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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

   |X| Quarterly report under Section 13 or 15(d) of the Securities Exchange
       Act of 1934

   For the quarterly period ended August 31, 1996

   |_| Transition report under Section 13 or 15(d) of the Exchange Act

   For the transition period from          to
                                  --------    --------

Commission File Number 0-11791


                            GREENTREE SOFTWARE, INC.
           (Name of Small Business Issuer as Specified in Its Charter)


             New York                                   13-2897997
----------------------------------         -----------------------------------
   (State or Other Jurisdiction            (I.R.S. Employer Identification No.)
 of Incorporation or Organization)

                               2801 Fruitville Rd.
                                    Suite 180
                               Sarasota, FL 34237
                     ---------------------------------------
                    (Address of Principal Executive Offices)

                                   (941) 954-2210
                   ------------------------------------------------
                   (Issuer's Telephone Number, Including Area Code)


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

                        Yes   |X|                           No   |_|

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

              Class                           Outstanding at October 11, 1996
------------------------------------          --------------------------------
      Common Shares, par value                        9,503,662 shares
          $.04 per share



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BOS-BUS:320010.1

<PAGE>

PART I.FINANCIAL INFORMATION
  Item 1.Financial Statements

     Company for which report is filed: Greentree Software, Inc. (the "Company")

                            GREENTREE SOFTWARE, INC.
                                 BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        August 31,       May 31,
                                                           1996           1996
         <S>                                         <C>             <C>
              ASSETS
              ------
         CURRENT ASSETS:

         Cash                                              $  235        $249,525
           Accounts receivable, net                       158,780         112,749
           Inventory                                        5,758           4,854
           Prepaid expenses and other current assets       56,831          17,153
                                                       -----------     -----------
         Total Current Assets                             221,603         384,281

         PROPERTY AND EQUIPMENT, NET                      105,451         120,000

         OTHER ASSETS
           Customer list (net of allowance)                41,342          45,361
           Deferred software development costs, net       738,409         768,516
           Security deposits                                5,152           5,111
                                                            4,547          10,382
                                                       -----------     -----------
           Other                                          789,450         829,350
                                                       ===========     ===========
         TOTAL ASSETS                                  $1,116,504      $1,333,631
                                                       ===========     ===========


             LIABILITIES AND STOCKHOLDERS' EQUITY
             -------------------------------------
         CURRENT LIABILITIES:
           Accounts payable                             $                $
                                                          508,736         447,791
           Accrued expenses                               394,978         430,296
           Deferred income                                134,462         151,452
                                                       -----------     -----------
         Total Current Liabilities                      1,043,176       1,029,539

         TOTAL LIABILITIES                              1,043,176       1,029,539

         STOCKHOLDERS' EQUITY:
         Common Stock, $0.04 par value, authorized
         15,000,000 shares, outstanding 9,503,662 at
         August 31, 1996 and at May 31, 1996              380,146         380,146
         Additional paid-in capital                    12,830,427      12,833,851
         Accumulated deficit                         (13,048,214)    (12,820,873)
                                                      ------------     -----------
                                                          162,359         393,124
           Less:  28,580 treasury stock, at cost         (89,032)        (89,032)
                                                       -----------     ----------
         Total Stockholders Equity                         73,328         104,092
                                                       ===========     ===========
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $1,116,504      $1,333,631
                                                       ===========     ===========
</TABLE>

See Notes to Unaudited Financial Statements.


