========

     Management  determined that it was more likely than not that future taxable
income would be  sufficient to enable the Company to realize all of its deferred
tax assets.  Accordingly,  no valuation  allowance  has been recorded at May 31,
2002 and 2001.

     At May 31, 2002, the Company had net operating loss  carryforwards  for tax
purposes of approximately $4,076,000, expiring at various dates through 2022.


NOTE 5- Commitments and Contingencies

       Lease Agreements

     The Company leases office space at 26 Harbor Park Drive,  Port  Washington,
NY 11050 (the "Facility")  from BFS Realty LLC,  successor to BFS Sibling Realty
and an affiliate of the Company's  Chairman (the  "Affiliate") (see Note 6). The
Company paid rent in the amount of $407,834 and  $615,412 to the  Affiliate  for
the years ended May 31, 2002 and 2001, respectively.

     On June 1, 2001 (revised  November,  2001) , the Company entered into a ten
(10) year lease for the  Facility  with the  Affiliate.  The lease  provides for
annual rental  payments of $277,817 for the period June 1, 2002 to May 31, 2003,
with annual 5% increases in each 12-month period thereafter.  The lease is being
expensed on a  straight-line  basis over the lease term. The lease also requires
monthly payments of various types, such as the Company's  proportionate share of
real  estate  taxes  and  common  area  maintenance   charges,   that  aggregate
approximately  $10,000 per month.  In November,  2001,  the lease was revised to
provide  that  the  Company  would  pay its  utility  expenses  directly  to the
respective utility company, not to the Affiliate.

     The Company has  obligations to pay rental  expense in connection  with six
sale/leaseback  transactions.  The rental  expenses  amounted  to  approximately
$1,195,000   and   $1,630,000  for  the  years  ended  May  31,  2002  and  2001
respectively. (See Note 8)

     Total office space and equipment  rental expense under all operating leases
amounted to  approximately  $2,294,000  and  $3,417,000 in fiscal 2002 and 2001,
respectively.

     Future minimum lease payments for all non  cancelable  operating  leases at
May 31, 2002 are as follows:

                              Year Ending May 31,               Amount
                              -------------------               ------
                                      2003                      $1,759,640
                                      2004                         969,461
                                      2005                         644,554
                                      2006                         336,390
                                      2007                         330,988
                                   Thereafter                    1,739,257
                                                                ----------

                                     Total                      $5,780,290
                                                                ==========
         Litigation

     a. On October  19,  1999,  the  Company  and  Pro-Health  brought an action
against  Provider  Solutions  Corporation  ("Provider")  and others,  in Supreme
Court,   New   York   County,   based  on   breach   of   contract,   fraudulent
misrepresentation and other causes of action, demanding damages of approximately
$10,000,000  (the "State  Action").  On October  22,  1999,  Provider  brought a
federal action in the United States  District Court for the Eastern  District of
New York (the "Federal Action").  The complaint demanded relief in the form of a
permanent  injunction  and damages  against the Company and Pro-Health for total
amounts  ranging  from   $10,000,000  to  $15,000,000.   The  State  Action  was
consolidated with the Federal Action.

     On March 8, 2001 the Company, Pro-Health, Provider and all involved parties
and individuals settled the consolidated Federal Action,  globally resolving all
issues,  claims and disputes.  The  settlement  entailed the exchange of general
releases  between the Company,  Pro-Health,  Provider  and all parties,  and the
payment of $600,000 to Provider,  of which $50,000 was paid by the Company.  The
balance  of the  payment  under  the  settlement  was  funded  by the  Company's
insurers.  The  settlement  did not  have a  material  effect  on the  Company's
operations.  The Company has  retained its  proprietary  interest in the subject
software.

     b. In August of 1999, the Company's wholly-owned subsidiary,  Sandsport was
named as a defendant in Greater Bright Light Home Care Services,  Inc. et al. v.
Joseph Jeffries-El, El Equity Corporation,  Sandsport Data Services, Inc. et al.
(Supreme Court of the State of New York, Kings County).  Sandsport's contractual
obligation  to  Greater   Bright  Light   involved  the  depositing  of  certain
government-issued  checks into a specific bank account.  Upon receiving  written
notification  from the agency issuing the checks to stop depositing them in that
account,  Sandsport  ceased  depositing  them. The plaintiff  brought the action
against Joseph Jeffries-El and El Equity, and El Equity  counterclaimed  against
the plaintiff,  each basing its claims on the financing  agreement between them.
El  Equity  also  cross-claimed  against  Sandsport,  asserting  that  Sandsport
converted the  government-issued  checks to its own use.  Although  Sandsport is
named  as a  defendant,  the  Complaint  seeks  no  affirmative  relief  against
Sandsport.  Co-defendant  Citibank has asserted  indemnification  claims against
Sandsport and all of the other  defendants.  Sandsport  disputes all  liability.
However,  the  Company is unable to  predict  the  outcome  of these  claims and
accordingly,  no  adjustments  have  been  made  in the  consolidated  financial
statements in response to these claims.

     c. On March 1, 2000,  Dataline,  Inc.  ("Dataline") began a lawsuit against
MCI WorldCom  Network  Services,  Inc. ("MCI") and the Company for alleged trade
libel and related  counts,  in the United States District Court for the Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001 MCI had brought a patent  infringement  lawsuit against
Dataline,  alleging that it was  infringing  three MCI patents,  under which the
Company  has an  exclusive  license in New York City.  Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments  from either MCI or the Company to  Dataline.  As part of
the settlement, Dataline agreed to pay the Company $100,000 in cash and issue an
8%  promissory  note  in the  amount  of  $721,000.  Due to the  uncertainty  of
realization of the note receivable, the Company is recognizing the income on the
note using the installment  method of accounting.  During the year ended May 31,
2002, the Company has recognized  approximately $115,000 of income. In addition,
Sandata and  Dataline  entered  into an  Exclusive  Service  Agreement  by which
Dataline  agreed to use the Company's "call capture  infrastructure"  for all of
Dataline's time and attendance systems,  and to pay royalties to the Company for
such use. The terms of the settlement also included mutual releases.

     d. An action was commenced  against the Company and Health Card by a former
executive of Health Card, Mary Casale, who alleged that employees of both Health
Card and the Company engaged in sex  discrimination as to Ms. Casale,  and thus,
violated  Title VII of the Civil Rights Act of 1964. In February 2002 the matter
was withdrawn from the Equal Employment Opportunity Commission,  and was settled
without any effect on the financial statements of the Company.

       Royalty Agreement

     The Company has been granted a license under certain of MCI's patents which
permits  the  Company  to  continue  to  market  and sell its  SANTRAX  time and
attendance verification product non-exclusively  nationwide,  and exclusively in
the home health care  industries  for the five New York  boroughs,  and that the
Company will pay MCI certain royalties, on a per call basis. The license remains
in  effect  until the last to expire  of  various  patents  held by MCI or until
October 19, 2010, whichever is later.

       Employment and Deferred Compensation Agreements

     On February 1, 1997 the Company and its Chairman  ("Mr.  Brodsky")  entered
into an  employment  agreement  for a five year term  (the  "Brodsky  Employment
Agreement").  Among other  things,  the Brodsky  Employment  Agreement  provides
compensation  at the annual  rate of  $500,000  or a lesser  amount if  mutually
agreed. The Brodsky Employment  Agreement also provides for payment of an annual
bonus at the sole  discretion of the Board of Directors.  Mr.  Brodsky agreed to
accept a reduction  in  compensation  for the fiscal  years ended May 31,  2002,
2001,  and  2000  and  has  signed  waivers  evidencing  his  agreement  to such
reductions. The Brodsky Employment Agreement was renewed, on identical terms, on
March 1, 2002.

     In  May  1992,  Mr.  Brodsky  and  the  Company  entered  into  a  deferred
compensation  agreement  pursuant  to which  the  Company  would  (i) pay to Mr.
Brodsky a lump sum ranging from $75,000 to $255,000 if he voluntarily terminated
his employment  with the Company after attaining 55 years of age, or (ii) pay to
Mr.  Brodsky's  beneficiary  a lump sum ranging from $200,000 to $450,000 in the
event of Mr. Brodsky's death during the term of his employment with the Company.
This agreement was terminated in October, 2001.

     On  August  9,  2001  the  Company  announced  that it had  terminated  the
employment  of  Stephen  Davies  as  President  of the  Company,  and  would  be
terminating  approximately 30 other  employees.  Mr. Davies received a severance
payment equal to six (6) months' base salary, or $100,000,  and had 90 days from
the date of  termination to exercise the 66,673 options that were vested on that
date.  None of such  options  were  exercised.  In  addition,  the Company  paid
approximately   $47,000  in  severance   payments  for  approximately  30  other
terminated employees.


NOTE 6 - Related Party Transactions

     a. In  November  1996  the  Company  entered  into an  agreement  with  the
Affiliate, the Nassau County Industrial Development Agency ("NCIDA"), and a Bank
(the "Bondholder") (the "Agreement").  Pursuant to the Agreement,  the Affiliate
(i) assumed all of the Company's rights and obligations  under a Lease Agreement
that was previously  between the Company and the NCIDA (the  "Lease"),  and (ii)
entered into a Sublease  Agreement with the Company for the premises the Company
occupies.  Pursuant to the  Agreement,  the Affiliate also obtained the right to
become the owner of the premises upon  expiration of the Lease.  Under the terms
of the Agreement,  the Company is jointly and separately liable to the NCIDA for
all obligations owed by the Affiliate to the NCIDA under the Lease; however, the
Affiliate  has  indemnified  the  Company  with  respect to certain  obligations
relative to the Lease and the  Agreement.  In addition,  the Agreement  provides
that the Company is bound by all the terms and conditions of the Lease, and that
a security interest is granted to the Affiliate in all of the Company's fixtures
constituting part of the premises.

     The  foregoing  transactions  and  agreements  were the last in a series of
transactions involving the Company, the Affiliate, NCIDA, the Bondholder and the
U.S. Small Business  Administration ("SBA"). Chief among these was the borrowing
by the  Affiliate  in  June  of 1994 of  $3,350,000  in the  form of  Industrial
Development  Revenue  Bonds (the  "Bonds")  to finance  the  acquisition  of the
Facility.  Simultaneously  with the  issuance of the Bonds:  (1) NCIDA  obtained
title  to the  Facility  and  leased  it to the  Affiliate,  (2)  the  Affiliate
subleased the Facility to the Company,  (3) the Bondholder bought the Bonds, (4)
the  Bondholder  received a mortgage  and  security  interest in the Facility to
secure the payment of the Bonds.  The  Affiliate's  obligations  under the Lease
were  guaranteed  by  Mr.  Brodsky,  the  Company,  Sandsport  and  others.  The
Affiliate's  obligations  respecting repayment of the Bonds were also guaranteed
by Mr. Brodsky, the Company, Sandsport and others.

     The Bonds  currently  bear interest at the rate of 9%, and the  outstanding
balance due on the Bonds as of May 31,  2002 was  $1,444,445.  The Company  paid
rent to the  Affiliate of $407,834 and $615,412 for the years ended May 31, 2002
and 2001.

     On August 11, 1995, the Company entered into a $750,000 loan agreement with
the Long Island Development  Corporation ("LIDC"),  under a guarantee by the SBA
(the "SBA Loan").  The SBA Loan was assigned to the Affiliate in November  1996;
however,  repayment  of the SBA loan is  guaranteed  by the  Company and various
subsidiaries of the Company. The entire proceeds were used to repay a portion of
the Bonds. The SBA Loan is payable in 240 monthly  installments of $6,255, which
includes principal and interest at a rate of 7.015%. The balance of the SBA loan
as of May 31, 2002 was $599,024.

     b. Until  January  2002,  the Company  derived  revenue from Health Card, a
company  affiliated with the Company's  Chairman,  principally for data base and
operating   system   support,   hardware   leasing,   maintenance   and  related
administrative  services.  The revenues  generated  from Health Card amounted to
approximately $693,000 and $2,458,000 for the years ended May 31, 2002 and 2001,
respectively. The Company billed Health Card approximately $126,000 and $821,000
for quality assurance testing of software programs  developed by Health Card and
network support,  and $47,000 and $561,000 for help desk services,  $175,000 and
$448,000 for data processing center as well as $305,000 and $534,000 for certain
computer  equipment  leases and other services for $40,000 and $95,000 for years
ended May 31, 2002 and 2001,  respectively.  In addition the Company resells its
telephone  services to Health Card.  The billings  for such  telephone  services
amounted to approximately $124,000 and $134,000 for the years ended May 31, 2002
and May 31, 2001 and are  recorded  as a reduction  of  operating  expense.  The
Company was owed $19,280 from Health Card at May 31, 2002. Subsequent to May 31,
2002, the Company received approximately $14,000 from Health Card,  representing
substantially  complete  payment of amounts due as of that date.  As of January,
2002,  the  Company  ceased  rendering  services  to Health  Card.  Health  Card
continues  to pay its  allocable  share of expenses for shared  services,  which
amounts to approximately $45,000 per month.

     c. The Company makes lease and rent payments to affiliates of the Company's
Chairman.  The payments for leased equipment were made to P.W. Capital Corp. and
P.W.  Medical  Management,  Inc.,  and were  $268,011 and $395,989 for the years
ended May 31, 2002 and 2001,  respectively.  The payments for the Facility  were
made to BFS Realty,  LLC, and were $407,834 and $615,412 for the years ended May
31, 2002 and 2001,  respectively.  In June 2001, the Company  entered into a new
lease for the Facility which was revised in November, 2001. (See Note 5).

     d. Medical Arts Office  Services,  Inc.  ("MAOS"),  of which the  Company's
Chairman  is  the  sole  shareholder,  provided  the  Company  with  accounting,
bookkeeping  and legal  services.  For the years ended May 31, 2002 and 2001 the
total  payments  made  by the  Company  to  MAOS  were  $340,869  and  $279,894,
respectively.

     e.  During  the  years  ended  May 31,  2002 and 2001 the  Company  paid an
aggregate of $57,285 and $65,894,  respectively on behalf of certain officers to
companies  affiliated  with the  Company's  Chairman  for payment of  automobile
leases.


NOTE 7 - SHAREHOLDERS' EQUITY

         Stock Options

         The Company maintains the following stock option plans:

         1984 Stock Option Plan

     There had been 2,536 options granted at an exercise price of $1.88 under an
incentive  stock  option  plan  adopted  in October  1984 (the "1984  Plan") and
subsequently  amended.  Options granted under this plan were granted at exercise
prices not less than fair market value on the date of grant.  All of the options
outstanding  under this plan expired in January 2001. No additional  options may
be granted under this plan.

         1995 Stock Option Plan

     At May 31, 2002, there were 590,500 incentive  options  outstanding under a
stock option plan adopted in January 1995 (the "1995 Plan"),  which provides for
both incentive and nonqualified  stock options and reserves  1,000,000 shares of
common  stock for grant under the plan.  Of these  options,  520,500 are held by
officers of the Company.  The plan requires that incentive options be granted at
exercise  prices not less than the fair market  value at the date of grant,  and
terminates  in  January  2005.  All  options  outstanding  under  this  plan are
exercisable at May 31, 2002 at prices ranging from $1.41 to $2.61 per share over
a period of five years from date of grant.

     On July 14, 1997,  the Company filed a  Registration  Statement on Form S-8
relative to  reofferings  of shares of Common Stock of the Company  which may be
acquired pursuant to the 1984 and 1995 Plan.

        1998 Stock Option Plan

     At May 31, 2002 there were  775,579  incentive  stock  options  outstanding
under a stock  option plan  adopted in October  1998,  (the "1998  Plan")  which
provides  for  both  incentive  and  nonqualified  stock  options  and  reserves
1,000,000  shares of common  stock for grant under the plan.  The plan  requires
that  incentive  options be granted  at  exercise  prices not less than the fair
market value at the date of grant and  terminates in August 2008. Of the options
outstanding  at May 31, 2002,  567,060 were  exercisable  at prices ranging from
$1.31 to $3.00 over three to five years from the date of grant.

        2000 Stock Option Plan

     At May 31, 2002, there were 28,340 incentive  options  outstanding  under a
stock option plan adopted on November 20, 2000 (the "2000 Plan"), which provides
for both incentive and nonqualified  stock options and reserves 1,500,000 shares
of common stock for grant under the plan. The 2000 Plan  terminates in September
2010.  Options  outstanding  under  the  plan  vest  over  a  seven-year  period
commencing December 31, 2000 and ending December 31, 2007 and are exercisable at
prices  ranging  from  $1.00 per  share to $3.00 per share  over a period of ten
years from the date of grant. At May 31, 2002,  there were no options  currently
exercisable.

       Summary information with respect to the stock option plans follows:

                                                                                         

                                                                  Range of          Outstanding       Outstanding
                                                                  exercise            options           options
                                                                  prices ($)          granted         exercisable
                                                                 ----------           -------         -----------

       Balance, June 1, 2000                                   1.31 - 3.00           1,523,902           849,871
       Granted                                                     3.00                279,808           269,653
       Cancelled                                                                       (76,118)          (11,146)
                                                                                    ----------        ----------
       Balance, May 31, 2001                                   1.31 - 3.00           1,727,592         1,108,378
       Granted                                                 1.00 - 3.00              40,085           150,895
       Cancelled                                                                      (373,258)         (101,713)
                                                                                    ----------        ----------

       Balance, May 31, 2002                                   1.31 - 3.00           1,394,419         1,157,560
                                                                                    ==========        ==========


       Stock option grants to certain officers and directors were as follows:

     In October  1998,  the Company  granted  certain  directors  of the Company
non-qualified  stock  options to purchase an aggregate  of 20,000  shares of the
Company's common stock under the 1998 Plan at an exercise price of $3.00.  These
options vested immediately and are exercisable over a five-year period.

     In December 1998, the Company granted 520,500  incentive options to certain
officers  of the Company  under the 1995 Plan at an exercise  price of $1.41 per
share.  These options vested  immediately and are  exercisable  over a five-year
period.

     In February 2000, the Company granted its Chairman  incentive stock options
to purchase an  aggregate  of 350,000  shares under the 1998 Plan at an exercise
price of $1.31. These options vest and are exercisable over a five-year period.

     In April  2000,  the  Company  granted  certain  directors  of the  Company
non-qualified  stock options to purchase an aggregate of 72,000 shares under the
1998 Plan at an exercise price of $3.00.  These options vest and are exercisable
over a six-year period.

