UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO.1 ON
                                   FORM 10-KSB/A

       FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
        ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1997

[_]     TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

                         COMMISSION FILE NUMBER 0-28008

                             SMARTSERV ONLINE, INC.
                             ----------------------
        (Exact name of small business issuer as specified in its charter)

           Delaware                                              13-3750708
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. employer
 incorporation or organization)                              identification no.)

One Station Place, Stamford, Connecticut                              06902
----------------------------------------                          --------------
(Address of principal executive offices)                            (Zip Code)

Issuer's telephone number, including area code (203) 353-5950

Securities registered pursuant to Section 12(b) of the Exchange Act:   NONE

Securities registered pursuant to Section 12(g) of the Exchange Act:

                                                    NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS                            ON WHICH REGISTERED
      -------------------                            -------------------
 Common Stock, $0.01 Par Value                       NASDAQ Stock Market
Common Stock Purchase Warrants                       NASDAQ Stock Market

Indicate by check mark whether the issuer: (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 issuer was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.
Yes  [X]      No   [_]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of  issuer's  knowledge,  in  definitive  proxy or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.___

Issuer's revenues for its most recent fiscal year.     $688,610

The  aggregate  market value of the voting stock (based on the closing  price of
such  stock on  NASDAQ)  held by  non-affiliates  of the issuer as of October 9,
1997,  was  approximately  $6,126,000.  All officers and directors of the issuer
have been deemed,  solely for the purpose of the  foregoing  calculation,  to be
"affiliates" of the issuer.

There were 3,695,000 shares of Common Stock outstanding at October 9, 1997.



<PAGE>


                                    PART III


ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

         The  following  table  sets  forth  information  with  respect  to  the
executive officers and directors of SmartServ Online, Inc. (the "Company").

         NAME                       AGE         POSITION

Sebastian E. Cassetta...............49      Chief Executive Officer, Chairman of
                                            the Board, Secretary and Class III 
                                            Director
Steven T. Francesco.................40      President, Chief Operating Officer 
                                            and Class III Director
Thomas W. Haller, CPA...............43      Vice President, Treasurer and Chief 
                                            Financial Officer
Donald J. Marino....................37      Vice President and Chief Technology
                                            Officer
Mario F. Rossi......................59      Vice President of Operations
Bernard Baum........................48      Class II Director
Beth Bronner........................46      Class I Director
Catherine Cassel Talmadge...........45      Class I Director
Hiro R. Hiranandani................ 59      Class II Director
L. Scott Perry .....................52      Class I Director

         SEBASTIAN E. CASSETTA has been Chief Executive Officer, Chairman of the
Board, Secretary and a director of the Company since inception. Mr. Cassetta was
also the Company's Treasurer from its inception until March 1996. From June 1987
to August 1992, Mr.  Cassetta was the President of Burns and Roe Securacom Inc.,
an engineering and  large-scale  systems  integration  firm. From August 1992 to
January 1994, Mr. Cassetta was a consultant to Smart Phone Services,  Inc. He is
also a former Vice President of Brinks, Incorporated.

         STEVEN T. FRANCESCO has been President and Chief  Operating  Officer of
the Company  since  inception  and a director of the Company since January 1994.
From May 1990 to October  1992,  Mr.  Francesco  was a Senior Vice  President of
Darien Development Corporation,  a technology consulting firm. Mr. Francesco was
also President of Smart Phone Services, Inc. from October 1991 to December 1993.
Mr.  Francesco  is also a former  Senior  Vice  President  of Cantor  Fitzgerald
Securities, Inc.

         THOMAS W. HALLER,  CPA joined the Company as Vice President,  Treasurer
and Chief Financial  Officer in March 1996. From December 1992 to February 1996,
Mr.  Haller  was a Senior  Manager  at  Kaufman  Greenhut  Forman,  LLP a public
accounting firm in New York City where he was responsible for technical advisory
services and the firm's quality  assurance  program.  From June 1991 to December
1992,  Mr.  Haller  was  engaged  in the  practice  of  public  accounting  as a
consultant to certain entrepreneurial  companies. From December 1982 to May 1991
he was a  Senior  Manager  with  Ernst  & Young  LLP,  an  international  public
accounting and consulting firm, where he had  responsibility for client services
and new business  development in the firm's  financial  services  practice.