<PAGE>



                                         GREENTREE SOFTWARE, INC.
                                         STATEMENT OF OPERATIONS
                                                (Unaudited)

<TABLE>
<CAPTION>
                                       For The Three Months Ended
                                        August 31,    August 31,
                                          1996          1995
<S>                                    <C>           <C>
NET SALES
  Product                              $  77,125     $  64,523
  Services                                38,945        44,248
                                       ----------    ----------
                                         116,070       108,771

COSTS AND EXPENSES
  Cost of sales                          108,791        86,838
  Selling expenses                        69,387       164,702
  General and administrative             169,830       143,138
  Interest expense                           -             744
                                       --------------- -------
                                         348,008       395,422

Operating loss                          (227,340)     (286,651)
                                       -----------   -----------

OTHER INCOME                               4,598            46
                                       ------------  ---------

LOSS BEFORE INCOME TAXES                (227,340)     (286,605)
                                       -----------   ----------

INCOME TAXES                                -            2,400
                                       ------------------------

NET LOSS                               $(227,340)    $(289,005)


LOSS PER SHARE
Net loss per common share              $   (0.02)   $    (0.06)
                                       ===========   ===========

Weighted average shares outstanding    9,503,662     4,721,790

</TABLE>


<PAGE>


                            GREENTREE SOFTWARE, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                      For the Three Months Ended
                                                 August 31, 1996      August 31, 1995
                                               ----------------    -------------------
 <S>                                               <C>              <C>

 CASH FLOW FROM OPERATING ACTIVITIES
   Net loss                                        $(227,340)       $(289,005)
   Adjustments to reconcile net loss to
   net cash provided by (used in) operating
   activities:
     Depreciation and amortization                    16,424           19,168
     (Increase) in accounts receivable               (46,031)          (6,310)
     Decrease in inventories                             904            3,899
     (Increase) decrease in prepaid expenses         (39,678)          (7,475)
     (Increase) decrease in other assets               5,835          (19,795)
     (Increase) decrease in deferred                  30,107          (21,292)
      software development costs, net
     Decrease in security deposits                        41               --
     Increase (decrease) in accounts payable          60,945          (34,967)
     Increase (decrease) in accrued expenses         (30,318)         228,854
     Increase in deferred income                     (16,990)          (4,774)
                                                 -------------    --------------
 Cash used in operating activities                  (245,866)        (125,087)

 CASH FLOW FROM INVESTING ACTIVITIES
   Retirement of certificate of deposit                   --          775,000
                                                 -------------    --------------
 Cash provided (used) in investing activities             --         (775,000)

 CASH FLOW FROM FINANCING ACTIVITIES
   Net proceeds from private placement                (3,424)              --
   Note payable reduction                                 --         (775,000)
                                                 -------------    --------------
 Cash (used) provided by financing activities         (3,424)        (775,000)

 Increase (Decrease)  in cash                       (249,290)        (125,097)
   Cash balance - beginning                          249,525          157,621
                                                 -------------    --------------
   Cash balance - ending                              $  235        $  32,524
                                                 -------------    --------------

See Notes to Unaudited Financial Statements.

</TABLE>

<PAGE>


                           GREENTREE SOFTWARE, INC.
                        NOTES TO FINANCIAL STATEMENTS
                               August 31, 1996
                                 (Unaudited)


1.  BASIS OF  PRESENTATION  In the  opinion  of the  Company's  management,  the
unaudited  financial  statements  include all  adjustments  (consisting  only of
normal adjustments)  necessary for a fair presentation of the financial position
of the  Company at August 31, 1996 and the  results of its  operations  and cash
flow statements for the three months ended August 31, 1996 and August 31, 1995.

      It is suggested that the unaudited financial  statements and notes thereto
in this Report be read in  conjunction  with the financial  statements and notes
thereto in the Company's  Annual Report on Form 10-KSB for the fiscal year ended
May 31, 1996 (the "1996 Annual Report") which was previously filed.

      The accompanying  financial  statements of the Company have been presented
on the  basis  that the  Company  is a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of  business.  The Company  reported a net loss of $227,346  for the three month
period  ended  August 31, 1996 and  $1,576,480  for the year ended May 31, 1996.
Additionally,  at August 31, 1996, the Company has a working  capital deficit of
$821,573 and an accumulated  deficit of  $13,048,214.  Information  available at
October 15, 1996 indicates that losses are continuing.  At October 15, 1996, the
Company had expended substantially all of its cash and cash equivalent balances.