     In April 2000,  the  Company  granted its then  President  incentive  stock
options to purchase an  aggregate  of 100,000  shares  under the 1998 Plan at an
exercise price of $3.00. In October 2000, the Company granted its then President
incentive  stock options to purchase  150,000  shares under the 2000 Plan, at an
exercise price of $3.00 per share. The President's  employment was terminated on
August 6, 2001, at which date the  President  became  entitled to exercise,  for
ninety days,  the options that had already  vested.  Those options  consisted of
33,340 shares under the 1998 Plan, and 33,333 under the 2000 Plan, none of which
were exercised before the right to exercise expired.

     In November  2000,  the Company  granted  certain  directors of the Company
non-qualified  stock  options to purchase an aggregate  of 20,000  shares of the
Company's common stock under the 1998 Plan at an exercise price of $3.00.  These
options  vest over a  three-year  period and are  exercisable  over a  five-year
period.

     During the fiscal year ended May 31, 2002 non-qualified options to purchase
up to 10,000  shares of Common Stock,  at an exercise  price of $1.00 per share,
were issued to each of two Director's.

     On July 14, 1998,  the  Chairman,  certain  officers and  directors,  and a
former  director  (who is also the  spouse  of an  officer  and an  employee  of
Sandsport  Data  Services,  Inc.  ("Sandsport"),   the  Company's  wholly  owned
subsidiary),  exercised  their  respective  options and  warrants to purchase an
aggregate of 921,334  shares of Common  Stock.  The exercise  prices ranged from
$1.38 to $2.61 per share for an aggregate cost of  $1,608,861.  Payment for such
shares was made to the Company in the amount of $921  representing the par value
of the shares, and a portion in the form of non-recourse promissory notes due in
July 2001,  with  interest at eight and  one-half  percent  (8-1/2%)  per annum,
payable annually, and secured by the number of shares exercised. The Company has
received  interest payments on such notes in the amount of $131,994 and $162,110
during the fiscal  years  ended May 31,  2002 and 2001.  As of May 31,  2002 and
2001, the outstanding balance on such notes, including principal and accrued but
unpaid interest, was $1,669,640 and $1,722,547,  respectively (see Note 12d). On
July 14,  2001,  the  Company  agreed to extend the due dates of the  promissory
notes for one hundred  twenty  days.  On  November 9, 2001,  the due date of the
notes was  extended to November 9, 2004,  and the Company  agreed to  substitute
full  recourse  unsecured  notes  for  the  notes  it had  previously  accepted.
Effective  December 1, 2001,  the  interest  rate was changed from 8-1/2% to 6%.
During  the year  ended  May 31,  2002,  24,667  shares  of  common  stock  were
surrendered  by a former  director and an employee in settlement of notes in the
amount of $37,962.

     Pro forma  information  regarding  net  income  and  earnings  per share is
required  by SFAS  No.  123,  and has  been  determined  as if the  Company  had
accounted  for its  employee  stock  option plans under the fair value method of
SFAS No.  123.  The fair value for these  options was  estimated  at the date of
grant   using  a   Black-Scholes   option-pricing   model  with  the   following
weighted-average  assumptions for 2002 and 2001.



                                                                                                

        ASSUMPTIONS
                                                                                      Year Ended May 31,
                                                                                      ------------------
                                                                               2002                       2001
                                                                               ----                       ----
        Risk free rate                                                     4.95 - 6.05%               5.25 - 6.04%
        Dividend yield                                                             .00%                       .00%
        Volatility factor of the expected market
         price of the Company's common stock                                        61%                       117%
        Average life                                                            5 years                    5 years


     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded  options which have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly  differently from those of traded options,  and because changes in
the subjective  input  assumptions  can materially  affect the fair market value
estimate,  in  management's  opinion,  the  existing  models do not  necessarily
provide a  reliable  single  measure  of the fair  value of its  employee  stock
options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is  amortized to expense  over the vesting  period of the  options.  The
Company's pro forma loss is as follows:


                                                                                                
                                                                                             Year Ended May 31,
                                                                                      2002               2001
                                                                                      ----               ----
     Pro forma net income (loss)                                                        $78,025    $(2,470,616)
     Pro forma net income (loss) per share                                               $  .03    $      (.99)



     The weighted  average fair value of options  granted during the years ended
May 31, 2002 and 2001 were $1.12 and $.86,  respectively.  The weighted  average
remaining  contractual  life of options  exercisable at May 31, 2002 is 5 years.
The exercisable  prices range from $1.31 to $3.00 for options  outstanding as of
May 31, 2002.

       Restricted Stock Grant Plan

     On September  1, 2000 the Board of  Directors  approved the adoption of the
Company's 2000 Restricted  Stock Grant Plan (the "Stock Grant Plan").  The Stock
Grant Plan was subsequently  adopted by the Shareholders at the Company's Annual
Meeting on November 20, 2000.  The Stock Grant Plan provides for the issuance of
shares that are subject to both standard restrictions on the sale or transfer of
such shares  (e.g.,  the standard  seven year vesting  schedule set forth in the
Stock  Grant  Plan)  and/or  restrictions  that the  Board may  impose,  such as
restrictions  relating to length of  service,  corporate  performance,  or other
restrictions.  As of May 31, 2002, no grants had been made under the Stock Grant
Plan and, therefore,  no shares had vested under it. There are 700,000 shares of
Common  Stock  reserved for  issuance in  connection  with grants made under the
Stock Grant Plan.

 NOTE 8 - Sale/Leaseback Transactions

     The  Company is a party to various  sale/leaseback  transactions  involving
certain fixed assets,  principally  computer  hardware,  software and equipment.
Gains on these transactions have been deferred and are being recognized over the
lives of the related leases, each of which is 36 months.  Approximately $297,000
and $344,000 of the deferred gains were recognized in other income for the years
ended May 31, 2002 and 2001,  respectively.  Included  in these  amounts are the
effects of the following sale/leaseback transactions:

     In January 1998, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $515,000,  were sold for
$700,000.  The resulting gain of approximately $185,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $36,000
of the deferred gain was recognized for fiscal 2001,  which was the last year of
the lease.  An  unaffiliated  third party  purchased the residual rights to such
lease.

     In January 1999, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $830,000,  were sold for
$1,100,000.  The  resulting  gain of  approximately  $270,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $60,000 and $90,000 of deferred gain was recognized for the years
ended May 31, 2002 and 2001, respectively. An unaffiliated third party purchased
the residual rights in such lease.

     In May 1999,  the Company  consummated  a  sale/leaseback  of certain fixed
assets  which  had a net book  value of  approximately  $896,000,  were sold for
$1,100,000.  The  resulting  gain of  approximately  $204,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $68,000 of  deferred  gain was  recognized  for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     In October 1999, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $895,000,  were sold for
$1,115,000.  The  resulting  gain of  approximately  $220,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $73,000 of the deferred gain was recognized for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     In January 2000, the Company  consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $442,000,  were sold for
$561,000.  The resulting gain of approximately $119,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $40,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     In February 2000, the Company consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $237,000,  were sold for
$277,000.  The resulting gain of approximately  $40,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $14,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     In November 2000, the Company consummated a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $421,500,  were sold for
$548,300.  The resulting gain of approximately $126,800 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $42,000
and $21,000 of the deferred gain was recognized for the years ended May 31, 2002
and 2001,  respectively.  An  unaffiliated  third party  purchased  the residual
rights in such lease.


NOTE 9 - Asset Acquisition and Impairment

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location  services for approximately  $201,000.  NAIS had entered
bankruptcy  proceedings  and,  under the auspices of the Bankruptcy  Court,  the
Company  was  permitted  to "credit  bid"  approximately  $124,000  of  expenses
(including salaries) it had incurred on behalf of NAIS as the purchase price for
the assets,  and was given 180 days to exploit the assets it had  acquired.  The
Company  incurred  approximately  $77,000  in  additional  costs  related to the
acquisition  of these  assets.  The tangible  assets were  determined to have no
significant  fair  value.  Therefore,   all  the  expenditures  related  to  the
acquisition  were  allocated to goodwill.  The Company has the option to abandon
the  exploitation  of these  assets  within the 180 day  period.  If the Company
continues to use the NAIS assets, 10% of the profits (defined as earnings before
interest expense and taxes) generated by such use must be paid to the bankruptcy
estate for the first three years.

     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the  goodwill.  As such,  the carrying  value of goodwill was
written  down to its  estimated  fair  value,  which  was  determined  based  on
discounted  estimated cash flows. The Company  recognized an impairment loss and
write down of the goodwill of approximately  $201,000.  Considerable  management
judgment is necessary to estimate fair value; accordingly,  actual results could
vary significantly from such estimates.


NOTE 10 - Retirement Plan

     The Company has a 401(k)  savings plan  covering all eligible  employees in
which the Company matches a portion of the employees'  contribution.  The amount
of  this  match  was  $40,204  and  $38,197  in  fiscal  years  2002  and  2001,
respectively.


NOTE 11 - Revenue by Product Line

     The Company operates in one business segment,  but derives its revenue from
several product lines. The following table provides the service fee revenues for
the product lines earned for the fiscal years ended May 31, 2002 and 2001:

                                                              Year Ended May 31,
                                                        2002                2001
                                                        ----                ----
   Computerized information processing           $  5,962,880      $   5,960,450
   Telephone-based data collection                  7,690,852          7,561,852
   Technology infrastructure and outsourcing          736,932          2,071,266
   Information technology                           2,765,761          2,170,240
   Other                                               17,497              5,261
                                                 ------------     --------------

             Total                                $17,173,922        $17,769,069
                                                  ===========        ===========


NOTE 12 - Subsequent Events

     a. By letter dated June 26, 2002, a former employee of the Company asserted
claims for back wages of $410,000.  The letter,  from the  employee's  attorney,
also contained allegations of age discrimination and retaliatory discharge.  The
letter also  contained an offer of  settlement.  No formal  litigation  has been
started and the Company intends to pursue settlement  negotiations.  A provision
of  $200,000 is included in accrued  expenses  relating to the  asserted  claim,
which represents the Company's best estimate of costs to be incurred. The amount
of the ultimate cost may vary from this estimate.

     b. The  Company  has  received  a  proposal  to engage  in a going  private
transaction.  The proposed  transaction  is  anticipated  to be in the form of a
merger with an entity owned by an investor  group to be led by Bert E.  Brodsky,
the Company's Chief Executive Officer,  and to include Directors Hugh Freund and
Gary Stoller as well as other investors (the "Acquiring Group"). Pursuant to the
proposal,  the Company's  shareholders  (other than Mr.  Brodsky,  and the other
shareholders that shall comprise the "Acquiring  Group") would receive $1.50 per
share of Common Stock of the Company (the  "Shares"),  in cash. The proposal may
be amended, modified or supplemented at any time.

     The Board of Directors has appointed a Special Committee (the "Committee"),
comprised of Ronald Fish and Martin Bernard, to review the proposed transaction.
The  Committee has retained  Brean Murray & Co., Inc. as its financial  advisor,
and has retained its own legal counsel.

     The  proposed  transaction  would result in the  acquisition  of all of the
outstanding  Shares  other than the Shares  owned by Mr.  Brodsky  and the other
shareholders  that shall  comprise the Acquiring  Group.  The final terms of any
acquisition  will be based on  negotiations  between the Acquiring Group and the
Committee.  The proposed acquisition will be subject to, among other things, (1)
the negotiation, execution, and delivery of a definitive agreement, (2) approval
of the proposed  transaction by the  Committee,  the full Board of Directors and
the Company's shareholders,  (3) receipt of a fairness opinion by the Committee,
(4) applicable regulatory approval,  and (5) obtaining any necessary third-party
consents  or  waivers.  There  can  be no  assurance  that a  definitive  merger
agreement will be executed and delivered,  or that the proposed transaction will
be consummated.

     c. On July 9,  2002 the  Company  issued a press  release  announcing  that
Nasdaq had informed  the Company that its shares would be subject to  de-listing
from the Small Cap Market for failure to comply with Nasdaq's  Marketplace Rules
regarding minimum value of publicly held shares and minimum bid price per share.
The Company requested a hearing on these matters,  and the de-listing was stayed
until the  hearing.  The Company was  informed by Nasdaq on August 21, 2002 that
the  Company  had  regained  compliance  with  both  Marketplace  Rules and that
therefore, the hearing was cancelled and the matter was moot.

     d. On August 22, 2002 the Chairman  repaid  $100,000 of the note receivable
officer.



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                             SANDATA TECHNOLOGIES, INC.
----------------------------------------------------------------------------
                                                    (Registrant)

                                        By     /s/ Bert E. Brodsky
----------------------------------------------------------------------------
                                                  Bert E. Brodsky, Chairman
                                          (Principal Executive Officer and
                                     Principal Financial and Accounting Officer)

Date: October 22, 2002

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


By   /s/ Bert E. Brodsky
-------------------------------------------------------------------
         Bert E. Brodsky, Chairman, Treasurer, Director

Date: October 22, 2002


By   /s/ Hugh Freund
-------------------------------------------------------------------
         Hugh Freund, Executive Vice President, Secretary, Director

Date: October 22, 2002


By   /s/ Gary Stoller
-------------------------------------------------------------------
         Gary Stoller, Executive Vice President, Director

Date: October 22, 2002


By    /s/ Martin Bernard
-------------------------------------------------------------------
          Martin Bernard, Director

Date: October 22, 2002


By   /s/ Ronald L. Fish
-------------------------------------------------------------------
         Ronald L. Fish, Director

Date: October 22, 2002





                             CERTIFICATE PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Amended Annual Report of Sandata Technologies,  Inc.
("the  "Company") on Form 10-KSB-A for the year ended May 31, 2002 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
Bert E. Brodsky,  Chief  Executive  Officer and Chief  Financial  Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.



/s/ Bert E. Brodsky



Bert E. Brodsky
Chief Executive Officer,
Chief Financial Officer


October 22, 2002




                                  CERTIFICATION

     I, Bert E. Brodsky,  Chief Executive  Officer and Chief Financial  Officer,
certify that:

     1. I have reviewed  this amended  annual report on Form 10-KSB/A of Sandata
Technologies, Inc. and its Subsidiaries;

     2. Based on my knowledge, this report does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not misleading  with respect to the periods covered by this amended annual
report; and

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included  in this  amended  annual  report,  fairly  present in all
material respects the financial condition,  results of operations and cash flows
of Sandata  Technologies,  Inc. and its Subsidiaries as of, and for, the periods
presented in this amended annual report.

     4. As both  Chief  Executive  Officer  and Chief  Financial  Officer,  I am
responsible for establishing and maintaining  disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant,  and I
have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others  within those  entities,  particularly  during the
periods in which this amended annual report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date within 90 days prior to the filing date of this amended
annual report (the "Evaluation Date"); and

     c) presented in this report my conclusions  about the  effectiveness of the
disclosure  controls and procedures  based on my evaluation as of the Evaluation
Date;

     5. As both  Chief  Executive  Officer  and Chief  Financial  Officer I have
disclosed,  based on my most recent evaluation, to the registrant's auditors and
the audit  committee of registrant's  board of directors (or persons  performing
the equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and report  financial  data,  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. As both Chief  Executive  Officer and Chief  Financial  Officer,  I have
indicated  in this  report  whether  or not there  were  significant  changes in
internal controls subsequent to the date of my most recent evaluation, including
any  corrective  actions with regard to  significant  deficiencies  and material
weaknesses.

 Date: October 22, 2002
                                   /s/ Bert E. Brodsky
                                       Bert E. Brodsky, Chief Executive
                                        Officer and Chief Financial Officer



                                                                    APPENDIX G



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                  FORM 10-KSB/A
                                 AMENDMENT NO. 2

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

                     For the fiscal year ended May 31, 2002

[  ]  Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934.

For the transition period from _______ to ___________


                         Commission file number 0-14401

                           SANDATA TECHNOLOGIES, INC.
              (Exact name of small business issuer in its charter)

                DELAWARE                        11-284179
       (State or other jurisdiction of    (I.R.S. Employee Identification No.)
       incorporation or organization)

                              26 Harbor Park Drive,
                               Port Washington, NY
                    (Address of principal executive offices)
                                      11050
                                   (Zip Code)

         Issuer's telephone number, including area code: (516) 484-4400

         Securities registered under Section 12(b) of the Exchange Act:
                                      None


         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.001 par value
                                (Title of class)


     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No




                                      G-1





     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The issuer's revenues for year ended May 31, 2002 were $17,852,710.

     The aggregate market value of the voting and non-voting  common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of August
16, 2002 was $1,536,918.

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

Yes                        No
    ----------------           -------------

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     The number of shares  outstanding of each of the issuer's classes of common
equity, as of August 16, 2002 was 2,481,808.

     Transitional Small Business Disclosure Format  (check one):

Yes                 No     X
    ------------       ------------

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.






                           AMENDMENT TO ANNUAL REPORT
                                 ON FORM 10-KSB
                         FOR THE YEAR ENDED MAY 31, 2002



     The  Annual  Report on Form  10-KSB for  Sandata  Technologies,  Inc.  (the
"Company") for the year ended May 31, 2002 is hereby amended and restated to the
extent, and only to the extent, of the following amendments:

ITEM 1 - DESCRIPTION OF BUSINESS

Business Development

             General

     The  Company,  by itself and  through  its wholly  owned  subsidiaries,  is
engaged in providing technology services to its customers. These services either
a) utilize software products  developed,  acquired or licensed by the Company or
b)  leverage  the  technology-based  core  competencies  that  the  Company  has
developed in formulating and delivering its software services.

     Applications  of the  Company's  software  include:  an  automated  payroll
processing and Medicaid  billing service  delivered via leased lines or over the
Internet,  computerized preparation of management reports,  telephone based data
collection   services,   and  automated   database  driven  outbound   telephone
notification.

     Services that leverage the Company's  core  competencies  are driven by the
Company's  Information  Technology ("IT") support  services.  The Company's core
competencies principally refers to its SHARP (Sandsport Home Attendant Reporting
Program)  product  which  provides  computer  services,  including  payroll  and
billing, to the home health care industry. The services currently offered by the
Company  include:  facilities  outsourcing  for  database and  operating  system
support, technology consulting,  custom software development and support, resale
and  implementation  of software  written and  distributed  by others,  web site
development  and  hosting,  help desk  services,  and hardware  maintenance  and
related administrative services.

     The  Company's  software  is  written in a variety  of  software  languages
including JAVA, C++, Oracle PL/SQL, CGI, Perl, VB, Foxpro, Access and COBOL.

     The Company  was  incorporated  in the State of New York in June,  1978 and
reincorporated  in the State of Delaware in December 1986. On November 21, 2001,
the Company changed its name from Sandata Inc. to its present name.

