<PAGE>
 
                                   FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549



(Mark One)

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
     THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended:  September 30, 1997

                                      OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

                       Commission file number:  0-21395

                       ALLIN COMMUNICATIONS CORPORATION
            (Exact name of registrant as specified in its charter)

             Delaware                           25-1795265
 (State or other jurisdiction of           (I.R.S. Employer
  incorporation or organization)          Identification No.)

                 300 Greentree Commons, 381 Mansfield Avenue,
                     Pittsburgh, Pennsylvania  15220-2751
         (Address of principal executive offices, including zip code)

                                (412) 928-8800
             (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days.

                            (X)   Yes      (  )   No

              Shares Outstanding of the Registrant's Common Stock

                            As of November 3, 1997

                        Common Stock,  5,184,067 Shares
<PAGE>
 
                       Allin Communications Corporation

                                   Form 10-Q

                                     Index

<TABLE>
<CAPTION>
 
<S>                                                                       <C> 
Part I - Financial Information
 
         Item 1.  Financial Statements                                    Page  3
 
         Item 2.  Management's Discussion and Analysis of Financial       Page  8
                  Condition and Results of Operations
 
         Item 3.  Quantitative and Qualitative Disclosure about Market    Page  17
                  Sensitive Instruments
 
 
Part II - Other Information
 
         Item 2.  Changes in Securities and Use of Proceeds               Page  18
 
         Item 6.  Exhibits and Reports on Form 8-K                        Page  19
 
Signatures                                                                Page  20

</TABLE>

                                      -2-
<PAGE>
 
Part I - Financial Information

ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

                                      (Dollars in thousands)
                              (Unaudited at September 30, 1997)

<TABLE>
<CAPTION>


                                                            

                                                              December 31,          September 30,
                                                                 1996                   1997  
                                                              ------------          ------------
<S>                                                           <C>                   <C>     
ASSETS                                                                                        
Current assets:                                                                               
          Cash and cash equivalents                              $16,227               $ 5,975
          Accounts receivable, net of allowance for doubtful                                  
                   accounts of $-0- and $54                        1,169                 2,809
          Inventory                                                   53                    48
          Prepaid expenses                                           477                   375
                                                                 -------               -------
                   Total current assets                           17,926                 9,207
                                                                                              
Property and equipment, at cost:                                                              
          Leasehold improvements                                      48                   398
          Furniture and equipment                                  1,227                 2,015
          On-board equipment                                       4,312                 7,540
          Construction-in-progress                                 2,329                 1,294
                                                                 -------               -------
                                                                   7,916                11,247
          Less--accumulated depreciation                            (911)               (2,283)
                                                                 -------               -------
                                                                   7,005                 8,964
                                                                                              
Assets held for resale                                               624                   103
Other assets, net of accumulated amortization of                                              
          $728 and $2,383                                          7,122                 6,055
                                                                 -------               -------
                                                                                              
Total assets                                                     $32,677               $24,329
                                                                 =======               ======= 

                   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
          Notes payable                                         $     69              $     28 
          Accounts payable                                         1,768                   600 
          Accrued liabilities:                                                                   
                   Compensation and payroll taxes                    233                   792
                   Other                                             601                   936
          Deferred revenues                                          509                   957
          Customer deposits                                          695                   ---
                                                                --------               -------
                                                                                                 
                   Total liabilities                               3,875                 3,313
                                                                                                
Series A convertible, redeemable preferred stock, par                                           
          value $.01 per share - authorized 100,000 shares,                                     
          issued and outstanding 25,000 shares                     2,480                 2,500
                                                                                                
Shareholders' equity:                                                                           
          Common stock, par value $.01 per share - authorized                                   
                   20,000,000 shares, issued and                                                
                   outstanding 5,184,067 shares                       52                    52
          Additional paid-in-capital                              37,905                37,905
          Deferred compensation                                     (377)                 (278)
          Retained deficit                                       (11,258)              (19,163)
                                                                --------              --------
                   Total shareholders' equity                     26,322                18,516
                                                                --------              --------
                                                                                                 
Total liabilities and shareholders' equity                      $ 32,677              $ 24,329
                                                                ========              ======== 
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

                                      -3-
<PAGE>
 
ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 
          (Dollars in thousands, except per share data)
                        (Unaudited)   
                      



<TABLE>
<CAPTION>
 
                                                 Three Months       Three Months     Nine Months     Nine Months
                                                    Ended              Ended            Ended           Ended
                                                 September 30,      September 30,    September 30,   September 30,
                                                     1996               1997             1996            1997
                                                 -------------      ------------     -------------   ------------
<S>                                               <C>               <C>               <C>               <C>         
                                                                                                                    
Revenue                                           $      133        $    3,214        $      296        $    9,839
  
Cost of sales                                             42             2,045                83             6,131  
                                                  ----------        ----------        ----------        ----------  
                                                                                                                    
Gross profit                                              91             1,169               213             3,708  
                                                                                                                    
Selling, general & administrative                      1,859             3,136             4,026            11,654  
                                                  ----------        ----------        ----------        ----------  
                                                                                                                    
Loss from operations                                  (1,768)           (1,967)           (3,813)           (7,946) 
                                                                                                                    
Interest expense (income), net                           328               (42)              796              (325) 
                                                  ----------        ----------        ----------        ----------  
                                                                                                                    
Loss before provision for income taxes                (2,096)           (1,925)           (4,609)           (7,621) 
                                                                                                                    
Provision for income taxes                               ---                67               ---               115  
                                                  ----------        ----------        ----------        ----------  
                                                                                                                    
Net loss                                              (2,096)           (1,992)           (4,609)           (7,736) 
                                                                                                                    
Accretion and dividends on preferred stock               ---                50               ---               169  
                                                  ----------        ----------        ----------        ----------  
                                                                                                                    
Net loss attributable to common shareholders      $   (2,096)       $   (2,042)       $   (4,609)       $   (7,905)  
                                                  ==========        ==========        ==========        ==========  
                                                                                                                    
Net loss per common share                             $(0.81)           $(0.39)           $(1.77)           $(1.52)  
                                                  ==========        ==========        ==========        ==========  
                                                                                                                    
Weighted average common and common equivalent                                                                       
  shares outstanding during the period             2,603,385         5,184,067         2,603,385         5,184,067  
                                                  ==========        ==========        ==========        ==========   
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                      -4-
<PAGE>
 
ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

               (Dollars in thousands)
                   (Unaudited)
<TABLE>
<CAPTION>
 
                                                                     Nine Months     Nine Months
                                                                        Ended           Ended
                                                                    September 30,   September 30,
                                                                         1996            1997
                                                                    --------------  --------------
<S>                                                                 <C>             <C>
 
Cash flows from operating activities:
          Net loss                                                       $(4,609)        $(7,736)
          Adjustments to reconcile net loss to net cash flows
             from operating activities:
                   Depreciation and amortization                              585           3,084
                   Accrued interest on shareholder notes payable              558             ---
                   Amortization of deferred compensation                      ---             100
                   Accretion to stated value of preferred stock                15             ---
                   Loss from sale of assets                                   ---              11
          Changes in certain assets and liabilities:
                   Accounts receivable                                        (65)         (1,640)
                   Inventory                                                  ---               5
                   Prepaid expenses                                          (626)            102
                   Software development costs                                (144)           (480)
                   Other assets                                               ---             389
                   Accounts and notes payable                               1,871          (1,209)
                   Accrued liabilities                                        577             742
                   Deferred revenues                                          ---             448
                   Customer deposits                                          ---            (695)
                                                                         --------        --------
             Net cash flows from operating activities                      (1,838)         (6,879)
                                                                         --------        --------
 
Cash flows from investing activities:
          Proceeds from sale of assets                                        ---              59
          Capital expenditures                                             (4,186)         (3,432)
                                                                         --------        --------
             Net cash flows from investing activities                      (4,186)         (3,373)
                                                                         --------        --------
 
Cash flows from financing activities:
          Proceeds from shareholder notes payable                           3,628             ---
          Proceeds from line of credit                                      5,000             ---
          Payments on shareholder notes payable                            (3,621)            ---
          Issuance of preferred stock, net of transaction costs               950             ---
                                                                         --------        --------
             Net cash flows from financing activities                       5,957             ---
                                                                         --------        --------
 
Net change in cash and cash equivalents                                       (67)        (10,252)
Cash and cash equivalents, beginning of period                                193          16,227
                                                                         --------        --------
Cash and cash equivalents, end of period                                 $    126        $  5,975
                                                                         ========        ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      -5-
<PAGE>
 
               Allin Communications Corporation and Subsidiaries

                  Notes to Consolidated Financial Statements


1.  Basis of Presentation
    ---------------------

    The information contained in these financial statements and notes for the
    three-and nine- month periods ended September 30, 1996 and 1997 should be
    read in conjunction with the audited financial statements and notes for the
    years ended December 31, 1995 and 1996, contained in Allin Communications
    Corporation's (the "Company") Annual Report on Form 10-K for the year ended
    December 31, 1996. The accompanying unaudited Consolidated Financial
    Statements have been prepared in accordance with generally accepted
    accounting principles and the rules and regulations of the Securities and
    Exchange Commission. These interim statements do not include all of the
    information and footnotes required for complete financial statements. It is
    management's opinion that all adjustments (including all normal recurring
    accruals) considered necessary for a fair presentation have been made;
    however, results for these interim periods are not necessarily indicative of
    results to be expected for the full year.

    Earnings Per Share

    Earnings per share ("EPS") of common stock have been computed using the
    weighted average number of common and common equivalent shares outstanding
    during the period. In periods the Company has losses, common share
    equivalents are not included as their inclusion would be anti-dilutive. For
    periods presented prior to the Company's initial public offering, the
    weighted average number of common and common equivalent shares include
    instruments convertible into common stock, issued within one year of the
    initial public offering. Fully diluted EPS is presented when it differs by
    more than three percent.

    Financial Accounting Standards Board Statement No. 128, "Earnings Per Share"
    ("SFAS No. 128") was issued in February 1997 and is effective for fiscal
    years beginning after December 15, 1997. This statement, upon adoption, will
    require all prior-period earnings per share ("EPS") to be restated to
    conform to the provisions of the statement. This statement's objective is to
    simplify the computation of EPS and to make the U.S. standard for EPS
    computations more compatible with that of the International Accounting
    Standards Committee. The Company will adopt SFAS No. 128 in fiscal 1998 and
    does not anticipate that the statement will have a significant impact on its
    reported EPS. There are no differences in EPS calculated under SFAS No. 128
    and that presented in the Consolidated Statements of Operations for the
    three and nine month periods ended September 30, 1996 and 1997, as
    calculated in accordance with Accounting Principles Bulletin No. 15,
    "Earnings per Share."

    Supplemental Disclosure Of Cash Flow Information

    Cash payments for income taxes were $-0- and approximately $31,000 during
    the three months ended September 30, 1996 and 1997, respectively. Cash
    payments for interest were approximately $89,000 and $-0- during the three
    months ended September 30, 1996 and 1997, respectively.

    Cash payments for income taxes were $-0- and approximately $131,000 during
    the nine months ended September 30, 1996 and 1997, respectively. Cash
    payments for interest were approximately $112,000 and $29,000 during the
    nine months ended September 30, 1996 and 1997, respectively.

    Dividends of $26,000 and $50,000 were accrued but unpaid during the three-
    month periods ended September 30, 1996 and 1997, respectively, on Series A
    convertible, redeemable preferred stock. Dividends of $26,000 and $149,000
    were accrued but unpaid during the nine-month periods ended September 30,
    1996 and 1997, respectively, on Series A convertible, redeemable preferred
    stock.

    Inventory

    Inventory, consisting principally of computer system hardware, components
    and technical supplies, is stated at the lower of cost (determined on the
    first-in, first-out method) or market.

                                      -6-
<PAGE>
 
2.  Accrual for Severance Costs
    ---------------------------

    An accrual of approximately $160,000 has been recorded on September 30, 1997
    to establish a liability for severance costs associated with workforce
    reductions.

3.  Equity Transactions
    -------------------

    There were no options awarded under the Company's 1997 Stock Plan during the
    three months ended September 30, 1997. See Note 4. Subsequent Events for
    information concerning options awarded subsequent to this date.