         DONALD J. MARINO, an information systems executive  specializing in the
securities  industry,  joined the Company in February  1997 as Chief  Technology
Officer.  Prior to joining  the Company he served as Vice  President  of Systems
Development at Deutsche Bank's New York headquarters from June 1996 to December

                                       -1-

<PAGE>



1996.  Prior thereto he was Director of MIS/EDP at Refco  Capital  Holdings from
March 1988 to May 1996 and a Vice President  responsible for Systems Development
and Advanced  Technologies at L.F.  Rothschild & Co. Inc., an investment banking
firm, from March 1985 to March 1988.

         MARIO F. ROSSI has been Vice  President  of  Operations  of the Company
since  December  1994.  From January 1989 to December  1994,  Mr. Rossi was Vice
President of Operations of MVS Inc., a fiber optic systems company.

         BERNARD BAUM has been a director of the Company since March 1996. Since
May 1997,  Mr. Baum has been  Executive  Vice  President  and Chief  Information
Officer of Signet Bank. From March 1996 to May 1997, Mr. Baum had been Executive
Vice President and Chief Operating Officer of Southeast Switch Inc.,  engaged in
the  ATM/POS/debit  card switch and  settlement  business.  From January 1995 to
March 1996, Mr. Baum had been Executive Vice President and Chief Information and
Operations  Officer of Bank South  Corporation,  a bank  holding  company.  From
January 1978 to January  1995,  Mr. Baum held various  positions  with  Citibank
N.A., including Vice President,  Senior Business Manager -- Consumer Bank, Chief
Technology  Officer-The  Citicorp Private Bank and Executive  Director -- Global
Finance.

         BETH BRONNER has been a director of the Company since March 1996. Since
September 1996, Ms. Bronner has been Vice President and Director of Marketing --
United States and Europe of Citibank,  engaged in the global  banking  business.
From July 1994 to September  1996,  Ms.  Bronner was Vice  President  --Emerging
Markets  with  AT&T  Domestic  Communications  Services,  the  consumer  service
division  of AT&T  Corp.  From  February  1992 to June  1994,  she held  various
executive  positions  with  Revlon,  Inc.,  including  President  of the  Revlon
Professional  (Salon  Products)  division and  Executive  Vice  President of the
Beauty Care and  Professional  Products  division.  From October 1990 to January
1992,  Ms.  Bronner was  President  of the Sweet  Goods & Dairy  division of the
Slim-Fast Foods Co. She is also director of The Hain Food Group, Inc.

         CATHERINE  CASSEL  TALMADGE  has been a director of the  Company  since
March 1996.  Since  January 1994,  Ms.  Talmadge has been Vice  President,  Time
Warner  Cable  Programming  of Time  Warner  Cable,  a division  of Time  Warner
Entertainment  Company,  L.P.  ("Time  Warner").  From September 1984 to January
1994,  she  held  various  positions  with  Time  Warner,   including  Director,
Programming Development;  Operations Director,  Financial Analyses; and Manager,
Budget Department.

         HIRO R.  HIRANANDANI  has been a director  of the  Company  since March
1996.  Since  June  1996,  Mr.  Hiranandani  has been the  President  and  Chief
Executive  Officer of  Computer  Power Inc.,  a public  company  which  provides
back-up power for the lighting industry. From January 1977 to December 1994, Mr.
Hiranandani held various positions with Pitney Bowes, Inc., including President,
Business  Systems-International  from  July  1987 to May 1990 and  President  of
Mailing Systems from May 1990 to October 1994.

         L. SCOTT PERRY has been a director of the Company since  November 1996.
Since  December  1995,  Mr.  Perry has been Vice  President,  Advanced  Platform
Services of AT&T Corp.  From  January  1989 to  December  1995,  Mr.  Perry held
various  positions  with AT&T  including  Vice  President - Business  Multimedia
Services,  Vice  President  (East) - Business  Communications  Services and Vice
President -  Marketing,  Strategy  and  Technical  Support for AT&T Data Systems
Group.  Since February 1996, Mr. Perry has also been the Chief Executive Officer
of GeoSphere Communications,  a networking software company. Mr. Perry serves on
the Board of Directors  of Junior  Achievement  of New York,  is a member of the
Cornell University  Engineering College Advisory Council and serves on the Board
of INEA, a private financial planning software company based in Toronto, Canada.