Business of Issuer

     Principal Products and Services

     Computerized  Information  Processing  Services.  The Company,  through its
wholly owned subsidiary,  Sandsport Data Services, Inc. ("Sandsport"),  provides
computer  services  to the home health care  industry,  principally  through its
SHARP product.


     The primary  customers  are vendor  agencies  that provide  home  attendant
services  to the elderly  and infirm in New York City.  The  Federal  Government
offers this program (the "Home Attendant  Program") to participating  states and
municipalities  as an  optional  part  of  its  Medicaid  program.  The  Federal
Government  funds a  substantial  portion of the  program and the New York State
Department of Social Services and New York City fund the balance of the program.
In New York  City,  the Home  Attendant  Program  is  administered  by the Human
Resources  Administration  ("HRA"),  which  sub-contracts  with  proprietary and
not-for-profit  agencies ("Vendor  Agencies") to provide home attendant services
to those in need. HRA refers  patients to Vendor  Agencies  that, in turn,  send
home  attendants to patients'  homes to assist in personal  care chores.  Vendor
Agencies also provide periodic nurse's visits to patients.

     Sandsport processes payroll,  preparing paychecks  indicating  year-to-date
earnings and  deductions,  payroll  journals and payroll  earnings and deduction
summaries.  Sandsport  provides  computerized  information  which permits Vendor
Agencies to prepare  their  Employer's  Quarterly  Federal Tax Return,  New York
State  unemployment   insurance  returns,   deposits  for  Federal  unemployment
insurance and all required New York City tax returns and deposits.

     Annually, Sandsport prepares for each Vendor Agency employee Transmittal of
Income and Tax  Statements,  reconciliation  of state tax  withheld  and Federal
Unemployment  Insurance  Returns.  Sandsport also  furnishes to Vendor  Agencies
employee-earning  ledgers  that  enable  them to review a full  year's  earnings
history for each of their employees.

     Generally,  in providing  software-related  services,  the Company receives
data from its  customers,  processes the data on the Company's  equipment at its
premises, and generates reports based on such data.

     These services are primarily provided through SHARP. Vendor Agencies enlist
Sandsport's  computer services to provide weekly time sheets,  billing,  payroll
processing and management  reports.  For the fiscal years ended May 31, 2002 and
2001,  approximately  $5,433,000 or 32% and $5,445,000 or 31%, respectively,  of
the Company's  total operating  revenues were derived from services  rendered to
Vendor Agencies.

     The Company's  strategy is to diversify and expand its health care customer
base. Its wholly-owned  subsidiary,  Pro-Health  Systems,  Inc.,  ("Pro-Health")
intends to utilize newly  acquired and enhanced  software to provide  additional
payroll and billing  functionality for SHARP users and, by expanding its billing
capabilities,  make the product relevant to home healthcare agencies that cannot
use SHARP in its current form.

     Pro-Health  offers  a  system  which  is  designed  to be  delivered  as an
Application  Service  Provider ("ASP")  solution,  which allows its customers to
access  certain  Pro-Health  software  over the  Internet  without the  customer
needing  sophisticated  hardware at its site to house the  software or store the
data.  This allows the Company's  customers to have access to software  programs
via low-cost  hardware and on a fee per transaction  basis,  and enables them to
utilize the Company's software services without a substantial upfront investment
in either hardware or software.  The software consists of a comprehensive  suite
of  on-line   interactive   modules  that  are  integrated  with  other  Company
applications such as Santrax(R) (see below). The Pro-Health systems' modular and
flexible design makes it adaptable to the changeable needs of a wide spectrum of
health care entities.


     For the fiscal years ended May 31, 2002 and 2001, approximately $530,000 or
3%, and $516,000 or 3% respectively,  of the Company's total operating  revenues
were derived from services rendered to customers using the Pro-Health system.

     Telephone-Based  Data  Collection  Services.  The Company has  developed an
automated  telephony  system  (combining  telephones  and  computers)  known  as
Sandata(R)  SANTRAX(R)  that allows the use of Automated  Number  Identification
("ANI") technology and voice recognition  technology to assist in capturing data
via telephone.  The system  incorporates  telephone  technologies  into the data
reporting process and is currently designed to monitor the arrival and departure
times of off-site  workers who simply call a unique  toll-free  number to record
their arrival and departure.  The system  automatically and immediately confirms
that the assigned  person is at the expected  place at the expected time for the
approved and scheduled  duration,  and produces  real-time  exception reports to
enable its clients to manage their off-site staff.

     In addition to  collecting  the  arrival  and  departure  times of off-site
workers  from the visit  site,  SANTRAX  is also able to collect a wide range of
additional  information.  By collecting  additional  data,  SANTRAX can increase
operational  efficiencies  and enable its  customers to generate  administrative
savings.  The information that can be collected and analyzed by SANTRAX includes
expense-related data such as mileage and supplies, as well as tasks performed by
the  off-site  worker.  This  data is  used to  produce  weekly  payroll  and to
automatically  prepare reimbursement  submissions.  Reports are generated to the
customer based upon its specific requirements.

     For the fiscal years ended May 31, 2002 and 2001,  approximately $7,691,000
or 45% and $7,562,000 or 43%,  respectively,  of the Company's  total  operating
revenues were derived from services rendered relating to SANTRAX.

     The  software  operates  on the ASP  model,  and the  Company  receives  an
aggregate of approximately  620,000 calls per week or 32 million calls per year.
The service is currently utilized  principally by the Company's home health care
clients,  and approximately  seventy-two per cent (72%) of current SANTRAX calls
are Vendor Agencies using the SHARP program.

     Although the Company developed SANTRAX on its own merits, on April 4, 1997,
MCI  Telecommunications  Corporation  ("MCI")  filed a claim against the Company
alleging that the Company infringed upon its patent.  Subsequently, a settlement
was reached with no admission of infringement by the Company.  Effective June 1,
1998,  the  Company  and MCI  entered  into a License  Agreement  (the  "License
Agreement")  pursuant to which the Company was granted a license,  under certain
of MCI's patents (each  individually a "Patent" and collectively the "Patents"),
which  enables it to use and sell its SANTRAX time and  attendance  verification
product  non-exclusively  nationwide  and  exclusively  in the home  health care
industries  for the five New York  boroughs.  The License  Agreement  remains in
effect until the last to expire of various  patents held by MCI or until October
19, 2010,  whichever is later.  Pursuant to the License  Agreement,  the Company
pays MCI certain royalties on a per call basis.

     Although no assurances  can be given,  it is  anticipated  that the SANTRAX
product  can  be  utilized  by  other  industry  applications.  The  Company  is
developing  the  product  so that it can be sold  into  the  general  commercial
market,  and the service is currently being modified to meet the needs of a wide
range of businesses wishing to monitor or collect data from off-site employees.


     Technology  Infrastructure and Outsourcing  Services.  The Company supports
specialized  system  applications  for  businesses  based upon its analysis of a
client's particular need and specialized system applications.

     In addition,  the Company develops web sites, runs e-commerce  applications
and resells  telephone  services,  leveraging the favorable rates it receives by
virtue of the  substantial  call volume driven by SANTRAX.  The Company has also
offered  managed  services  in the  security  arena  such  as  security  audits,
enterprise  firewalls  and  network  monitoring,  although it  currently  is not
providing  such   services.   The  Company  plans  to  diversify  the  web  site
development,  e-commerce,  and telephone  services and resell them to businesses
throughout the New York metropolitan area.

     For the fiscal years ended May 31, 2002 and 2001, approximately $737,000 or
4% and  $2,071,000  or  12%,  respectively,  of the  Company's  total  operating
revenues  were derived from  services  rendered for  outsourcing  services.  The
decrease in revenues from  outsourcing for 2002 as compared to 2001 is primarily
due to the  reduction of  programming  and  technical  services that the Company
provided  for Health Card during  fiscal 2002.  Previously,  Health Card did not
have its own programming and technical  services and therefore  outsourced these
services to the Company. However, as Health Card has grown, it has developed its
own  programming  and  technical  services  and  therefore  the  demand  for the
Company's outsourcing services has decreased.

     Information  Technology  Services.  The Company,  through its SandataNet(R)
division,  provides IT consulting services for businesses and the public sector.
It  delivers  computer,   communications  and  networking  sales  and  services,
including training, maintenance and repair services, to companies and government
and professional services organizations.

     SandataNet(R)  manages a help desk for the Company's  internal  operations.
This help desk is responsible for desk side support services, including software
support,  hardware  support/break-fix,   LAN  administration  and  configuration
services.

     The  Company  has  installed  critical  software  applications  at a  local
municipal  government  office.  It also provides  custom  programming,  software
development and installation services to this sector.

     For the fiscal years ended May 31, 2002 and 2001  approximately  $2,766,000
or 15% and  $2,170,000 or 12%,  respectively  of the Company's  total  operating
revenues were derived from services rendered relating to SandataNet(R).

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location services.  NAIS had entered bankruptcy  proceedings and,
under the auspices of the Bankruptcy Court, the Company was permitted to "credit
bid" approximately  $124,000 of expenses (including salaries) it had incurred on
behalf of NAIS as the purchase  price for the assets,  and was given 180 days to
exploit the assets it had acquired.  The Company  incurred $77,000 in additional
costs  related to the  acquisition  of these  assets.  The tangible  assets were
determined to have no significant  fair value.  Therefore,  all the expenditures
related to the  acquisition  were  allocated  to  goodwill.  The Company has the
option to abandon the exploitation of these assets within the 180 day period. If
the Company  continues  to use the NAIS assets,  10% of the profits  (defined as
earnings before interest  expense and taxes)  generated by such use must be paid
to the bankruptcy estate for the first three years.


     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the goodwill.  Therefore,  the carrying value of the impaired
goodwill  was written down to its  estimated  fair value,  which was  determined
based on discounted  estimated cash flows. The Company  recognized an impairment
loss and write down of the  goodwill  of  approximately  $201,000.  Considerable
management  judgment is necessary to estimate  fair value;  accordingly,  actual
results could vary significantly from such estimates.


     Seasonality

     The Company's revenues are not subject to seasonal fluctuations.

     Competition

     In the sale of its software products, the Company competes for customers on
the basis of the range, price,  functionality and quality of its software and on
its ability to develop programs tailored to its customers' requirements. Many of
its competitors are companies with directly competitive software products, and a
number have substantially  greater financial resources and substantially  larger
marketing, technical and field organizations.

     With respect to the Company's  SHARP business,  there is added  competitive
pressure and  uncertainty  because the City of New York  requires all  contracts
with City agencies to undergo competitive bidding.  Furthermore,  the success of
the SHARP business rests with a key officer of the Company,  who has established
strong relationships with the Company's SHARP customers over the years. Although
the  Company  has been  awarded  contracts  based on its  bids,  there can be no
assurance that its bids will be accepted in the future.

     The computer services industry is characterized by competition in the areas
of service, quality, price and technical expertise.  Competitors in this segment
vary from small,  local  companies to  multinational  consulting  and accounting
firms.

      Customers

     The  Company's  customer  base is  primarily  drawn  from the  health  care
industry.  During the fiscal years 2002 and 2001, the Company  derived  revenues
from  the  Vendor  Agencies  who  are all  funded  by one  governmental  agency,
amounting to  approximately  $10,549,000 or 61% and  $10,608,000 or 60% of total
operating revenues,  respectively. The Company was owed approximately $1,259,000
and $1,160,000 from these customers at May 31, 2002 and 2001, respectively.  The
Company  also  derived  approximately  $693,000 or 4% and  $2,458,000  or 14% of
revenue in the years 2002 and 2001 from  National  Medical  Health Card Systems,
Inc.  ("Health  Card") for  database  and  operating  system  support,  hardware
leasing,  maintenance  and  related  administrative  services.  Health Card is a
public company engaged in the pharmacy  benefits  management  business;  Bert E.
Brodsky,  Chairman of the Board and Chief Executive  Officer of the Company,  is
also the Chairman of the Board and a principal  shareholder of Health Card. (See
Item 6 - "Management's  Discussion and Analysis or Plan of Operation - Liquidity
and Capital Resources").


     The Company  markets its products and services  through  telemarketing  and
sales representatives.

     Proprietary Rights

     The Company filed a United States Trademark  application  which renames its
voice recognition timekeeping system to SANTRAX. The trademark was registered on
September 16, 1997.

     On March 3, 1997 the Company  filed an  application  with the United States
Patent  and  Trademark  Office to  register  its  SandataNet(R)  trademark.  The
trademark was registered on February 24, 1998.

     The Company has not applied  for  Federal  copyright  registration  for its
computer  software  systems now in existence or being  developed.  However,  the
Company believes that its systems are trade secrets and that they, together with
the  documentation,  manuals,  training aids,  instructions  and other materials
supplied  to users,  are  subject to the  proprietary  rights of the Company and
protected by applicable trade secret laws. The Company generally seeks to obtain
trade  secret  protection   pursuant  to  non-disclosure   and   confidentiality
agreements with its employees. Although the Company's customers are advised that
the Company  retains title to all of its  products,  and they agree to safeguard
against  unauthorized  use of such systems,  there can be no assurance  that the
Company  will be able to protect  against  misappropriation  of its  proprietary
rights and trade secrets.

    Research and Development

     The Company  incurred  approximately  $62,000 and $10,000 during the fiscal
years 2002 and 2001,  respectively,  on research  and  development.  The Company
incorporates its research and development into its on-going business activities.
The Company's  employees may develop new software  programs and expand or modify
existing  ones.  After  determining  that a program  has  reached  technological
feasibility,  the subsequent development costs are capitalized.  All other costs
are expensed.

     Employees

     As of  May  31,  2002,  the  Company  and  its  subsidiaries  employed  102
employees,  including  98  full-time  and 4  part-time  employees.  The  Company
believes  that  its  success  will  depend  in part on its  ability  in a highly
competitive   environment  to  attract  and  retain  highly  skilled  technical,
marketing and management personnel.

     On August 8, 2001, the Company  eliminated certain positions and terminated
approximately  thirty (30) employees.  Projected  revenue  reductions and recent
operating losses combined to cause management to re-evaluate staffing needs. The
eliminations  and  terminations  from within the  Company  and its  subsidiaries
generated  approximately  $1,600,000  in  reduced  expenses.  The  Company  also
incurred approximately $47,000 in severance payments.

     The Company  considers  its  employee  relations  to be  satisfactory.  The
Company is not a party to any collective bargaining agreement.

ITEM 3 - LEGAL PROCEEDINGS

     In August of 1999, the Company's  wholly-owned  subsidiary,  Sandsport Data
Services,  Inc.  ("Sandsport")  was named as a defendant in Greater Bright Light
Home Care Services,  Inc. et al. v. Joseph  Jeffries-El,  El Equity Corporation,
Sandsport  Data Services,  Inc. et al.  (Supreme Court of the State of New York,
Kings  County).  Greater  Bright  Light Home Care  Services,  Inc.  ("GBL") is a
not-for-profit  corporation  that was  organized  to render home care  attendant
services to individuals  selected as eligible recipients by the City of New York
acting  through  the  Department  of  Social  Services  of the  Human  Resources
Administration ("HRA").  Pursuant to its agreement with HRA, GBL was entitled to
reimbursement  checks  from the New York  State  Department  of Health  Medicaid
Management  Information  System for the  services it provided  ("MMIS  Checks").
Before  GBL could  provide  home care  attendant  services  it was  required  to
demonstrate  to HRA that it  obtained  a $1.2  million  line of  credit.  Joseph
Jeffries El  represented  to GBL that he would  provide it with the $1.2 million
line of credit  that HRA  required  in  exchange  for an annual fee of  $120,000
payable in twelve equal monthly installments of $10,000. GBL and Joseph Jeffries
El's company,  El Equity  Corporation ("El Equity"),  thereafter entered into an
Escrow  Agreement  pursuant  to which El Equity  was to receive a portion of the
funds  received  from MMIS.  The MMIS checks were to be deposited in a specified
account at Marine Midland Bank. GBL alleged that El Equity  misappropriated  the
MMIS funds.  GBL further  alleged that El Equity  breached the Escrow  Agreement
because it failed to provide GBL with the $1.2 million line of credit.

     Sandsport  had been  retained by GBL to pick up its MMIS checks and deposit
them in a designated  account at Marine  Midland  Bank.  El Equity  alleged that
Sandsport's agreement with GBL prohibited it from depositing the MMIS funds into
any other account absent written  instructions signed by both GBL and El Equity.
El Equity  alleged that  Sandsport,  pursuant to GBL's  instructions,  deposited
certain MMIS checks into an account other than the designated account. El Equity
therefore  asserted  cross-claims  against  Sandsport for breach of contract and
conversion.  Although Sandsport is named as a defendant,  the complaint seeks no
affirmative  relief  against  Sandsport.   Co-defendant  Citibank  has  asserted
indemnification  claims  against  Sandsport  and  all of the  other  defendants.
Sandsport  disputes all liability and has denied any  wrongdoing.  The aggregate
amount of the funds at issue is approximately $262,000.

     On October 19, 1999, the Company and  Pro-Health  brought an action against
Provider  Solutions  Corporation  ("Provider") and others, in Supreme Court, New
York County, based on breach of contract, fraudulent misrepresentation and other
causes of action,  demanding  damages of  approximately  $10,000,000 (the "State
Action").  On October 22, 1999,  Provider brought a federal action in the United
States  District  Court  for the  Eastern  District  of New York  (the  "Federal
Action").  The complaint  demanded relief in the form of a permanent  injunction
and damages  against the Company and Pro-Health  for total amounts  ranging from
$10,000,000 to $15,000,000.  The State Action was consolidated  with the Federal
Action.  On March 8, 2001 the  Company,  Pro-Health,  Provider  and all involved
parties  and  individuals  settled the  consolidated  Federal  Action,  globally
resolving all issues, claims and disputes.  The settlement entailed the exchange
of general releases between the Company,  Pro-Health,  Provider and all parties,
and the  payment of  $600,000  to  Provider,  of which  $50,000  was paid by the
Company.  The  balance of the  payment  under the  settlement  was funded by the
Company's  insurers.  The  settlement  did not  have a  material  effect  on the
Company's  financial  performance.  The Company  has  retained  its  proprietary
interest in the subject software.