    During the three months ended September 30, 1997, options to purchase 20,750
    shares of common stock previously awarded under the Company's 1996 Stock
    Plan were forfeited under the terms of the Plan. There were no options
    awarded under the 1996 Stock Plan during this period. Options to purchase
    178,400 shares of common stock remain outstanding as of September 30, 1997.

4.  Subsequent Events
    -----------------

    Subsequent to September 30, 1997, the Company awarded 70,050 options for
    common shares under the Company's 1997 Stock Plan. A total of 29,550 of the
    options awarded are exercisable at a price of $4.50 per share and 40,500 of
    the options are exercisable at a price of $7.50 per share. The options will
    vest with respect to 20% of the shares subject to each grant on each of the
    first through fifth anniversaries of the grant date. The right to purchase
    shares expires seven years from the grant date or earlier if the option
    holder ceases to be employed by the Company or a subsidiary.

                                      -7-
<PAGE>
 
Item 2.


                       Allin Communications Corporation

                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations


     The following discussion and analysis by management provides information
with respect to the Company's financial condition and results of operations for
the three- and nine-month periods ended September 30, 1997 and 1996.  This
discussion should be read in connection with the information in the consolidated
financial statements and the notes pertaining thereto contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.


Overview of Organization, Products & Markets

      Allin Communications Corporation (the "Company") was organized under the
laws of the State of Delaware in July 1996 to act as a holding company for five
operating subsidiaries which focus on particular aspects of the Company's
business: SeaVision, Inc., a Delaware corporation ("SeaVision"), PhotoWave,
Inc., a Delaware corporation ("PhotoWave"), SportsWave, Inc., a Pennsylvania
corporation ("SportsWave"), Kent Consulting Group, Inc., a California
corporation ("KCG"), and Netright, Inc., a California corporation ("Netright").
All such subsidiaries, as well as Allin Holdings Corporation, a Delaware
corporation and non-operating subsidiary, are wholly owned by the Company.
Unless the context otherwise requires, all references herein to the "Company"
refer to Allin Communications Corporation and its subsidiaries.

     Allin Communications Corporation is a media, technology and services
company which provides customized interactive television ("ITV"), and
communications and information systems integration services to users in the
international cruise industry. The Company also provides digital photography
services to users in both commercial and consumer markets, advanced software
design and network solution services to clients in a variety of industries and a
full range of sports marketing and promotion services to a diverse clientele.

     Many of the Company's services are oriented around its proprietary
interactive media and information platform which was created to run on the
Microsoft Windows NT operating system. The platform includes a multimedia
digital file server and Windows-based software applications, and features high
resolution and animated graphics, compressed full motion video, superior quality
audio and flexible input capacity. The Company's platform features rapid
response and real time interfacing with a variety of third party software and
systems permitting the immediate execution and confirmation of transactions. The
platform, which received an applications development award from Microsoft in
1995, can provide its media and imaging services over a variety of network
architectures, including the Internet, telephone and cable television systems,
and other public and private communications networks.

     SeaVision was formed in June 1994 and focuses on the international cruise
industry.  SeaVision became a subsidiary of the Company in August 1996 through a
merger.  Its operations to date have involved the development of an interactive
media and information platform, the installation and operation of ITV systems in
the international cruise industry, and the provision of communications and
information systems integration services primarily to cruise industry clients.
SeaVision has become a significant supplier of ITV systems to the cruise
industry.  The Company has contracts in place to provide ITV services to each of
Carnival Cruise Lines ("Carnival"), Celebrity Cruises, Inc. ("Celebrity"),
Cunard Line Limited, Norwegian Cruise Line Limited ("Norwegian") and Royal
Caribbean International ("Royal Caribbean").  At September 30, 1997, a total of
ten systems were in operation on cruise ships with an annual capacity of
approximately 948,000 passengers.

     SeaVision's shipboard installations offer customers a variety of
interactive services including pay-per-view movies, shopping, games of chance,
excursion ticketing, informational messages, account review and room service.
SeaVision derives transactional revenue from pay-per-view movies, shopping and
games of chance.  SeaVision has recently renegotiated its contracts with
Celebrity and Royal Caribbean to provide sources of revenue in addition to the
recurring onboard transactional revenue.  The amended agreement with Celebrity
became effective in September 1997 while the amended agreement with Royal
Caribbean became effective in October 1997.

                                      -8-
<PAGE>
 
     Under the two amended agreements, the cruise lines have agreed to pay
management fees to SeaVision for operation and administration of the onboard ITV
systems.  In addition, SeaVision will bill the cruise lines for expenses related
to SeaVision's onboard operators.  The foregoing fees represent a new source of
revenue for SeaVision which will be reflected in future operating results.  As
of September 30, 1997, SeaVision operated ITV systems on four Celebrity ships
and two Royal Caribbean ships (with a third activated in October 1997).
Additionally, SeaVision has agreed to complete the installation of its ITV
system onboard Celebrity's m.v. Mercury, which installation is expected to be
completed in 1997 at Celebrity's cost.  After completion of the installation,
Celebrity will own the system hardware and will license the system software.
Transactional revenue, management fees, and fees associated with the onboard
operator for the m.v. Mercury will be on the same basis as other Celebrity
ships.

     SeaVision is currently attempting to renegotiate the economic terms of its
ITV system contracts with Carnival and Norwegian to make such terms more
favorable to SeaVision.  Of the ten ship ITV systems in operation as of
September 30, 1997, two were on Carnival ships and one was on a Norwegian ship.
Included in the discussions are methods for enhancing SeaVision revenue such as
management fees for system operation, charges for system operation costs, and
increased cruise line capital commitments for new system installations.  During
the quarter ended September 30, 1997, Carnival and SeaVision reached a short
term arrangement for six months providing for charges to Carnival for system
operator costs and certain other system expenses while negotiations continue.
There can be no assurance that SeaVision will be successful in renegotiating its
contracts with Carnival and Norwegian to obtain terms more favorable to the
Company or that, if successful, the revised terms will result in the desired
improvements to SeaVision's revenue and operating income.

     The Company has derived communication and information systems integration
revenue to date primarily through engagements with the cruise lines utilizing
the Company's ITV platform.  Services have included integration of the various
shipboard communication and information systems including broadcast, property
management and inventory control systems with the ITV system as well as retrofit
of shipboard broadcast studio and other communications equipment.  The Company
intends to market fee-based systems integration services utilizing the
technological capabilities and advantages of its media and information platform
to clients in different industries.  There can be no assurance, however, that
the Company will be successful at marketing its services to new industries, or
that provision of such services will result in improvements to the Company's
financial condition and results of operations.

