================================================================================


                                   FORM 10-QSB

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


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


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                         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 Identification No.)
incorporation or organization)


          METRO CENTER, ONE STATION PLACE, STAMFORD, CONNECTICUT 06902
      --------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.   YES [X]       NO [_]

Transitional Small Business Disclosure Format (check one)
         YES [_]    NO [X]


The number of shares of common stock, $.01 par value,  outstanding as of May 15,
1998 was 4,699,531.

================================================================================

<PAGE>


                             SMARTSERV ONLINE, INC.

                                   FORM 10-QSB

                                      INDEX





PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Balance Sheets - June 30, 1997 and March 31, 1998 (unaudited)........2

          Statements of Operations - three months ended March 31, 1998 and
          1997 and nine months ended March 31, 1998 and 1997 (unaudited).......3

          Statement of Changes in Stockholders' Equity (Deficiency) - nine
          months ended March 31, 1998 (unaudited)..............................4

          Statements of Cash Flows - three months ended March 31, 1998 and
          1997 and nine months ended March 31, 1998 and 1997 (unaudited).......5

          Notes to Unaudited Financial Statements..............................6

Item 2.   Management's Discussion and Analysis or Plan of Operation...........11


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings...................................................17

Item 4.   Submission of Matters to a Vote of Security Holders.................17

Item 6.   Exhibits and Reports on Form 8-K....................................19

          Signatures..........................................................20



<PAGE>


                             SMARTSERV ONLINE, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                MARCH 31,        JUNE 30,
                                                                  1998            1997
                                                              ------------    ------------
ASSETS                                                         (UNAUDITED)
<S>                                                           <C>             <C>         
Current assets
   Cash and cash equivalents                                  $    394,088    $     93,345
   Accounts receivable, net of an allowance for losses
       of $6,000 at March 31, 1998 and June 30, 1997               178,100         149,782
   Prepaid expenses and other receivables                          137,988          90,725
                                                              ------------    ------------
Total current assets                                               710,176         333,852

Property and equipment - net                                       652,694         743,714

Other assets                                                        70,437         169,123
                                                              ------------    ------------

Total Assets                                                  $  1,433,307    $  1,246,689
                                                              ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                                           $    972,293    $    829,355
   Accrued liabilities                                             344,588         211,813
   Accrued interest                                                   --            16,323
   Payroll taxes payable                                             2,869          20,383
   Salaries payable                                                 36,297          46,018
   Current portion of capital lease obligation                      73,600          86,072
   Deferred revenues                                                24,562          24,914
                                                              ------------    ------------
Total current liabilities                                        1,454,209       1,234,878
                                                              ------------    ------------

Long-term portion of capital lease obligation                       99,254         160,139

Notes payable                                                         --           550,000

STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock - $.01 par value
   Authorized - 15,000,000 shares
   Issued and outstanding - 3,958,339 shares at
       March 31, 1998 and 3,695,000 shares at June 30, 1997         39,583          36,950
Additional paid-in capital                                      17,801,659       9,046,592
Unearned compensation                                           (4,366,545)           --
Accumulated deficit                                            (13,594,853)     (9,781,870)
                                                              ------------    ------------
Total stockholders' equity (deficiency)                           (120,156)       (698,328)
                                                              ------------    ------------

Total Liabilities and Stockholders' Equity (Deficiency)       $  1,433,307    $  1,246,689
                                                              ============    ============
</TABLE>

See accompanying notes.

                                       2
<PAGE>


                             SMARTSERV ONLINE, INC.

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                THREE MONTHS                    NINE MONTHS
                                               ENDED MARCH 31                 ENDED MARCH 31
                                         --------------------------    --------------------------
                                             1998           1997           1998           1997
                                         -----------    -----------    -----------    -----------
<S>                                      <C>            <C>            <C>            <C>        
Revenues                                 $   231,309    $   170,674    $   613,096    $   467,783
                                         -----------    -----------    -----------    -----------

Costs and expenses:
   Costs of revenues                         323,579        310,374      1,042,264        837,734
   Product development expenses              218,727        427,955        646,432        920,662
   Selling, general and administrative
      expenses                               753,501        806,797      1,913,728      2,247,696
                                         -----------    -----------    -----------    -----------
   Total costs and expenses                1,295,807      1,545,126      3,602,424      4,006,092
                                         -----------    -----------    -----------    -----------