      The Company's  continued  existence is dependent upon its ability to raise
capital and subsequently market its Windows(R)-based purchasing applications--GT
Purchase  PRO.  Management  believes  that  is  will be  successful  in  raising
additional  capital  through  the  placement  of the  Company's  equity and debt
securities as discussed in Note 10 of the financial  statements contained in the
1996 Annual Report. Historically,  the Company has been successful raising funds
from outside sources through private placement or other means. While the Company
believes  that its most  recent  version  of GT  Purchase  PRO has demand in the
marketplace, a successful equity placement will be dependent upon each potential
investor's  evaluation  of the  prospects  for  generating  revenues  from  this
product. The Company,  however, provides no assurances that significant revenues
will be generated.

      As discussed in Note 5 of the financial  statements  contained in the 1996
Annual  Report,  the Company is currently  party to two  lawsuits,  one of which
involves its rights to continue to sell GT Purchase PRO. The ultimate outcome of
such litigation is currently uncertain.

      The  Company  is  considered  a Small  Business  (SB)  filer  pursuant  to
Securities and Exchange Commission (SEC) regulations.  As such, the accompanying
financial statements,  are not intended to, nor do they, include all disclosures
required by the SEC's Regulation S-X.


                                       2

<PAGE>

      2.    Summary of Significant Accounting Practices

      (a)   Accounting Estimates

      Management  is  required  to make  estimates  and  assumptions  during the
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles.  These  estimates  and  assumptions  affect the reported
amounts of assets and  liabilities  and the disclosure of contingent  assets and
liabilities  at the date of the  financial  statements.  They  also  affect  the
reported  amounts of net income (loss) during the period.  Actual  results could
differ materially from these estimates and assumptions.

      (b)   Revenue Recognition

      The Company generally  recognizes product revenue at the time products are
shipped provided that no significant  Company obligations remain outstanding and
collection  of the  resulting  receivable  is  deemed  probable  by  management.
Insignificant support obligations remaining at the time of shipment are accrued.
In fiscal 1996 and the first quarter of fiscal 1997,  the Company did not obtain
signed license agreements on certain product shipments,  including all shipments
of its most  recent  version of GT Purchase  PRO.  For these  shipments  where a
license  agreement  does not exist and the  probability  of  collection  and the
existence of remaining obligations could not be determined the sale has not been
recorded  and  revenue has not been  recognized  in the  accompanying  financial
statements.

      Service  revenues  are  comprised   primarily  of  revenues  derived  from
maintenance  agreements.  Maintenance  fees are recorded as deferred revenue and
recognized over the maintenance period which is usually 12 months. Also included
in deferred revenue are deferred  product revenues which,  based on their terms,
will be recognized as revenue when the various terms are met.

      (c)   Accounts receivable

      Accounts  receivable  is  presented  net of  allowance  for  uncollectible
accounts of $26,700 at August 31, 1996 and at May 31, 1996.

      (d)   Software Development Costs

      The Company is engaged in research and development  activities in the area
of  computer  software.   In  accordance  with  generally  accepted   accounting
principles,  costs incurred prior to determination of technological  feasibility
are  considered  research  and  development  and  treated as a period  cost and,
accordingly,  charged to operations.  Once  technological  feasibility  has been
established,  development costs, including improvements to existing products and
certain new products,  are capitalized and amortized over the estimated economic
lives of the respective  products.  The Company has determined that an estimated
product useful life of three years is reasonable for amortization purposes.


                                       3

<PAGE>

      (e)   Property and Equipment

      Property and equipment are stated at cost, less accumulated  depreciation.
Depreciation  is charged to operations  over the estimated  lives of the related
assets,   generally  five  to  seven  years,  using  the  straight-line  method.
Maintenance  and repairs are charged to expense as  incurred.  Improvements  and
betterments that extend the useful life of the assets are capitalized.