     PhotoWave was formed as a subsidiary of the Company in August 1996 to
pursue the development and marketing of digital imaging services, and currently
applies the Company's proprietary interactive media and information platform
through its mobile interactive digital photography studio. The interactive
system allows images to be viewed, customized and produced within the mobile
vehicle. Digital images can also be accessed remotely through an Internet
website by utilizing the PhotoWave Surfboard access card.

     In November 1996, Kent Consulting Group, Inc., an entity formed in 1994,
but which had been operating through a predecessor since 1983, merged with and
into a wholly owned subsidiary of the Company, which then changed its name to
Kent Consulting Group, Inc. KCG provides varied software design and network
solution services to corporate clients in a wide variety of industries and
supports the development and technology efforts of the Company. KCG's areas of
expertise include ITV platforms, Internet applications, groupware and e-mail
applications, networking products and database applications.

     SportsWave, formerly International Sports Marketing, Inc., was formed in
1989 and was acquired by the Company in November 1996. SportsWave's
International Sports Marketing division provides a full range of sports
marketing and promotion services such as promotions, premiums, corporate
incentive programs, event marketing and licensing.

     Netright sells computer-related hardware and software, and was acquired by
the Company in November 1996 primarily to support the operations of the Company
through its purchasing capabilities and agreements with vendors. Netright's
operations are not material to the Company as a whole.

     The Company's historical results of operations reflect the operations of
Allin, SeaVision, and PhotoWave for the three- and nine-month periods ended
September 30, 1996 and for all companies for the three- and nine-month periods
ended September 30, 1997.

                                      -9-
<PAGE>
 
Results of Operations:
---------------------

Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996

     For the three-month period ended September 30, 1997, the Company reported
revenue of  $3,214,000 versus $133,000 for the three months ended September 30,
1996.  All revenue during the 1996 period was derived from SeaVision.
PhotoWave was formed in August 1996 but did not have revenue during the three
months ended September 30, 1996.  SportsWave, KCG and Netright were acquired in
November 1996.  Accordingly, a comparison of revenue for those companies for the
three-month periods ended September 30, 1997 and September 30, 1996 is not
meaningful.

     As of September 30, 1997, SeaVision had installed its ITV system on eleven
cruise ships and activated the system on ten ships with an annual passenger
capacity of approximately 948,000, based on their itineraries and passenger
configurations at that time.  As of September 30, 1996, SeaVision had installed
and activated its ITV system on three cruise ships with an annual passenger
capacity of approximately 261,000.

     Total revenue for SeaVision for the three months ended September 30, 1997
was approximately $1,148,000, including $401,000 for pay-per-view movies and
games of chance, $717,000 for systems integration services and $30,000 for
management fees and other revenue. For the three months ended September 30,
1996, total SeaVision revenue was $133,000, including $132,000 for pay-per-view
movies and games of chance and $1,000 in other revenue. During the quarter ended
September 30, 1997, SeaVision began operations under the amended contract with
Celebrity discussed above.

     Direct costs for SeaVision for the three-month period ended September 30,
1997 were $758,000, including $102,000 for pay-per-view movies and $655,000 for
systems integration services. Included in the systems integration revenue are
proceeds under an agreement whereby one cruise line agreed to contribute toward
the overall capital cost of the ITV system by assuming ownership of certain
installed in-cabin hardware integral to the functioning of the ITV system at an
agreed upon price. The actual cost of this equipment was in excess of the agreed
upon price, resulting in direct costs for this systems integration component of
the project being in excess of revenue for the project. Under the terms of
certain other contracts, SeaVision has borne the full cost of essential
hardware. Direct costs related to SeaVision transactional revenue for the three
months ended September 30, 1996 were $42,000 and related primarily to cost of
sales for the pay-per-view service.

     For the three months ended September 30, 1997, SportsWave realized revenue
of $1,031,000 and direct costs of $642,000. KCG, during the same period,
recognized revenue of $915,000 with direct costs of $539,000. Netright had sales
totalling $76,000 with direct costs of $74,000. PhotoWave realized $43,000 of
revenue during the period with direct costs of $32,000.

     During the three months ended September 30, 1997, selling, general and
administrative expenses, excluding depreciation and amortization, increased to
$2,042,000  from $1,625,000 for the corresponding period in 1996.  This increase
is attributable primarily to $712,000 of expenses of additional entities,
primarily SportsWave and KCG.  Selling, general, and administrative expenses for
Allin, SeaVision and PhotoWave totaled $1,330,000 during the three months ended
September 30, 1997, a reduction of $295,000 from the comparable 1996 period for
these three entities.  The increase in overall selling, general and
administrative expenses also reflects a charge of approximately $160,000,
recognized during the three months ended September 30, 1997, for severance costs
related to workforce reductions.  During the quarter ended September 30, 1997,
the Company eliminated positions representing approximately 10% of its
workforce.  Positions eliminated were concentrated in the marketing area as the
Company refocused its marketing initiatives, and in the corporate administrative
area.  Included in selling, general and administrative expenses for the three-
month period ended September 30, 1997 was $30,000 in research and development
expense.  For the same period in 1996, $357,000 in research and development
expense was recognized.  SeaVision has curtailed development projects related to
its ITV systems with the exception of certain hardware projects intended to
result in short term cost savings.  PhotoWave research and development was
limited to that necessary to facilitate basic operation of its mobile digital
photography system and its Internet based digital imaging archival system, which
was completed during the quarter ended September 30, 1997.  For the three months
ended September 30, 1997, a total of $17,000 in research and development
relating to PhotoWave operations was capitalized.  There were no capitalized
research and development costs during the comparable period of the prior year.

                                      -10-
<PAGE>
 
     The Company's management continued its pursuit of expense reductions
throughout its operations during the three months ended September 30, 1997 while
at the same time continuing expense reduction initiatives put into place late in
the second quarter. The most significant of these, reductions in the scope of
research and development activities and workforce size reductions have been
discussed above. Selling, general and administrative expenses were reduced from
$4,370,000 in the second quarter of 1997 to $3,136,000 in the third quarter, a
reduction of approximately 28%. Management intends to continue to seek
opportunities to achieve expense reductions. However, there can be no assurance
that management will be successful in further expense reduction efforts.

