SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB



               QUARTERLY REPORT FILED UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended                        Commission File Number
      May 31, 1997                                           0-21649
      ------------                                           -------



                                 WEBSECURE, INC.
                                 ---------------
                          (Exact Name of Small Business
                       Issuer As Specified In Its Charter)



           Delaware                                       04-3296069
           --------                                       ----------
(State or Other Jurisdiction of                        (I.R.S. Employer
 Incorporation or Organization)                      Identification Number)

                   1711 Broadway, Saugus, Massachusetts 01906
                   ------------------------------------------

                    (Address of Principal Executive Offices)

                                 (617) 867-2300
                                 --------------

                (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
                  -------                                      -------

         As of July 14, 1997, the Company had  outstanding  5,606,875  shares of
Common Stock, $.01 par value per share.





                                 WEBSECURE, INC.

                                      INDEX

<TABLE>
<CAPTION>



PART I.  FINANCIAL INFORMATION                                                        PAGE
<S>                                                                                   <C>

ITEM 1.  FINANCIAL STATEMENTS

Balance Sheets
    as of May 31, 1997 (Unaudited) and August 31, 1996 (Audited)...................      3

Statements of Operations
    for the Three and Nine Month Periods ended May 31, 1997 and 1996 (Unaudited)
    and cumulative from inception (July 19, 1995) to May 31, 1997..................      4
Statements of Cash Flows
    for the Three and Nine Month Periods ended May 31, 1997 and 1996 (Unaudited)
    and cumulative from inception (July 19, 1995) to May 31, 1997..................    5-6

Notes to Financial Statements  (Unaudited).........................................    7-8

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS .....................................   9-11

PART II. OTHER INFORMATION ........................................................     12

ITEM 1.  LEGAL PROCEEDINGS.........................................................     12

ITEM 2.  CHANGES IN SECURITIES.....................................................     13

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES...........................................     13

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS  .....................     13

ITEM 5.  OTHER INFORMATION  .......................................................     13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..........................................     13

SIGNATURES.........................................................................  14,15

</TABLE>


                                       2





                                 WEBSECURE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               May 31,           August 31,
                                                                                1997               1996
                                                                                ----               ----
                                                                             (Unaudited)         (Audited)
<S>                                                                          <C>                 <C>

ASSETS

CURRENT ASSETS:
         Cash and cash equivalents                                            $ 3,074,631          $    12,832
         Accounts receivable, net                                                 183,238               21,797
         Inventories                                                                  943                5,971
         Due from related parties                                                  84,630               59,776
         Prepaid expenses and other                                                68,402                6,600
         Legal retainers and deposit                                              233,251                  --
                                                                              -----------          -----------

         Total Current Assets                                                   3,645,094              106,976
PROPERTY AND EQUIPMENT, NET                                                     1,215,881            1,173,397
RESTRICTED CASH                                                                   691,405                   --
DEFERRED REGISTRATION COSTS                                                            --              424,060
OTHER ASSETS                                                                     122,254                41,515
                                                                              -----------           ----------
                                                                              $ 5,674,634           $1,745,948
                                                                              ===========           ==========

LIABILITIES AND STOCKHOLDERS' EQUITY  (DEFICIT)

CURRENT LIABILITIES:
         Accounts payable and accrued expenses                                $   338,614           $  679,435
         Reserve for software license settlement                                  791,750                   --
         Due to related parties                                                        --              125,635
         Note payable to related party                                                 --              672,000
         Current portion of capital lease obligations                             183,432               71,763
                                                                              -----------           ----------
                  Total current liabilities                                     1,313,796            1,548,833
CAPITAL LEASE OBLIGATION, LESS CURRENT MATURITIES                                 802,951              300,430
                                                                              -----------           ----------
                  Total liabilities                                             2,116,748            1,849,263
                                                                              -----------           ----------

STOCKHOLDERS' EQUITY  (DEFICIT):
         Preferred stock, $.01 par value; 1,000,000 shares
           authorized; no shares issued and outstanding                                --                   --
         Common stock, $.01 par value; 20,000,000 shares
           authorized; 5,606,875 and 2,105,000 shares issued
           and outstanding.                                                        56,069               21,050
         Class B common stock, $.01 par value; 2,000,000
           shares authorized;  0 and 625,000 shares issued and
           outstanding                                                                 --                6,250
         Additional paid-in capital                                            14,288,131            7,827,025
         Deficit accumulated during the development stage                     (10,786,314)          (7,957,640)
                                                                              -----------           ----------
                  Total stockholders' equity  (deficit)                         3,557,886             (103,315)
                                                                              -----------           ----------
                                                                              $ 5,674,634           $1,745,948
                                                                              ===========           ==========
</TABLE>