     On March 1, 2000, Dataline,  Inc.  ("Dataline") began a lawsuit against MCI
WorldCom Network Services,  Inc. ("MCI") and the Company for alleged trade libel
and  related  counts,  in the  United  States  District  Court for the  Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001, MCI had brought a patent infringement  lawsuit against
Dataline,  alleging that it was  infringing  three MCI patents,  under which the
Company  has an  exclusive  license in New York City.  Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments from either MCI or the Company to Dataline.  In addition,
Sandata and  Dataline  entered  into an  Exclusive  Service  Agreement  by which
Dataline  agreed to use the Company's "call capture  infrastructure"  for all of
Dataline's time and attendance systems,  and to pay royalties to the Company for
such use. The terms of the settlement also included mutual releases. See Note 5c
to the Financial Statements comprising Item 7 hereof.

     An action was  commenced  against  the  Company and Health Card by a former
executive of Health Card, Mary Casale, who alleged that employees of both Health
Card and the Company engaged in sex  discrimination as to Ms. Casale,  and thus,
violated  Title VII of the Civil Rights Act of 1964. In February 2002 the matter
was withdrawn from the Equal Employment Opportunity Commission,  and was settled
without any effect on the business or financial condition of the Company.


ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The Company provides its computerized  information processing services to a
variety of users, although principally to the health care industry.  Many of the
Company's  software  programs are  adaptable  to customers in related  fields of
enterprise.  Thus,  the  components  of the SHARP system for the Home  Attendant
Program - Medicaid reimbursable billing, management reports, payroll processing,
tax reports - are being  developed for  utilization in other  settings,  such as
nursing homes, skilled nursing facilities, and rehabilitation facilities.

     The  Company's  telephone-based  data  collection  services  are  currently
principally used to monitor  off-site  workers in the home healthcare  industry.
The SANTRAX  proprietary  software could be used to monitor  off-site workers in
other industries,  and the Company is currently  exploring  opportunities in the
temporary staffing, security guard and building maintenance industries.

     Technology  infrastructure and outsourcing  services are currently utilized
in-house and within  affiliate  companies.  The Company intends to take the core
competencies  that it has  developed in  supporting  its service  offerings  and
resell them into the business  community in the New York metropolitan  area. The
Company cannot assure its ability to resell such services.

     The Company believes it can leverage its in-house capabilities to develop a
new IT services  business,  and intends  that such IT services  will be marketed
primarily to businesses in the New York metropolitan  area, where it believes it
can support  professional  services with on-site  technical help. In the future,
the Company believes it will have the capability of rolling out such IT services
to a wider  geographical  audience.  The  Company  cannot  assure its ability to
develop a new IT service  business and cannot predict that such services will be
successful.

     Analysis of Operations

     Fiscal Years ended May 31, 2002 compared with May 31, 2001

     Service  fee  revenues  for fiscal  2002 were  $17,173,922  as  compared to
$17,769,069  for the  previous  fiscal  year,  a decrease of $595,147 or 3%. The
decrease is primarily  attributable  to a decrease in service fee revenues  from
Health Card of  approximately  $1,300,000 due to a reduction of programming  and
technical services provided by the company. Previously, Health Card did not have
its own  programming  and  technical  services and  therefore  outsourced  these
services to the company. However, as Health Card has grown, it has developed its
own  programming  and  technical  services  and  therefore  the  demand  for the
Company's  outsourcing  services has  decreased.  In  addition,  the decrease is
partially  attributable  to the sale of a customer  list to a third party,  as a
result of which the Company is no longer able to  recognize  the  revenues  from
such  customers.  The decrease in revenues is  partially  offset by increases in
revenue from SandataNet  Consulting of  approximately  $1,266,000 due to several
consulting contracts with customers.

     Other  income for the year ended May 31,  2002 was  $514,999 as compared to
$368,502  for the year ended May 31,  2001,  an increase of $146,497 or 40%. The
increase is attributable  to $115,000 in payments  received in connection with a
litigation  settlement  and the sale of a customer  list for  $79,000 to a third
party. This increase is partially offset by a decrease in revenue recognition on
sales/leasebacks  transactions  as some of the leases  have  expired  and no new
sales/leasebacks were entered into during fiscal 2002.

       Expenses Related to Services

     Operating  expenses  were  $9,877,651  for the year ended May 31, 2002,  as
compared to $10,372,524  for the year ended May 31, 2001, a decrease of $494,873
or 5%. Decreased payroll expenses (approximately $875,000) due to a reduction in
workforce,  and decreased  equipment rental expenses  (approximately  $373,000),
partially offset by increases in purchases for resale  (approximately  $945,000)
were the primary factors for the decrease in operating expenses.

     Selling,  general and  administrative  expenses  for the year ended May 31,
2002 were $5,502,264  compared to $5,004,255 for the year ended May 31, 2001, an
increase of $498,099 or 9%. The  increases  were  primarily  due to increases in
consulting and legal expenses, and additional insurance premiums.

     Depreciation and  amortization  expenses were $1,839,959 for the year ended
May 31,  2002,  as compared to  $2,748,411  for the year ended May 31,  2001,  a
decrease of $908,452 or 33%.  The  decrease was  primarily  attributable  to the
write off of impaired  software in 2001,  as  described  below under the heading
"Impairment of Developed Software."

     Interest  expense for the year ended May 31, 2002 was  $241,729 as compared
to $189,240 for the year ended May 31, 2001,  an increase of $52,489 or 28%. The
increase  was a result  of  higher  overall  average  daily  balances  under the
Company's  revolving  credit  agreement.  The higher overall daily balances were
primarily  due to increased  borrowings  to fund working  capital  requirements,
specifically  to fund the  Company's  increased  accounts  payable  and  accrued
expenses.

      Impairment of Developed Software

     During the fourth  quarter of the year ended May 31, 2001, the Company shut
down  certain  operating  systems and  hardware  configurations,  which had been
capitalized  in  previous  years.  The  Company  had  determined  that the older
system's  architecture  had become  obsolete and too costly to maintain,  so the
Company  coordinated  placing  several new systems in  production  after running
parallel  with  pre-existing  systems  resulting in the  retirement of the older
systems during the fourth quarter.  The Company further determined that there is
no net realizable value remaining since no future revenue would be recognized in
the retired systems because the architecture was completely  replaced by the new
systems.  As such the Company  recognized  an impairment  loss of  approximately
$3,300,000 for the year ended May 31, 2001.

      Impairment of Goodwill

     On April 27, 2001,  the Company  acquired  certain assets of North American
Internet Services,  Inc. ("NAIS"),  a provider of broadband  services,  Internet
access, and co-location  services for approximately  $201,000.  NAIS had entered
bankruptcy  proceedings  and,  under the auspices of the Bankruptcy  Court,  the
Company  was  permitted  to "credit  bid"  approximately  $124,000  of  expenses
(including salaries) it had incurred on behalf of NAIS as the purchase price for
the assets,  and was given 180 days to exploit the assets it had  acquired.  The
Company  incurred  approximately  $77,000  in  additional  costs  related to the
acquisition  of these  assets.  The tangible  assets were  determined to have no
significant  fair  value.  Therefore,   all  the  expenditures  related  to  the
acquisition  were  allocated to goodwill.  The Company has the option to abandon
the  exploitation  of these  assets  within the 180 day  period.  If the Company
continues to use the NAIS assets, 10% of the profits (defined as earnings before
interest expense and taxes) generated by such use must be paid to the bankruptcy
estate for the first three years.

     At May 31, 2001, the Company performed an evaluation of the  recoverability
of the assets acquired from NAIS and concluded that a significant  impairment of
these assets had occurred  based on actual results during the year ended May 31,
2001 and on  estimated  future  cash flows not being  sufficient  to recover the
carrying  value of the  goodwill.  As such,  the carrying  value of goodwill was
written  down to its  estimated  fair  value,  which  was  determined  based  on
discounted  estimated cash flows. The Company  recognized an impairment loss and
write down of the goodwill of approximately  $201,000.  Considerable  management
judgment is necessary to estimate fair value; accordingly,  actual results could
vary significantly from such estimates.


     Income Tax Expenses

     Income tax expense  (benefit) was $249,067 and $(1,293,401) for fiscal 2002
and 2001,  respectively.  The  increase  in income tax  expense is due to higher
pretax  income.  The effective tax rates for fiscal 2002 and 2001 were 63.7% and
(37.0%), respectively.

     IDA/SBA Financing

     In November, 1996 the Company entered into an agreement with the Affiliate,
the Nassau County Industrial  Development  Agency ("NCIDA"),  and Marine Midland
Bank (the  "Bondholder")  (the  "Agreement").  Pursuant  to the  Agreement,  the
Affiliate (i) assumed all of the Company's rights and obligations  under a Lease
Agreement that was  previously  between the Company and the NCIDA (the "Lease"),
and (ii) entered into a Sublease Agreement with the Company for the premises the
Company  occupies.  Pursuant to the  Agreement,  the Affiliate also obtained the
right to become the owner of the premises upon  expiration  of the Lease.  Under
the terms of the Agreement,  the Company is jointly and separately liable to the
NCIDA for all  obligations  owed by the  Affiliate to the NCIDA under the Lease;
however,  the  Affiliate  has  indemnified  the Company  with respect to certain
obligations relative to the Lease and the Agreement.  In addition, the Agreement
provides that the Company is bound by all the terms and conditions of the Lease,
and that a security interest is granted to the Affiliate in all of the Company's
fixtures constituting part of the premises.

     The  foregoing  transactions  and  agreements  were the last in a series of
transactions involving the Company, the Affiliate, NCIDA, the Bondholder and the
U.S. Small Business  Administration.  Chief among these was the borrowing by the
Affiliate in June of 1994 of $3,350,000  in the form of  Industrial  Development
Revenue  Bonds  (the  "Bonds")  to  finance  the  acquisition  of the  Facility.
Simultaneously  with the issuance of the Bonds:  (1) NCIDA obtained title to the
Facility  and  leased  it to the  Affiliate,  (2) the  Affiliate  subleased  the
Facility to the Company, (3) the Bondholder bought the Bonds, (4) the Bondholder
received a mortgage and security  interest in the Facility to secure the payment
of the Bonds. The Affiliate's obligations under the Lease were guaranteed by Mr.
Brodsky,  the  Company,   Sandsport  and  others.  The  Affiliate's  obligations
respecting  repayment  of the Bonds were also  guaranteed  by Mr.  Brodsky,  the
Company, Sandsport and others.

     The Bonds  currently  bear interest at the rate of 9%, and the  outstanding
balance  due on the Bonds as of May 31,  2002 was  $1,444,445.  During the years
ended  May 31,  2002  and  2001,  the  Company  paid  rent to the  Affiliate  of
approximately $408,000 and $615,000, respectively.

     On August 11, 1995, the Company entered into a $750,000 loan agreement with
the Long Island Development Corporation ("LIDC"),  under a guarantee by the U.S.
Small  Business  Administration  ("SBA")  (the  "SBA  Loan").  The SBA  Loan was
assigned to the Affiliate in November 1996;  however,  repayment of the SBA Loan
is guaranteed by the Company and various subsidiaries of the Company. The entire
proceeds  were used to repay a portion of the Bonds.  The SBA Loan is payable in
240 monthly  installments of $6,255,  which includes principal and interest at a
rate of 7.015%. The balance of the SBA Loan as of May 31, 2002 was $599,024.

      Liquidity and Capital Resources

     The Company's  working  capital  decreased as of May 31, 2002 to $1,890,988
from $1,956,661 as of May 31, 2001. The primary factors that  contributed to the
decrease  were  increases  in  accounts  payable,  accrued  expenses  and  notes
receivable-officer,  and decreases in receivables  from  affiliates and deferred
income, offset by an increase in cash and cash equivalents.

     The Company has spent  approximately  $2,620,049 for fixed asset additions,
including  software  capitalization  costs in connection with revenue growth and
new  product  development.  The  Company  expects a  reduction  in the levels of
capital expenditures in the future.

     On July 14, 1998 the  Chairman,  certain  officers and  directors  (Bert E.
Brodsky, Hugh Freund and Gary Stoller), and a former director, Carol Freund (who
is also the spouse of an officer  and an employee of  Sandsport  Data  Services,
Inc.  ("Sandsport"),  the Company's  wholly owned  subsidiary),  exercised their
respective  options and warrants to purchase an  aggregate of 921,334  shares of
Common  Stock.  The exercise  prices ranged from $1.38 to $2.61 per share for an
aggregate cost of $1,608,861. Payment for such shares was made to the Company in
the amount of $921  representing  the par value of the shares,  and a portion in
the form of  non-recourse  promissory  notes due in July 2001,  with interest at
eight and one-half percent (8-1/2%) per annum, payable annually,  and secured by
the number of shares  exercised.  The Company has received  interest payments on
such notes in the amount of $131,994 and $162,110  during the fiscal years ended
May 31, 2002 and 2001. As of May 31, 2002 and 2001, the  outstanding  balance on
such notes,  including principal and accrued but unpaid interest, was $1,669,640
and $1,722,547,  respectively  (see item 7 "Financial  Statements" note 12d). On
July 14,  2001,  the  Company  agreed to extend the due dates of the  Promissory
Notes for one hundred  twenty  days.  On  November 9, 2001,  the due date of the
Notes was  extended to November 9, 2004,  and the Company  agreed to  substitute
full  recourse  unsecured  Notes  for  the  Notes  it had  previously  accepted.
Effective  December 1, 2001,  the interest rate was changed from 8-1/2% to 6% to
reflect fair market value, and the shares and note of the spouse of the officer,
Carol Freund, were both transferred to the officer.

     On April 18, 1997 Sandsport, entered into a revolving credit agreement (the
"Credit  Agreement") with the Bank which allowed  Sandsport to borrow amounts up
to  $3,000,000.  Interest  accrues  on  amounts  outstanding  under  the  Credit
Agreement at a rate equal to the London Interbank  Offered Rate plus 2% and will
be paid quarterly in arrears or, at Sandsport's  option,  interest may accrue at
the Bank's  prime rate.  The Credit  Agreement  requires  Sandsport to pay a fee
equal to 1/4% per annum on the unused average daily balance of amounts under the
Credit  Agreement.  In addition,  there are other fees and charges imposed based
upon  Sandsport's  failure to  maintain  certain  minimum  balances.  The Credit
Agreement has been amended by the Bank to permit  Sandsport to borrow amounts up
to  $4,500,000  until June 14,  2003.  Interest  accrues at the same rate as the
original  Credit  Agreement.  The  indebtedness  under the Credit  Agreement  is
guaranteed by the Company and Sandsport's sister subsidiaries (the "Group"). All
of the  Group's  assets are  pledged to the Bank as  collateral  for amounts due
under the  Credit  Agreement,  which  pledge is  secured  by a first lien on all
equipment owned by members of the Group,  as well as a collateral  assignment of
$2,000,000 of life insurance payable on the life of the Company's Chairman.  The
Group's  guaranty  to  the  Bank  was  subsequently   modified  to  include  all
indebtedness  incurred by the Company under the amended Credit  Agreement  dated
August 24, 2001 (see below).

     In  addition,  pursuant to the Credit  Agreement,  the Group is required to
maintain  certain  levels  of net  worth and meet  certain  financial  ratios in
addition to various other  affirmative and negative  covenants.  At May 31, 2001
the Group  failed to meet  these net worth and  financial  ratios,  and the Bank
granted the Group a waiver.  As of August 24, 2001,  Sandsport,  the Company and
the other members of the Group,  and the Bank,  entered into the Third Amendment
and Waiver  (the "Third  Amendment")  to the Credit  Agreement.  Pursuant to the
Third  Amendment,  Sandsport's  covenants  to the Bank to maintain a certain net
worth and to maintain certain financial ratios were revised,  on a going-forward
basis, and the noncompliance with the existing covenants was waived by the Bank.
In addition,  in connection with the Third Amendment,  Sandsport and each member
of the  Group  executed  and  delivered  to the Bank a  Collective  Amended  and
Restated Security Agreement,  pursuant to which the Bank's security interest was
extended  to include a security  interest  in all of the  personal  and  fixture
property of  Sandsport,  the Company and the members of the Group.  On April 11,
2002 the Bank  approved  the  extension  of the  termination  date of the Credit
Agreement  to June 14,  2003.  There  can be no  assurance  that  the Bank  will
continue to grant waivers if the Group fails to meet the net worth and financial
ratios in the future.  If such  waivers are not granted,  any loans  outstanding
under the Credit Agreement become immediately due and payable, which may have an
adverse effect on the Company's business,  operations or financial condition. As
of May 31, 2002, the outstanding  balance on the Credit  Agreement with the Bank
was $4,500,000 and the Company was in compliance with the covenants.

     The  Company is a party to various  sale/leaseback  transactions  involving
certain fixed assets,  principally  computer  hardware,  software and equipment.
Gains on these transactions have been deferred and are being recognized over the
lives of the related leases, each of which is 36 months.  Approximately $297,000
and $344,000 of the deferred gains were recognized in other income for the years
ended May 31, 2002 and 2001,  respectively.  Included  in these  amounts are the
effects of the following sale/leaseback transactions:

     (a) In January 1998, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $515,000, were sold for
$700,000.  The resulting gain of approximately $185,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $36,000
of the deferred gain was recognized  for the year ended May 31, 2001,  which was
the last year of the lease. An  unaffiliated  third party purchased the residual
rights in such lease.

     (b) In January 1999, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $830,000, were sold for
$1,100,000.  The  resulting  gain of  approximately  $270,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $60,000 and $90,000 of deferred gain was recognized for the years
ended May 31, 2002 and 2001, respectively. An unaffiliated third party purchased
the residual rights in such lease.

     (c) In May 1999, the Company entered into a sale/leaseback of certain fixed
assets  which  had a net book  value of  approximately  $896,000  were  sold for
$1,100,000.  The  resulting  gain of  approximately  $204,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $68,000 of  deferred  gain was  recognized  for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     (d) In October 1999, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $895,000, were sold for
$1,115,000.  The  resulting  gain of  approximately  $220,000  was  recorded  as
deferred   income  and  is  being   recognized  over  the  life  of  the  lease.
Approximately  $73,000 of the deferred gain was recognized for each of the years
ended May 31, 2002 and 2001. An unaffiliated  third party purchased the residual
rights in such lease.

     (e) In January 2000, the Company  consummated a  sale/leaseback  of certain
fixed assets which had a net book value of approximately $442,000, were sold for
$561,000.  The resulting gain of approximately $119,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $40,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     (f) In February 2000, the Company entered into a sale/leaseback  of certain
fixed assets which had a net book value of approximately $237,000, were sold for
$277,000.  The resulting gain of approximately  $40,000 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $14,000
of  deferred  gain was  recognized  for each of the years ended May 31, 2002 and
2001. An unaffiliated third party purchased the residual rights in such lease.