     Depreciation and amortization expense increased to $1,094,000 during the
three months ended September 30, 1997 as compared to $234,000 in the
corresponding period in 1996, principally as a result of the completed
installation of additional ITV systems, corporate office leasehold improvements
and furniture acquisition and $430,000 of amortization related to the November
1996 purchase of KCG and SportsWave.

     The Company's operating loss was $1,967,000 for the three months ended
September 30, 1997, as compared to $1,768,000 for the three months ended
September 30, 1996.  A gross margin increase of $1,078,000 between the periods
was offset by an $860,000 increase in depreciation and amortization for the
reasons noted above and a $417,000 increase in other selling, general and
administrative expenses due to the inclusion of additional entities in the 1997
period.  The Company realized net interest income of $42,000 for the three
months ended September 30, 1997 as compared to interest expense of $328,000 in
the three months ended September 30, 1996 relating to borrowings under a bank
line of credit and interest on stockholder loans, which was accrued but unpaid
during the period.  Provision for income taxes of $67,000 recognized during the
three month period ended September 30, 1997 reflects estimated state income tax
expense for certain subsidiaries.  The Company sustained a net loss of
$1,992,000 during the three months ended September 30, 1997, a $104,000
reduction from the net loss of $2,096,000 for the three months ended September
30, 1996, as a result of the various factors discussed above.  Earnings per
common share improved from a net loss of $0.81 per share for the three months
ended September 30, 1996 to a net loss of $0.39 per share during the three
months ended September 30, 1997.


Results of Operations:
---------------------

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996

     For the nine-month period ended September 30, 1997, the Company reported
revenue of  $9,839,000 versus $296,000 for the nine months ended September 30,
1996.  All revenue during the 1996 period was derived from SeaVision.  As noted
above, PhotoWave was formed in August 1996, but did not have revenues during the
period ended September 30, 1996.  SportsWave, KCG and Netright were acquired in
November 1996.  Accordingly, a comparison of revenue for those companies for the
nine month periods ended September 30, 1997 and September 30, 1996 is not
meaningful.

     Total revenue for SeaVision for the nine months ended September 30, 1997
was $4,293,000, including $998,000 for pay-per-view movies and games of chance,
$3,158,000 for systems integration services, and $137,000 for management fees,
advertising and other revenue. For the period ended September 30, 1996, total
SeaVision revenue was $296,000, including $293,000 for pay-per-view movies and
games of chance and $3,000 in other revenue.

     Direct costs for SeaVision for the nine-month period ended September 30,
1997 were $2,850,000, including $248,000 for pay-per-view movies and $2,600,000
for systems integration services. Direct costs for SeaVision relating to ITV
transactional revenue for the nine months ended September 30, 1996 were $83,000,
attributable primarily to cost of sales for the pay-per-view service.

     For the nine months ended September 30, 1997, SportsWave realized revenue
of $2,918,000 and direct costs of $1,629,000. KCG, during the same period,
recognized revenue of $2,384,000 with direct costs of $1,443,000. Netright had
sales totalling $160,000 with direct costs of $150,000. PhotoWave realized
$78,000 of revenue during the period with direct costs of $59,000.

                                      -11-
<PAGE>
 
     During the nine months ended September 30, 1997, selling, general and
administrative expenses, excluding depreciation and amortization, increased to
$8,570,000 from $3,442,000 for the corresponding period in 1996. This increase
is attributable primarily to the addition of PhotoWave, SportsWave, KCG and
Netright operations for the full nine months in 1997 and to the costs of
personnel added from the third quarter of 1996 until the second quarter of 1997
as the Company moved from the developmental stage to the operational stage of
its ITV system. The increase also reflects approximately $460,000 of severance
costs recorded in the 1997 period for second and third quarter workforce
reductions. Included in selling, general and administrative expenses for the
nine-month period ended September 30, 1997 was $166,000 in research and
development expense. For the same period in 1996, $758,000 of research and
development expense was recognized with $145,000 being capitalized. For the nine
months ended September 30, 1997, a total of $480,000 in research and development
relating to PhotoWave operations was capitalized.

     Depreciation and amortization expense increased to $3,084,000 during the
nine months ended September 30, 1997 as compared to $584,000 in the
corresponding period in 1996, principally as a result of the completed
installation of additional ITV systems, corporate office leasehold improvements
and furniture acquisitions and $1,290,000 of amortization related to the
November 1996 purchase of KCG and SportsWave.

     The Company's operating loss was $7,946,000 for the nine months ended
September 30, 1997, as compared to $3,813,000 for the nine months ended
September 30, 1996. This increase is attributable primarily to the addition of
PhotoWave, SportsWave, KCG and Netright operations for the full nine months in
1997, increased depreciation and amortization as discussed above and to the
costs of personnel added from the third quarter of 1996 until the second quarter
of 1997, as the Company moved from the developmental stage to the operational
stage of its ITV system.  The Company realized net interest income of $325,000
for the nine months ended September 30, 1997 as compared to interest expense of
$796,000 in the nine months ended September 30, 1996, relating to borrowings
under a bank line of credit and interest on stockholder loans, which was accrued
but unpaid during the period. Provision for income taxes of $115,000 recognized
during the 1997 period reflects estimated state income tax expense for certain
subsidiaries.  The Company sustained a net loss of $7,736,000 during the nine
months ended September 30, 1997, compared to a net loss of $4,609,000 for the
nine months ended September 30, 1996, as a result of the increased operating
losses discussed above. Earnings per common share improved from a net loss of
$1.77 per share for the nine months ended September 30, 1996 to a net loss of
$1.52 per share during the nine months ended September 30, 1997.


Liquidity and Capital Resources

     At September 30, 1997, the Company had cash and liquid cash equivalents of
$5,975,000 available to meet its working capital and operational needs.