                 See accompanying notes to financial statements




                                       -3-



                                                        
                                 WEBSECURE, INC.
                          (A DEVELOPMENT STAGE COMPANY)


                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                                Cumulative
                                                                                                               from Inception
                                                    Three Months Ended              Nine months Ended       (July 19, 1995)  to
                                                     May 31,     May 31,           May 31,       May 31,           May 31,
                                                     1997         1996             1997           1996              1997
                                                   --------     --------          --------      -------          --------
<S>                                              <C>           <C>              <C>           <C>              <C>   

Revenues                                             $68,410           $17        $216,240         $31,763         $313,495
Cost of revenues                                     260,315       (24,059)        750,302          77,951         $943,742
                                                 -----------    ----------      ----------     -----------     ------------

Gross margin                                        (191,905)       24,076        (534,062)        (46,188)        (630,247)
                                                 -----------   -----------      ----------     -----------     ------------

Operating expenses:
         General and administrative                1,018,026       566,815        1,802,791        948,446        2,381,039
          Selling and marketing                       74,416       136,659          398,573        204,706          699,199
 Research and development                             61,447       303,239          147,072        471,937        1,323,443
          Charge for acquired
           research and development                    ---       5,760,000           ---         5,760,000        5,760,000
                                                 -----------   -----------      -----------    -----------     ------------
  Total operating expenses                         1,153,889     6,766,713        2,348,436      7,385,089       10,163,681

Loss from operations                              (1,345,794)   (6,742,637)      (2,882,498)    (7,431,277)     (10,793,928)
    Interest income (expense), net                    32,002        18,762           53,824          1,890            7,614
                                                 -----------   -----------      -----------    -----------     ------------
Loss before income taxes                          (1,313,792)   (6,723,875)      (2,828,674)    (7,429,387)     (10,786,314)
Income taxes                                           ---          ---               ---              ---           ---
                                                 -----------   -----------      -----------    -----------     ------------

Net loss                                         $(1,313,792)  $(6,723,875)     $(2,828,674)   $(7,429,387)    $(10,786,314)
                                                 ===========   ===========      ===========    ===========     ============

Net loss per common and
  common equivalent shares                              (.23)        (1.20)            (.50)         (1.33)           (1.92)
                                                        ====         =====             ====          =====            =====
Weighted Average Shares used in computing
  net loss per common and common
  equivalent shares                                5,606,496     5,605,750        5,606,129      5,605,750        5,606,875

</TABLE>



                 See accompanying notes to financial statements




                                       -4-







                                 WEBSECURE, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                Cumulative
                                                                                                              from Inception
                                                     Three Months Ended           Nine months Ended         (July 19, 1995) to
                                                    May 31,       May 31,         May 31,        May 31,          May 31,
                                                    1997           1996            1997           1996             1997
                                                    ----           ----            ----           ----             ----

<S>                                              <C>           <C>              <C>           <C>             <C>   

Cash flows from operating activities:
     Net loss                                    $(1,313,792)  $(6,723,877)     $(2,828,674)   $(7,429,386)   $ (10,786,314)
      Adjustments to reconcile net loss
       to net cash used
       by operating activities:
        Charge for acquired research and
           development                               ---         5,760,000          ---          5,760,000        5,760,000

       Issuance of common stock for
           professional services                     ---            79,800          ---             79,800           79,800
       Depreciation and amortization                 118,038        69,640          326,881        127,920          524,347
        Changes in operating assets and
           liabilities
             Accounts receivable & other            (173,094)      173,506         (161,441)      ( 41,484)        (183,238)
             Inventories                                  29        (3,537)           5,028      (  10,295)            (943)
             Prepaid expenses and other             (112,538)        1,116         (295,052)         9,445         (301,652)
             Accounts payable and accrued
                expenses                             (84,960)      236,095          450,929      1,137,515        1,130,364
                                                  ----------      --------       ----------     ----------       ----------
             Net cash used by
               operating activities               (1,566,317)     (407,257)      (2,502,329)      (366,485)      (3,777,636)
                                                  ----------      --------       ----------     ----------       ----------

