10QSB 1 usw12310410q.htm DECEMBER 31, 2004 FORM 10-QSB U.S. Wireless Data, Inc.--December 31, 2004 Form 10-QSB

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

[X]

Quarterly Report under Section 13 or Section15 (d) of the Securities Exchange Act of 1934
for the quarterly period ended December 31, 2004

[ ]

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-22848

U.S. Wireless Data, Inc.
(Exact name of small business issuer as specified in its charter)

Delaware
(State of incorporation)

84-1178691
(IRS Employer Identification No.)

420 Lexington Avenue, Suite 2450
New York, NY 10170
(Address of principal executive offices, including zip code)

(646) 452-6128
(Registrant’s Telephone Number, including area code)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes [ ] No [X]

As of March 17, 2005, there were outstanding 18,159,556 shares of the Registrant’s Common Stock ($0.01 par value per share).

Transitional Small Business Disclosure Format. Yes [ ] No [X]

U.S. WIRELESS DATA, INC.
TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheet as of
December 31, 2004	3
Consolidated Statements of Operations for the three and six months
ended December 31, 2004 and 2003	4
Consolidated Statements of Cash Flows for the six months ended
December 31, 2004 and 2003	5
Consolidated Statements of Stockholders’ Equity for
the year ended June 30, 2004 and the six months
ended December 31, 2004	6

Notes to Consolidated Financial Statements	7-	16
ITEM 2. Management’s Plan of Operation	17-	23
ITEM 3. Controls and Procedures	23
PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings	24
ITEM 2. Changes in Securities and Small Business
Issuer Purchases of Equity Securities	24
ITEM 3. Defaults Upon Senior Securities	24
ITEM 4. Submission of Matters to a Vote of Security Holders	24
ITEM 5. Other Information	25
ITEM 6. Exhibits	25
SIGNATURES	26

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
CONSOLIDATED BALANCE SHEET
(Unaudited)

	December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$ 460,000
Cash and cash equivalents in escrow	3,610,000
Accounts receivable	1,000
Due from winning auction sale bidder	64,000
Prepaids and other current assets	83,000

Total assets	$ 4,218,000


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 12,000
Accrued liabilities	856,000

Total liabilities not subject to compromise	868,000
Prepetition liabilities subject to compromise	2,533,000

Total liabilities	3,401,000

Commitments and contingencies
Stockholders’ equity:
Preferred stock, 25,000,000 shares authorized:
Series C convertible, at $.01 par value, liquidation value
$10.00 per share, aggregating $32,302,000; 8,450,000
shares authorized, 3,230,200 issued and outstanding	32,000
Common stock, 200,000,000 shares authorized at $.01 par value;
18,159,556 shares issued and outstanding	182,000
Additional paid-in capital	143,077,000
Accumulated deficit	(142,474,000	)

Total stockholders’ equity	817,000

Total liabilities and stockholders’ equity	$ 4,218,000

Accompanying notes are an integral part of the financial statements

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the three months ended December 31,				For the six months ended December 31,
	2004		2003		2004		2003
Continuing operations
General and administrative expenses	$ (420,000	)	$ --		$ (727,000	)	$ --
Interest income	9,000		1,000		24,000		2,000
Interest expense	5,000		(208,000	)	5,000		(284,000	)
Other income (expense)	(8,000	)	31,000		(9,000	)	58,000

Loss before reorganization items	(414,000	)	(176,000	)	(707,000	)	(224,000	)
Reorganization items
Professional fees and U.S. Trustee fees	(12,000	)	--		(69,000	)	--

Loss before discontinued operations	(426,000	)	(176,000	)	(776,000	)	(224,000	)

Discontinued operations
Loss from discontinued operations	(93,000	)	(1,339,000	)	(247,000	)	(2,622,000	)

Loss on discontinued operations	(93,000	)	(1,339,000	)	(247,000	)	(2,622,000	)

Net loss	$ (519,000	)	$(1,515,000	)	$(1,023,000	)	$(2,846,000	)


Basic and diluted net loss per share:
Loss before discontinued operations	$ (0.02	)	$ (0.01	)	$ (0.04	)	$ (0.01	)
Loss on discontinued operations	(0.01	)	(0.08	)	(0.02	)	(0.15	)

Net loss per share	$ (0.03	)	$ (0.09	)	$ (0.06	)	$ (0.16	)


Weighted average common shares outstanding,
basic and diluted	18,160,000		17,709,000		18,157,000		17,669,000

Accompanying notes are an integral part of the financial statements

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the six months ended December 31,
	2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(1,023,000	)	$(2,846,000	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization from discontinued operations	--		306,000
Accretion of bridge loan discount	--		152,000
Amortization of deferred financing costs	--		17,000
Provision for doubtful accounts	52,000		12,000
Deferred rent	--		7,000
Write-down of inventory	--		79,000
Changes in operating assets and liabilities:
Accounts receivable	(39,000	)	(14,000	)
Due from factor	63,000		65,000
Due from winning auction sale bidder	107,000		--
Inventory	--		(62,000	)
Deferred cost of revenue	--		(74,000	)
Prepaids and other current assets	287,000		27,000
Accounts payable	(26,000	)	104,000
Accrued liabilities	297,000		(22,000	)
Accrued restructuring expense	--		65,000
Customer advances	--		(236,000	)
Deferred revenue	--		128,000
Other liabilities	--		(138,000	)
Prepetition liabilities	52,000		--