     The Company recognized an operating loss during the nine months ended
September 30, 1997 of $7,946,000.  Capital expenditures were $3,432,000 during
the nine months ended September 30, 1997.  Given its resources on hand, its
operating results and the absence of in-place third party financing, the Company
has taken steps to significantly reduce its cash expenditures.  These have
included a voluntary moratorium on additional installations of shipboard ITV
systems pending the outcome of negotiations with cruise line clients regarding
new installations as discussed above under the heading "Overview of
Organization, Products & Markets", and curtailment of research and development
activities and significant workforce reductions, each as discussed above under
the heading "Results of Operations: Three Months Ended September 30, 1997
             ---------------------
Compared to Three Months Ended September 30, 1996".  These steps have reduced
the Company's capital expenditures to approximately $200,000 during the third
quarter of 1997 and planned capital expenditures to $400,000 for the remainder
of the year ending December 31, 1997.  The actual amount and timing of the
Company's capital expenditures will vary and such variations could be material.
Pending the outcome of further negotiations with cruise lines, the Company
intends to limit its further investment in cruise line installations. In
addition, the Company has discontinued further internally funded development in
SportsWave applications of its media and information platform.  PhotoWave will
emphasize operational improvement of revenue from both its mobile digital
platform as well as fixed site event digital photography and will limit further
development of its technology until the revenue streams are proven.

                                      -12-
<PAGE>
 
     The Company believes that the steps it has implemented, as described above,
have resulted in reductions in its cash expenditures during the third quarter of
1997.  The net outflow of its cash and cash equivalents during the first three
quarters of 1997 has been reduced from $5,553,000 in the first quarter to
$3,510,000 in the second quarter and $1,188,000 in the third quarter.  The
Company continues to implement steps, including the third quarter workforce
reductions, that are anticipated to reduce current and future cash expenditures.
The Company is also continuing efforts to build revenue streams with the goal of
attaining a positive cash flow.  There can be no assurance, however, that the
Company's revenue enhancement and cost reduction efforts will result in a
positive cash flow.

     The Company believes, in light of the modifications to its business plan
discussed in the preceding paragraphs,  that available funds and cash flows
expected to be generated by operations, will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for at least
the next twenty-four months.  If currently available funds and cash generated by
operations were insufficient to satisfy the Company's cash requirements, the
Company would be required to consider other financing alternatives, such as
selling additional equity or debt securities or obtaining long or short-term
credit facilities, although no assurance can be given that the Company could
obtain such financing.  Any sale of additional equity or convertible debt
securities would result in additional dilution to the Company's shareholders.

     SportsWave has been notified by the Major League Baseball Players Alumni
("MLBPA"),  that MLBPA does not wish to renew its present contract with
SportsWave, which expires on December 31, 1998.  MLBPA has indicated, however,
that it is willing  to negotiate a contract for the period beginning January 1,
1999.  The Company intends to pursue negotiations with MLBPA for a contract
renewal, although there can be no assurance that the Company will be successful
or that the terms of any contract renewal will be favorable to the Company.  The
Company does not believe this matter will have a material adverse effect on the
Company's business, financial condition or results of operations.


Special Note on Forward-Looking Statements

     Certain statements in the preceding discussion and analysis constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things:

     Limited Operating History. The Company was not organized until July 1996
and did not until November 1996 conduct any operations as a combined entity
consisting of the businesses of SeaVision, PhotoWave, SportsWave and KCG.
Furthermore, SeaVision has been in operation only since 1994 and has
concentrated on developing its media and information platform and ITV system and
on securing contracts to install and operate the ITV system on cruise ships. To
date, SeaVision is operating its ITV system in only eleven installations, and
revenue generated by the ITV system has not been sufficient to result in
profitable operations. Although SeaVision, SportsWave and KCG have had prior
relationships, there can be no assurance that the Company will be able to
integrate the businesses successfully. Because SeaVision has only a limited
operating history and the Company has only a limited operating history as a
combined entity, there can be no assurance that the Company will succeed in
implementing its strategy for development and growth or that it will obtain
financial returns sufficient to justify its investment in the markets in which
it participates.

     Recent Net Losses and Accumulated Deficit. The Company has sustained
substantial net losses during the years ended December 31, 1995 and 1996 and the
nine months ended September 30, 1997 and, as of September 30, 1997, had an
accumulated deficit of $19,163,000. SeaVision has recognized net losses since
inception in 1994 primarily because of the limited revenue generated during its
start-up phase. During the start-up phase, the Company has researched, developed
and installed the only ITV system that to its knowledge is presently in use in
the cruise industry, and has incurred substantial costs in doing so. The Company
anticipates that it will continue to incur net losses at least through 1998, and
there can be no assurance that it will be able to achieve revenue growth or
profitability on an ongoing basis in the future.

                                      -13-
<PAGE>
 
     Contract Renegotiations.  As discussed above, the Company is attempting to
renegotiate the economic terms of its ITV system contracts with Carnival and
Norwegian to make such terms more favorable to the Company.  Two of the ten ship
ITV systems in operation as of September 30, 1997 were on Carnival ships and one
was on a Norwegian ship.  There can be no assurance that the Company will be
successful in renegotiating its contracts with Carnival and Norwegian to obtain
terms more favorable to the Company or that, if successful, the revised terms
will result in the desired improvements to SeaVision's revenue and operating
income.  In the event such negotiations are not successful, the Company may re-
evaluate the ongoing operation of ITV systems currently in place with these
cruise lines.  If operations on these ships were discontinued, the Company would
seek to utilize equipment not purchased by the cruise lines on other cruise
lines' ships under the economic terms of recently amended contracts.  The
Company will similarly evaluate its continued operations on any cruise line with
which it is not successful in renegotiating contract terms and will consider
transfer of equipment to other potential ship operations as described above.
There can be no assurance, however, that any such transfer of equipment would
result in systems operations allowing the desired improvements to the Company's
revenue growth, profitability or cash flow.  Any termination of operations of an
existing ship system  could have an adverse effect on the Company's business,
financial condition and results of operations.

     Additional System Installations.  The Company is currently negotiating with
various cruise lines the economic terms under which it would proceed with
installations of ITV systems on ships in their fleets.  There can be no
assurance that the Company will be successful in negotiating contracts with the
cruise lines to obtain installation terms favorable to the Company or that, if
successful, the terms will result in the desired improvements to SeaVision's
revenue and operating income.  In the event such negotiations are not
successful, additional cruise ship ITV installations may not be undertaken.