Loss from operations                      (1,064,498)    (1,374,452)    (2,989,328)    (3,538,309)
                                         -----------    -----------    -----------    -----------

Other income (expense):
   Interest income                            10,883          8,086         33,514         73,271
   Interest expense and other
     financing costs                        (182,088)        (2,452)      (857,169)        (8,160)
                                         -----------    -----------    -----------    -----------
                                            (171,205)         5,634       (823,655)        65,111
                                         -----------    -----------    -----------    -----------

Net loss                                 $(1,235,703)   $(1,368,818)   $(3,812,983)   $(3,473,198)
                                         ===========    ===========    ===========    ===========

Basic and diluted earnings per common
   share (Note 2)                        $     (0.30)   $     (0.37)   $     (0.95)   $     (0.94)
                                         ===========    ===========    ===========    ===========

Weighted average shares outstanding
   (Note 2)                                4,173,609      3,695,000      4,033,521      3,695,000
                                         ===========    ===========    ===========    ===========
</TABLE>

See accompanying notes.


                                       3
<PAGE>


                             SMARTSERV ONLINE, INC.

            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

                        NINE MONTHS ENDED MARCH 31, 1998
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                 ADDITIONAL
                                         COMMON STOCK              PAID-IN        UNEARNED       ACCUMULATED
                                     SHARES       PAR VALUE        CAPITAL       COMPENSATION      DEFICIT          TOTAL
                                  ------------   ------------    ------------    ------------    ------------    ------------
<S>                                  <C>         <C>             <C>             <C>             <C>             <C>          
Balance at June 30, 1997             3,695,000   $     36,950    $  9,046,592    $       --      $ (9,781,870)   $   (698,328)

Issuance of 4,000 Prepaid
   Common Stock Purchase
   Warrants, net of direct
   costs of $545,000                      --             --         3,455,000            --              --         3,455,000

Conversion of 175 Prepaid
  Common Stock Purchase
  Warrants into Common Stock
                                       263,339          2,633          (2,633)           --              --              --

Issuance of Common Stock
   Purchase Warrants to a
   financial consultant in
   connection with the issuance
   of 4,000 Prepaid Common
   Stock Purchase Warrants                --             --         4,528,500      (4,528,500)           --              --

Issuance of Common Stock
   Purchase Warrants in
   connection with the
   issuance of notes                      --             --           654,200            --              --           654,200

Issuance of Common Stock
  Purchase Warrants in
  connection with investment
  advisory contracts
                                          --             --           120,000            --              --           120,000

Amortization of unearned
  compensation over the term
  of the agreement                        --             --              --           161,955            --           161,955

Net loss for the period                   --             --              --              --        (3,812,983)     (3,812,983)
                                  ------------   ------------    ------------    ------------    ------------    ------------
Balance at March 31, 1998            3,958,339   $     39,583    $ 17,801,659    $ (4,366,545)   $(13,594,853)   $   (120,156)
                                  ============   ============    ============    ============    ============    ============
</TABLE>

See accompanying notes.



                                       4
<PAGE>


                             SMARTSERV ONLINE, INC.

                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                            THREE MONTHS                  NINE MONTHS
                                                           ENDED MARCH 31                ENDED MARCH 31
                                                     --------------------------    --------------------------
                                                         1998           1997           1998           1997
                                                     -----------    -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>            <C>         
OPERATING ACTIVITIES
Net loss                                             $(1,235,703)   $(1,368,818)   $(3,812,983)   $(3,473,198)
Adjustments to reconcile net loss to net cash used
in operating activities:
    Depreciation and amortization of property
       and equipment                                      47,984         27,578        141,321         65,904
    Non-cash interest expense and other
       financing costs                                   123,100           --          804,664           --
    Changes in market value of employee options             --             --             --          188,293
    Amortization of unearned revenues                    (13,562)          --          (18,229)          --
    Amortization and write-off of deferred charges          --            9,000         63,000         27,000
    Amortization of unearned compensation                 80,980           --          161,955           --
    Other changes that provided (used) cash
       Accounts receivable                               (50,938)        32,188        (28,318)      (117,156)
       Inventories                                          --             --             --          (30,000)
       Prepaid expenses and other receivables              3,655        (16,135)        16,737        (66,319)
       Accounts payable and accrued liabilities          179,434        429,892        286,713        478,361
       Accrued interest                                     --             --          (16,323)          --
       Payroll taxes payable                              (4,713)         6,611        (28,514)        13,199
       Salaries payable                                  (49,587)       (11,493)        (9,721)        (1,517)
       Unearned revenues                                  22,022           --           37,877         20,000
       Security deposit reduction                         (3,472)          --           10,781           --
                                                     -----------    -----------    -----------    -----------
    Net cash used in operating activities               (900,800)      (891,177)    (2,391,040)    (2,895,433)
                                                     -----------    -----------    -----------    -----------

