FORM 10-QSB

                    SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C.  20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                      SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 1997

                                    OR

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

For the transition period from                to               .

Commission file number 0-27828 

               WANDERLUST INTERACTIVE, INC.                      
          (Exact name of registrant as specified in its charter)

          Delaware                          13-3779546      
(State or other jurisdiction of         (IRS Employer 
incorporation or organization)           Identification No.)


       5301 Beethoven Street, Los Angeles, CA 90066              
                 (Address of principal executive offices)
                                (Zip Code)

                                                                 
           (Registrant's telephone number, including area code)


                                                                      
     (Former name, former address and former fiscal year, if changed  
since last report)

     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 and 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.      

Yes  X    No    

     Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of February 10, 1997

Shares of common stock, par value $.01 per share.

                               Page 1 of 10
                        There is no Exhibit Index.


                       WANDERLUST INTERACTIVE, INC.


                                   INDEX



Part I.  Financial Information                                     Page No.

     Item 1.   Financial Statements                         

               Consolidated Balance Sheet                   3
               at December 31, 1997

               Consolidated Statements of                   4
               Operations - Three Months Ended 
               December 31, 1997 and 1996 
               and Six Months Ended 
               December 31, 1997 and 
               1996

               Consolidated Statements of                   5
               Cash Flows - Six Months 
               Ended December 31, 1997,
               and 1996

               Notes to Consolidated                        6
               Financial Statements                                        

     Item 2.   Management's Discussion                      7-8
               and Analysis of Financial 
               Condition and Results of 
               Operations

Part II.  Other Information                                 

     Item 6.   Exhibits and Reports on Form 8-K             9

Signature                                                   10












                                     




                Wanderlust Interactive, Inc. and Subsidiary
                        Consolidated Balance Sheet 

                                  ASSETS
                                              December 31,  
                                                  1997     
Current assets:
 Cash and cash equivalents                      $  214,581  
 Accounts  receivable, net of reserve
 of $23,500                                         400,277
  Prepaid expenses                                    38,529
  Other current assets                               119,320  
    Total current assets                           772,707  

Fixed assets, net                                  685,205  

Other assets:
 License rights, advance royalty                   150,000  
 Security deposits, and other                       45,122  
 Patents and licenses, net                       2,763,604 
 Capitalized software                               49,238
 Goodwill, net                                   1,642,157   
                                                 4,650,121  

                                                $6,108,033  
 

                   LIABILITIES AND SHAREHOLDERS' EQUITY 

Current liabilities:
 Accounts payable and accrued liabilities       $  797,213  
 Billings in excess of costs and estimated 
  earnings on contracts in progress                313,238
 Notes and loans payable                           585,413
 Convertible debentures                            102,500    
    Total current liabilities                    1,798,364  

Due to officer/shareholder                          53,203

Commitments and contingency

Shareholders' equity: 
 Preferred stock, $.01 par value; authorized,
  100,000 shares; issued and outstanding, none            0       
 Common stock, $.01 par value; authorized, 
  10,000,000 shares; issued and outstanding,
 6,497,061 shares                                   64,971
 Additional paid-in capital                     11,985,690    
 Accumulated deficit                           ( 7,794,195)   
                                                 4,256,466    

                                                $6,108,033    
  
             See notes to  consolidated financial  statements.             

<TABLE>

                Wanderlust Interactive, Inc. and Subsidiary
                   Consolidated Statements of Operations

<CAPTION>
                                                                               
                                                                                             
                         Three          Three       Six            Six 
                         Months         Months      Months         Months       
                         Ended          Ended       Ended          Ended 
                         December 31,   December 31, December 31,  December 31, 
                         1997            1996        1997         1996         
<S>                        <C>          <C>         <C>           <C>                                                      

Revenues:
 Product sales              $        0   $  38,000   $    2,367    $  38,000  
 Development contracts         584,207           0      834,150            0
 Royalties                     268,345     138,087      505,835      256,387  

                               852,552     176,087    1,342,352      294,387  

Expenses:
 Cost of product sales               0      50,042       34,000       50,042   
 Cost of development
 contracts                     299,974           0      576,431            0
 Research and development       24,641     785,326      236,592    1,524,720   
 Selling, general 
  and administrative           437,313     336,740      839,582      695,492  
 Depreciation and 
  amortization                 192,699     125,623      574,609      159,510
 Interest expense
  (income), net                 13,188  (    4,153)      32,112   (   38,965)

                               967,815   1,293,578    2,293,326    2,390,799

Net loss                     $ 115,263  $1,117,491   $  950,974   $2,096,412  

Net loss per common share,
 basic and diluted          $      .02  $      .30   $      .17   $      .56