     (g) In November 2000, the Company entered into a sale/leaseback  of certain
fixed assets which had a net book value of approximately $421,500, were sold for
$548,300.  The resulting gain of approximately $126,800 was recorded as deferred
income and is being recognized over the life of the lease. Approximately $42,000
and $21,000 of the deferred gain was recognized for the years ended May 31, 2002
and 2001,  respectively.  An  unaffiliated  third party  purchased  the residual
rights in such lease.

     Until  January of 2002,  the Company was leasing  equipment  and  providing
services to Health Card  pursuant to a verbal  agreement,  and was receiving its
allocable  share of  administrative  and  support  services  that were shared by
Health  Card  and  the  Company  at a  cost  to  Health  Card  of  approximately
$81,000/month.  As of January,  2002, the Company ceased  rendering  services to
Health Card.  Health Card  continues to pay its allocable  share of expenses for
shared services, which amounts to approximately $45,000 per month.

     The Company believes the results of its present  operations,  together with
the available  Credit Line,  should be adequate to fund present and  foreseeable
working capital requirements.

Prospects for the Future, Trends and Other Events

     There is added competitive  pressure and uncertainty in the Company's SHARP
business  because the City of New York requires all contracts with City agencies
to undergo competitive bidding.  Furthermore,  the success of its SHARP business
rests  with  a  key  officer  of  the  Company,   who  has  established   strong
relationships  with the Company's SHARP  customers over the years.  Although the
Company has been awarded  contracts based on its bids, there can be no assurance
that its bids will be accepted in the future.

Going Private Transaction

     The  Company  has  received  a  proposal  to  engage  in  a  going  private
transaction.  The proposed  transaction  is  anticipated  to be in the form of a
merger with an entity owned by an investor  group to be led by Bert E.  Brodsky,
the  Company's  Chief  Executive  Officer,  and to include  Hugh Freund and Gary
Stoller,  as well as other  investors (the "Acquiring  Group").  Pursuant to the
proposal,  the  Company's  shareholders  (other  than Mr.  Brodsky and the other
shareholders  that shall  comprise  part of the  Acquiring  Group) would receive
$1.50 per share of Common  Stock of the Company  (the  "Shares"),  in cash.  The
proposal may be amended, modified or supplemented at any time.

     The Board of Directors has appointed a Special Committee (the "Committee"),
comprised of Ronald Fish and Martin Bernard, to review the proposed transaction.
The  Committee has retained  Brean Murray & Co., Inc. as its financial  advisor,
and has retained its own legal counsel.

     The  proposed  transaction  would result in the  acquisition  of all of the
outstanding Shares of the Company other than the shares owned by Mr. Brodsky and
the other  shareholders  that shall  comprise part of the Acquiring  Group.  The
final  terms  of any  acquisition  will be  based on  negotiations  between  the
Acquiring Group and the Committee.  The proposed acquisition will be subject to,
among other things, (1) the negotiation, execution, and delivery of a definitive
agreement,  (2) approval of the proposed transaction by the Committee,  the full
Board of Directors  and the  Company's  shareholders,  (3) receipt of a fairness
opinion by the Committee,  (4) applicable regulatory approval, and (5) obtaining
any necessary third-party consents or waivers.  There can be no assurance that a
definitive merger agreement will be executed and delivered, or that the proposed
transaction will be consummated.

     Except as  discussed  above,  the Company has no  knowledge of any specific
prospects,  industry or other trends,  events or uncertainties that might have a
material impact on the Company's net sales or revenues or income from continuing
operations,  or that would  increase the value of the shares in the long-term or
the short-term.




                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                           SANDATA TECHNOLOGIES, INC.
     -------------------------------------------------------------------------
                                  (Registrant)

  By /s/Bert E.Brodsky
     -------------------------------------------------------------------------
                           Bert E. Brodsky, Chairman
                        (Principal Executive Officer and
                          Principal Financial Officer)

   Date: January 28, 2003

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


By /s/Bert E.Brodsky
   ---------------------------------------------------------------------------
                     Bert E. Brodsky, Chairman, Treasurer, Director

  Date: January 28, 2003


By /s/Hugh Freund
   --------------------------------------------------------------------------
                 Hugh Freund, Executive Vice President, Secretary, Director

  Date: January 28, 2003


By /s/Gary Stoller
   -------------------------------------------------------------------------
                     Gary Stoller, Executive Vice President, Director

  Date: January 28, 2003


By /s/Martin Bernard
  -------------------------------------------------------------------------
                    Martin Bernard, Director

  Date: January 28, 2003

By /s/Ronald L.Fish
   ------------------------------------------------------------------------
                     Ronald L. Fish, Director

  Date: January 28, 2003




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection   with  the  Amendment  to  the  Annual  Report  of  Sandata
Technologies,  Inc.  (the  "Company")  on Form 10-KSB for the year ended May 31,
2002 as filed with the  Securities  and Exchange  Commission  on the date hereof
(the "Report"),  Bert E. Brodsky,  Chief  Exectuive  Officer and Chief Financial
Officer of the Company,  certifies,  pursuant to 18 U.S.C.  ss. 1350, as adopted
pursuant  to ss. 906 of the  Sarbanes-Oxley  Act of 2002,  that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.


 /s/  Bert E. Brodsky

 Bert. E. Brodsky
 Chief Executive Officer and Chief Financial Officer
 January 28, 2003







                                  CERTIFICATION

I, Bert E. Brodsky, Chief Executive Officer and Chief Financial Officer, certify
 that:

                    1. I have  reviewed  this  amended  annual  report  on  Form
               10-KSB/A of Sandata Technologies, Inc. and its Subsidiaries;

                    2. Based on my  knowledge,  this report does not contain any
               untrue  statement of a material  fact or omit to state a material
               fact  necessary  to make  the  statements  made,  in light of the
               circumstances   under  which  such   statements  were  made,  not
               misleading  with  respect to the periods  covered by this amended
               annual report; and

                    3. Based on my  knowledge,  the  financial  statements,  and
               other  financial  information  included  in this  amended  annual
               report,  fairly  present in all material  respects the  financial
               condition,  results  of  operations  and cash  flows  of  Sandata
               Technologies,  Inc.  and its  Subsidiaries  as of,  and for,  the
               periods presented in this amended annual report.

                    4. As both  Chief  Executive  Officer  and  Chief  Financial
               Officer,  I  am  responsible  for  establishing  and  maintaining
               disclosure  controls and  procedures  (as defined in Exchange Act
               Rules 13a-14 and 15d-14) for the registrant, and I have:

                    a) designed  such  disclosure  controls  and  procedures  to
               ensure that  material  information  relating  to the  registrant,
               including its consolidated  subsidiaries,  is made known to me by
               others within those entities,  particularly during the periods in
               which this amended annual report is being prepared;

                    b)  evaluated   the   effectiveness   of  the   registrant's
               disclosure  controls and  procedures  as of a date within 90 days
               prior to the  filing  date of this  amended  annual  report  (the
               "Evaluation Date"); and

                    c)  presented  in  this  report  my  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               my evaluation as of the Evaluation Date;

                    5. As both  Chief  Executive  Officer  and  Chief  Financial
               Officer I have disclosed,  based on my most recent evaluation, to
               the registrant's auditors and the audit committee of registrant's
               board  of  directors  (or  persons   performing   the  equivalent
               function):

                    a) all  significant  deficiencies in the design or operation
               of   internal   controls   which  could   adversely   affect  the
               registrant's  ability to record,  process,  summarize  and report
               financial data, and have identified for the registrant's auditors
               any material weaknesses in internal controls; and

                    b)  any  fraud,  whether  or  not  material,  that  involves
               management or other employees who have a significant  role in the
               registrant's internal controls; and

                    6. As both  Chief  Executive  Officer  and  Chief  Financial
               Officer,  I have  indicated  in this report  whether or not there
               were significant  changes in internal controls  subsequent to the
               date of my  most  recent  evaluation,  including  any  corrective
               actions  with regard to  significant  deficiencies  and  material
               weaknesses.

               Dated: January 28, 2003
                                       --------------------------------------
                                       Bert E. Brodsky, Chief Executive
                                       Officer and Chief Financial Officer



                                                                      APPENDIX H


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934.

                     For the period ended November 30, 2002

[  ] Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934.

For the transition period from _______ to __________

                         Commission file number 0-14401

                           SANDATA TECHNOLOGIES, INC.
              (Exact name of small business issuer in its charter)

           DELAWARE                                    11-2841799
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)

                              26 Harbor Park Drive
                               Port Washington, NY
                    (Address of principal executive offices)
                                      11050
                                   (Zip Code)

         Issuer's telephone number, including area code: (516) 484-4400

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes        X               No
    ----------------           -------------

                               APPLICABLE ONLY TO
                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

         Check whether the issuer has filed all documents and reports required
to be filed by section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

Yes____       No____

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         The number of shares outstanding of each of the issuer's classes of
common equity, as of January 12, 2003 was 2,481,808.

         Transitional Small Business Disclosure Format (check one):

Yes         No X
   ------     -------

                                      H-1




                   SANDATA TECHNOLOGIES INC. AND SUBSIDIARIES
                                      INDEX



                                                                                               
                                                                                                          Page
                          PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements:
           Condensed Consolidated Balance  Sheets as of
           November 30, 2002 (Unaudited) and May 31, 2002  (Audited).......................................3

           Unaudited Condensed Consolidated Statements of Operations
            for the three and six months ended November 30, 2002 and November 30, 2001.....................4

           Unaudited Condensed Consolidated Statements of Cash Flows for
            the six months ended November 30, 2002 and November 30, 2001...................................5

           Notes to Condensed Consolidated Financial Statements (Unaudited)................................6


Item 2.  Management's Discussion and Analysis
          or Plan of Operation ...........................................................................15

Item 3.  Procedures and Controls..........................................................................19


                           PART II. OTHER INFORMATION


Item 1.  Legal Proceedings................................................................................20

Item 2.  Changes in Securities and Use of Proceeds........................................................20

Item 3.  Defaults Upon Senior Securities..................................................................20

Item 4.  Submission of Matters to a Vote of Security Holders..............................................19

Item 5.  Other Information................................................................................20

Item 6.  Exhibits and Reports on Form 8-K.................................................................21

              Signature...................................................................................22

              Certifications..............................................................................23






                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                                                                               

                                                                               November 30, 2002       May 31, 2002
                                                                                 (unaudited)             (audited)
                           ASSETS
 CURRENT ASSETS:

 Cash and cash equivalents                                                      $     612,247         $  1,630,617
 Accounts receivable, net of allowance for doubtful accounts
  of $239,696 and $202,746 at 2002 and 2001, respectively                           2,112,025            2,182,963
 Receivables from affiliates                                                          270,178              280,297
 Notes receivable - officer                                                               --               100,000
 Inventories                                                                           87,552               45,342
 Prepaid expenses and other current assets                                            222,457              345,349
 Deferred income taxes                                                                214,099              207,595
                                                                                    ---------           ----------
         Total Current Assets                                                       3,518,558            4,792,163

 FIXED ASSETS, NET                                                                  6,481,560            6,820,596

 DEFERRED INCOME TAXES                                                                139,000              171,579

OTHER ASSETS
  Notes receivable                                                                     22,434               25,190
  Cash surrender value of officer's life insurance,
   security deposits and other assets                                               1,121,408            1,105,502
                                                                                   ----------           ----------
         Total Assets                                                             $11,282,960          $12,915,030
                                                                                  ===========          ===========


                                       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

  Accounts payable and accrued expenses                                           $  2,961,074          $ 2,781,550
  Deferred/unearned revenue - maintenance contracts                                     24,837               16,367
  Deferred income - sales-leaseback                                                     52,264              103,258
  Short-term debt                                                                    2,750,000                  --
                                                                                  ------------           ----------
         Total Current Liabilities                                                   5,788,175            2,901,175

LONG-TERM DEBT                                                                             --             4,500,000

DEFERRED INCOME                                                                            --                21,142
                                                                                   -----------           ----------
         Total Liabilities                                                           5,788,175            7,422,317
                                                                                   -----------           ----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Common stock, $.001 par value, 6,000,000 shares
   authorized; 2,481,808 shares issued and outstanding                                   2,482                2,482
  Additional paid in capital                                                         5,765,766            5,765,766
  Retained earnings                                                                  1,195,827            1,193,755
  Notes receivable - officers                                                       (1,469,290)          (1,469,290)
                                                                                   -----------          -----------
         TOTAL SHAREHOLDERS' EQUITY                                                  5,494,785            5,492,713
                                                                                   -----------          -----------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                $11,282,960          $12,915,030
                                                                                   ===========          ===========







                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                               

                                                                    Three Months Ended             Six Months Ended
                                                                        November 30,                November 30,

                                                                      2002          2001           2002         2001
                                                                      ----          ----           ----         ----
 REVENUES
  Service fees                                                    $3,906,524    $4,137,580     $8,305,350    $8,529,906
  Other income                                                        67,543       168,467        147,063       267,209
  Interest income                                                     41,514        44,843         85,090        78,439
                                                                   ---------     ---------      ---------     ---------
                                                                   4,015,581     4,350,890      8,537,503     8,875,554
COSTS AND EXPENSES
  Operating                                                        2,185,718     2,328,035      4,882,348     5,042,118
  Selling, general and administrative                              1,265,934     1,329,139      2,529,002     2,979,309
  Depreciation and amortization                                      510,378       455,875      1,009,880       883,737
  Interest expense                                                    32,096        72,068         77,851       149,747
                                                                   ---------     ---------      ---------     ---------
         TOTAL COSTS AND EXPENSES                                  3,994,126     4,185,117      8,499,081     9,054,911
                                                                   ---------     ---------      ---------     ---------
EARNINGS (LOSS) BEFORE INCOME TAXES                                   21,455       165,773         38,422      (179,357)
                                                                   ---------     ---------      ---------     ---------
            INCOME TAX EXPENSE (BENEFIT)                              12,253        81,741         36,350       (88,438)
                                                                   ---------     ---------      ---------     ---------

  NET INCOME (LOSS)                                                $   9,202      $ 84,032          2,072      $(90,919)
                                                                   =========      ========      =========      ========
EARNINGS PER SHARE OF COMMON STOCK:
  Basic income (loss) per share                                    $    0.00      $   0.03       $   0.00       $ (0.04)
                                                                   =========      ========       ========       =======
  Dilutive income (loss) per share                                 $    0.00      $   0.03           0.00       $ (0.04)
                                                                   =========      ========       ========       =======
  Basic weighted average common shares
    outstanding                                                    2,481,808     2,506,475      2,481,808     2,506,475
                                                                   =========     =========      =========     =========
  Dilutive weighted average common shares and
   common stock equivalents outstanding                            2,680,164     2,506,475      2,485,872     2,506,475
                                                                   =========     =========      =========     =========





                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE SIX MONTHS ENDED NOVEMBER 30,

                                                                                            

                                                                                         2002               2001
                                                                                         ----               ----
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net Income (loss)                                                              $     2,072         $   (90,919)
   Adjustments to reconcile net income (loss) to net cash
         provided by operating activities:
         Depreciation and amortization                                              1,009,880             883,737
         Gain on disposal of fixed assets                                                  --              (4,309)
         Provision for doubtful accounts                                               36,950              41,719
         Recognition of deferred income                                               (72,137)           (163,278)
         Recognition of deferred revenue                                              (37,486)              2,612
         Deferred tax provision                                                        26,075             (88,438)
    (Increase) decrease in operating assets
          Accounts receivable                                                          33,988              66,902
          Receivables from affiliates                                                  10,119             388,005
          Inventories                                                                 (42,210)              2,235
          Prepaid expenses and other current assets                                   122,892             125,990
          Other assets                                                                (13,150)           (160,459)
    Increase (decrease) in operating liabilities
          Accounts payable and accrued expenses                                       179,524             183,697
          Deferred/unearned revenue                                                    45,957                  --
                                                                                   ==========           =========
NET CASH PROVIDED BY OPERATING ACTIVITIES                                          1,302,474           1,187,494
                                                                                   ==========           =========
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of fixed assets                                                        (670,844)         (1,560,506)
                                                                                   ----------          ----------

NET CASH USED IN INVESTING ACTIVITIES                                                (670,844)         (1,560,506)
                                                                                   ----------          ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on note payable                                                    --            (500,000)
     Proceeds from note payable                                                            --             500,000
     Proceeds  from note receivable officer.                                          100,000                 --
     Proceeds from line of credit                                                     500,000           1,800,000
     Principal payments on line of credit                                          (2,250,000)         (1,150,000)
                                                                                   ----------           ---------

NET CASH (USED IN) PROVIDED BY FINANCING
 ACTIVITIES                                                                        (1,650,000)            650,000
                                                                                   ----------            --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                               (1,018,370)            276,988

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      1,630,617             475,578
                                                                                    ---------             -------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD                                       $  612,247           $ 752,566
                                                                                     ========             =======








                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     The  Condensed  Consolidated  Balance  Sheet as of November 30,  2002,  the
Condensed  Consolidated  Statements of  Operations  for the three and six months
ended November 30, 2002 and 2001, and the Condensed  Consolidated  Statements of
Cash Flows for the six month periods ended  November 30, 2002 and 2001 have been
prepared by Sandata Technologies,  Inc. and Subsidiaries (the "Company") without
audit. In the opinion of management, all adjustments (which include only normal,
recurring  adjustments) necessary to present fairly the financial position as of
November 30, 2002 and for all periods presented have been made.

     For information  concerning the Company's significant  accounting policies,
reference  is made to the  Company's  Annual  Report on Form 10-KSB for the year
ended May 31, 2002. Results of operations for the period ended November 30, 2002
are not necessarily  indicative of the operating  results  expected for the full
year.

Selected Accounting Policies and New Pronouncements

Cash and Cash Equivalents

     The Company considers all short-term  investments with an original maturity
of  three  months  or less  to be cash  equivalents.  Due to the  nature  of its
operations,  the Company  deposits,  on a monthly  basis,  amounts in  financial
institutions for the payment of payroll liabilities for certain customers.  Such
amounts are reduced  when the Company  pays such  liabilities.  Such  reductions
generally  occur over five to ten  business  days.  At November  30,  2002,  the
Company had amounts on deposit for these liabilities of approximately  $676,000.
The Company has cash balances in banks in excess of the maximum  amount  insured
by the FDIC as of November 30, 2002.