INVESTING ACTIVITIES
Purchase of equipment                                     (7,425)      (119,332)       (50,301)      (338,075)
                                                     -----------    -----------    -----------    -----------
    Net cash used in investing activities                 (7,425)      (119,332)       (50,301)      (338,075)
                                                     -----------    -----------    -----------    -----------

FINANCING ACTIVITIES
Repayment of capital lease obligation                    (18,546)          --          (73,357)          --
Proceeds from the issuance of short-term notes              --             --          196,500           --
Proceeds from the issuance of warrants, net                 --             --        2,643,941           --
Costs of the issuance of warrants                           --             --          (25,000)          --
Proceeds from officers' loans                               --             --           37,500           --
Repayment of officers' loans                                --             --          (37,500)          --
                                                     -----------    -----------    -----------    -----------
    Net cash provided by (used in) financing
    activities                                           (18,546)          --        2,742,084           --
                                                     -----------    -----------    -----------    -----------

Increase (decrease) in cash and cash equivalents        (926,771)    (1,010,509)       300,743     (3,233,508)
Cash and cash equivalents - beginning of period        1,320,859      1,237,851         93,345      3,460,850
                                                     -----------    -----------    -----------    -----------

Cash and cash equivalents - end of period            $   394,088    $   227,342    $   394,088    $   227,342
                                                     ===========    ===========    ===========    ===========
</TABLE>

See accompanying notes.


                                       5
<PAGE>


                             SMARTSERV ONLINE, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                                 MARCH 31, 1998



1. ORGANIZATION

SmartServ Online, Inc. (the "Company")  commenced operations on August 20, 1993.
The Company makes available  online  information and  transactional  services to
subscribers through  screen-based phones,  personal computers,  personal digital
assistants,  the Internet,  interactive  voice response  systems,  alpha-numeric
pagers and other  personal  communications  systems.  The Company  also offers a
range of  services  designed  to meet the varied  needs of clients of  Strategic
Marketing  Partners,  as well as direct  subscribers,  including:  stock quotes,
charting,  nationwide business and residential directory services,  business and
financial news, sports information,  research and analysis reports, online FedEx
package tracking, e-mail, local information,  national weather reports and other
business and entertainment information.  The Company's software architecture and
capabilities  format  information  for  a  particular  device  and  present  the
information in a user-friendly manner.

On March 21, 1996, the Company completed an Initial Public Offering of 1,695,000
shares of $.01 par value  common stock at $5.00 per share and  1,725,000  common
stock purchase  warrants at $.10 per warrant.  The Company  received  $7,058,648
from the Offering, net of the costs of issuing these securities of $1,588,852.

On September 30, 1997, the Company completed a private  placement  ("Placement")
of $4 million of Prepaid Common Stock Purchase Warrants ("Prepaid  Warrants") as
more fully  disclosed  in Note 6. An  integral  part of this  Placement  was the
conversion of notes payable and accrued interest thereon,  aggregating $836,059,
into such  Prepaid  Warrants.  The net  proceeds  to the  Company of  $2,643,941
provided it with working capital to allow it to continue its marketing efforts.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
---------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
the instructions of Form 10-QSB and Rule 310 of Regulation SB and, therefore, do
not include all information and notes necessary for a presentation of results of
operations,  financial  position  and cash flows in  conformity  with  generally
accepted  accounting  principles.  The  balance  sheet at June 30, 1997 has been
derived from the audited financial statements at that date, but does not include
all of the information and footnotes required by generally  accepted  accounting
principles for complete financial statements. The financial statements should be
read in  conjunction  with the Company's  Annual Report on Form 10-KSB/A for the
year  ended  June 30,  1997.  In the  opinion of the  Company,  all  adjustments
(consisting of normal recurring accruals) necessary for a fair presentation have
been made.  Results of  operations  for the nine months ended March 31, 1998 are
not necessarily indicative of those expected for the year ending June 30, 1998.