                                       -2-

<PAGE>



         The Board of Directors  consists of seven directors  divided into three
classes  of  directors:  Class I  Directors,  Class II  Directors  and Class III
Directors.  The  Company's  Class I Directors,  Class II Directors and Class III
Directors will serve until the annual meeting of the Company's  stockholders  to
be held in  1999,  1997 and  1998,  respectively,  and  until  their  respective
successors are duly elected and qualified or until their earlier  resignation or
removal.  Directors of each Class are elected for a full term of three years (or
any lesser period  representing  the balance of the previous term of such Class)
and until their  respective  successors  are duly elected and qualified or until
their earlier resignation or removal.  Officers are appointed annually and serve
at the  discretion  of the  Board  for one year.  Mr.  Cassetta  serves as Chief
Executive  Officer,  Chairman of the Board and  Secretary of the Company and Mr.
Francesco  serves  as  President  and Chief  Operating  Officer  of the  Company
pursuant to employment agreements.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Pursuant  to  Section 16 of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange Act"),  officers,  directors and holders of more than 10%
of the outstanding  shares of the Company's Common Stock  ("Reporting  Persons")
are required to file periodic  reports of their  ownership of, and  transactions
involving,   the  Company's  Common  Stock  with  the  Securities  and  Exchange
Commission  (the  "SEC").  Based  solely  upon a review  of Forms 3, 4 and 5 and
amendments  thereto  furnished to the Company  during and with respect to fiscal
year ended June 30,  1997,  the  Company  believes  that its  Reporting  Persons
complied with all Section 16 filing requirements applicable to them with respect
to the Company's fiscal year ended June 30, 1997.

ITEM 10. EXECUTIVE COMPENSATION

         The  following  table  sets  forth  information  concerning  annual and
long-term compensation, paid or accrued, for the Chief Executive Officer and for
each other executive officer of the Company whose compensation exceeded $100,000
in fiscal 1997 (the "Named  Executive  Officers") for services in all capacities
to the Company during the last three fiscal years:

                         SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
                                                                             LONG-TERM
                                                                           COMPENSATION
                                      ANNUAL COMPENSATION                     AWARDS
                            -----------------------------------------      ------------
                                                             OTHER
                                                             ANNUAL         SECURITIES
         NAME AND           FISCAL                           COMPEN-         UNDERLYING      ALL OTHER
    PRINCIPAL POSITION       YEAR      SALARY    BONUS      SATION(2)(3)      OPTIONS      COMPENSATION
    ------------------       ----      ------    -----      ------------      -------      ------------
<S>                          <C>      <C>                    <C>              <C>                  
Sebastian E. Cassetta        1997     $125,000     --        $ 9,750          100,000            --
Chief Executive Officer      1996     $125,000     --        $ 9,750          100,000(5)         --
                             1995     $125,000     --        $ 9,750             --              --

Steven T. Francesco          1997     $125,000     --        $ 9,750          100,000            --
President and Chief          1996     $125,000  $22,000      $11,750          100,000(5)     $20,000(4)
Operating Officer            1995     $125,000     --        $ 9,750             --              --
</TABLE>




                                       -3-

<PAGE>



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

(1)   None of the Named Executive  Officers received any Restricted Stock Awards
      or LTIP Payouts in 1995, 1996 or 1997.

(2)   As to each Named  Executive  Officer,  the  aggregate  amount of  personal
      benefits  not included in the Summary  Compensation  Table does not exceed
      the lesser of either  $50,000 or 10% of the total annual  salary and bonus
      paid to such Named Executive Officer.

(3)   Amounts shown consist of a non-accountable expense allowance.

(4)   Represents  a payment by the  Company  to Mr.  Francesco  of an  aggregate
      amount equal to the additional  income taxes and penalties  resulting from
      the early  withdrawal by him from an IRA of $35,000 which he loaned to the
      Company.

(5)   On July 16,  1996 the  Compensation  Committee  of the Board of  Directors
      canceled  the stock  options  representing  these  underlying  shares  and
      granted new options to Messrs. Cassetta and Francesco.