Net cash (used in) operating activities	(230,000	)	(2,430,000	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	--		(160,000	)
Decrease in restricted cash	456,000		625,000
Transfer to Chapter 11 escrow accounts	(222,000	)	--

Net cash provided by investing activities	234,000		465,000

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bridge loan	--		2,540,000
Accrued interest on bridge loan	--		38,000
Financing costs of bridge loan	--		(90,000	)
Proceeds from notes payable	--		450,000
Payment of notes payable	--		(450,000	)
Payments for real estate lease termination	(456,000	)	(625,000	)
Payments of obligations under capital lease	--		(44,000	)

Net cash (used in) provided by financing activities	(456,000	)	1,819,000

Net (decrease) in cash and cash equivalents	(452,000	)	(146,000	)
Cash and cash equivalents, beginning of period	912,000		602,000

Cash and cash equivalents, end of period	$ 460,000		$ 456,000

Accompanying notes are an integral part of the financial statements

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the year ended June 30, 2004, and the six months ended December 31, 2004 (Unaudited)

	Series C Convertible Preferred Stock			Common Stock			Additional Paid-in		Accumulated		Total Stockholders’
	Shares		Amount		Shares	Amount	Capital		Deficit		Equity
BALANCE AT JUNE 30, 2003	3,548,700		$ 36,000		17,628,716	$176,000	$ 142,688,000		$(142,635,000	)	$ 265,000
Conversion of Series C convertible
preferred stock	(308,500	)	(4,000	)	514,173	5,000	(1,000	)	--		--
Issuance of warrants for bridge loan	--		--		--	--	780,000		--		780,000
Termination of warrants for bridge
loan	--		--		--	--	(390,000	)	--		(390,000	)
Net income	--		--		--	--	--		1,185,000		1,185,000

BALANCE AT JUNE 30, 2004	3,240,200		$ 32,000		18,142,889	$181,000	$ 143,077,000		$(141,450,000	)	$ 1,840,000
Conversion of Series C convertible
preferred stock	(10,000	)	--		16,667	1,000	--		(1,000	)	--
Net loss	--		--		--	--	--		(1,023,000	)	(1,023,000	)

BALANCE AT DECEMBER 31, 2004	3,230,200		$ 32,000		18,159,556	$182,000	$ 143,077,000		$(142,474,000	)	$ 817,000

Accompanying notes are an integral part of the financial statements

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

NOTE 1 — THE COMPANY

U.S. Wireless Data, Inc. (“USWD”, the “Company”, “we”, “us”, “our” or similar terms) was incorporated in the state of Colorado on July 30, 1991 and was reincorporated in the state of Delaware on October 6, 2000. We are operating under the Chapter 11 Proceedings (as defined below) and as of May 21, 2004, we sold all of our operations in the Auction Sales (as defined below). Subsequent to the Auction Sales, we do not have any assets or operations other than those related to the Chapter 11 Proceedings. Prior to that time, we were principally engaged in providing wireless transaction delivery and gateway services to the payment processing industry.

Going Concern, Liquidity Uncertainties and Chapter 11 Proceedings

Since the Company’s inception, the Company has incurred significant losses and negative cash flow from operations. As of December 31, 2004, we had an accumulated deficit of approximately $142 million. Management’s concerns about capital led it to take additional steps to cut costs, dispose of operations and, on March 26, 2004, we filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Court”), in re U.S. Wireless Data, Inc., Case Number 04-12075.

We are operating as a debtor-in-possession (“DIP”) under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court (the “Chapter 11 Proceedings”).

In connection with our bankruptcy filing, we issued a press release announcing that we had executed an agreement with NBS Synapse Corporation to sell our Synapse point-of-sale gateway business to NBS for $2.85 million in cash plus up to $2.15 million credit for free payment processing services to be rendered to us for our vending operations plus the assumption of certain liabilities. We simultaneously announced that we had reached an agreement with SANI Operating Co., LLC (“SANI”) to sell our vending operations, including the $2.15 million credit for free payment processing services from NBS, for $1.6 million in cash plus the assumption of certain liabilities. We had also arranged DIP financing with SANI in order to fund our ongoing operations during the bankruptcy process and through the closing of the sales of the operations. We drew $925,000 on the DIP loan at March 31, 2004 and $675,000 on May 7, 2004. Interest accrued on the DIP loan at a rate of 6% per annum. The DIP loan was repaid, with interest, on May 11, 2004 from a deposit of the proceeds of the Auction Sales.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

On May 11, 2004, we completed the bankruptcy auctions for the sale of (i) our Synapse point-of-sale gateway business, and (ii) our vending operations (collectively, the “Auction Sales”). Transaction Network Services (“TNS”) was awarded by the Court as the winning bidder for each of the operations offered for sale. TNS paid $6 million in cash for our wireless payment processing business and $3.7 million in cash for our wireless vending business, for an aggregate purchase price of $9.7 million in cash. The sales to TNS were completed on May 21, 2004.

The Court entered an order that established August 9, 2004 as the last date for each person or entity to file a proof of claim or preferred equity interest against us (the “Bar Date”). In addition, the Court established a separate date of September 23, 2004 for governmental units only to file a proof of claim (the “Governmental Bar Date”). We are analyzing the actual claims filed by creditors against the pre-petition liabilities accrued by us. In some individual instances and in total, claims filed by creditors are in excess of the amounts recorded by us, allowed under the law, or provided for by agreement. There is uncertainty as to the ultimate liability that will be allowed with creditors in the case, and the final liability that will be allowed at a future date may be significantly higher or lower than our current estimate. We intend to contest claims to the extent that they exceed the amounts we believe are due.