The  Company  has  completed   development  of  its  information   platform  and
communications  software  and exited the  developmental  stage.  The Company has
incurred  recurring  operating  losses and its  operations  have not  produced a
positive cash flow.  Additionally,  there is no assurance  that the Company will
generate future revenues or cash flow from operations.



                                       6
<PAGE>




RECLASSIFICATIONS
-----------------
Certain  amounts in the 1997  financial  statements  have been  reclassified  to
conform to the 1998 presentation.

BASIC AND DILUTED EARNINGS PER SHARE
------------------------------------
In 1997, the Financial  Accounting  Standards Board ("FASB") issued Statement of
Financial  Accounting  Standards No. 128, Earnings per Share ("Statement  128").
Statement  128  replaced  the  previously  reported  primary  and fully  diluted
earnings  per share with basic and diluted  earnings per share.  Unlike  primary
earnings per share,  basic earnings per share  excludes any dilutive  effects of
options,  warrants,  and convertible  securities.  Diluted earnings per share is
very similar to the previously  reported fully diluted  earnings per share.  All
earnings  per share  amounts  for all  periods  have been  presented,  and where
necessary,   restated  to  conform  to  the  Statement  128  requirements.   The
weighted-average  shares  outstanding  are determined as the mean average of the
shares outstanding and assumed to be outstanding during the period.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In February 1997, the FASB issued  Statement No. 129,  Disclosure of Information
about Capital  Structure.  This Statement  established  standards for disclosing
information about an entity's capital structure. This statement is effective for
fiscal years ending on or after  December 15, 1997.  The Company  plans to adopt
and apply the  provisions of this  statement for the fiscal year ending June 30,
1998. The resulting  effect of the application of this statement is not expected
to have a material impact on the financial statements.


3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                            MARCH 31,    JUNE 30,
                                                              1998         1997
                                                            ---------    ---------
<S>                                                         <C>          <C>      
Data processing equipment                                   $ 613,444    $ 564,098
Data processing equipment purchased under a capital lease     246,211      246,211
Office furniture and equipment                                 69,830       69,196
Display equipment                                               9,635        9,635
Leasehold improvements                                         36,678       36,357
                                                            ---------    ---------

                                                              975,798      925,497

Accumulated depreciation, including $45,139 and
$8,207 at March 31, 1998 and June 30, 1997, respectively,
for equipment purchased under a capital lease                (323,104)    (181,783)
                                                            ---------    ---------
                                                            $ 652,694    $ 743,714
                                                            =========    =========
</TABLE>


4. NOTES PAYABLE

On May 29,  1997,  the Company  entered  into a line of credit  facility  with a
financial institution for a maximum borrowing thereunder of $550,000. Borrowings
under this facility were to be repaid on August 27, 1997, along with interest at
the rate of 24% per annum. On July 21, 1997 and September 16, 1997, the facility
was amended to provide for additional borrowings of up to $222,222. On September
30, 1997, notes payable of $772,222 and accrued interest thereon of $63,837 were
converted into the 




                                       7
<PAGE>




Company's Prepaid Warrants (`Prepaid  Warrants") as more fully described in Note
6.

In conjunction with the origination of the line of credit facility,  the Company
issued  250,000  Common Stock Purchase  Warrants  ("Warrants")  to the financial
institution.  Similarly, the Company issued 50,500 Warrants for each of the July
and September  amendments.  As a result of the Company's  default on the note in
August,  the Company was required to issue  300,500  "default"  Warrants to such
institution.  At March 31, 1998,  these 651,500  Warrants  have exercise  prices
ranging from $0.75 to $1.375 and expire in September 2002. Pursuant to Statement
of  Financial   Accounting   Standard  No.  123,   Accounting  for  Stock  Based
Compensation,   the  Company  valued  these  warrants  in  accordance  with  the
Black-Scholes  pricing  methodology  at the time of issuance and  recorded  such
valuation in the  statement of  operations  as financing  costs.  Certain of the
Warrants contain  variable  exercise  provisions  predicated on the price of the
Company's  Common Stock upon the  conclusion of certain  future events or at the
time of  exercise.  These  Warrants  have been  revalued  at March  31,  1998 in
accordance with the Black-Scholes  pricing  methodology giving  consideration to
facts and  circumstances  as they existed at that date. The Company has recorded
financing costs  associated with these Warrants of $123,100 and $654,200 for the
quarter and nine month period ended March 31, 1998, respectively.