STOCK OPTIONS

         The  following  table  sets  forth  information  with  respect to stock
options granted to the Named Executive Officers during fiscal year 1997:

                          OPTION GRANTS IN FISCAL 1997
                             (INDIVIDUAL GRANTS)(1)


                         NUMBER OF       % OF TOTAL
                         SECURITIES       OPTIONS
                         UNDERLYING      GRANTED TO
                          OPTIONS        EMPLOYEES      EXERCISE    EXPIRATION
             NAME         GRANTED      IN FISCAL 1997    PRICE         DATE (2)
             ----        ---------     --------------   -------    ------------

Sebastian E. Cassetta     100,000          23.6%         $5.0625   July 15, 2006

Steven T. Francesco        19,753           4.7%         $5.56875  July 15, 2001
                           80,247          18.9%         $5.0625   July 15, 2006

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

(1)   No stock  appreciation  rights  ("SARs")  were granted to any of the Named
      Executive  Officers  during  fiscal  1997.  On  September  24,  1997,  the
      Compensation  Committee granted new stock options to employees conditional
      upon cancellation of all of their existing stock options. As a consequence
      of this action and upon  cancellation of the options  described above, Mr.
      Cassetta  received an option to purchase  100,000  shares of the Company's
      Common  Stock  exercisable  at a price  of $2.00  per  share  expiring  on
      September 23, 2007 and Mr. Francesco received an option to purchase 45,454
      shares of the Company's  Common Stock  exercisable at a price of $2.20 per
      share  expiring on  September  23,  2002 and an option to purchase  54,546
      shares of the Company's  Common Stock  exercisable at a price of $2.00 per
      share expiring on September 23, 2007.  The options  become  exercisable in
      full on the first anniversary of the grant date.


                                       -4-

<PAGE>



(2)   The options  become  exercisable  in full on the first  anniversary of the
      grant date.

         The  following  table  sets  forth  information  as to  the  number  of
unexercised  shares of Common Stock  underlying stock options at fiscal year end
and the value of unexercised in-the-money stock options at fiscal year
end:

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                        FISCAL YEAR END OPTION VALUE (1)

<TABLE>
<CAPTION>
                                                         NUMBER OF
                                                        UNEXERCISED
                                                         SECURITIES             VALUE OF
                             SHARES                  UNDERLYING OPTIONS   UNEXERCISED IN-THE-
                            ACQUIRED                 AT FISCAL YEAR END      MONEY YEAR END
                               ON         VALUE         EXERCISABLE/          EXERCISABLE/
   NAME                     EXERCISE    REALIZED       UNEXERCISABLE       UNEXERCISABLE (2)
   ----                     --------    --------      ---------------      -----------------
<S>                                                      <C>     <C>           <C>  
Sebastian E. Casetta.....      --          --            0/100,000             $0/$0
Steven T. Francesco......      --          --            0/100,000             $0/$0
</TABLE>

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

(1)   No SARs were  granted  to, or  exercised  by,  any of the Named  Executive
      Officers during fiscal 1997.

(2)   Value is based on the  closing  price  of the  Company's  Common  Stock as
      reported by the National  Association  of  Securities  Dealers'  Automated
      Quotation  System  ("NASDAQ")  on June 30, 1997  ($2.00) less the exercise
      price of the option.

EMPLOYMENT AGREEMENTS

         The Company and  Sebastian  E.  Cassetta  are parties to an  Employment
Agreement (the "Cassetta Agreement"),  effective January 31, 1994, which expires
on January 31,  1999.  The  Cassetta  Agreement  provides for (i) an annual base
salary of $125,000,  (ii) a performance  bonus for each fiscal year between June
30, 1995 and June 30, 1998, payable in cash and Common Stock of the Company,  in
the event the Company  achieves the levels of earnings before  interest,  income
taxes,  depreciation and amortization  ("EBITDA") provided therein and (iii) any
additional amount as determined by the Board or an outside  compensation  board.
The EBITDA goals are $7,000,000 and $10,500,000 for 1997 and 1998, respectively.
If any goal is achieved,  Mr.  Cassetta will receive a cash bonus of one-half of
one  percent  of the goal and  approximately  22,000  shares  of  Common  Stock.
Pursuant to the Cassetta Agreement, Mr. Cassetta is also entitled to participate
in any present or future insurance, pension, retirement, profit sharing or bonus
plan or other  compensation  or  incentive  plan  adopted by the Company for the
general and overall  benefit of full-time  principal  executives of the Company,
such  participation to be upon the same terms and conditions as generally relate
to such full-time principal executives.  Pursuant to the Cassetta Agreement,  in
the event that Mr.  Cassetta's  employment  is  terminated  without  cause,  the
Company is obligated to make a severance  payment to Mr.  Cassetta in the amount
of $250,000 within 30 days following the date of such termination.