In September 2004, we filed a “Plan of Reorganization” and “Disclosure Statement” with the Court. On November 21, 2004, the Court approved an “Amended Disclosure Statement” and on December 21, 2004 held a hearing to consider confirmation of the Plan of Reorganization.

On December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the “Plan”). The Plan contemplates that the primary source of cash for distributions will be the proceeds from the aforementioned sale of our businesses and the cash contribution of Trinad Capital, L.P. (“Trinad”), the plan sponsor. Trinad will contribute $500,000 in cash to us in exchange for 93% of the new common stock to be issued under the Plan, with the remaining 7% of the new common stock being issued to the holders of record of our Series C Preferred Stock and our common stock as of February 7, 2005, with 3.5% going to each class. Of such $500,000 from Trinad, $400,000 will be added to the funds used to pay administrative costs, creditors and, possibly, a small portion of the liquidation preference. The remaining $100,000 will be retained by us to fund the expenses of remaining public. The Plan contemplates that all cash (other than the $100,000 to be retained by the reorganized debtor) will be placed in a liquidation trust (the “Liquidation Trust”) and, after the payment of administrative costs, will be used to pay our liabilities. If there is any remaining cash, it will be used to settle a small portion of the aggregate $32,302,000 liquidation preference to which the holders of our Series C Preferred Stock are entitled as of February 7, 2005.

The Plan also contemplates that the Liquidation Trust will pay for the prosecution of our pending litigation against AT&T Wireless. On February 20, 2004, we commenced arbitration proceedings against AT&T Wireless whereby we were seeking a $12 million judgment against AT&T Wireless relating to its decommissioning of the cellular digital packet data (CDPD) network. Any recoveries, net of the costs of prosecuting the arbitration and administering the trust, will be distributed by the Liquidation Trust as described above. On March 8, 2005 we submitted a Settlement and Release Agreement to the Court in order to settle this matter. Additional information is included in Note 10 – Subsequent Events.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

There is no assurance that there will be sufficient assets to satisfy all of our liabilities, or to pay any portion of the Series C Preferred liquidation preference. Our disclosure statement projected that available cash would be adequate to pay 70-80% of the unsecured claims made. However, we do plan to challenge certain of the claims and, if successful, of which there is no assurance, we may be able to pay 100% of such claims and retain a small surplus for payment of a small portion of the Series C Liquidation preference. Only holders of record of our Series C Preferred Stock as of February 7, 2005 will be entitled to receive any payments towards the Series C liquidation preference, or to receive any pro rata share of the new common stock allocated to Series C Preferred Stock. Cash distributions shall be made as soon as practicable, as determined by the trustee of the Liquidation Trust. Distributions of the new stock shall be made as soon as practicable after we make certain filings with the Securities and Exchange Commission (“SEC”) which were not made, in light of the uncertainties associated with the bankruptcy, in order to conserve cash. We anticipate that the remaining filing due is this report on Form 10-QSB. In light of the sale of our operating assets to TNS in May 2004, the information to be contained in such reports will be largely irrelevant to stockholders of the reorganized USWD.

Additional details concerning the Plan are in the Amended Disclosure Statement filed with the Court in November 2004 in support of the Plan, the Amended Plan of Reorganization and Order Confirming Amended Plan of Reorganization, each of which is filed as an exhibit to Form 8-K filed with the SEC on January 18, 2005.

As soon as practicable after we become current on our filings with the SEC, new common stock will be issued to Trinad (93%), holders of record of our Series C Preferred Stock as of February 7, 2005 (3.5%) and holders of record of our common stock as of the same date (3.5%). On that date, Robert Ellin and Jay Wolf shall become our sole Board members and shall also be our Chief Executive Officer and Chief Operating Officer, respectively, and Barry Regenstein will be our Chief Financial Officer. On that date, we will be capitalized with $100,000 of the $500,000 Trinad has paid, with the $400,000 having been transferred to the Liquidation Trust.

Trinad has advised us that it will seek to raise additional capital (which will dilute the ownership interests of all stockholders) with a view to making us an attractive vehicle with which to acquire a business. It will then seek a suitable acquisition candidate. No such business has been identified and we will be subject to a number of risks, including that any acquisition consummated by us may turn out to be unsuccessful; investors in us will not know what operating business, if any, will be acquired, including the particular industry in which the business operates, and whether dilutive financing will be required therewith; the historical operations of a specific business opportunity may not necessarily be indicative of the potential for the future; we may acquire a company in the early stage of development causing us to incur further risks; we may be dependent upon the management of an acquired business which has not proven its abilities or effectiveness; we will be controlled by a small number of stockholders and such control could prevent the taking of certain actions that may be beneficial to other stockholders; our common stock will likely be thinly traded, and the public market may provide little or no liquidity for holders of our common stock.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

Trinad has agreed that it will not dispose of any of its common stock until an acquisition transaction has been consummated and a Current Report on Form 8-K setting forth the terms of the acquisition and audited financial statements of the acquisition target have been filed with the SEC.