5. LOANS PAYABLE TO OFFICERS

Loans  payable to officers of the Company were  non-interest  bearing and due on
demand. The last of such loans was repaid on October 2, 1997.


6. EQUITY TRANSACTIONS

On September  30, 1997,  The Zanett  Securities  Company  ("Zanett"),  acting as
placement agent for the Company,  completed the private placement  ("Placement")
of $4 million of the Company's Prepaid Common Stock Purchase Warrants  ("Prepaid
Warrants").  The sale of these Prepaid Warrants was exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Regulation D
thereof.  Each Prepaid  Warrant  entitles the holder to purchase  that number of
shares  of  Common  Stock  that is equal to  $1,000  divided  by the  applicable
exercise  price.  Such  exercise  price is  determined  initially  as 70% of the
average  closing bid price of the Common Stock for the 10 trading days ending on
the day prior to exercise of the Prepaid  Warrants.  Additionally,  the exercise
discount  shall be  increased by 1% for each  subsequent  60 day period that the
Prepaid Warrants remain unexercised.  The exercise price,  however,  shall never
exceed $1.40. The Prepaid Warrants became  exercisable on December 29, 1997. The
sale of Common  Stock issued upon  exercise of such  Warrants is  restricted  to
one-third for the first 60, 90 and 120 days subsequent to February 27, 1998, the
date the registration statement became effective. The Prepaid Warrants expire on
September 30, 2000.

Terms of the Placement included the conversion by Zanett of notes payable in the
amount of  $772,222  and  accrued  interest  thereon  of  $63,837  into  Prepaid
Warrants.  The net proceeds of the  Placement of  $2,643,941  have been used for
general working capital requirements.

As  compensation  for its  services,  Zanett  received  a  placement  fee and an
unaccountable   expense   allowance  of  10%   ($400,000)   and  3%  ($120,000),
respectively, of the gross proceeds of the Placement.  Additionally, the Company
issued 600,000 Common Stock Purchase  Warrants to Zanett that are exercisable at
$1.125 per share of Common Stock. These warrants expire on September 30, 2002.

Also in conjunction  with the Placement,  the Company  entered into an agreement
with a financial  consultant who is an affiliate of Zanett  Lombardier,  Ltd, an
investor in the Prepaid  Warrants.  During the  five-year  term of the agreement
such  consultant  will provide the Company with  advisory  services  




                                       8
<PAGE>




relating to financial and strategic  ventures and alliances,  investment banking
and general  financial  advisory  services,  and advice and assistance  with the
Company's market development activities. As compensation for these services, the
Company  authorized  the issuance of 3,555,555  Common Stock  Purchase  Warrants
("Consulting  Warrants") to this  consultant  that are exercisable at $1.125 per
share of Common Stock. The issuance of 3,055,555 of such Consulting Warrants was
contingent upon the approval of the Company's shareholders which was received on
April 24, 1998. At September 30, 1997,  the Company  valued these warrants using
the  Black-Scholes  pricing  methodology at approximately  $4,400,000.  However,
since the issuance of 3,055,555 of such Consulting  Warrants was uncertain until
April 24, 1998, the Company has revalued these Consulting Warrants in accordance
with  Statement  of  Financial  Accounting  Standard  No.  123,  Accounting  for
Stock-Based Compensation, and the Black-Scholes pricing methodology at March 31,
1998,  giving  consideration  to the facts and  circumstances as they existed at
that date. Accordingly, unearned compensation has been adjusted to $4,528,500 at
March 31,  1998.  Such  amount  has been  recorded  in  stockholders'  equity as
unearned compensation and will be amortized to income over the five-year term of
the  agreement.  These  warrants  expire on September 30, 2002.  The Company has
recorded  consulting  expense of $80,975 and  $161,955  for the quarter and nine
month period ended March 31, 1998, respectively.


7. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                THREE MONTHS ENDED MARCH 31    NINE MONTHS ENDED DECEMBER 31
                                 --------------------------    --------------------------
                                     1998           1997           1998           1997
                                 -----------    -----------    -----------    -----------
<S>                              <C>            <C>            <C>            <C>         
Numerator:
   Net loss                      $(1,235,703)   $(1,368,818)   $(3,812,983)   $(3,473,198)
                                 ===========    ===========    ===========    ===========

Denominator:
   Weighted-average shares         4,173,609      3,695,000      4,033,521      3,695,000
                                 ===========    ===========    ===========    ===========