Cash flows from investing activities:
      Acquisition of property and equipment        ( 112,612)    ( 119,009)        (369,365)      (798,614)      (1,738,980)
      Notes Receivable                                 ---         122,110            ---         (127,890)          ---
      Deferred registration costs                                 (170,003)         424,060       (224,060)          ---
      Increase (decrease) in other assets            (54,154)      (24,915)        ( 80,739)       (21,806)        (123,502)
                                                  ----------     ---------       ----------     ----------       ----------
                                                                                          
      Net cash used in investing
          activities                                (166,766)    ( 191,817)         (26,044)    (1,172,370)      (1,862,482)
                                                  ----------    ----------       ----------    -----------       ----------
                                                                                              

Cash flows from financing activities:
      Borrowings under capital leases                 ---           ---             735,431        416,084        1,124,487
      Principal payments on capital lease           ( 47,839)     ( 10,919)       ( 121,241)       (27,028)        (138,104)
      (Increase) decrease in due
              from related parties                   (54,081)       41,580          (24,854)      (785,795)         (84,630)
      Subscriptions receivable                        ---          595,000            ---            ---              ---
      Decrease in due to related parties              ---           ---            (125,635)       (17,343)           ---
      Decrease (increase) in restricted cash          49,169        ---            (691,405)         ---           (691,405)

</TABLE>

                 See accompanying notes to financial statements



                                        5






                                 WEBSECURE, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>

                                                                                                                 Cumulative
                                                                                                               from Inception
                                                        Three Months Ended            Nine months Ended       (July 19, 1995) to
                                                       May 31,      May 31,         May 31,      May 31,           May 31,
                                                      1997          1996            1997          1996              1997        
                                                     -------       -----          ---------       ----             -----
                                                                                                          

<S>                                               <C>            <C>             <C>            <C>              <C>    

Cash flows from financing activities (continued):
      Proceeds from issuance of common stock            ---          ---          6,485,375      2,014,535        8,499,900
      Proceeds from exercise of common stock
        options                                        4,500         ---              4,500        ---                4,500
      Proceeds from notes payable to related
        party                                           ---        105,250           27,083        239,178        1,522,083
      Payments of notes payable to related
        party                                           ---          ---           (699,083)      (168,928)      (1,522,083)
                                                  ----------      --------       ----------      ---------       ----------

      Net cash provided (used) by financing          (48,251)      730,911        5,590,171      1,670,703        8,714,748
                                                  ----------     ---------       ----------      ---------       ---------
        activities

      Net increase (decrease) in cash and
        cash equivalents                          (1,781,333)      131,839        3,061,799        131,848        3,074,631


      Cash and cash equivalents,
         beginning of period                       4,855,964        ---              12,832                          ---
                                                  ----------     ---------       ----------    -----------       ----------
                                                                                                  
      Cash and cash equivalents, end of period    $3,074,631     $ 131,839       $3,074,631    $   131,839       $3,074,631
                                                  ==========     =========       ==========    ===========       ==========
      Supplemental cash flow
        information:
        Cash paid for interest                    $   27,070     $  16,872       $   85,040    $    16,872       $  125,776

</TABLE>

                 See accompanying notes to financial statements




                                       6








                                 WEBSECURE, INC.
                          NOTES TO FINANCIAL STATEMENTS

1. GENERAL

WebSecure,  Inc. (the  "Registrant")  is in the development  stage, and as such,
success of future operations is subject to a number of risks similar to those of
other  companies in the same stage of  development.  Principal among these risks
are the Company's limited operating history,  history of operating losses, early
stage of market development,  competition from substitute products,  larger more
established competitors and rapid technological change.

The accompanying unaudited financial statements have been prepared in accordance
with  the  instructions  for  Form  10-QSB  and  therefore  do not  include  all
information  and  footnotes  necessary  for a  fair  presentation  of  financial
position,  results of operations  and changes in cash flows in  conformity  with
generally accepted accounting  principles.  The unaudited  financial  statements
should be read in  conjunction  with the financial  statements and related notes
included in the Registrant's Form SB-2 Registration  Statement as filed with the
Securities  and  Exchange  Commission  (the "SEC") on  December 4, 1996.  In the
opinion  of  management,   the  unaudited   financial   statements  contain  all
adjustments  necessary for a fair  presentation  of the  Registrant's  financial
condition and results of operations  for the interim  periods  presented and all
such adjustments are of a normal and recurring nature. The results of operations
for the nine months  ended May 31, 1997 are not  necessarily  indicative  of the
results which may be expected for the entire fiscal year.