As a result of the sale of virtually all of our operating assets, the historical financial statements are irrelevant to any assessment of our operations on an ongoing basis. Accordingly, readers are advised not to rely on any historical financial information in considering an investment in or the disposition of our stock. After we emerge from bankruptcy, we will have no liabilities and extremely limited cash under new management. The Liquidation Trust will be entirely for the benefit of the holders of the Series C Preferred Stock as of the record date, after payment of administrative costs and allowed claims in accordance with the provisions of the Plan, and will not be an asset of the corporation.

Bridge Loan

Prior to the Petition Date, we partially financed our business through a factoring arrangement with Platinum Funding Corp. (“Platinum”). Our obligations to Platinum were secured by all of the Company’s assets. By the date of the Auction Sales, we had fully repaid this obligation and were released from the liens on our assets.

Also, prior to the bankruptcy filing, we financed our business through a $2.75 million bridge loan (the “Bridge Loan”) made by Brascan Financial Corporation (“Brascan”), a subsidiary of the Toronto, Canada-based Brascan Corporation. The Bridge Loan was secured by a lien upon and security interest in all of the Company’s assets. As part of the transaction, Platinum contractually subordinated its lien upon our assets (other than Accounts Receivable) to Brascan’s liens to the extent of $3,500,000. In connection with the Bridge Loan, Brascan received a warrant on September 16, 2003 exercisable for 10 million shares of our common stock at $.15 per share (the “Bridge Loan Warrant”). The Bridge Loan Warrant was subsequently amended and restated to 5 million shares as of the Petition Date. The Bridge Loan Warrant became exercisable on December 31, 2003 and was to expire in September 2008.

The Bridge Loan was repaid, with interest, on May 21, 2004 from the proceeds of the Auction Sales.

NOTE 2 – BASIS OF PRESENTATION

Basis of Consolidation and Auction Sales

Our consolidated financial statements include the accounts of our former wholly-owned subsidiary, UNS Corporation, formerly known as NXT Corporation (“NXT”). UNS Corporation was dormant during the period July 1, 2003 through its dissolution on December 11, 2003.

During March 2004, our Board of Directors approved and authorized management to seek the sale of our operations which were sold in the Auction Sales. We closed the sales of our operations included in the Auction Sales on May 21, 2004. Such operations have been classified as discontinued operations in the accompanying consolidated financial statements.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

Basis of Presentation and Use of Estimates

The accompanying financial statements have been prepared by us, without an audit. In the opinion of management, all adjustments have been made, which include normal recurring adjustments necessary to present fairly the consolidated financial statements. Operating results for the three and six months ended December 31, 2004 and 2003 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. We believe that the disclosures provided are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report for the year ended June 30, 2004 on Form 10-KSB.

The preparation of consolidated 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the financial statements for periods subsequent to the Chapter 11 filing petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, all pre-petition liabilities subject to compromise are separately classified. Additional pre-petition claims (liabilities subject to compromise) may arise due to the rejection of executory contracts or unexpired leases, or as a result of the allowance of contingent or disputed claims. Revenues, expenses, realized gains and losses and provision for losses resulting from the reorganization are reported separately as “Reorganization items” in the unaudited consolidated statements of operations.

Except for the reclassification of our “Prepetition liabilities subject to compromise” as current liabilities at December 31, 2004, the accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties nor do they reflect any adjustments that will result from SOP 90-7.

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business and in accordance with SOP 90-7.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

Stock-based Compensation

We account for employee stock-based compensation cost using the intrinsic value method of accounting prescribed by the Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”). The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock Based-Compensation” and SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” for employee stock arrangements. Restricted stock or stock awards are recorded as compensation expense over the vesting period, if any, based on the market value on the date of grant.

For options issued to non-employees, we utilize the fair value method prescribed in SFAS No. 123.

Prior to the effective date of the Plan, we had four fixed stock-based compensation plans. The exercise price of each option granted pursuant to these plans was equal to the market price of the Company’s common stock on the date of grant. Accordingly, pursuant to APB No. 25, no compensation cost has been recognized for such grants. Had compensation cost been determined based on the fair value at the grant dates for such awards consistent with the method prescribed by SFAS No. 123, the Company’s net loss and loss per share for the periods indicated would have been as follows:

	Three months ended December 31,				Six months ended December 31,
	2004		2003		2004		2003
Loss before discontinued operations	$ (426,000	)	$ (176,000	)	$ (776,000	)	$ (224,000	)
Loss on discontinued operations	(93,000	)	(1,339,000	)	(247,000	)	(2,622,000	)

Net loss, as reported	$ (519,000	)	(1,515,000	)	$ (1,023,000	)	(2,846,000	)
Deduct: Total stock-based
compensation expense determined
under fair value based method	(62,000	)	(198,000	)	(139,000	)	(753,000	)

Pro forma net loss	(581,000	)	(1,713,000	)	$ (1,162,000	)	(3,599,000	)


Per share, as reported
Before discontinued operations	$ (0.02)		$ (0.02)		$ (0.04)		$ (0.01)
From discontinued operations	(0.01)		(0.08)		(0.02)		(0.15)

Net loss	$ (0.03)		$ (0.09)		$ (0.06)		$ (0.16)


Per share, pro forma
Before discontinued operations	$ (0.02)		$ (0.02)		$ (0.04)		$ (0.05)
From discontinued operations	(0.01)		(0.08)		(0.02)		(0.15)

Net loss	$ (0.03)		$ (0.10)		$ (0.06)		$ (0.20)

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

In determining the fair value of each option, we used the Black-Scholes option-pricing model as prescribed by SFAS No. 123 using the following assumptions: dividend yield of zero, expected volatility of 123%, an average expected option life of 3.5 years and an average risk-free interest rate of 2.31% for the year ended June 30, 2003. We did not grant options during the year ended June 30, 2004 or during the three and six months ended December 31, 2004.