      (f)   Cash and Cash Equivalents

      The  Company  considers  all  highly  liquid   investments  with  original
maturities of 90 days or less to be cash  equivalents  for  financial  statement
purposes.  Included in cash  equivalents  at May 31, 1996 was a  certificate  of
deposit totaling  approximately  $100,000. As discussed in Note 1, as of October
15,  1996,  the  Company  had  expended  substantially  all of its cash and cash
equivalent balances.

      (g)   Loss Per Common Share

      Net loss per common share is computed by dividing net loss by the weighted
average  number of shares  outstanding  during the  period.  For the three month
period  ended  August 31, 1996 and the year ended May 31,  1996,  common  shares
options and warrants  were  anti-dilutive  and were not included in the weighted
average of common shares used in determining per share amounts.


                                       4


<PAGE>


Item 2.     Management's Discussion and Analysis or Plan of Operation

Results of Operations

For the Three Months Ended August 31, 1996 Versus 1995

      Total  sales for the three  months  ended  August 31,  1996 were  $116,070
compared to $108,771 for the three months ended August 31, 1995,  reflecting  an
increase of $7,299 of 6.7%.  Product  revenues for the three months ended August
31, 1996 were $77,125  compared to $64,523 for the three months ended August 31,
1995, an increase of $12,872 or 20%.  Maintenance  revenues were $31,871 for the
three  months  ended  August 31, 1996  compared to $42,248 for the three  months
ended  August 31,  1995,  a decrease  of  $10,377 or 24.6%.  Training  and other
revenues  were $7,074 for the three  months  ended  August 31, 1996  compared to
$2,000 for the three  months  ended  August 31,  1995,  an  increase  of 253.7%.
Initial  sales of the new version of the  Company's  GT Purchase PRO product are
responsible for the increases in total revenues and product sales.

      The Company is in the  initial  stages of selling  and  marketing  the new
version of GT Purchase PRO. While there have been expressions of interest in the
product by a number of potential  customers,  there can be no assurance that any
of these  prospective  customers  will buy the product.  GT Purchase PRO, by the
nature of the product,  the integral role it plays in the purchasing  process of
large corporate  organizations,  and the sales price of the product,  has a long
selling  cycle;  there  can be no  assurance  that the  Company  will be able to
sustain  its  operations  for a  sufficient  period of time to close the  sales,
install the product,  and receive full payment from those prospective  customers
who do  express a  willingness  to place an order for the  product.  Finally,  a
number of large corporations that have expressed an interest in the product have
also  expressed  concern  about  the  Company's  financial  viability,  and  may
therefore decide to not place an order for the product.

      The cost of sales for the three months ended August 31, 1996 were $108,791
compared to $86,838 for the three months  ended August 31, 1995,  an increase of
$21,953 or 25.3%. This increase was primarily due to additional  development and
installation  expense  associated  with the  release  of the new  version  of GT
Purchase PRO.

      Selling  expense  for the three  month  period  ended  August 31, 1996 was
$69,387 compared to $164,702 for the three month period ended August 31, 1995, a
decrease of $95,315 or 57.9%.  This  decrease  was  primarily  due to  decreased
personnel,  advertising and marketing expenses; it is not anticipated that these
reductions will be maintained as marketing and sales activity  increases  during
fiscal 1997.

      General and administrative expense for the three month period ended August
31, 1996  compared to $143,138,  an increase of $26,692 or 18.6%.  This increase
was primarily due to increased professional fees and compensation expense.

                                       5

<PAGE>

      For the three month period ended August 31, 1996,  the Company  reported a
net loss of  $227,340  (or $.02 per share) as compared to a net loss of $289,005
(or $.06 per share) for the three month period ended August 31, 1995.  This loss
was caused by the continuation of low sales volumes,  but was reduced due to the
lower level of personnel, advertising and marketing expenses required to support
the lower sales volume. The reduction in loss per share is largely the result of
the increase in the number of issued and outstanding shares.