COMPUTATION OF NET LOSS PER COMMON AND COMMON EQUIVALENT SHARES

The net loss per common and common equivalent shares is computed by dividing the
net loss by the weighted average number of shares outstanding during each period
presented,  as adjusted for the effects of application  of SEC Staff  Accounting
Bulletin  No. 83 ("SAB No.  83").  Pursuant to SAB No. 83, all common  stock and
common stock equivalents issued within twelve months prior to the initial filing
of the registration  statement relating to the Company's initial public offering
(the "IPO") at a price less than the IPO price have been treated as  outstanding
for all  reported  periods.  The number of shares used in the  computation  also
includes the conversion of outstanding  Class B Common Stock into four shares of
Common Stock, which occurred on the date of filing of the Registrant's Form SB-2
Registration Statement with the SEC.

INITIAL PUBLIC OFFERING

On December  10, 1996 the Company  consummated  a public  offering of  1,000,000
shares of common stock at a price of $8.00 per share and redeemable  warrants to
purchase 1,000,000 shares of common stock at $9.60 per share, at a price of $.20
per warrant.  The gross  proceeds  from the public  offering of  $8,200,000  was
reduced by the  underwriting  discount  and  non-accountable  expense  allowance
totaling $1,066,000 and legal, printing, accounting and other registration costs
of $648,625.


                                       7





 2.    REVERSAL OF REVENUE FROM MANADARIN TRADING CO. LTD.

As a result of an investigation  conducted in the prior quarter at the Company's
request,  by the  Boston law firm of Hill & Barlow,  the  Company  restated  its
revenues  for the first  quarter  ended  November  30,  1996.  During  the first
quarter,  the  Company  previously  reported  sales of  approximately  $887,000;
approximately  $792,000  of said  sales  were for  licensing  software  that the
Company believed it had purchased in exchange for stock  from  Manadarin Trading
Company, Ltd., an Irish corporation.

      Based upon the Hill & Barlow investigation, the Company determined that it
never  received  any  software  from  Manadarin,  and even  though  it  received
approximately   $792,000  from  two  purported  sublicensees  of  the  software,
WebSecure never delivered any software to them.

      The Company has booked the money received from the  sublicensees  as cash,
instead of revenue, and simultaneously  recorded the approximately $792,000 as a
liability on its books.  Subsequently on June 30, 1997 the Company repaid one of
the sublicensees $266,750 and $7,308 of interest.

      WebSecure is considering what further action to take and intends to report
its findings to proper  authorities  and will  cooperate  fully with any further
investigation.

 3.    ACCOUNTS RECEIVABLE

On April 18, 1997 the Company  entered into a factoring  agreement with Cauldron
Corporation  which calls for  WebSecure  to factor up to $200,000 of  Cauldron's
accounts receivable.  The agreement specifies that WebSecure is to receive a fee
of 2% of the face value of the accounts  receivable  factored and that WebSecure
fund 80% of the value of each  account  and hold 20% in  reserve  to be  applied
against  charge-backs  or any  obligations  of Cauldron to  WebSecure.  Cauldron
Corporation is owned in principle by an employee of WebSecure.  WebSecure earned
$3,106 on the  factored  receivables  during  the  quarter  ended May 31,  1997.
Factored receivables were $133,255 at May 31, 1997.

4.    SUBSEQUENT EVENTS

On July 10, 1997  WebSecure  appointed the firm of Reznick Fedder & Silverman as
the Company's  independent  accountants to replace BDO Seidman,  LLP. During the
year ended  August 31, 1996 and the period  from  inception  (July 19,  1995) to
August 31, 1995, and the  subsequent  interim period through April 21, 1997 (the
date  of  BDO  Seidman,   LLP's   resignation   as  the  Company's   independent
accountants),  there were no disagreements with BDO Seidman,  LLP on any matters
of  accounting  principles  or  practices,  financial  statement  disclosure  or
auditing scope or procedure or any  "reportable  events" with the accountants as
described in Items  304(a)(1)(iv)  and (v) of  Regulation  S-K. The  independent
accountant reports of BDO Seidman, LLP on the Company's financial statements for
the year ended  August 31, 1996 and period  from  inception  (July 19,  1995) to
August 31, 1995 each expressed a going concern opinion.