As of the effective date of the Plan and as provided for under the provisions of the Plan, all outstanding warrants and options expired worthless.

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (Revised 2004) “Share-Based Payment” (“SFAS No. 123R”) that addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25, “Accounting for Stock Issued to Employees”, that was provided in Statement 123 as originally issued. Under SFAS No. 123R companies are required to record compensation expense for all share based payment award transactions measured at fair value. This statement is effective for quarters ending after June 15, 2005. The adoption of SFAS No. 123R did not have a material effect on our results of operation or financial condition.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions (SFAS 153). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an exception for exchanges that do not have commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 did not have a material impact on our financial statements.

NOTE 4 – AUCTION SALES

Revenues and loss from the discontinued operations relating to the Auction Sales are as follows:

	Three months ended December 31,				Six months ended December 31,
	2004		2003		2004		2003
Revenues	$ --		$ 1,313,000		$ --		$ 2,559,000
Loss from operations	(93,000	)	(1,339,000	)	(1,023,000	)	(2,622,000	)

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

NOTE 5 – PREPETITION LIABILITIES SUBJECT TO COMPROMISE

At December 31, 2004, “Prepetition liabilities subject to compromise” are as follows:

Accounts payable		$ 743,000
Accrued liabilities		524,000
Obligation under capital lease		510,000
Obligation for rejected real property lease		212,000
Obligation for rejected executory agreements		544,000

Balance at December 31, 2004		$2,533,000

NOTE 6 – STOCKHOLDERS’ EQUITY

During the six months ended December 31, 2004, 10,000 shares of Series C preferred stock were converted into 16,667 shares of common stock, in accordance with the Series C preferred stock documents.

As of the effective date of the Plan and as provided for under the provisions of the Plan, all outstanding warrants and options expired worthless.

NOTE 7 — NET LOSS PER SHARE

Loss per common share is computed in accordance with the provisions of SFAS No. 128, “Earnings per Share”. SFAS No. 128 establishes standards for the computation, presentation, and disclosure of earnings per share. Basic per share amounts are computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted per share amounts incorporate the incremental shares issuable upon the assumed exercise of the Company’s stock options and warrants and assumed conversion of convertible securities. During the three and six months ended December 31, 2004 and 2003, such incremental amounts have been excluded from the calculation since their effect would be anti-dilutive. Such stock options, warrants and conversions could potentially dilute earnings per share in the future.

NOTE 8 — SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information:

$0 and $85,000 was paid in cash for interest for the six months ended December 31, 2004 and 2003, respectively.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

Supplemental disclosure of non-cash financing and investing activities:

Six months ended December 31, 2004

Conversion of 10,000 shares of Series C Convertible Preferred Stock into 16,667 shares of Common Stock.

Six months ended December 31, 2003

Conversion of 168,500 shares of Series C Convertible Preferred Stock into 280,836 shares of Common Stock.

Issuance of warrant in connection with the Bridge Loan, exercisable for 10,000,000 shares of Common Stock valued at $780,000. Amended and restated for 5,000,000 shares on March 26, 2004.

Accretion of Bridge Loan discount of $152,000.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

On May 31, 2004, we vacated our former leased office space in New York and rejected the balance of the lease. We accrued an aggregate of $668,000 at March 31, 2004 as an estimated obligation on the rejected lease plus the associated New York City Commercial Rent Taxes, recognizing that this amount is subject to rejection and reduction for a variety of reasons. Such amount was reduced by the elimination of $206,000 of deferred rent expense. We had maintained a letter of credit in the amount of $456,000 as a security deposit for this lease and had restricted cash of the same amount on deposit in a money market fund as collateral for the letter of credit maintained by the issuing bank. In September 2004, the issuing bank claimed the collateral in settlement of the letter of credit, which was presented and drawn by the landlord. The actual amount of the remaining claim may be greater or less than the remaining estimated accrual.

We are now subletting much smaller, more economical space on a month to month basis, which will enable us to wind down the Chapter 11 Proceedings and terminate our rental obligations once all matters have been concluded.

Rent expense for the six months ended December 31, 2004 and 2003 was $14,000 and $361,000, respectively.

Future minimum lease payments on capital leases aggregated $510,000 and are included under “Prepetition liabilities” as of December 31, 2004.

We had employment agreements with our four executive officers. The agreements were for initial terms of one to three years, with automatic one-year extensions after the initial term. The employment agreements had committed the Company to annual salary compensation of $738,000. The agreements included provisions for severance payments upon nonrenewal or termination under certain conditions. The agreements were rejected in conjunction with, and are subject to, the Chapter 11 Proceedings. One agreement was assigned with the Auction Sales. We accrued a “Provision for rejected executory agreements” of $544,000 at June 30, 2004, which amount was included in the “Pre-petition liabilities subject to comprise” at December 31, 2004.