Liquidity and Capital Resources

      The Company has a working  capital  deficit of $821,573 at August 31, 1996
as compared to a working capital deficit of $645,258 at May 31, 1996, a decrease
in working  capital of $176,315.  The primary  cause for the decrease in working
capital was the loss for the quarter.  Cash at August 31, 1996 was $235 compared
to $249,525 at May 31, 1996, a decrease of $249,290. As of October 15, 1996, the
Company  has  expended  substantially  all  of  its  cash  resources.   Accounts
receivable  were  $158,780 at August 31, 1996 as compared to $112,749 at May 31,
1996,  an increase of $46,031 or 40.8%.  The primary cause for this increase was
the increase in the product sales and the terms of the sales for the GT Purchase
PRO product.

      The Company is currently engaged in an effort to raise up to $1.25 million
through a private  offering of its common shares and  convertible  debt. The per
share price of its common shares is expected to be $.25.  The  convertible  debt
will be issued at face value,  have a two year term,  accrue interest  beginning
six months after  issuance,  and will  convert to common  shares at a conversion
price of one share for each $.25 of outstanding  principal and accrued  interest
upon the filing of an amendment to the Company's  Certificate  of  Incorporation
increasing the number of authorized common shares.  As additional  consideration
for the private offering, the Company will issue common shares purchase warrants
exercisable  for one  common  share for every two  common  shares or  conversion
shares purchased,  at an exercise price to be determined based on a formula. The
proceeds  of this  private  offering  will be used to pay  outstanding  accounts
payable,  amounts owed to current and former  employees and  consultants  and to
faciliate marketing and sales efforts and customer support functions.  There can
be no assurance that the Company will be able to raise such additional  funding,
or that,  if obtained,  the funding will be  sufficient to support the Company's
operations  until such time as the Company's  operations  may be sustained  from
operating cash flow.  There also is no assurance that the Company's  projections
as to an increase in sales and attaining  profitability,  as well as producing a
positive operating cash flow, will be realized.

                                       6

<PAGE>


PART II.    OTHER INFORMATION

Item 1.     Legal Proceedings

      On February 12, 1996 the Company was sued by Parera Information  Services,
Inc. in the United  States  District  Court for the  District of  Massachusetts.
Parera and the Company were  parties to a software  development  agreement.  The
complaint  seeks  unspecified  money  damages  for alleged  breach of  contract,
copyright  infringement,  misrepresentation  and violation of the  Massachusetts
Consumer  Protection  Act.  The Court has denied all of Parera's  requests for a
preliminary injunction, and the matter is now scheduled for trial to commence on
November 4, 1996.

      The Company is unable to predict the likelihood of an unfavorable  outcome
in this matter  although  there are strong  defenses to the claims and the Court
has twice  determined that Parera has not established a likelihood of success on
the merits in denying Parera's motions for preliminary injunction.

      On August 22,  1996,  the  Company  was sued by a former  employee  in the
United States District Court for the Southern  District of New York. The Company
was served with  process on August 26,  1996.  The  complaint  alleges  that the
Company  owes the  employee  back wages and  further  alleges  that the  Company
wrongfully  rescinded  stock  options  for  approximately  37,500  shares of the
Company's  stock.  The Company  has denied all claims and filed a  counter-claim
against the former employee.

Item 5.     Other Information

      The Company currently intends to conduct a private placement of its
debt and equity securities.  See Management's Discussion and Analysis or Plan
of Operation--Liquidity and Capital Resources.

Item 6.     Exhibits and Reports on Form 8-K

      (a)   Exhibits

            None

      (b)   Reports on Form 8-K

            None


                                       7

<PAGE>

                                  SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    GREENTREE SOFTWARE, INC.



Date:  October 15, 1996             By: /s/ Jeffrey B. Pinkerton
                                        ---------------------------------
                                        Name:  Jeffrey B. Pinkerton
                                        Title: President and Chief Financial
                                        Officer



                                       8