                                       8







ITEM 2.                 MANAGEMENT'S DISCUSSION AND ANALYSIS
                        ------------------------------------
OVERVIEW

         The Registrant, a development stage Company, offers Internet access and
support services for secure communications and commercial  transactions over the
Internet.  The Company provides general Internet services,  such as connectivity
and communications services.

         The financial  results for the period from inception (July 19, 1995) to
May  31,  1997  primarily  relate  to the  Company's  initial  organization  and
establishment  of  infrastructure.  The Company has had limited  revenues  since
inception and working capital of $2,331,298 at May 31, 1997. The results for the
quarter ended May 31, 1997 are not necessarily  indicative of the results of the
Company's  operations that may be expected for the fiscal year ending August 31,
1997.

         The Company  completed  its IPO on December 10, 1996.  The Company sold
1,000,000 shares of common stock and 1,150,000 redeemable warrants, and received
net proceeds of approximately $6,485,000.

         The  Company's  plan of  operations  for the next  twelve  months  will
principally  involve  the sale of  connectivity  and the  provision  of Internet
access services in addition to web site development and internet  commerce.  The
Company  continues  to use a  portion  of the IPO  proceeds  to hire  additional
personnel, including marketing, sales and customer service personnel, as well as
to continue to upgrade its Internet access infrastructure and services.

RESULTS OF OPERATIONS

Revenues.  The Company had  revenues  of $216,240  during the nine month  period
ended May 31,  1997  compared to $31,673  during the nine  months  ended May 31,
1996,  an increase  of $184,477  primarily  related to  increased  connectivity,
communications  services and web site  development.  The Company  anticipates it
will derive revenues primarily from connectivity charges,  hosting services, web
site development and intranet networking.

Cost of revenues.  The Company's  cost of revenues have exceeded  revenues since
inception.  The negative  gross margin of  ($534,062)  primarily  relates to the
Company's early stages of development.  As sales revenues increase,  the cost of
revenues is expected to decline as a percentage of revenue.

General and Administrative.  The Company had general and administrative expenses
of  $1,802,791  during the nine month  period  ended May 31,  1997  compared  to
$948,446  during the nine months  ended May 31,  1996,  an increase of $854,345.
This increase consists  primarily of legal,  compensation  expense for increased
personnel,  rent and insurance expenses.  From inception through March 31, 1997,
approximately $1,679,000 of the general and administrative expenses were paid to
Employee  Resource,  Inc.  ("ERI"),  an employee  leasing  Company  owned by the
Company's  former  President  and Chief  Executive  Officer  which leased to the
Company all of its employees, including the officers of the Company. The Company
terminated  its agreement  with ERI on March 31, 1997 and entered into a similar
agreement with Genesis Consolidated Services, Inc., an unaffiliated company.

Selling  and  Marketing.  The Company  had  selling  and  marketing  expenses of
$398,573  during the nine 


                                       9






month  period  ended May 31, 1997  compared  to $204,706  during the nine months
ended May 31,  1996,  an  increase  of  $193,867.  This  increase  consisted  of
primarily of salaries and advertising costs.

Research and  Development.  The Company's  research and development  efforts are
focused on development of the Company's co-hosting capabilities.  The Company is
also developing intranet models for intraorganization communications that can be
used by multi-site  organizations as well as a communications  infrastructure to
allow for daily  information  transfer to the Company  for  periodic  back-up of
customer  files for  disaster  control  purposes.  The Company had  research and
development expenses of $147,072 during the nine month period ended May 31, 1997
compared to $471,937  during the nine months  ended May 31,  1996, a decrease of
$324,865.  The decrease in research and development expenses is due primarily to
the fact that the majority of the initial  infrastructure  development  has been
accomplished.

Net Interest  Income  (Expense).  Net interest  income was $32,002 for the three
month period ended May 31, 1997  compared to interest  income of $18,762 for the
three months ended May 31,  1996.  Net interest  income was $53,824 for the nine
month  period ended May 31, 1997  compared to interest  income of $1,890 for the
nine month  period  ended May 31, 1996 an increase of $51,934.  The  increase in
interest  income was from  investment  of the proceeds of the  Company's  IPO in
interest bearing  instruments and cash equivalent  securities.  Interest expense
decreased  as a result of the  payoff of Notes  Payable  to  related  parties in
January 1997.