U.S. WIRELESS DATA, INC.
(Debtor in Possession)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended December 31, 2004 and 2003
(Unaudited)

We had committed to reimburse a third party 50%, up to a maximum of $300,000, for certain agreed upon development costs. The obligation is subject to the Chapter 11 Proceedings.

On March 12, 2004, we were served with a complaint filed by U.S.A. Technologies, Inc. in the District Court for the District of Delaware, alleging infringement of one patent relating to certain aspects of the Company’s technology to enable vending machines to accept credit cards and seeking unspecified damages and injunctive relief. The Company believes this suit is without merit and intended to vigorously defend such action. The suit has been stayed by virtue of the Company’s bankruptcy filing. The suit is subject to the Chapter 11 Proceedings.

We are not currently subject to any other material legal proceedings. However, we may from time to time become a party to legal proceedings arising in the ordinary course of our business.

See Note 1 - The Company.

NOTE 10 – SUBSEQUENT EVENTS

First Distribution for Allowed Claims

On January 19, 2005 we paid approximately $889,000 as an initial payment to creditors for prepetition liabilities representing approximately 50% of “Allowed Claims”.

Settlement and Release Agreement regarding the AT&T Action

On February 23, 2005, we entered into a Settlement and Release Agreement (the “Agreement”) with Cingular Wireless, LLC (successor in interest to AT&T Wireless Services, Inc.) in order to settle the previously disclosed arbitration relating to the “AT&T Action” between the parties.

The Agreement shall become effective when all of the following events have occurred: (a) the Agreement has been fully executed by the parties; (b) we have submitted the Agreement to the United States Bankruptcy Court for the Southern District of New York and that court has entered an order (“Order”) approving the Agreement; and (c) the period for appealing the Order has expired and no appeal has been filed or the Order has been affirmed on appeal.

The Agreement has been executed by both parties and was submitted to the bankruptcy court on March 8, 2005. The court has assigned March 31, 2005 as the date of the hearing at which the court will review the Agreement.

Cingular has agreed to pay us the sum of $900,000 within 15 days of the Agreement becoming effective. In addition, within 15 days of the Agreement becoming effective, the parties have agreed to execute and file a stipulation for dismissal of the arbitration with prejudice, and without award of costs or attorneys’ fees to either party. In addition, we must seek approval of the Agreement and authorization to execute it from the Bankruptcy Court and shall be responsible for all costs and attorneys’ fees incurred in seeking and obtaining that approval.

The parties shall bear their own costs and attorneys’ fees in connection with the arbitration and the negotiation, drafting and execution of the agreement. The parties each shall pay one-half of the hearing fees assessed or to be assessed by the American Arbitration Association in connection with the arbitration. The parties also agreed to mutually release one another from any and all claims through the date of the Agreement.

ITEM 2. MANAGEMENT’S PLAN OF OPERATION

Special Note Regarding Forward-Looking Statements

We may, in discussions of our future plans, objectives and expected performance in periodic reports filed by us with the Securities and Exchange Commission (“SEC”) (or documents incorporated by reference therein) and in written and oral presentations made by us, include projections or other forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 or Section 21E of the Securities Act of 1934, as amended. Such projections and forward-looking statements are based on assumptions, which we believe are reasonable but are, by their nature, inherently uncertain. You are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) our ability to consummate our plan of reorganization with respect to the Chapter 11 case; (ii) our inability to obtain sufficient cash to fund ongoing obligations and continue as a going concern; (iii) our ability to carry out our operating and restructuring strategy; and (iv) other factors including those discussed below. We undertake no obligation to publicly update or revise forward looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-QSB or to reflect the occurrence of unanticipated events.

Overview

U.S. Wireless Data, Inc. was incorporated on July 30, 1991 in the State of Colorado. On October 6, 2000, we reincorporated in the state of Delaware. Until May 21, 2004, we were principally engaged in providing wireless transaction delivery and gateway services to the payment processing industry.

On March 26, 2004, we filed a petition for relief under Chapter 11 of the United States Bankruptcy Code. On May 11, 2004, the United States Bankruptcy Court (the “Court”) conducted an auction of our assets and on May 21, 2004, the sale of all of our assets and operations to Transactional Network Services, Inc. (“TNS”) closed. TNS paid $6,000,000 for our wireless payment processing business and $3,700,000 for our wireless vending business. Thus, from May 21, 2004 through June 30, 2004, we did not have any assets or operations other than those related to the bankruptcy. Currently, we have no operations.

On November 4, 2004, we filed an Amended Plan of Reorganization (the “Plan”) which contemplates that all cash after the payment of administrative costs and claims will be used to pay our liabilities and any remaining cash will be used to settle a portion of the aggregate $32,302,000 liquidation preference to which the holders of our Series C Preferred Stock are entitled.

In mid-December, we became aware of a tender offer of $0.12 per share for up to 2 million shares of our Series C Preferred Stock that had been launched on December 2, 2004 by Regen Acquisition I, LLC (“Offeror”). The offer expired on December 30, 2004. Although we do not know how many shares were tendered in the offering, according to a Form 3 and 4 filed on January 5, 2005 by Riverside Contracting LLC (with an address at Offeror), such entity owns 1,204,583 shares of Series C Preferred Stock. We expressed concerns to Offeror that the offer may not have been widely enough published for all holders to have been advised of it and also, that as a result of their late notice to us, our Board had not been able to weigh in with its opinion.