         The  Company  and Steven T.  Francesco  are  parties  to an  Employment
Agreement (the "Francesco Agreement"), effective January 31, 1994, which expires
on January 31, 1999.  The  Francesco  Agreement  provides for (i) an annual base
salary of $125,000, (ii) a performance bonus for each fiscal year between June


                                       -5-

<PAGE>



30, 1995 and June 30, 1998, payable in cash and Common Stock of the Company,  in
the event the Company  achieves the levels of EBITDA provided  therein and (iii)
any  additional  amount as  determined  by the Board or an outside  compensation
board.  The  EBITDA  goals  and  bonuses  are the same as those in the  Cassetta
Agreement.  Pursuant to the Francesco Agreement,  Mr. Francesco is also entitled
to participate in any present or future insurance,  pension, retirement,  profit
sharing or bonus plan or other  compensation  or  incentive  plan adopted by the
Company for the general and overall benefit of full-time principal executives of
the Company,  such  participation  to be upon the same terms and  conditions  as
generally  relate  to  such  full-time  principal  executives.  Pursuant  to the
Francesco Agreement,  in the event that Mr. Francesco's employment is terminated
without  cause,  the Company is  obligated  to make a  severance  payment to Mr.
Francesco in the amount of $250,000  within 30 days  following  the date of such
termination.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The  following  table  sets  forth,  as of  October 24,  1997,  certain
information with respect to the beneficial  ownership of the Common Stock by (i)
each  person  known by the  Company  to  beneficially  own  more  than 5% of the
outstanding  shares,  (ii)  each  director  of the  Company,  (iii)  each  Named
Executive  Officer and (iv) all executive  officers and directors of the Company
as a group.  Except as otherwise  indicated,  each person  listed below has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite such person's name.

<TABLE>
<CAPTION>
           NAME AND ADDRESS OF            AMOUNT AND NATURE OF          PERCENT OF
          BENEFICIAL OWNER (1)          BENEFICIAL OWNERSHIP (2)    OUTSTANDING SHARES (3)
          --------------------          ------------------------    ----------------------
<S>                                           <C>                      <C>  
Steven T. Francesco
c/o SmartServ Online, Inc.
Metro Center, One Station Place
Stamford, CT 06902 ..................         839,445                  22.7%

Sebastian E. Cassetta
c/o SmartServ Online, Inc.
Metro Center, One Station Place
Stamford, CT 06902 ..................         376,250                  10.2%

InterBank Communications, Inc.
1733 Connecticut Avenue, N.W.
Washington, DC 20009 ................         204,250(4)               5.5%

Bernard Baum.........................           5,000(5)                 *

Beth Bronner.........................          10,000(5)                 *

Catherine Cassel Talmadge............           7,500(5)                 *

Hiro R. Hiranandani..................          20,000(5)(6)              *

L. Scott Perry.......................          10,000(5)                 *

All executive officers and directors
as a group (10 persons)..............       1,280,695(7)               34.3%
</TABLE>
--------------------
*     Less than 1%



                                       -6-

<PAGE>



(1)   Under the rules of the SEC,  addresses are only given for holders of 5% or
      more of the outstanding Common Stock of the Company.

(2)   Under the rules of the SEC, a person is deemed to be the beneficial  owner
      of a security if such person has or shares the power to vote or direct the
      voting of such security or the power to dispose or direct the  disposition
      of such security.  A person is also deemed to be a beneficial owner of any
      securities  if that person has the right to acquire  beneficial  ownership
      within 60 days of the date hereof. Unless otherwise indicated by footnote,
      the named  entities or individuals  have sole voting and investment  power
      with respect to the shares of Common Stock beneficially owned.