Income Taxes. Since inception, the Company has generated tax benefits related to
its operating loss  carry-forwards  and of research and development  costs.  The
deferred  asset related to such  benefits was fully  reserved as of May 31, 1997
due to the  significant  doubt about the  realization of the deferred tax asset.
Accordingly,  there has been no income tax expense or benefit  reflected  on the
accompanying statements of operations since inception.

LIQUIDITY AND CAPITAL RESOURCES

         Since its inception,  the Company has financed its activities primarily
by  the  IPO  which  closed  on  December  10,  1996  and  raised  approximately
$6,485,000,  as well as by loans from a stockholder,  and the sale of its Common
Stock to private  investors.  As a result of the IPO, working capital at May 31,
1997 was $2,331,298.  The Company has three capital lease  agreements  which are
secured by fixed assets.  The outstanding  balance as of May 31, 1997 for one of
these  agreements  was  approximately  $319,000 and matures in December 2000. In
September 1996, the Company entered into two additional capital lease agreements
under  which  it  may  borrow  up  to  an  aggregate  of   $1,000,000  of  which
approximately $668,000 was outstanding at May 31, 1997. These obligations mature
in October 2001. On December 10, 1996, the Company deposited,  as collateral,  a
portion of the proceeds from the IPO equal to the amount  outstanding  under the
September 1996 agreements.

         For the  three  months  ended  May  31,  1997,  cash  of  approximately
$1,566,000 was used by operating  activities  compared to cash used by operating
activities  of  approximately  $407,000 for the three months ended May 31, 1996.
The Company used cash of approximately  $2,502,000  during the nine month period
ended May 31, 1997  compared to  approximately  $366,000  during the nine months
ended May 31, 1996,  an increase of  $2,136,000,  due primarily to the Company's
net loss of approximately $2,829,000, compared to $1,670,000 (excluding non-cash
charges of  $5,760,000)  for the nine months  ended May 31, 1996, a


                                       10







reduction in accounts payable and accrued expenses of approximately $687,000 and
increase of  approximately  of $305,000 in prepaid  expenses.  During the period
from  inception  to May 31,  1997,  the  Company  recorded a non-cash  charge of
$5,760,000  against earnings for acquired research and development,  which was a
substantial  component  of the  Company's  overall  net loss for the  period  of
approximately $10,786,000.

         On December 10, the Company  consummated a public offering of 1,000,000
shares of common stock at a price of $8.00 per share and redeemable  warrants to
purchase 1,000,000 shares of common stock at $9.60 per share, at a price of $.20
per warrant.  The gross  proceeds  from the public  offering of  $8,200,000  was
reduced by the  underwriting  discount  and  non-accountable  expense  allowance
totaling $1,066,000 and legal, printing, accounting and other registration costs
of $648,625.

         In addition the Company has raised  approximately  $2,014,500  from the
sale of Common Stock and private offerings to third party  investors  during the
year ended August 31, 1996.  The Company has borrowed  approximately  $1,522,000
from related parties since inception, all of which has been repaid as of January
17, 1996.

         Management  believes that the net proceeds from the IPO and anticipated
revenues from  operations  will be sufficient to meet the Company's  anticipated
cash needs and  finance  its plans for  expansion  for at least the next  twelve
months.  Thereafter,  the Company  anticipates  that it may  require  additional
financing to meet its current plans for expansion.  No assurance can be given of
the Company's ability to obtain such financing on favorable terms, if at all. If
the Company is unable to obtain  additional  financing,  its ability to meet its
current plans for expansion could be materially adversely affected.

IMPACT OF INFLATION

         Inflation  has not  had a  material  adverse  effect  on the  Company's
business.

NEW ACCOUNTING STANDARDS

         Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," issued by the Financial Accounting Standards Board ("FASB"), is
effective for financial statements for fiscal years beginning after December 15,
1995.  The new standard  establishes  new guidelines  regarding when  impairment
losses on  long-lived  assets,  which  include  plant and  equipment and certain
identifiable  intangible  assets  and  goodwill,  should be  recognized  and how
impairment losses should be measured.  The adoption of the standard did not have
a material effect on its financial position or results of operations.

         In  October  1995,  the FASB  issued  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation."  The Company has determined that it will continue to
account for stock-based  compensation for employees under Accounting  Principles
Board Opinion No. 25 and elect the  disclosure-only  alternative  under SFAS No.
123.  The Company  will be required to disclose the pro forma net income or loss
and per  share  amounts  in the  notes to the  financial  statements  using  the
fair-value-based  method  beginning  in the year ending  August 31,  1997,  with
comparable  disclosures  for the year ended August 31, 1996. The Company has not
determined the impact of these pro forma adjustments.