     In October 2001, the Financial  Accounting  Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 144 ("SFAS No. 144"), "Accounting
for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 addresses the
accounting  model for long-lived  assets to be disposed of by sale and resulting
implementation  issues.  This statement requires that those long-lived assets be
measured  at the  lower of  carrying  amount  or fair  value  less cost to sell,
whether  reported  in  continuing  operations  or  in  discontinued  operations.
Therefore,  discontinued operations will no longer be measured at net realizable
value or include  amounts for operating  losses that have not yet  occurred.  It
also broadens the reporting of discontinued operations to include all components
of an entity  with  operations  that can be  distinguished  from the rest of the
entity and that will be eliminated from the ongoing  operations of the entity in
a disposal  transaction.  SFAS No. 144 is  effective  for the  Company in fiscal
2003. The provisions of the  interpretations  that are applicable to the Company
were  implemented  on a  prospective  basis  as of June 1,  2002,  which  had no
material effect on the Company's financial statements.

     On April  30,  2002 the FASB  issued  SFAS  No.  145,  "Rescission  of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections". SFAS No. 145 eliminates the requirement that gains and losses from
the  extinguishment  of debt be  aggregated  and, if material,  classified as an
extraordinary  item,  net of the  related  income tax effect and  eliminates  an
inconsistency between the accounting for sale-leaseback transactions and certain
lease   modifications   that  have   economic   effects   that  are  similar  to
sale-leaseback   transactions.   Generally,   SFAS  No.  145  is  effective  for
transactions  occurring after May 15, 2002. The adoption of this standard had no
material impact to the Company.

     SFAS No.  146,  "Accounting  for Costs  Associated  with  Exit or  Disposal
Activities"  ("SFAS  No.  146"),   provides  guidance  on  the  recognition  and
measurement  of  liabilities   for  costs   associated  with  exit  or  disposal
activities.  The provisions of this Statement are effective for exit or disposal
activities  that are initiated after December 31, 2002. The Company is currently
reviewing SFAS No. 146 to determine the impact upon adoption.

2. RELATED PARTY TRANSACTIONS

     a. Pursuant to an agreement (the "Agreement") involving the Company, Nassau
County  Industrial   Development   Agency  ("NCIDA"),   BFS  Realty,   LLC  (the
"Affiliate")  HSBC Bank USA  (successor to Marine Midland Bank) (the "Bank") and
the  U.S.  Small  Business   Administration   ("SBA"),  the  Affiliate  borrowed
$3,350,000 in Industrial  Development Revenue Bonds (the "Bonds") to finance the
acquisition of the Company's facility (the "Facility").

     Under the terms of the  Agreement,  the Company is jointly  and  separately
liable to the NCIDA for all obligations owed by the Affiliate to the NCIDA under
the lease  agreement  between NCIDA, as landlord,  and the Affiliate,  as Tenant
(the "Lease");  however,  the Affiliate has indemnified the Company with respect
to certain  obligations  relative  to the Lease and the  Agreement.  The Company
subleases  space from the Affiliate  (see below).  The  Affiliate's  obligations
under the Lease were  guaranteed  by Mr.  Brodsky,  the Company,  Sandsport  and
others. The Affiliate's  obligations respecting repayment of the Bonds were also
guaranteed  by Mr.  Brodsky,  the  Company,  Sandsport  and  others.  The  Bonds
currently  bear interest at the rate of 9%, and the  outstanding  balance due on
the Bonds as of November 30, 2002 was $1,357,778.

     The Company has also entered into a $750,000 loan  agreement  with the Long
Island Development Corporation ("LIDC"),  under a guarantee by the SBA (the "SBA
Loan").  The SBA Loan was assigned to the Affiliate in November  1996;  however,
repayment of the SBA Loan is guaranteed by the Company and various  subsidiaries
of the Company.  The SBA Loan is payable in 240 monthly  installments of $6,255,
which  includes  principal and interest at a rate of 7.015%.  The balance of the
SBA Loan as of November 30, 2002 was $584,924.


     b. The Company derived  revenue from National  Medical Health Card Systems,
Inc.  ("Health  Card")  a  company  affiliated  with  the  Company's   Chairman,
principally  for  database  and  operating  system  support,  hardware  leasing,
maintenance and related administrative services. No revenues were generated from
Health Card for the three and six months ended  November 30, 2002.  The revenues
generated from Health Card amounted to approximately $581,000 and $1,211,000 for
the three and six months  ended  November  30,  2001 for  various  services.  In
addition the Company resells its telephone services to Health Card. The billings
for such telephone  services amounted to approximately  $10,000 and $121,000 for
the six months ended November 30, 2002 and 2001,  respectively  and are recorded
as a reduction of operating expense.  The Company was owed approximately  $3,000
from Health Card at November 30,  2002.  Subsequent  to November  30, 2002,  the
Company received approximately $3,000 from Health Card.

     c. The Company makes lease and rent payments to affiliates of the Company's
Chairman.  The payments for leased equipment were made to P.W. Capital Corp. and
P.W. Medical Management,  Inc., and were approximately  $54,000 and $108,000 for
the three and six months ended  November  30, 2002 as compared to  approximately
$71,000 and $166,000 for the three and six months ended  November 30, 2001.  The
payments for the Facility  were made to the  Affiliate,  and were  approximately
$68,000 and  $136,000  for the three and six months  ended  November 30, 2002 as
compared to  approximately  $138,000  and  $281,000 for the three and six months
ended November 30, 2001.

     d. Medical Arts Office  Services,  Inc.  ("MAOS"),  of which the  Company's
Chairman  is  the  sole  shareholder,  provided  the  Company  with  accounting,
bookkeeping and legal services.  For the three and six months ended November 30,
2002 and 2001 the total payments made by the Company to MAOS were  approximately
$162,000 and $277,000,  as compared to  approximately  $135,000 and $224,000 for
the three and six months ended November 30, 2001.

3. DEBT

         Credit Agreement

     The  Company's  wholly-owned  subsidiary,  Sandsport  Data  Services,  Inc.
("Sandsport"),  has a revolving credit  agreement (the "Credit  Agreement") with
the Bank which allows Sandsport to borrow amounts up to $4,500,000 and is due on
June 14,  2003.  Interest  accrues  on  amounts  outstanding  under  the  Credit
Agreement at a rate equal to the London Interbank Offered Rate ("LIBOR") plus 2%
and will be paid  quarterly in arrears or, at Sandsport's  option,  interest may
accrue at the Bank's prime rate. The Credit Agreement  requires Sandsport to pay
a fee equal to 1/4% per annum on the  unused  average  daily  balance of amounts
under the  Credit  Agreement.  In  addition,  there are other  fees and  charges
imposed based upon Sandsport's failure to maintain certain minimum balances. The
indebtedness  under the  Credit  Agreement  is  guaranteed  by the  Company  and
Sandsport's  sister  subsidiaries  (the "Group").  All of the Group's assets are
pledged  to the  Bank as  collateral  for  the  amounts  due  under  the  Credit
Agreement,  which  pledge is secured by a first lien on all  equipment  owned by
members of the Group,  as well as a collateral  assignment of $2,000,000 of life
insurance  payable  on the life of the  Company's  Chairman.  In  addition,  the
Company is restricted  in its ability to declare and pay  dividends  pursuant to
the Credit Agreement. The Group's guaranty to the Bank was subsequently modified
to include all  indebtedness  incurred by the Company  under the amended  Credit
Agreement dated August 24, 2001 (see below).

     On August 24,  2001,  Sandsport,  the Company and the other  members of the
Group,  and the Bank,  entered into the Third  Amendment  and Waiver (the "Third
Amendment")  to  the  Credit   Agreement.   Pursuant  to  the  Third  Amendment,
Sandsport's  covenants  to the Bank to  maintain  a certain  net  worth,  and to
maintain certain financial ratios, were revised on a going-forward basis and the
noncompliance  with the existing  covenants was waived by the Bank. In addition,
in connection with the Third  Amendment,  Sandsport and each member of the Group
executed and  delivered to the Bank a Collective  Amended and Restated  Security
Agreement,  pursuant  to which the Bank's  security  interest  was  extended  to
include a security  interest  in all of the  personal  and  fixture  property of
Sandsport, the Company and the members of the Group. As of November 30, 2002 the
Group failed to meet the working  capital  requirement of the Credit  Agreement,
and the Bank  granted  the Group a waiver.  In the past the Group has  failed to
meet  certain of the  financial  ratios,  and the Bank has  granted  the Group a
waiver.  There can be no assurance  that the Bank will continue to grant waivers
if the Group  fails to meet  certain  financial  covenants  in the  future.  The
outstanding  balance on the Credit  Agreement  with the Bank was  $2,750,000  at
November 30, 2002.

4. NET EARNINGS (LOSS) PER COMMON SHARE

     The Company  computes  earnings per share in accordance  with  Statement of
Financial  Accounting Standards No. 128 "Earnings per Share." Basic earnings per
share have been computed  using the weighted  average number of shares of common
stock outstanding.

     During the three and six months ended November 30, 2002,  198,356 and 4,064
options and warrants to purchase  shares of common  stock,  were included in the
dilutive  earnings  per share  calculation.  Options  and  warrants  to purchase
486,213 and 1,356,713 shares of common stock, for the three and six months ended
November 30, 2002, respectively, were outstanding at November 30, 2002, were not
included in the  computation  of diluted  earnings per share because the options
were not in the money, during the aforementioned periods.

5. SHAREHOLDERS' EQUITY

Stock Options

     On July 14, 1998, the Chairman,  certain officers,  directors, and a former
director  and the  spouse  of an  officer  (who  is an  employee  of  Sandsport)
exercised  their  respective  options and  warrants to purchase an  aggregate of
921,334 shares of Common Stock.  The exercise  prices ranged from $1.38 to $2.61
per share for an aggregate cost of $1,608,861.  Payment for such shares was made
to the Company in the amount of $921  representing  the par value of the shares,
and a portion  in the form of  non-recourse  promissory  notes due in July 2001,
with  interest  at eight  and  one-half  percent  (8 1/2%)  per  annum,  payable
annually, and secured by the number of shares acquired  ("Non-recourse  Notes").
On July 14, 2001, the Company agreed to extend the due dates of the Non-recourse
Notes for one hundred  twenty  days.  On  November 9, 2001,  the due date of the
notes was extended to November 9, 2004 and the Company agreed to substitute full
recourse  unsecured notes ("Recourse  Notes") for the Non-recourse  Notes it had
previously  accepted.  The Recourse Notes bear interest at the rate of eight and
one-half percent (8 1/2%) per annum, payable annually, with the principal amount
of each Recourse Note, plus any accrued and unpaid interest,  due and payable on
November 9, 2004.

     Effective  December 1, 2001,  the interest  rate on the Recourse  Notes was
changed to six percent (6%) per annum,  and the shares and Recourse  Note of the
spouse of an officer were both transferred to the officer.

     During  the year ended May 31,  2002,  24,667  shares of common  stock were
surrendered by a former  director and an employee in settlement of  Non-recourse
Notes in the  amount of  $37,962.  As of  November  30,  2002 , the  outstanding
balance on Recourse Notes,  including principal and accrued but unpaid interest,
was $1,505,646. On August 22, 2003, the Chairman repaid $100,000 of his Recourse
Note.

6. COMMITMENTS AND CONTINGENCIES

         Litigation

     a. In August of 1999, the Company's wholly-owned subsidiary,  Sandsport was
named as a defendant in Greater Bright Light Home Care Services,  Inc. et al. v.
Joseph Jeffries-El, El Equity Corporation,  Sandsport Data Services, Inc. et al.
(Supreme Court of the State of New York, Kings County).  Sandsport's contractual
obligation  to  Greater   Bright  Light   involved  the  depositing  of  certain
government-issued  checks into a specific bank account.  Upon receiving  written
notification  from the agency issuing the checks to stop depositing them in that
account,  Sandsport  ceased  depositing  them. The plaintiff  brought the action
against Joseph Jeffries-El and El Equity, and El Equity  counterclaimed  against
the plaintiff,  each basing its claims on the financing  agreement between them.
El  Equity  also  cross-claimed  against  Sandsport,  asserting  that  Sandsport
converted the  government-issued  checks to its own use.  Although  Sandsport is
named  as a  defendant,  the  Complaint  seeks  no  affirmative  relief  against
Sandsport.  Co-defendant  Citibank has asserted  indemnification  claims against
Sandsport and all of the other  defendants.  Sandsport  disputes all  liability.
However,  the  Company is unable to  predict  the  outcome  of these  claims and
accordingly,  no  adjustments  have  been  made  in the  consolidated  financial
statements in response to these claims.

     b. On March 1, 2000,  Dataline,  Inc.  ("Dataline") began a lawsuit against
MCI WorldCom  Network  Services,  Inc. ("MCI") and the Company for alleged trade
libel and related  counts,  in the United States District Court for the Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001 MCI had brought a patent  infringement  lawsuit against
Dataline,  alleging that it was  infringing  three MCI patents,  under which the
Company  has an  exclusive  license in New York City.  Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments  from either MCI or the Company to  Dataline.  As part of
the settlement, Dataline agreed to pay the Company $100,000 in cash and issue an
8%  promissory  note  in the  amount  of  $721,000.  Due to the  uncertainty  of
realization of the note receivable, the Company is recognizing the income on the
note using the  installment  method of accounting.  For the three and six months
ended November 30, 2002, the Company has  recognized  approximately  $45,000 and
$90,000 respectively,  of income. In addition, Sandata and Dataline entered into
an Exclusive  Service  Agreement by which  Dataline  agreed to use the Company's
"call capture infrastructure" for all of Dataline's time and attendance systems,
and to pay  royalties to the Company for such use.  The terms of the  settlement
also included mutual releases.

     c. By letter dated June 26, 2002, a former employee of the Company asserted
claims for back wages of $410,000.  The letter,  from the  employee's  attorney,
also contained allegations of age discrimination and retaliatory discharge.  The
letter also  contained an offer of  settlement.  No formal  litigation  has been
started and the Company intends to pursue settlement  negotiations.  A provision
of  $200,000 is included in accrued  expenses  relating to the  asserted  claim,
which represents the Company's best estimate of costs to be incurred. The amount
of the ultimate cost may vary from this estimate.

     d.  For  description  of  the  going  private   transaction,   and  of  the
class-action lawsuits initiated in connection with such transaction, see Note 9.

Royalty Agreement

     The Company has been granted a license under certain of MCI's patents which
permits  the  Company  to  continue  to  market  and sell its  SANTRAX  time and
attendance verification product non-exclusively  nationwide,  and exclusively in
the home health care  industries  for the five New York  boroughs,  and that the
Company will pay MCI certain royalties, on a per call basis. The license remains
in  effect  until the last to expire  of  various  patents  held by MCI or until
October 19, 2010, whichever is later.


7. REVENUE BY PRODUCT LINE

     The Company derives its revenue from several product lines that are similar
in nature. The following table provides the service fee revenues for the product
lines  earned for the three and six month  periods  ended  November 30, 2002 and
2001:


                                                                                             

                                                             For the three months ended     For the six months ended
                                                                    November 30,                    November 30,

                                                                   2002         2001            2002            2001
                                                                   ----         ----            ----            ----

Computerized information processing                          1,474,963      1,484,952       3,020,227       3,007,197
Telephone-based data collection                              2,134,823      1,854,195       4,220,712       3,746,346
Technology infrastructure and outsourcing                        9,453        213,553          20,602         615,845
Information technology                                         287,285        581,883       1,043,295       1,145,958
Other                                                             --            2,997             514          14,560
                                                            ----------     ----------      ----------      ----------
                                                            $3,906,524     $4,137,580      $8,305,350      $8,529,906
                                                            ==========     ==========      ==========      ==========



8. ECONOMIC DEPENDENCE

     A  significant  number of the  Company's  customers  (both  for-profit  and
not-for-profit  companies) receive some or all of their funding from Federal and
State  agencies.  These  customers'  contracts  with the  Company are subject to
review and approval by a New York City governmental agency. For the three months
ended  November  30, 2002 and 2001,  the Company  received  revenues  from these
customers amounting to approximately $2,762,000,  and $2,619,000,  respectively.
For the six months  ended  November  30,  2002 and 2001,  the  Company  received
revenues  from these  customers for  approximately  $5,599,000  and  $5,286,000,
respectively. The Company was owed approximately $1,568,000 from these customers
at November 30, 2002.

9. GOING PRIVATE TRANSACTION

     The Company entered into a Merger Agreement dated as of October 28, 2002 by
and among the Company,  Sandata  Acquisition  Corp.  and Bert E.  Brodsky,  Hugh
Freund and Gary Stoller. The Merger Agreement provides for the merger of Sandata
Acquisition Corp. with and into the Company,  with the Company continuing as the
surviving  corporation.  Prior  to the  effective  time of the  merger,  Messrs.
Brodsky,  Freund and Stoller and members of their immediate families have agreed
to contribute  all of the Company's  stock owned by them to Sandata  Acquisition
Corp. and at the effective  time of the merger,  (i) each share of the Company's
common stock, other than stock owned by Messrs.  Brodsky, Freund and Stoller and
members of their  immediate  families  and Sandata  Acquisition  Corp.,  will be
converted  into the right to receive the merger  consideration  of $1.91 in cash
and (ii) each outstanding  share of Sandata  Acquisition Corp. will be converted
into one share of common  stock of the  surviving  corporation.  Pursuant to the
Merger  Agreement,  all  outstanding  options to  purchase  common  stock of the
Company will be cancelled and converted into the right to receive a cash payment
equal to the  product  of the  number of shares  subject  to the  option and the
difference between the merger  consideration of $1.91 and the per share exercise
price of the option.  Under the Merger  Agreement,  options  held by the Messrs.
Brodsky,  Freund and  Stoller and members of their  immediate  families  will be
cancelled  and the holders of those  options will not be entitled to receive any
consideration.  The Board of Directors of the Company, acting upon the unanimous
recommendation  of  a  Special   Committee  of  the  Board,   comprised  of  two
non-management  directors who are not materially  interested in the transaction,
unanimously  approved the merger.  In reaching  its  decision to  recommend  the
merger to the full Board, the Special Committee received a fairness opinion from
the Committee's financial advisor, Brean Murray & Co., Inc.

     Completion  of the  merger is  subject  to  customary  closing  conditions,
including,  among others,  stockholder approval,  that no actions or proceedings
are pending seeking to prevent consummation of the merger and that no injunction
preventing the consummation of the merger is in effect.