Weighted average 
 shares outstanding          5,865,950   3,763,719    5,499,145    3,763,719



















             See notes to  consolidated financial  statements.             <PAGE>
              
</TABLE>

                Wanderlust Interactive, Inc. and Subsidiary
                   Consolidated Statements of Cash Flows
                                                                               
                                                                               
                                           Six                Six 
                                           Months             Months      
                                           Ended              Ended      
                                           December 31,       December 31,  
                                           1997               1996          
Cash flows from operating
 activities:
Net loss                                    ($ 950,975)       ($ 2,096,412)   
Adjustments to reconcile net loss 
 to net cash used in operating activities:
 Write off of license rights                    50,000                    0  
 Write off of capitalized software               50,700                   0 
 Amortization                                   304,455                   0 
 Depreciation                                  169,454             159,510     

Change in:
  Accounts receivable                       (  163,296)        (    56,351)
  Costs and estimated earnings in excess of 
   billings on contracts in progress             20,600                   0  
  Billings in excess of costs and estimated 
   earnings on contracts in progress            182,953                   0 
  Inventory                                          0         (    47,090)
  Accounts payable and accrued expenses         82,986                 784
  Prepaid expenses                          (  14,029)                   0     
  Other assets                              (  108,491)              19,550 
Net cash used in operating activities       (  375,643)        ( 2,020,009)    

Cash flows from investing activities:
 Purchase of fixed assets                   (    8,860)        (   361,977)  
  Noncurrent  receivable                               0         (   230,000)
Net cash used in investing activities       (    8,860)        (   591,977)  

Cash flows from financing activities:  
  Payments on notes payable                 (   94,756)                  0
  Proceeds from loan payable                   192,000                   0
  Payments on due to officer                (   30,097)                  0
  Issuance of common stock and warrants, 
   Net of costs of issuance                    303,176                   0  
Net cash provided by financing activities      370,323                   0  

Increase (decrease) in cash 
 and cash equivalents                     (    14,180)        (  2,611,986)    
 
Cash and cash equivalents, beginning           228,761           4,893,658     

Cash and cash equivalents, ending           $  214,581         $ 2,281,672     
   

During the six months ended December 31, 1997 269,583 shares of
common stock were
issued in exchange for $162,500 of convertible debentures.

During the six months ended December 31, 1997 1,250 shares of common stock were
issued for extension of due date of convertible debentures.

During the six months ended December 31, 1997 285,000 shares of common stock
were issued for services relating to raising capital.

During the six months ended December 31, 1997 50,000 shares of
common stock were issued to satisfy $30,000 of accounts payable.


See notes to  consolidated financial  statements.            <PAGE>
      

Wanderlust Interactive, Inc.
                                     
               Notes to  Consolidated Financial  Statements

1.   The financial statements as of December 31, 1997 and for the
     three and six month periods ending December 31, 1997 and 1996
     are unaudited and reflect all adjustments (consisting of only
     normal recurring adjustments) which are, in the opinion of
     management, necessary for a fair presentation of the financial
     position and operating results for the interim periods.  The
     financial statements should be read in conjunction with the
     financial statements and notes thereto, together with
     management s discussion and analysis of financial condition
     and results of operations contained in the Company s Annual
     Report to Stockholders incorporated by reference in the
     Company s Annual Report on Form 10- KSB  for the fiscal year
     ended June 30, 1997.  The results of operations for the three
     and six months ended December 31, 1997 are not necessarily
     indicative of the results for the entire fiscal year ending
     June 30, 1998.

2.   During the six months ended December 31, 1997 the Company
     effected a private offering of 850,000 shares of common stock
     and 212,500 warrants for aggregate consideration, net of
     expenses of $303,176.  The warrants are exercisable at $1.25
     per share and expire one year from the date of issuance.  In
     connection with services performed for the private offering,
     the Company issued 285,000 shares of common stock.


3.   During the quarter ended December 31, 1997, the Company
     revised its  assessment of the useful lives of its patents and
     licenses.  The assessment indicated that a useful life of
     eight years (rather than four years as previously used) would
     be appropriate.  As a result of this change in accounting
     estimate, net loss for the six months and three months ended
     December 31, 1997 was reduced by $141,724 and $141,724,
     respectively, and net loss per common share for the comparable
     periods was reduced by $.03 and $.02, respectively.