As noted above, due to the fact that we learned of the tender offer so late into the process, we were not in a position to report to our stockholders what our opinion would have been. There are three separate sources of potential recovery for a holder of Series C Preferred Stock and there is no assurance that such sources will not exceed or be less than $0.12 per share. Those sources, as described above in more detail, consist of (i) any cash remaining after payment of our administrative costs and liabilities, (ii) any recovery from the AT&T Wireless arbitration, net of the costs of prosecuting and administering such claim, and (iii) the value of a Series C stockholders shares in the reorganized U. S. Wireless Data.

As a result of the foregoing, very little of what is included in this Report on Form 10-QSB is relevant to investors in the ongoing business. However, this report is being filed to comply with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Discontinued Operations

During March 2004, our Board of Directors approved and authorized management to seek the sale of our operations which were sold in the Auction Sales. In accordance with accounting principles generally accepted in the United States of America, we classified our former operations sold in the Auction Sales as discontinued operations and have eliminated such operations from the discussion that follows except where indicated.

Management’s Plan of Operation

As described above, on May 11, 2004, the Court conducted an auction of our assets and on May 21, 2004, the sale of all of our assets and operations to TNS closed. TNS paid $6,000,000 for the wireless payment processing business and $3,700,000 for the wireless vending business. On November 4, 2004, we filed the Plan, which contemplates that all cash after the payment of administrative costs will be used to pay our liabilities and any remaining cash will be used to settle a portion of the aggregate $32,302,000 liquidation preference to which the holders of our Series C Preferred Stock are entitled.

On December 27, 2004, the Court confirmed the Plan, which contemplates that the primary source of cash for distributions will be the proceeds from the aforementioned sale of our businesses and the cash contribution of Trinad, the plan sponsor. Trinad will contribute $500,000 in cash to us in exchange for 93% of the new common stock to be issued under the Plan, with the remaining 7% of the new common stock being issued to the holders of record of our Series C Preferred Stock and our common stock as of February 7, 2005, with 3.5% going to each class. Of such $500,000 from Trinad, $400,000 will be added to the funds used to pay administrative costs, creditors and, possibly, a small portion of the liquidation preference. The remaining $100,000 will be retained by us to fund the expenses of remaining public. The Plan contemplates that all cash (other than the $100,000 to be retained by the reorganized debtor) will be placed in the Liquidation Trust and, after the payment of administrative costs, will be used to pay our liabilities. If there is any remaining cash, it will be used to settle a small portion of the aggregate $32,302,000 liquidation preference to which the holders of our Series C Preferred Stock are entitled.

There is no assurance that there will be sufficient assets to satisfy all of our liabilities, or to pay any portion of the Series C Preferred liquidation preference. Our disclosure statement projected that available cash would be adequate to pay 70-80% of the unsecured claims made. However, we do plan to challenge certain of the claims and, if successful, of which there is no assurance, we may be able to pay 100% of such claims and retain a small surplus for payment of a small portion of the Series C Liquidation preference. Only holders of record of our Series C Preferred Stock as of February 7, 2005 will be entitled to receive any payments towards the Series C liquidation preference, or to receive any pro rata share of the new common stock allocated to Series C Preferred Stock. Cash distributions shall be made as soon as practicable, as determined by the trustee of the Liquidation Trust. Distributions of the new stock shall be made as soon as practicable after we make certain filings with the SEC which were not made, in light of the uncertainties associated with the bankruptcy, in order to conserve cash. Such filings include this Annual Report on Form 10-KSB. In light of the sale of our operating assets to TNS in May 2004, the information to be contained in such reports will be largely irrelevant to stockholders of the reorganized U.S. Wireless Data.

As soon as practicable after we have filed our late SEC reports, new common stock will be issued to Trinad (93%), holders of record of our Series C Preferred Stock as of February 7, 2005 (3.5%) and holders of record of our common stock as of the same date (3.5%). On that date, Robert Ellin and Jay Wolf shall become our sole Board members and shall also be our Chief Executive Officer and Chief Operating Officer, respectively, and Barry Regenstein will be our Chief Financial Officer. On that date, we will be capitalized with $100,000 of the $500,000 Trinad has paid, with the $400,000 having been transferred to the Liquidation Trust.

As a result of the sale of virtually all of our operating assets, the historical financial statements are irrelevant to any assessment of our operations on an ongoing basis. Accordingly, readers are advised not to rely on any historical financial information in considering an investment in or the disposition of our stock. The Plan was confirmed by the Court and after we emerge from bankruptcy we will have no liabilities and extremely limited cash under new management. The Liquidation Trust will be entirely for the benefit of the holders of the Series C Preferred Stock as of the record date, after payment of administrative costs and allowed claims in accordance with the provisions of the Plan, and will not be an asset of the corporation.

As described more fully above, subsequent to the above-referenced transactions, our plan of operation is to merge or effect a business combination with a domestic or foreign private operating entity. We may seek to raise additional capital first to make ourselves more attractive to acquisition candidates. We believe that there are perceived benefits to being a “reporting company” with a class of publicly-traded securities which may be attractive to private entities. Other than activities relating to such financing attempting to locate such a candidate, we do not currently anticipate conducting any operations.

We may enter into a definitive agreement with a wide variety of private businesses without limitation as to their industry or revenues. It is not possible at this time to predict when, if ever, we will enter into a business combination with any such private company or the industry or the operating history, revenues, future prospects or other characteristics of any such company. Trinad intends to raise capital to make us a more attractive acquisition vehicle and then seek a suitable merger candidate. Trinad has not identified anyone for acquisition at this juncture.