     Cruise Lines' Rights to Terminate Operations and Purchase Systems.
Celebrity and Royal Caribbean have the right to terminate the Company's
operations, purchase the hardware installed by the Company and obtain
nontransferable licenses to use the software installed by the Company. Any such
termination and purchase would eliminate the Company's ability to charge
management fees for operation of the system and the Company's ability to share
in revenue produced by the purchased system. The loss or elimination of the
Company's rights to these sources of revenue resulting from any of the foregoing
events could have a material adverse effect on the Company's business, financial
condition, and results of operations.

     Risks Inherent in Development of New Markets. The Company's strategy
includes attempting to enter new markets for new applications for its
interactive media and information platform and technologies on a communications
and information systems integration basis. This strategy presents risks inherent
in assessing the value of development opportunities, in committing resources in
unproven markets and in integrating and managing new technologies and
applications. Within these new markets, the Company will encounter competition
from a variety of sources. It is also possible that the Company will experience
delays or setbacks in developing new applications of its technology for new
markets. There can be no assurance that the Company will be successful at
penetrating new markets for alternative applications of its media and
information platform, or that any contracts obtained will generate improvements
to the Company's profitability or cash flow.

     Risks Inherent in Development of New Products. Management has evaluated its
plans for research and development activities for various applications of its
media and information platform and digital photography technologies and has
determined that the interests of the Company would best be served for the short
term through conservation of its liquid resources and a reduction of its non-
essential development costs. SeaVision has curtailed development projects
related to its ITV systems with the exception of certain hardware projects.
PhotoWave research and development was limited to that necessary to facilitate
basic operation of its mobile digital photography system and its Internet-based
digital imaging archival system, which was completed in the third quarter of
1997. SportsWave research and development has also been curtailed. KCG's
software development and network systems consultants had been responsible for a
significant portion of the Company's ongoing research and development
activities. The majority of the KCG consultants have been redeployed toward
consulting projects for third parties, although no assurance can be given that
additional third-party business will be obtained on an ongoing basis. It is also
possible that the Company will experience delays or setbacks in the areas in
which it operates. There can be no assurance that the Company's new products and
applications, if any, will generate additional revenue or improved profitability
for the Company.

                                      -14-
<PAGE>
 
     Dependence on Proprietary Technology; Absence of Patents.   The Company's
success is highly dependent upon its proprietary technology. The Company does
not have patents on any of its technology and relies on a combination of
copyright and trade secret laws and contractual restrictions to protect its
technology. It is the Company's policy to require employees, consultants and
clients to execute nondisclosure agreements upon commencement of a relationship
with the Company, and to limit access to and distribution of its software,
documentation and other proprietary information. Nonetheless, it may be possible
for third parties to misappropriate the Company's technology and proprietary
information or independently to develop similar or superior technology. There
can be no assurance that the legal protections afforded to the Company and the
measures taken by the Company will be adequate to protect its technology. Any
misappropriation of the Company's technology or proprietary information could
have a material adverse effect on the Company's business, financial condition
and results of operations.

     There can be no assurance that other parties will not assert technology
infringement claims against the Company, or that, if asserted, such claims will
not prevail. In such event, the Company may be required to engage in protracted
and costly litigation, regardless of the merits of such claims; discontinue the
use of certain software codes or processes; develop non-infringing technology;
or enter into license arrangements with respect to the disputed intellectual
property. There can be no assurance that the Company would be able to develop
alternative technology or that any necessary licenses would be available or
that, if available, such licenses could be obtained on commercially reasonable
terms. Responding to and defending against any of these claims could have a
material adverse effect on the Company's business, financial condition and
results of operations.

     Risk of Technological Obsolescence. The ability of the Company to maintain
a standard of technological competitiveness is a significant factor in the
Company's strategy to maintain and expand its customer base, enter new markets
and generate revenue. The Company's success will depend in part upon its ability
to identify promising emerging technologies and to develop, refine and introduce
high quality services in a timely manner and on competitive terms. However, as
discussed above, the Company has significantly curtailed research and
development activity which limits the Company's ability to so identify and
develop technologies and services. There can be no assurance that future
technological advances by direct competitors or other providers will not result
in improved equipment or software systems that could adversely affect the
Company's business, financial condition and results of operations.

     Need for Management of Growth. The Company's growth strategy will require
its management to conduct operations and respond to changes in technology and
the market. If the Company's management is unable to manage growth effectively,
its business, financial condition and results of operations will be materially
adversely affected.

     Dependence on Key Personnel. The Company's success is dependent on a number
of key management, research and operational personnel for the management of
operations, development of new markets and products and timely installation of
its systems. The loss of one or more of these individuals could have an adverse
effect on the Company's business and results of operations. The Company has in
place key person life insurance policies on certain of its key employees. The
Company depends on its continued ability to attract and retain highly skilled
and qualified personnel and to engage non-employee consultants. There can be no
assurance that the Company will be successful in attracting and retaining such
personnel or contracting with such non-employee consultants.

     Dependence on Major League Sports.   The Company's sports marketing and
promotion business conducted through SportsWave is dependent on the success and
continued popularity of major league sports. Factors which adversely affect
major league sports could also adversely affect the Company's business and
results of operations. For example, SportsWave's business was adversely impacted
by the players' strike and owners' lockout during the 1994 and 1995 Major League
Baseball seasons. There can be no assurance that there will be no strike or
other event with a similar adverse impact in the future involving one or more of
Major League Baseball, the National Football League, the National Basketball
Association or the National Hockey League.

     Fluctuations in Operating Results.   The Company expects to experience
significant fluctuations in its future quarterly operating results that may be
caused by many factors, including the seasonal aspects of SportsWave's business.
Accordingly, quarterly revenues and operating results will be difficult to
forecast, and the Company believes that period-to-period comparisons of its
operating results will not necessarily be meaningful and should not be relied
upon as an indication of future performance

                                      -15-
<PAGE>
 
     Potential Impact of Privacy Concerns. One of the features of the Company's
ITV system is the ability to develop and maintain information regarding usage of
the system by cruise ship passengers and other parties. The perception by the
users of substantial security and privacy concerns, whether or not valid, may
cause users to resist providing the personal information that might be useful
for demographic purposes and may inhibit market acceptance and usage of the
Company's video systems. In the event such concerns are not adequately
addressed, the Company's business, financial condition and results of operations
could be materially adversely affected.