Basic and diluted earnings per
   common share                  $     (0.30)   $     (0.37)   $     (0.95)   $     (0.94)
                                 ===========    ===========    ===========    ===========
</TABLE>

At March 31, 1998 there were,  exclusive of the Common Stock  Purchase  Warrants
issued in connection with the issuance of notes payable (Note 4) and the Prepaid
Warrants (Note 6), 2,687,500 Common Stock Purchase  Warrants  outstanding.  Such
warrants have exercise prices ranging from $0.625 to $12.00 per share and expire
from March 2001 through March 2003.  None of these warrant  issuances  have been
included in the  computation  of diluted loss per share because their  inclusion
would be  antidilutive.  Additionally,  the Company has  established an employee
stock option plan for the benefit of directors, employees and consultants to the
Company. These options are intended to qualify as incentive stock options within
the meaning of Section  422 of the  Internal  Revenue  Code,  as amended,  or as
nonqualified stock options. The options are partially exercisable after one year
from date of grant and no options may be granted  after April 15,  2006.  At the
Annual Meeting on April 24, 1998, the shareholders  approved an amendment to the
Plan  authorizing  the  issuance of up to  1,500,000  options to  employees  and
non-employee directors. At March 31, 1998, there are options outstanding for the
purchase of 1,070,475 shares of the Company's Common Stock.



                                       9
<PAGE>


SUBSEQUENT EVENTS

Subsequent  to March 31,  1998,  investors  in the  Company's  Prepaid  Warrants
converted  1,037.5 of such  warrants  into 741,192  shares of Common Stock at an
exercise price of $1.40 per share.

At the Annual Meeting on April 24, 1998, the shareholders approved the amendment
of the  Company's  Certificate  of  Incorporation  to  increase  the  number  of
authorized shares of the Company's Common Stock, par value $0.01 per share, from
15,000,000 to 40,000,000  shares.  Additionally,  the shareholders  approved the
amendment of the Company's  Certificate  of  Incorporation  to create a class of
1,000,000 shares of Preferred Stock, par value $0.01 per share.









                                       10
<PAGE>





ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


PLAN OF OPERATION

The Company  provides online  information  and  transactional  services  through
screen-based telephones,  personal computers,  personal digital assistants,  the
Internet,  interactive voice response systems,  alpha-numeric paging devices and
other  personal   communications  systems  to  clients  of  Strategic  Marketing
Partners,  as well as to prospective direct subscribers.  The Company has exited
from the development stage with the completion of its software  architecture and
product  offering  and  has  commenced  the   implementation  of  its  marketing
strategies.

The Company's business plan focuses on the strategy of marketing its services in
partnership with those companies that have an economic  incentive to provide the
Company's  information  platform  to their  customers.  Through  the use of this
model, the consumer is a customer of both SmartServ and its Strategic  Marketing
Partner.  The Company also  believes that the sale of its  information  platform
through the cooperative  efforts of partners with more recognizable  brand names
than its own is important to its success.

The Company is developing  strategic  marketing  relationships with key partners
that provide  access to large numbers of potential  subscribers  for its monthly
services.  Toward that end, on May 1, 1998, the Company consummated an agreement
with Data Transmission  Network Corp. ("DTN") whereby DTN obtained the exclusive
right to market the Company's three financial services  information  products to
the finance and investment communities. These products include: SmartServ Pro, a
real-time,  tick-by-tick  stock  quote  service;  and  TradeNet  and  BrokerNet,
real-time  trading  and account  information  products  for the stock  brokerage
industry.  Additionally,  DTN has  acquired  SmartServ's  Internet  based retail
customers.

DTN  is  an  innovative   information  and   communications   provider  for  the
agricultural, automotive, energy, farm implement, financial, mortgage, golf turf
management,  construction,  aviation,  emergency  management and weather related
industries.  DTN provides  commodities and financial  information to farmers and
others via  satellite  transmission  and leased  telecommunications  lines.  The
SmartServ/DTN   partnership   provides  DTN  with  quality  financial   products
engineered for low cost delivery  through the Internet while allowing  SmartServ
the opportunity to reduce its costs and substantially increase revenues. DTN has
a sales force of more than 200 sales  personnel  which when  coupled  with DTN's
subscriber  base  and  marketing  and  advertising   capabilities  represents  a
significant  opportunity  for the  Company.  Effective  May 1,  1998,  with  the
licensing to DTN of the SmartServ Pro product, the Company has exited the retail
market  for a more cost  effective  business-to-business  arrangement.  Thus the
significant  marketing,  advertising and infrastructure  costs associated with a
direct marketing program will be borne by DTN.