     On September 11, 2002, a shareholder  of the Company filed a lawsuit in the
Delaware  Chancery  Court  against  the  Company and the members of its Board of
Directors.  (Eva Seitler v. Sandata Technologies,  Inc., Bert E. Brodsky, Ronald
L. Fish,  Martin  Bernard,  Hugh  Freund,  and Gary  Stoller,  Civil  Action No.
19886-NC).  The plaintiff  alleges that the defendants  breached their fiduciary
duties to the Company and the Company's  public  shareholders in connection with
Sandata  Acquisition  Corp.'s proposal to acquire all of the outstanding  public
shares of the Company.  The plaintiffs also allege, among other things, that the
directors  serving on the special  committee are not  independent,  and that the
merger  consideration  is inadequate.  The complaint seeks  certification of the
action as a class action,  both a preliminary and permanent  injunction  against
the proposed transaction, and rescission if it is not enjoined. On September 13,
another  shareholder of the Company filed a separate  lawsuit in the same court,
making substantially  identical allegations and seeking substantially  identical
remedies.  These actions were  consolidated by the Delaware Chancery Court in an
order dated October 22, 2002 (Civil Action No. 19886-NC).

     On December 23, 2002 the Company  entered into a nonbinding  Memorandum  of
Understanding  among the Company,  the members of its Board of Directors and the
plaintiffs in these actions.  Pursuant to the  Memorandum,  Sandata  Acquisition
Corp. agreed to increase its offer set forth in the Merger  Agreement,  to $2.21
for each outstanding share of Sandata common stock. The Memorandum also provides
for the  parties  to the  lawsuits  to use their  best  efforts  to agree  upon,
execute, and present to the Court a formal Stipulation of Settlement in order to
obtain  the  approval  of  the  Court  of  the  settlement  and  release  of the
consolidated actions. The parties agreed that the Stipulation of Settlement will
provide,  among other things,  (i) that Sandata  Acquisition Corp. will increase
its offer contained in the merger agreement to $2.21 per share of Sandata common
stock and (ii) for a complete  release  and  settlement  of all  claims  against
Sandata,  the  members  of  its  Board,  Sandata  Acquisition  Corp.  and  their
respective predecessors,  successors, assignees, parents, subsidiaries, counsel,
accountants,  attorneys,  affiliates,  agents  and  representatives,   including
without  limitation,  investment  banks or bankers or  commercial  banks and any
past,  present,  or future officers,  directors,  or employees of defendants and
their  predecessors,  successors,  assignees,  parents,  subsidiaries,  counsel,
accountants, attorneys, affiliates, agents and representatives, which have been,
or could have been,  asserted relating to Sandata  Acquisition Corp.'s proposal.
The Memorandum  further  provides that the parties to the  consolidated  actions
will petition the Court for final  certification  of a non-opt out class defined
as all  holders  of  Company  common  stock as of August 5,  2002,  through  and
including the closing date of the Merger Agreement.  The settlement contemplated
by the  Memorandum  is  subject to the  execution  of a formal  Stipulation  and
Settlement,  the consummation of the merger transaction with Sandata Acquisition
Corp. for $2.21 per share of Company  common stock,  final approval of the Court
of the settlement,  including certification of a class, and the dismissal of the
consolidated actions by the Court. The Memorandum also provides that, subject to
approval of the Court,  none of the defendants  will object to an application by
plaintiff's  counsel for attorneys' fees and expenses in an amount not to exceed
$60,000.  The  Company is unable to predict  the  outcome  of this  matter  and,
accordingly,  no  adjustments  have  been  made  in the  condensed  consolidated
financial statements in response to this matter.

 
                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES

        ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

     Revenues were  $4,015,581 and $8,537,503 for the three and six months ended
November 30, 2002 as compared to $4,350,890 and $8,875,554 for the three and six
months ended  November 30, 2001, a decrease of $335,309 or 8% and $338,051 or 4%
respectively.  The  decreases  are primarily due to the decreases in service fee
revenue and other income.

     Service fee revenue for the three and six months  ended  November  30, 2002
was  $3,906,524  and $8,305,350 as compared to $4,137,580 and $8,529,906 for the
three and six months  ended  November 30, 2001 a decrease of $231,056 or 6%, and
$224,558 or 3% respectively. The decrease in service fee revenue is attributable
to  decreases  in  technology  infrastructure  and  outsourcing  of $204,100 and
$595,243,  information technology $294,598 and $102,663,  offset by increases in
telephone-based data collection of $280,628 and $474,336,  for the three and six
months ended November 30, 2002, respectively.

     Other  income  for the three and six months  ended  November  30,  2002 was
$67,543 and  $147,063 as compared to $168,467 and $267,209 for the three and six
months ended  November 30, 2001. The decrease is  attributable  to a decrease in
income recognized on sales/leaseback transactions.

Expenses Related to Services

     Operating  expenses were  $2,185,718  and  $4,882,348 for the three and six
months ended  November 30, 2002 as compared to $2,328,035 and $5,042,118 for the
three and six months  ended  November  30,  2001,  a decrease  of  $142,317  and
$159,770, respectively. Decreased equipment rentals and decreased payroll costs,
as  discussed  further  below,  are the  primary  reasons for the  reduction  in
operating expenses.

     Selling, general and administrative expenses were $1,265,934 and $2,529,002
for the three and six months ended  November 30, 2002, as compared to $1,329,139
and  $2,979,309 for the three and six months ended November 30, 2001, a decrease
of $63,205  and  $450,307,  respectively.  The  decrease is  primarily  due to a
decrease in payroll,  as discussed  further below,  partially offset by expenses
related to the Company going private (see Note 9).

     On  August  9,  2001  the  Company  announced  that it had  terminated  the
employment  of  Stephen  Davies  as  President  of the  Company,  and  would  be
terminating  approximately  30 other  employees.  Under the terms of Mr. Davies'
Employment  Agreement,  he is entitled to a severance  payment  equal to six (6)
months' base salary,  or $100,000,  and has 90 days from the date of termination
to exercise the 66,673 options that were vested on that date. The elimination of
approximately  30  positions  from  within  the  Company  and  its  subsidiaries
generated  approximately  $1.7  million  in  reduced  expenses  and  capitalized
software.  In  addition,  the Company  paid  approximately  $47,000 in severance
payments for approximately 30 terminated employees.

     Depreciation and amortization  expense were $510,378 and $1,009,880 for the
three and six months  ended  November  30,  2002 as  compared  to  $455,875  and
$883,737  for the three and six months  ended  November  30, 2001 an increase of
$54,503 and $126,143,  respectively.  The increase was primarily attributable to
the  write-off of  developed  software  that  occurred in the year ended May 31,
2001, which resulted in decreased  amortization  expense in last year's quarter,
as well as additional  fixed assets being amortized  during the six months ended
November 30, 2002.

     Interest expense was $32,096 and $77,851 for the three and six months ended
November  30, 2002 as compared  to $72,068  and  $149,747  for the three and six
months  ended  November  30,  2001.  The  decrease  was a  result  of  decreased
borrowings on the Company's Credit  Agreement,  and the decrease in the rate due
to market conditions.

Income Tax Expenses (Benefit)

     Income tax expense for the three and six months ended November 30, 2002 was
$12,253 and $36,350,  respectively,  as compared to income tax expense (benefit)
of $81,741 and ($88,438)  for the three and six months ended  November 30, 2001,
respectively.  The  increase  in income tax  expense  for the six  months  ended
November  30,  2002 as  compared to the six months  ended  November  30, 2001 is
primarily due to the decrease in the deferred tax asset.  The deferred tax asset
primarily  decreased due to the decrease in the net  operating  loss utilized in
the deferred tax  calculation.  The Company had taxable  income that  utilized a
portion of its net operating loss during the six months ended November 30, 2002.

Liquidity and Capital Resources

     The  Company  has a working  capital  deficit as of  November  30,  2002 of
$2,269,617,  as compared to working  capital of $1,890,988 at May 31, 2002.  The
primary  factor  is a  result  of net  repayments  of the  Credit  Agreement  of
$1,750,000 and the Credit  Agreement  becoming a short-term  liability  versus a
long-term liability, of which $2,750,000 is due in June 2003.

     For the three and six months ended  November 30,  2002,  the Company  spent
approximately $405,000 and $671,000 in fixed asset additions,  of which $228,000
and $457,000 respectively,  was for software  capitalization costs in connection
with revenue growth and new product development. The Company expects the current
levels of capital expenditures to continue.

     On July 14, 1998, the Chairman,  certain  officers,  directors and a former
director  and the  spouse  of an  officer  and an  employee  of  Sandsport  Data
Services, Inc. ("Sandsport"),  the Company's wholly owned subsidiary,  exercised
their respective options and warrants to purchase an aggregate of 921,334 shares
of Common Stock at exercise  prices ranging from $1.38 to $2.61 per share for an
aggregate cost of $1,608,861. Payment for such shares was made to the Company in
the amount of $921  representing  the par value of the shares,  and a portion in
the form of  non-recourse  promissory  notes due in July 2001,  with interest at
eight and one-half percent (8-1/2%) per annum, payable annually,  and secured by
the number of shares  exercised.  On July 14, 2001, the Company agreed to extend
the due dates of such notes for one hundred twenty days until November 11, 2001.
On November 9, 2001,  the Company agreed to substitute  full recourse  unsecured
Notes for the Notes it had previously  accepted in connection  with these option
and warrant  exercises.  Such notes will bear  interest at the rate of eight and
one-half percent (8 1/2%) per annum, payable annually, with the principal amount
of each such Note,  plus any  accrued  and unpaid  interest,  due and payable on
November 9, 2004.

     As of December 1, 2001,  the interest  rate on the notes was changed to six
percent  (6%) per annum,  and the  shares and note of the spouse of the  officer
were both transferred to the officer. During the year ended May 31, 2002, 24,667
shares of common stock were  surrendered by a former director and an employee in
settlement  of notes in the amount of $37,962.  As of  November  30,  2002,  the
outstanding  balance on such notes,  including  principal and accrued but unpaid
interest, was $1,505,646.

     On April 18,  1997,  the  Company's  wholly  owned  subsidiary,  Sandsport,
entered into a revolving  credit  agreement (the "Credit  Agreement")  with HSBC
Bank USA, which allows  Sandsport to borrow  amounts up to $3,000,000.  Interest
accrues on amounts outstanding under the Credit Agreement at a rate equal to the
London Interbank  Offered Rate plus 2% and will be paid quarterly in arrears or,
at Sandsport's option,  interest may accrue at the Bank's prime rate. The Credit
Agreement requires Sandsport to pay a fee equal to 1/4% per annum payable on the
unused average daily balance of amounts under the Credit Agreement. In addition,
there are other  fees and  charges  imposed  based upon  Sandsport's  failure to
maintain certain minimum balances.  The Credit Agreement has been amended by the
Bank to permit  Sandsport to borrow amounts up to $4,500,000  until February 14,
2003.  Interest accrues at the same rate as the original Credit  Agreement.  The
indebtedness  under the  Credit  Agreement  is  guaranteed  by the  Company  and
Sandsport's  sister  subsidiaries  (the "Group").  All of the Group's assets are
pledged to the Bank as  collateral  for amounts due under the Credit  Agreement,
which pledge is secured by a first lien on all equipment owned by members of the
Group,  as well as a  collateral  assignment  of  $2,000,000  of life  insurance
payable on the life of the Company's Chairman.  The Group's guaranty to the Bank
was  modified to include  all  indebtedness  incurred  by the Company  under the
Credit  Agreement.  On April 11, 2002,  the Bank  approved the  extension of the
termination  date of the Credit  Agreement  to June 14, 2003 (from  February 14,
2003).

     In  addition,  pursuant to the Credit  Agreement,  the Group is required to
maintain  certain  levels  of net  worth and meet  certain  financial  ratios in
addition to various other affirmative and negative  covenants.  As of August 24,
2001,  Sandsport,  the Company and the other members of the Group, and the Bank,
entered  into the Third  Amendment  and Waiver  (the "Third  Amendment")  to the
Credit Agreement. Pursuant to the Third Amendment,  Sandsport's covenants to the
Bank to maintain a certain net worth and to maintain  certain  financial  ratios
were revised, on a going-forward  basis, and the noncompliance with the existing
covenants  was waived by the Bank.  In addition,  in  connection  with the Third
Amendment,  Sandsport and each member of the Group executed and delivered to the
Bank a Collective Amended and Restated Security Agreement, pursuant to which the
Bank's security  interest was extended to include a security  interest in all of
the personal and fixture  property of Sandsport,  the Company and the members of
the Group. On October 23, 2001 the Credit  Agreement was amended with respect to
one of the financial ratios, at the Company's request.  At November 30, 2002 the
Group failed to meet the working  capital  requirement of the Credit  Agreement,
and the Bank  granted the Group a waiver.  In the past,  the Group has failed to
meet  certain of the  financial  ratios,  and the Bank has  granted  the Group a
waiver.  There can be no assurance  that the Bank will continue to grant waivers
if the Group  fails to meet the net worth and  financial  ratios in the  future.
Management  does not  anticipate  any  problems in  renewing  the line of credit
and/or negotiating  alternative debt financing. If such waivers are not granted,
any loans  outstanding  under the Credit  Agreement  become  immediately due and
payable, which may have an adverse effect on the Company's business,  operations
or financial condition.  As of November 30, 2002, the outstanding balance on the
Credit Agreement with the Bank was $2,750,000.

     The Company believes the results of its continued operations, together with
the  available  credit line,  should be adequate to fund  presently  foreseeable
working capital requirements.



                   SANDATA TECHNOLIGIES, INC. AND SUBSIDIARIES

                         ITEM 3-PROCEDURES AND CONTROLS


     Within the 90 days prior to the date of this  report,  the Company  carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's  management,  primarily Bert Brodsky,  the Company's  Chief  Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation  of the  Company's  disclosure  controls  and  procedures  pursuant to
Exchange  Act Rule  13a-14.  Based  upon that  evaluation,  the Chief  Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and procedures are effective.  There were no significant changes in the
Company's internal controls or in other factors that could significantly  affect
these controls subsequent to the date of their evaluation.






                   SANDATA TECHNOLOGIES, INC. AND SUBSIDIARIES


PART II - OTHER INFORMATION


Item 1  - LEGAL PROCEEDINGS

     Reference is made to Notes 6 and 9 to the Condensed  Consolidated Financial
Statements comprising Part I, Item 1 of this Form 10-QSB.

Item 2  - CHANGES IN SECURITIES

     The Company's  ability to declare and pay dividends is restricted  pursuant
to the terms of a Revolving  Credit  Agreement  dated April 18, 1997 between the
company and HSBC Bank USA,  formerly Marine Midland Bank (the "Bank"),  and also
under the terms of the  Guaranty  Agreement  dated June 1, 1994 by and among the
Company  (as a  guarantor),  BFS  Realty,  LLC (an  affiliate  of the  Company's
Chairman), and the Bank (among others). The Guarantee Agreement was entered into
in  connection  with the  IDA/SBA  Financing  discussed  in Item 6 of the Annual
Report on Form  10-KSB  for the year ended May 31,  2002,  filed with the SEC on
August 27, 2002.

Item 3  - DEFAULTS UPON SENIOR SECURITIES

None

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

None

Item 5  - OTHER INFORMATION

None

Item 6  - EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

99.1     Certification Pursuant to Sarbanes Oxley Act, Section 302

99.2     Certification Pursuant to Sarbanes Oxley Act, Section 906

         (b) Reports on Form 8-K

                1.  Current Report on Form 8-K filed September 18, 2002
                    reporting under Item 5 the Company's acceptance of a
                    proposal to engage in a going private transaction, subject
                    to the conditions specified in the press release
                    comprising an Exhibit to the Report.

                2.  Current Report on Form 8-K filed November 4, 2002 reporting
                    under Item 5 that the Company entered into an Agreement
                    and Plan of Merger dated as of October 28, 2002 by and
                    between the Company, Sandata Acquisition Corp., Bert E.
                    Brodsky, Hugh Freund and Gary Stoller, subject to the
                    terms and conditions specified in the Merger Agreement and
                    press release comprising Exhibits to the Report.




                                  SIGNATURES


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



                                          SANDATA TECHNOLOGIES, INC.
                                                (Registrant)



Date: January 14, 2003                       By: /s/ Bert E. Brodsky
                                                     -----------------------
                                                     Bert E. Brodsky
                                                     Chairman of the Board,
                                                     Chief Executive Officer,
                                                     Chief Financial Officer



                                                                   EXHIBIT 99.1

                                  CERTIFICATION

     I, Bert E. Brodsky,  Chief Executive  Officer and Chief Financial  Officer,
certify that:

     1. I have  reviewed  this  quarterly  report  on  Form  10-QSB  of  Sandata
Technologies, Inc. and its Subsidiaries;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report; and

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects  the  financial  condition,  results  of  operations  and cash flows of
Sandata  Technologies,  Inc.  and its  Subsidiaries  as of, and for, the periods
presented in this quarterly report.

     4. As both  Chief  Executive  Officer  and Chief  Financial  Officer,  I am
responsible for establishing and maintaining  disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant,  and I
have:

          a) designed  such  disclosure  controls and  procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  me by  others  within  those  entities,
     particularly during the period in which this quarterly is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  my  conclusions  about  the
     effectiveness  of  the  disclosure  controls  and  procedures  based  on my
     evaluation as of the Evaluation Date;

     5. As both  Chief  Executive  Officer  and Chief  Financial  Officer I have
disclosed,  based on my most recent evaluation, to the registrant's auditors and
the audit  committee of registrant's  board of directors (or persons  performing
the equivalent function):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data, and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     controls; and

     6. As both Chief  Executive  Officer and Chief  Financial  Officer,  I have
indicated in this quarterly report whether or not there were significant changes
in  internal  controls  subsequent  to the  date of my most  recent  evaluation,
including any  corrective  actions with regard to significant  deficiencies  and
material weaknesses.


 Date: January 14, 2003                  /s/Bert E. Brodsky
                                            ----------------------------------
                                            Bert E. Brodsky, Chief Executive
                                            Officer and Chief Financial Officer



                                                                EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Sandata Technologies,  Inc. (the
"Company") on Form 10-Q for the period ended November 30, 2002 as filed with the
Securities and Exchange  Commission on the date hereof (the  "Report"),  Bert E.
Brodsky,  Chief Executive  Officer and Chief  Financial  Officer of the Company,
certifies, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.

 January 14, 2003               /s/Bert E. Brodsky
                                   ------------------------------
                                   Bert E. Brodsky
                                   Chief Executive Officer
                                     and Chief Financial Officer





                                                                    APPENDIX I


                                UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934.