CRITICAL ACCOUNTING POLICIES

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Estimates and assumptions

Financial Reporting by Entities in Reorganization under the Bankruptcy Code

The accompanying consolidated financial statements have been prepared in accordance with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the financial statements for periods subsequent to the Chapter 11 filing petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, all pre-petition liabilities subject to compromise are separately classified. Additional pre-petition claims (liabilities subject to compromise) may arise due to the rejection of executory contracts or unexpired leases, or as a result of the allowance of contingent or disputed claims. Revenues, expenses, realized gains and losses and provision for losses resulting from the reorganization are reported separately as “Reorganization items” in the accompanying consolidated statements of operations.

Except for the reclassification of our “Prepetition liabilities subject to compromise” as current liabilities at December 31, 2004, the accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties nor do they reflect any adjustments that will result from SOP 90-7.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business and in accordance with SOP 90-7.

Revenue Recognition from Discontinued Operations

We adopted the provisions of Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (“SAB 101”), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the Securities and Exchange Commission. In addition, we follow the guidance contained in Emerging Issues Task Force position No. 00-21 with respect to sales arrangements with multiple deliverables.

We adopted Emerging Issues Task Force (EITF) No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables, which is being applied on a prospective basis. The consensus addresses how to account for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. Revenue arrangements with multiple deliverables are required to be divided into separate units of accounting if the deliverables in the arrangement meet certain criteria. Arrangement consideration must be allocated among the separate units of accounting based on their relative fair values. The consensus also supersedes certain guidance set forth in SEC Staff Accounting Bulletin Number 101, Revenue Recognition in Financial Statements (SAB 101). SAB 101 was amended in December 2003 by Staff Accounting Bulletin Number 104 (SAB 104). The adoption of this pronouncement did not have a material impact on our financial statements.

We derived revenue from two primary sources from our discontinued operations: service fees and product (equipment) sales.

Services. Service fees consist of: (a) one-time, non-refundable service activation fees; (b) monthly minimum subscription fees for the availability of service; (c) fees for transactions delivered on wireless or other methods through our hosts; and (d) other fees, including administration and other fees for certain wireless services, certain charges for telecommunications connections between us and a party, and installation fees and expenses. Service fees are generated from our Synapse Service. Service activation fees are recognized ratably over the estimated average life of a customer contract. All other service revenues are recognized as services are provided.

Product sales. Product sales (i.e., sales of equipment) are primarily derived from the sale of our proprietary Synapse Enabler and Synapse Adapter products. Revenues from product sales are recognized upon shipment and acceptance, although product sales of our Synapse Enabler for Vending are recognized ratably over the life of the customer contract upon activation.

Loss Contingencies, Impairment of an Asset or Incurrence of a Liability

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

RECENT ACCOUNTING PRONOUNCEMENTS

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We currently have no floating rate indebtedness, hold no derivative instruments, and do not earn foreign-sourced income. Accordingly, changes in interest rates or currency exchange rates do not generally have a direct effect on our financial position. Changes in interest rates may affect the amount of interest we earn on available cash balances as well as the amount of interest we pay on borrowings. To the extent that changes in interest rates and currency exchange rates affect general economic conditions, we may also be affected by such changes.

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-QSB, have concluded that, based on such evaluation, our disclosure controls and procedures were adequate and effective to ensure that material information relating to us, including our consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-QSB was being prepared.

(b) Changes in Internal Controls. There were no significant changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 26, 2004, we filed a petition for relief under Chapter 11 of the Bankruptcy Code with the Court. On May 21, 2004, the Court closed the sale of all of our assets and operations to TNS. We are operating as a debtor-in-possession (“DIP”) under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court (the “Chapter 11 Proceedings”).

On March 12, 2004, we were served with a complaint filed by U.S.A. Technologies, Inc. in the District Court for the District of Delaware, alleging infringement of one patent relating to certain aspects of our technology to enable vending machines to accept credit cards and seeking unspecified damages and injunctive relief. We believe this suit is without merit and intended to vigorously defend such action. The suit has been stayed by virtue of our bankruptcy filing and is subject to the Chapter 11 Proceedings.

We are not currently subject to any other material legal proceedings. However, we may from time to time become a party to legal proceedings arising in the ordinary course of our business.

ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

First Distribution for Allowed Claims

On January 19, 2005 we paid approximately $889,000 as an initial payment to creditors for prepetition liabilities representing approximately 50% of “Allowed Claims”.

Settlement and Release Agreement regarding the AT&T Action

ITEM 6. EXHIBITS

Exhibit No.		Description of Exhibit

31	.1	Section 302 Certifications by the Chief Executive Officer
31	.2	Section 302 Certifications by the Chief Financial Officer
32	.1	Section 906 Certifications by the Chief Executive Officer
32	.2	Section 906 Certifications by the Chief Financial Officer

SIGNATURES

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

U.S. WIRELESS DATA, INC.

Dated: March 18, 2005
	By: /s/ Dean M. Leavitt Dean M. Leavitt Chairman of the Board (Former Chief Executive Officer and acting Principal Executive Officer)

Dated: March 18, 2005
	By: /s/ Charles I. Leone Charles I. Leone Executive Vice President and Chief Administrative Officer (Acting Chief Financial Officer and Principal Financial Officer)