                                       11






                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

         1.       The  Registrant  has been named as a defendant  in five almost
                  identical  proceedings  brought in the United States  District
                  Court for the District of  Massachusetts  (Nager v. WebSecure,
                  Inc. et al);  (Krause and Krause v.  WebSecure,  Inc., et al);
                  (Miller,  Weberman  and  Fisher  v.  WebSecure,  Inc.  et al);
                  (Lifshitz  v.  WebSecure,   Inc.  et  al);  and  (Friedman  v.
                  WebSecure,  Inc. et al).  The actions were  commenced  between
                  March and May 1997.  Also  named as  defendants  were  certain
                  current and former  officers and directors of the  Registrant,
                  Coburn & Meredith,  Inc.  and  Shamrock  Partners,  Ltd.,  the
                  underwriters of the Registrant's  initial public offering (the
                  "IPO"), and Centennial Technologies, Inc. ("Centennial").  The
                  complaints  allege inter alia that the registration  statement
                  filed by the  Registrant in  connection  with the IPO contains
                  certain  false  and  misleading   statements   concerning  the
                  Registrant  and its  operations  and in certain cases that the
                  stock price of the Registrant was artificially  inflated.  The
                  complaints seek  compensatory  damages,  attorney's  fees, and
                  other damages.

         2.       The  Registrant  has responded to subpoena  duces tecum by the
                  Massachusetts  Securities  Division  (the  "Division"),  which
                  inquiry  was  commenced  on March 19,  1997.  The  Division is
                  seeking  additional  information  concerning the  relationship
                  between the Registrant and Centennial.  Also named as subjects
                  of the  inquiry  are  Coburn &  Meredith,  Inc.  and  Shamrock
                  Partners,  Ltd. In addition,  the Office of the U.S.  Attorney
                  for  Massachusetts  has issued a subpoena to the Registrant to
                  produce    certain    documents   in   connection   with   the
                  above-described relationship and related matters.

         3.       On April 7,  1997,  the  Company  received  a letter  from the
                  Securities  and Exchange  Commission  ("SEC")  requesting  the
                  voluntary   production   of  documents  and   information   in
                  connection with an informal inquiry captioned In the Matter of
                  WebSecure,  Inc. (MB-930). The Company is cooperating with the
                  SEC and is in the process of producing the requested documents
                  and information.

         4.       On June 12, 1997 the  Registrant  received  notification  from
                  NASDQ that the  Company's  shares of common stock and warrants
                  were  delisted from the NASDQ  SmallCap  Market as a result of
                  its' failure to meet the public interest requirement as stated
                  in the  Marketplace  Rule  4330(a)(03).  On June 18,  1997 the
                  Company   requested   that  the   decision  of  the   Listings
                  qualification   Panel  be  reviewed  by  the  Hearings  Review
                  Committee  and  reversed.  The  Registrant  has also  received
                  notification  from the  Philadelphia  Stock  Exchange that the
                  Company's  common stock  will be delisted on the  Philadelphia
                  Stock  Exchange  as well based  upon  similar  rationale.  The
                  Company  is  currently  in the  process  of taking  actions to
                  rectify  the  problems   which   resulted  in  the  NASDQ  and
                  Philadelphia Stock Exchange delisting decisions.



                                       12




ITEM 2.  CHANGES IN SECURITIES.  None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.  None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  None.

ITEM 5.  OTHER INFORMATION.  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

                  (a)      EXHIBITS.  None.

                  (b)      REPORTS  ON FORM 8-K.  The  Registrant  filed reports
                           on Form 8-K on April 2 and April 9, 1997 under Item 5
                           ("Other  Events") and  on April 28, 1997 under Item 4
                           ("Changes  in Registrants  Certifying  Accountants").
                           No financial statements were filed with that report.




                                       13






                                   SIGNATURES


         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.

                                          WEBSECURE, INC.


Date:  July 16, 1997                   By: /s/ Carroll M. Lowenstein
                                              --------------------------
                                                  Carroll M. Lowenstein   
                                                  President and Secretary


                                          By: /s/  Neil G. Howland
                                              ---------------------------
                                                   Neil G. Howland
                                                   Director



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