                     For the period ended November 30, 2002

[  ] Transition report pursuant to Section 13 or 15(d) of the
        Securities Exchange Act of 1934.

For the transition period from        to
                               -------    ---------

                         Commission file number 0-14401

                           SANDATA TECHNOLOGIES, INC.
              (Exact name of small business issuer in its charter)

       DELAWARE                                      11-2841799
 (State or other jurisdiction of       (I.R.S. Employer Identification No.)
incorporation or organization)

                              26 Harbor Park Drive,
                               Port Washington, NY
                    (Address of principal executive offices)
                                      11050
                                   (Zip Code)

         Issuer's telephone number, including area code: (516) 484-4400

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

Yes        X               No
    ----------------           -------------

                               APPLICABLE ONLY TO
                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

         Check whether the issuer has filed all documents and reports required
to be filed by section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

Yes____       No____

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         The number of shares outstanding of each of the issuer's classes of
common equity, as of January 12, 2003 was 2,481,808.

         Transitional Small Business Disclosure Format (check one):

Yes____     No    X
            -------

                                      I-1





                          AMENDMENT TO QUARTERLY REPORT
                                 ON FORM 10-QSB
                     FOR THE QUARTER ENDED NOVEMBER 30, 2002

     The  Quarterly  Report on Form 10-QSB for Sandata  Technologies,  Inc.  and
Subsidiaries  (the  "Company") for the quarter ended November 30, 2002 is hereby
amended  and  restated to the  extent,  and only to the extent of  amending  the
following sections of the items.

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. SHAREHOLDERS' EQUITY

         Stock Options

     On July 14, 1998, the Chairman,  certain officers,  directors, and a former
director  (Bert E.  Brodsky,  Hugh Freund and Gary Stoller) and the spouse of an
officer,  Carol  Freund (who is an employee of  Sandsport  Data  Services,  Inc.
("Sandsport"),   the  Company's  wholly  owned   subsidiary),   exercised  their
respective  options and warrants to purchase an  aggregate of 921,334  shares of
Common  Stock.  The exercise  prices ranged from $1.38 to $2.61 per share for an
aggregate cost of $1,608,861. Payment for such shares was made to the Company in
the amount of $921  representing  the par value of the shares,  and a portion in
the form of  non-recourse  promissory  notes due in July 2001,  with interest at
eight and one-half percent (8 1/2%) per annum, payable annually,  and secured by
the number of shares  acquired  ("Non-recourse  Notes").  On July 14, 2001,  the
Company agreed to extend the due dates of the Non-recourse Notes for one hundred
twenty  days.  On  November 9, 2001,  the due date of the notes was  extended to
November 9, 2004 and the Company  agreed to substitute  full recourse  unsecured
notes ("Recourse Notes") for the Non-recourse Notes it had previously  accepted.
The Recourse  Notes bear  interest at the rate of eight and one-half  percent (8
1/2%) per annum,  payable  annually,  with the principal amount of each Recourse
Note, plus any accrued and unpaid interest, due and payable on November 9, 2004.

     Effective  December 1, 2001,  the interest  rate on the Recourse  Notes was
changed to six  percent  (6%) per annum to reflect  fair market  value,  and the
shares and Recourse Note of the spouse of an officer,  Carol  Freund,  were both
transferred to the officer.

     During  the year ended May 31,  2002,  24,667  shares of common  stock were
surrendered by a former  director and an employee in settlement of  Non-recourse
Notes in the  amount of  $37,962.  As of  November  30,  2002 , the  outstanding
balance on Recourse Notes,  including principal and accrued but unpaid interest,
was $1,505,646. On August 22, 2002, the Chairman repaid $100,000 of his Recourse
Note.

6. COMMITMENTS AND CONTINGENCIES

         Litigation

     a. In August of 1999, the Company's wholly-owned subsidiary, Sandsport Data
Services,  Inc.  ("Sandsport")  was named as a defendant in Greater Bright Light
Home Care Services,  Inc. et al. v. Joseph  Jeffries-El,  El Equity Corporation,
Sandsport  Data Services,  Inc. et al.  (Supreme Court of the State of New York,
Kings  County).  Greater  Bright  Light Home Care  Services,  Inc.  ("GBL") is a
not-for-profit  corporation  that was  organized  to render home care  attendant
services to individuals  selected as eligible recipients by the City of New York
acting  through  the  Department  of  Social  Services  of the  Human  Resources
Administration ("HRA").  Pursuant to its agreement with HRA, GBL was entitled to
reimbursement  checks  from the New York  State  Department  of Health  Medicaid
Management  Information  System for the  services it provided  ("MMIS  Checks").
Before  GBL could  provide  home care  attendant  services  it was  required  to
demonstrate  to HRA that it  obtained  a $1.2  million  line of  credit.  Joseph
Jeffries El  represented  to GBL that he would  provide it with the $1.2 million
line of credit  that HRA  required  in  exchange  for an annual fee of  $120,000
payable in twelve equal monthly installments of $10,000. GBL and Joseph Jeffries
El's company,  El Equity  Corporation ("El Equity"),  thereafter entered into an
Escrow  Agreement  pursuant  to which El Equity  was to receive a portion of the
funds  received  from MMIS.  The MMIS checks were to be deposited in a specified
account at Marine Midland Bank. GBL alleged that El Equity  misappropriated  the
MMIS funds.  GBL further  alleged that El Equity  breached the Escrow  Agreement
because it failed to provide GBL with the $1.2 million line of credit.

     Sandsport  had been  retained by GBL to pick up its MMIS checks and deposit
them in a designated  account at Marine  Midland  Bank.  El Equity  alleged that
Sandsport's agreement with GBL prohibited it from depositing the MMIS funds into
any other account absent written  instructions signed by both GBL and El Equity.
El Equity  alleged that  Sandsport,  pursuant to GBL's  instructions,  deposited
certain MMIS checks into an account other than the designated account. El Equity
therefore  asserted  cross-claims  against  Sandsport for breach of contract and
conversion.  Although Sandsport is named as a defendant,  the complaint seeks no
affirmative  relief  against  Sandsport.   Co-defendant  Citibank  has  asserted
indemnification  claims  against  Sandsport  and  all of the  other  defendants.
Sandsport  disputes all liability and has denied any  wrongdoing.  However,  the
Company is unable to predict the  outcome of these  claims and  accordingly,  no
adjustments have been made in the consolidated  financial statements in response
to these claims.

     b. On March 1, 2000,  Dataline,  Inc.  ("Dataline") began a lawsuit against
MCI WorldCom  Network  Services,  Inc. ("MCI") and the Company for alleged trade
libel and related  counts,  in the United States District Court for the Southern
District of New York. The court dismissed that lawsuit,  with prejudice,  on May
23, 2002. On May 4, 2001 MCI had brought a patent  infringement  lawsuit against
Dataline,  alleging that it was  infringing  three MCI patents,  under which the
Company  has an  exclusive  license in New York City.  Shortly  thereafter,  the
Company  joined  MCI in the suit  against  Dataline.  Pursuant  to a  Settlement
Agreement  dated  January  1, 2002 among MCI,  its  parent  (MCI  Communications
Corporation),  the Company, and Dataline, Dataline acknowledged the validity and
enforceability of the 3 MCI-owned patents that were the subject of the lawsuits.
There were no payments  from either MCI or the Company to  Dataline.  As part of
the settlement, Dataline agreed to pay the Company $100,000 in cash and issue an
8%  promissory  note  in the  amount  of  $721,000.  Due to the  uncertainty  of
realization of the note receivable, the Company is recognizing the income on the
note using the  installment  method of accounting.  For the three and six months
ended November 30, 2002, the Company has  recognized  approximately  $45,000 and
$90,000 respectively,  of income. In addition, Sandata and Dataline entered into
an Exclusive  Service  Agreement by which  Dataline  agreed to use the Company's
"call capture infrastructure" for all of Dataline's time and attendance systems,
and to pay  royalties to the Company for such use.  The terms of the  settlement
also included mutual releases.

     c. By letter dated June 26, 2002, a former employee of the Company asserted
claims for back wages of $410,000.  The letter,  from the  employee's  attorney,
also contained allegations of age discrimination and retaliatory discharge.  The
letter also  contained an offer of  settlement.  No formal  litigation  has been
started and the Company intends to pursue settlement  negotiations.  A provision
of  $200,000 is included in accrued  expenses  relating to the  asserted  claim,
which represents the Company's best estimate of costs to be incurred. The amount
of the ultimate cost may vary from this estimate.

     d.  For  description  of  the  going  private   transaction,   and  of  the
class-action lawsuits initiated in connection with such transaction, see Note 9.

         Royalty Agreement

     The Company has been granted a license under certain of MCI's patents which
permits  the  Company  to  continue  to  market  and sell its  SANTRAX  time and
attendance verification product non-exclusively  nationwide,  and exclusively in
the home health care  industries  for the five New York  boroughs,  and that the
Company will pay MCI certain royalties, on a per call basis. The license remains
in  effect  until the last to expire  of  various  patents  held by MCI or until
October 19, 2010, whichever is later.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Liquidity and Capital Resources

     The  Company  has a working  capital  deficit as of  November  30,  2002 of
$2,269,617,  as compared to working  capital of $1,890,988 at May 31, 2002.  The
primary  factor  is a  result  of net  repayments  of the  Credit  Agreement  of
$1,750,000 and the Credit  Agreement  becoming a short-term  liability  versus a
long-term liability, of which $2,750,000 is due in June 2003.

     For the three and six months ended  November 30,  2002,  the Company  spent
approximately $405,000 and $671,000 in fixed asset additions,  of which $228,000
and $457,000 respectively,  was for software  capitalization costs in connection
with revenue growth and new product development. The Company expects the current
levels of capital expenditures to continue.

     On July 14,  1998,  the  Chairman,  certain  officers,  directors  (Bert E.
Brodsky,  Hugh Freund and Gary Stoller) and a former  director and the spouse of
an officer and an employee of Sandsport Data Services, Inc.  ("Sandsport"),  the
Company's  wholly owned  subsidiary,  Carol Freund,  exercised their  respective
options and warrants to purchase an aggregate of 921,334  shares of Common Stock
at exercise  prices  ranging from $1.38 to $2.61 per share for an aggregate cost
of $1,608,861.  Payment for such shares was made to the Company in the amount of
$921  representing  the par value of the  shares,  and a portion  in the form of
non-recourse  promissory  notes due in July  2001,  with  interest  at eight and
one-half percent (8-1/2%) per annum, payable annually, and secured by the number
of shares  exercised.  On July 14,  2001,  the Company  agreed to extend the due
dates of such notes for one hundred  twenty days until  November  11,  2001.  On
November 9, 2001, the Company agreed to substitute full recourse unsecured Notes
for the Notes it had  previously  accepted in  connection  with these option and
warrant  exercises.  Such  notes  will  bear  interest  at the rate of eight and
one-half percent (8 1/2%) per annum, payable annually, with the principal amount
of each such Note,  plus any  accrued  and unpaid  interest,  due and payable on
November 9, 2004.

     As of December 1, 2001,  the interest  rate on the notes was changed to six
percent (6%) per annum, to reflect fair market value, and the shares and note of
the spouse of the officer,  Carol Freund,  were both transferred to the officer.
During  the year  ended  May 31,  2002,  24,667  shares  of  common  stock  were
surrendered  by a former  director and an employee in settlement of notes in the
amount of $37,962.  As of November 30,  2002,  the  outstanding  balance on such
notes, including principal and accrued but unpaid interest, was $1,505,646.

     On April 18,  1997,  the  Company's  wholly  owned  subsidiary,  Sandsport,
entered into a revolving  credit  agreement (the "Credit  Agreement")  with HSBC
Bank USA, which allows  Sandsport to borrow  amounts up to $3,000,000.  Interest
accrues on amounts outstanding under the Credit Agreement at a rate equal to the
London Interbank  Offered Rate plus 2% and will be paid quarterly in arrears or,
at Sandsport's option,  interest may accrue at the Bank's prime rate. The Credit
Agreement requires Sandsport to pay a fee equal to 1/4% per annum payable on the
unused average daily balance of amounts under the Credit Agreement. In addition,
there are other  fees and  charges  imposed  based upon  Sandsport's  failure to
maintain certain minimum balances.  The Credit Agreement has been amended by the
Bank to permit  Sandsport to borrow amounts up to $4,500,000  until February 14,
2003.  Interest accrues at the same rate as the original Credit  Agreement.  The
indebtedness  under the  Credit  Agreement  is  guaranteed  by the  Company  and
Sandsport's  sister  subsidiaries  (the "Group").  All of the Group's assets are
pledged to the Bank as  collateral  for amounts due under the Credit  Agreement,
which pledge is secured by a first lien on all equipment owned by members of the
Group,  as well as a  collateral  assignment  of  $2,000,000  of life  insurance
payable on the life of the Company's Chairman.  The Group's guaranty to the Bank
was  modified to include  all  indebtedness  incurred  by the Company  under the
Credit  Agreement.  On April 11, 2002,  the Bank  approved the  extension of the
termination  date of the Credit  Agreement  to June 14, 2003 (from  February 14,
2003).

     In  addition,  pursuant to the Credit  Agreement,  the Group is required to
maintain  certain  levels  of net  worth and meet  certain  financial  ratios in
addition to various other affirmative and negative  covenants.  As of August 24,
2001,  Sandsport,  the Company and the other members of the Group, and the Bank,
entered  into the Third  Amendment  and Waiver  (the "Third  Amendment")  to the
Credit Agreement. Pursuant to the Third Amendment,  Sandsport's covenants to the
Bank to maintain a certain net worth and to maintain  certain  financial  ratios
were revised, on a going-forward  basis, and the noncompliance with the existing
covenants  was waived by the Bank.  In addition,  in  connection  with the Third
Amendment,  Sandsport and each member of the Group executed and delivered to the
Bank a Collective Amended and Restated Security Agreement, pursuant to which the
Bank's security  interest was extended to include a security  interest in all of
the personal and fixture  property of Sandsport,  the Company and the members of
the Group. On October 23, 2001 the Credit  Agreement was amended with respect to
one of the financial ratios, at the Company's request.  At November 30, 2002 the
Group failed to meet the working  capital  requirement of the Credit  Agreement,
and the Bank  granted the Group a waiver.  In the past,  the Group has failed to
meet  certain of the  financial  ratios,  and the Bank has  granted  the Group a
waiver.  There can be no assurance  that the Bank will continue to grant waivers
if the Group  fails to meet the net worth and  financial  ratios in the  future.
Management  does not  anticipate  any  problems in  renewing  the line of credit
and/or negotiating  alternative debt financing. If such waivers are not granted,
any loans  outstanding  under the Credit  Agreement  become  immediately due and
payable, which may have an adverse effect on the Company's business,  operations
or financial condition.  As of November 30, 2002, the outstanding balance on the
Credit Agreement with the Bank was $2,750,000.

     The Company believes the results of its continued operations, together with
the  available  credit line,  should be adequate to fund  presently  foreseeable
working capital requirements.






                                  SIGNATURES




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



                                             SANDATA TECHNOLOGIES, INC.
                                                  (Registrant)



Date: January 28, 2003                       By: /s/ Bert E. Brodsky
                                                 -------------------------------
                                                     Bert E. Brodsky
                                                     Chairman of the Board,
                                                     Chief Executive Officer,
                                                     Chief Financial Officer





                                  CERTIFICATION

     I, Bert E. Brodsky,  Chief Executive  Officer and Chief Financial  Officer,
certify that:

          1. I have  reviewed  this amended  quarterly  report on Form 10-QSB of
     Sandata Technologies, Inc. and its Subsidiaries;

          2. Based on my  knowledge,  this  amended  quarterly  report  does not
     contain any untrue statement of a material fact or omit to state a material
     fact necessary to make the statements  made, in light of the  circumstances
     under which such  statements  were made, not misleading with respect to the
     period covered by this quarterly report; and

          3. Based on my knowledge,  the financial  information included in this
     amended  quarterly  report,  fairly  present in all  material  respects the
     financial  condition,  results  of  operations  and cash  flows of  Sandata
     Technologies,  Inc.  and its  Subsidiaries  as of,  and  for,  the  periods
     presented in this quarterly report.

          4. As both Chief Executive Officer and Chief Financial  Officer,  I am
     responsible  for  establishing  and  maintaining  disclosure  controls  and
     procedures  (as  defined in Exchange  Act Rules  13a-14 and 15d-14) for the
     registrant, and I have:

               a) designed  such  disclosure  controls and  procedures to ensure
          that material  information  relating to the registrant,  including its
          consolidated subsidiaries,  is made known to me by others within those
          entities,  particularly  during the period in which this  quarterly is
          being prepared;

               b) evaluated the  effectiveness  of the  registrant's  disclosure
          controls  and  procedures  as of a date  within  90 days  prior to the
          filing date of this quarterly report (the "Evaluation Date"); and

               c) presented in this quarterly  report my  conclusions  about the
          effectiveness  of the disclosure  controls and procedures  based on my
          evaluation as of the Evaluation Date;

          5. As both Chief Executive  Officer and Chief Financial Officer I have
     disclosed, based on my most recent evaluation, to the registrant's auditors
     and the audit  committee of  registrant's  board of  directors  (or persons
     performing the equivalent function):

               a) all  significant  deficiencies  in the design or  operation of
          internal  controls  which  could  adversely  affect  the  registrant's
          ability to record,  process,  summarize and report financial data, and
          have identified for the registrant's  auditors any material weaknesses
          in internal controls; and

               b) any fraud,  whether or not material,  that involves management
          or other  employees  who have a significant  role in the  registrant's
          internal controls; and

          6. As both Chief Executive Officer and Chief Financial Officer, I have
     indicated in this quarterly  report  whether or not there were  significant
     changes  in  internal  controls  subsequent  to the date of my most  recent
     evaluation,  including any  corrective  actions with regard to  significant
     deficiencies and material weaknesses.


  Date: January 28, 2003                     /s/Bert E. Brodsky
                                              ----------------------------------
                                               Bert E. Brodsky,
                                                Chief Executive Officer
                                                and Chief Financial Officer




                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Sandata Technologies,  Inc. (the
"Company") on Form 10-Q for the period ended November 30, 2002 as filed with the
Securities and Exchange  Commission on the date hereof (the  "Report"),  Bert E.
Brodsky,  Chief Executive  Officer and Chief  Financial  Officer of the Company,
certifies, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.


       /s/Bert E. Brodsky
          Bert E. Brodsky
          Chief Executive Officer and Chief Financial Officer
          January 28, 2003