                                     
<PAGE>
Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations


     Results of Operations

     For the three months ended December 31, 1997, the Company had
revenues of $852,552, an increase of $676,469 or 384% over revenues
of $176,083 in the corresponding three month period in 1996.  This
increase was derived largely from the Company's acquisition of
Western Technologies, where the Company has added new customers in
the funded development of video and computer games and the created
new funded toy designs.  In the three months ended December 31,
1997, the results improved significantly with a net loss of
$115,263, or $.02 per share, compared with a loss of $1,293,578, or
$.30 per share, in the previous period, a $1,002,230 reduction of
losses in the current period.  When non-cash depreciation and
amortization expenses of $192,699 are excluded, the results in the
three month period ended December 31, 1997 reflect a positive cash
flow of $77,436 compared with a negative cash flow of $991,868 in
the previous period excluding non-cash depreciation and
amortization expenses of $125,623, a positive swing of $1,069,304
during the current period.

     For the six months ended December 31, 1997 and 1996, the
Company had revenues of $1,342,352 and $294,387, respectively, an
improvement of $1,047,965.  The Company incurred a net loss of
$950,974, or $.17 per share, for the six month period ended
December 31, 1997 as compared to $2,096,412, or $.56 for the year
earlier period, a $1,145,438 reduction of losses in the current
period.  When non-cash depreciation and amortization expenses of
$574,609 are excluded, the results for the six month period ended
December 31, 1997 reflect a negative cash flow of $376,365 compared
with a negative cash flow of $1,936,902 in the previous period
excluding non-cash depreciation and amortization expenses of
$159,510, a positive swing of $1,560,537.

     For the six month periods ended December 31, 1997 and 1996,
research and development expenses totaled $236,592 and $1,524,720,
respectively, reflecting the end of development on the Pink Panther
games.  Selling, general and administrative expenses were $839,582
and $695,492 for the six month periods ended December 31, 1997 and
1996, respectively.  


     Financial Condition

     The Company used substantially less cash for operating
activities in the amount of $375,643 during the six months ended
December 31, 1997, as compared to using $2,020,009 in the year
earlier period, an improvement of $1,644,366.  This reflects the
Company's change in activities due to its acquisition of Western
Technologies and reduction of costs at its New York and California
offices.  The Company purchased $8,860 of fixed assets during the
six months ended December 31, 1997, as compared to $361,977 a year
ago.  Financing activities provided funds in the amount of $370,323
and $0 during the six months ended December 31, 1997 and 1996,
respectively.  This primarily reflects issuance of common stock and
warrants during the current period.

     The Company reduced its working capital deficit at December
31, 1997 to $1,025,657 from $1,116,839 at June 30, 1997, an
improvement of $91,182 in the current period.  The Company's
current ratio was .43 to 1 at December 31, 1997 as compared to .31
to 1 at June 30, 1997.

     During the six months ended December 31, 1997, holders of
$162,500 of convertible debentures converted their debentures into
269,583 shares of Common Stock of the Company (the "Common Stock"). 
At December 31, 1997, there remained $102,500 of these convertible
debentures, of which $31,250 were due, unpaid and in default.

     During the six months ended December 31, 1997, the Company
conducted a private equity offering pursuant to which it issued
850,000 shares of Common Stock and 212,500 warrants to purchase
additional shares of Common Stock, for net proceeds of $303,176.

     Due to significant losses and lower sales than forecast from
the Company's Pink Panther CD-Rom titles, the Company has
experienced significant cash flow shortages resulting in the
Company substantially reducing its staff, especially in its New
York office where it went from 50 to three.  In addition, the
Company is attempting to further reduce its expenditures, and is
subleasing unused facilities.  Evenso, unless the Company raises
additional capital or its revenues from operations increase, the
Company will encounter increased liquidity pressures that could
result in a further material disruption of its operations.  There
is no assurance, however, that such additional capital will be
available, or if available, whether it will be available on terms
acceptable to the Company.   


     Safe Harbor Statement

     Statements which are not historical facts, including
statements about the Company's confidence and strategies and its
expectations about new and existing products, technologies and
opportunities, market and industry segment growth, demand and
acceptance of new and existing products are forward looking
statements that involve risks and uncertainties.  These include,
but are not limited to, product demand and market acceptance risks;
the impact of competitive products and pricing; the results of
financing efforts; the loss of any significant customers of any
business; the effect of  the Company's accounting policies; the
effects of economic conditions and trade, legal, social, and
economic risks, such as import, licensing, and trade restrictions;
the results of the Company's business plan and the impact on the
Company of its relationship with its lenders.

<PAGE>
                        PART II - OTHER INFORMATION



Item 6.   Exhibits and Reports on From 8-K

     (b)  During the quarter ended December 31, 1997, the
registrant did not file any reports on Form 8-K.








<PAGE>
                                 SIGNATURE




     Pursuant to the requirements of the Securities Exchange At of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                                   WANDERLUST INTERACTIVE, INC.



Dated:  February 19, 1998          s/Jay Smith, III           
                                   Jay Smith, III
                                   President
                                  (Principal Financial Officer)


































WPDOCS\CDKIDZ\10Q.97