(3)   Represents the number of shares of Common Stock  beneficially  owned as of
      October 24, 1997, by each named person or group, expressed as a percentage
      of the sum of all of the shares of such class  outstanding as of such date
      and the number of shares not  outstanding but  beneficially  owned by such
      named person or group.

(4)   Includes 10,000 shares subject to currently exercisable warrants.

(5)   Includes 5,000 shares subject to currently exercisable options.

(6)   Includes 10,000 shares subject to currently exercisable warrants.

(7)   Includes  36,000  shares  subject to  currently  exercisable  options  and
      warrants.

CHANGES IN CONTROL

         The Company and each of Messrs.  Cassetta  and  Francesco  have entered
into an agreement with Zanett Capital,  Inc. ("Zanett") dated September 29, 1997
which provides, among other things, that for a period of 5 years, at the request
of Zanett the Company  will  appoint  such number of  designees of Zanett to its
Board of Directors so that the designees of Zanett will constitute a majority of
the members of the Board of Directors of the Company.  Further, Messrs. Cassetta
and  Francesco  have agreed to vote their shares of Common  Stock,  representing
approximately 32.5% of the outstanding stock of the Company, and any shares they
may acquire in the future,  in favor of the  designees  of Zanett at each Annual
Meeting of Stockholders of the Company at which Directors are elected.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In March 1996, upon the  consummation  of the Company's  Initial Public
Offering, the Company and InterBank Communications, Inc. ("InterBank") agreed to
terminate  a  Consulting  Agreement  entered  into  on  June  1,  1995  and,  in
consideration therefor, the Company issued 10,000 warrants to InterBank and paid
InterBank $50,000. The Company also paid InterBank $36,000 in full settlement of
all  amounts  past  due  under  the  Consulting  Agreement.  On the  date of the
execution and delivery of the Consulting Agreement, InterBank beneficially owned
more  than 5% of the  Company's  Common  Stock  and  Simon  A.  Hershon,  Ph.D.,
President  of  InterBank,  was a director  of the  Company.  Mr.  Hershon  was a
director of the Company until November 1996.

         In March 1996, upon the  consummation  of the Company's  Initial Public
Offering,  the Company repaid $707,780  principal amount of certain  convertible
subordinated notes (and accrued interest thereon), and the


                                       -7-

<PAGE>


balance of the notes and accrued  interest  thereon was  converted  into 427,735
shares of Common Stock or more than 5% of the then outstanding  shares of Common
Stock.  Holders of such notes were present or former investment advisory clients
of Laifer Capital Management, Inc.

         In  connection  with a  private  placement  of  securities  made by the
Company in 1995, Sebastian E. Cassetta and Steven T. Francesco, each an officer,
director  and  beneficial  owner  of more  than 5% of the  Common  Stock  of the
Company,  entered  into a  Non-Recourse  Guaranty  and Pledge  Agreement,  dated
October 2, 1995 (the  "Pledge  Agreement"),  with the  placement  agent for such
securities as agent for the subscribers named therein, pursuant to which Messrs.
Cassetta and Francesco each pledged 250,000 shares of Common Stock, which shares
secured the repayment of the  $1,200,000  principal  amount of promissory  notes
sold by the  Company to such  subscribers.  The notes were  repaid in March 1996
upon the consummation of the Company's  Initial Public  Offering,  whereupon the
Pledge Agreement was terminated.

         The Company believes that the terms of the transactions described above
between the Company and its officers, directors or other affiliates were no less
favorable to the Company  than would have been  obtained  from a  non-affiliated
third  party  for  similar  transactions  at the  time  of  entering  into  such
transactions.  In addition,  the Company has adopted a policy whereby all future
transactions and/or loans between the Company and its officers or directors will
be on terms  that the  Company  believes  are no less  favorable  than  could be
obtained from unaffiliated  third parties (at the time such transactions  and/or
loans are entered  into) and will be  approved by a majority of the  independent
disinterested directors of the Company.




                                       -8-


<PAGE>
  

                                   SIGNATURES




           Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

October 28, 1997                        SMARTSERV ONLINE, INC.
                                                     Registrant

                                        By:  /S/SEBASTIAN E. CASSETTA
                                           ------------------------------
                                              Sebastian E. Cassetta
                                              Chairman of the Board
                                              Chief Executive Officer



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