     Competitive Market Conditions. The market for interactive communications
and digital imaging is new, rapidly evolving and highly competitive. Many of the
Company's current and potential competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
the Company and therefore may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. There can be no assurance
that the Company will be able to compete effectively with current or future
competitors or that the competitive pressures faced by the Company will not have
a material adverse effect on the Company's business, financial condition and
results of operations.

     Government Regulation and Legal Uncertainties. The Company is subject, both
directly or indirectly, to various laws and governmental regulations relating to
its business. As a result of rapid technology growth and other related factors,
laws and regulations may be adopted which significantly impact the Company's
business.


Effect of Recently Issued Accounting Standards

     Financial Accounting Standards Board Statement No.128, "Earnings Per Share"
("SFAS No. 128") was issued in February 1997 and is effective for fiscal years
beginning after December 15, 1997.  This statement, upon adoption, will require
all prior-period earnings per share ("EPS") data to be restated, to conform to
the provisions of the statement.  This statement's objective is to simplify the
computation of EPS and to make the U.S. standard for EPS computations more
compatible with that of the International Accounting Standards Committee.  The
Company will adopt SFAS No. 128 in fiscal 1998 and does not anticipate that the
statement will have a significant impact on its reported EPS. There are no
differences in EPS calculated under SFAS No. 128 and that presented in the
Consolidated Statements of Operations for the three and nine month periods ended
September 30, 1996 and 1997, as calculated in accordance with Accounting
Principles Bulletin No. 15, "Earnings per Share."

     Financial Accounting Standards Board Statement No. 129, "Disclosure of
Information about Capital Structure" ("SFAS No. 129"), was issued in February
1997 and is effective for periods ending after December 15, 1997.  This
statement, upon adoption, will require all companies to provide specific
disclosure regarding the entity's capital structure.  SFAS No. 129 will specify
the disclosures, for all companies, including descriptions of the securities
comprising the capital structure and the contractual rights of the holders of
such securities.  The Company will adopt SFAS No. 129 in fiscal 1997 and does
not anticipate that the statement will have a significant impact on its
disclosures.

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130 "Reporting Comprehensive
Income", which establishes standards for reporting and display of comprehensive
income and its components in financial statements.  SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997.  Currently there are no
components of comprehensive income which apply to the Company.

                                      -16-
<PAGE>
 
Part I - Financial Information

Item 3.  Quantitative and Qualitative Disclosure about Market Risk Sensitive
         Instruments

     The Company currently does not invest excess funds in derivative financial
instruments or other market rate sensitive instruments for the purpose of
managing its foreign currency exchange rate risk or for any other purpose.

                                      -17-
<PAGE>
 
Part II - Other Information

Item 2.  Changes in Securities and Use of Proceeds.
         ----------------------------------------- 

     On November 1, 1996, the Securities and Exchange Commission declared
effective the Company's registration statement on Form S-1, File No. 333-10447,
and the offering commenced on that date.  Such registration statement registered
at an offering price of $15.00 per share the sale by the Company of 2,000,000
shares of its common stock and the sale by the Company pursuant to an over-
allotment option granted to the underwriters of up to 300,000 shares of its
common stock, for an aggregate of 2,300,000 shares of common stock registered at
an aggregate offering price of $34,500,000.  On November 6, 1996, the Company
sold 2,000,000 shares of its common stock.  On December 4, 1996, the
underwriters purchased an additional 300,000 shares of common stock pursuant to
the over-allotment option, at which time the offering was terminated with all
2,300,000 shares of common stock sold at an aggregate price of $34,500,000.  The
Company received net proceeds of $30,669,113 after deduction of $3,830,887 for
underwriting discounts and commissions and other expenses of the offering.
Friedman, Billings, Ramsey & Co., Inc. was the managing underwriter of the
offering.

     As of September 30, 1997, all net proceeds of the offering had been applied
by the Company.  The information below updates the information concerning the
application of such proceeds as of August 31, 1997, filed by the Company on Form
S-R under the Securities Act of 1933, as amended.

     As of August 31, 1997, $908 of the net proceeds from the offering had not
yet been applied.  The remainder of the net proceeds has been applied to working
capital by the Company during September 1997.

                                      -18-
<PAGE>
 
Part II - Other Information

Item 6.  Exhibits and Reports on Form 8-K.
         --------------------------------

           (a)  Exhibits.


<TABLE> 
<CAPTION> 

Exhibit
Number                      Description of Exhibit
------                      ----------------------

<S>          <C>
10.1         Amendment to First Amended and Restated Agreement dated as of
             September 19, 1997 by and between SeaVision, Inc. and Celebrity
             Cruises, Inc. (subject to request for confidential treatment).

10.2         Amendment to Concession Agreement dated as of October 16, 1997 by
             and between SeaVision, Inc. and Royal Caribbean Cruises, Ltd.
             (subject to request for confidential treatment).

11           Computation of Earnings per Share.

27           Financial Data Schedule

</TABLE> 


           (b)  Reports on Form 8-K.

                No report on Form 8-K was filed by the Company during the
                quarter ended September 30, 1997.

                                      -19-
<PAGE>
 
                                  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.


                             ALLIN COMMUNICATIONS CORPORATION
                             (Registrant)

Date: November 12, 1997      By:  /s/   Richard W. Talarico
                                  -------------------------
                             Richard W. Talarico
                             Chairman and Chief Executive Officer


Date: November 12, 1997      By:  /s/   Dean C. Praskach
                                  -----------------------
                             Dean C. Praskach
                             Vice President-Finance and Chief Accounting Officer

                                      -20-
<PAGE>
 
Allin Communications Corporation
Form 10-Q
September 30, 1997
Exhibit Index


<TABLE> 
<CAPTION> 

Exhibit
Number                          Description of Exhibit
------                          ----------------------

<S>            <C>
10.1           Amendment to First Amended and Restated Agreement dated as of
               September 19, 1997 by and between SeaVision, Inc. and Celebrity
               Cruises, Inc. (subject to request for confidential treatment).

10.2           Amendment to Concession Agreement dated as of October 16, 1997 by
               and between SeaVision, Inc. and Royal Caribbean Cruises, Ltd.
               (subject to request for confidential treatment).

11             Computation of Earnings per Share

27             Financial Data Schedule


</TABLE> 

                                      -21-