Other potential partners include regional telephone  operating  companies,  long
distance  carriers,   telephone  equipment   manufacturers  and  companies  that
distribute screen telephone equipment, market local screen telephone services or
otherwise benefit from the increased acceptance of these devices.  Screen phones
were  developed  to  facilitate  the use of caller ID,  call  waiting  and other
services offered at a premium by the telephone companies. To these partners, the
Company's services are perceived as a means of increasing  interest in and sales
of  screen  telephones,  and there is thus a strong  incentive  to  promote  the
Company's  services as a value-added  benefit.  In September  1997,  the Company
signed a three year contract with  Sprint/United  Management  Company ("Sprint")
for the delivery of the Company's  information  services into additional markets
beyond the initial trial city--Las Vegas. In December 1997, Sprint commenced the
deployment  of the  Company's  services in three  Florida  markets.  The Company
anticipates that this will result in the deployment of the Company's information
services in 




                                       11
<PAGE>




New York, North Carolina,  Chicago,  Los Angeles and other designated markets as
part of a national campaign.

The Company  has also signed an  agreement  with CIDCO  Incorporated,  a leading
marketer of screen-based phones and other Caller ID devices,  whereby CIDCO will
offer the Company's suite of online financial and  entertainment  information to
buyers of the CIDCO CST 2100 screen phone.  These services are to be marketed as
"CIDCO Personal Information Services". CIDCO's clients include Southwestern Bell
and Bell Atlantic.

Management continues to believe that substantially all of the Company's revenues
will be derived from  customers  that  purchase the Company's  services  through
Strategic  Marketing Partners with mass distribution  capabilities.  The Company
anticipates that Strategic Marketing Partners will brand the Company's "bundled"
information services with their own private label, promote the packaged offering
and then distribute the Company's  information  package on screen-based  phones,
PCs,  PDAs, the Internet,  interactive  voice  response  systems,  alpha-numeric
pagers and other PCS devices to their customers.  The Company has the ability to
customize  the  information  package to be offered to each  Strategic  Marketing
Partner, and in turn to their customers.

The  market  for  online  information  and  transactional   services  is  highly
competitive and subject to rapid innovation and technological  change,  shifting
consumer  preferences  and  frequent  new  service  introductions.  The  Company
believes  that  potential  new  competitors,   including  large  multimedia  and
information  systems  companies,  are  increasing  their  focus  on  transaction
processing. Increased competition in the market for the Company's services could
materially  and  adversely  affect the Company's  results of operations  through
price reductions and loss of potential  market share.  The Company's  ability to
compete in the future depends on its ability to maintain the  technological  and
performance advantages of its current distribution platform and to introduce new
applications that achieve market acceptance.

Notwithstanding  the  execution  of  contracts  with both DTN and Sprint and the
continual   discussions  with  potential   Strategic  Marketing  Partners  about
potential marketing relationships,  there can be no assurance that the Company's
products and services  will  continue to be accepted in the  marketplace  by the
ultimate consumers.

Management   anticipates   that  staffing   requirements   associated  with  the
implementation of its plan of operation will result in the addition of a minimum
of three to six  personnel  during the period ending  September  30, 1998.  Such
personnel will be added to assist with the programming requirements of Strategic
Marketing Partners' product offerings and for customer support.


RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1998 VS. QUARTER ENDED MARCH 31, 1997

During the quarter ended March 31, 1998,  total  revenues  amounted to $231,309,
consisting  primarily  of  subscription  fees  for the  SmartServ  Online  "Pro"
real-time stock quote service  ($136,600) and sales generated from the Company's
relationships  with  Sprint  ($22,500)  and  Schroder  ($72,000).   The  Company
commenced the  implementation of its marketing plan with a national  advertising
campaign in September  1996.  Total revenues during the quarter ended March 1997
were $170,674,  consisting  primarily of subscription  fees from the sale of the
Company's  information  services  of  $75,800  and  fees  for  the  enhancement,
implementation,   and  marketing  of  services  associated  with  the  Company's
arrangement with Schroder of $94,800.



                                       12
<PAGE>




During the quarter ended March 31, 1998, the Company  incurred costs of revenues
of $323,579.  Such costs consisted  primarily of information  and  communication
costs  ($161,400),  personnel costs  ($83,700),  and computer  hardware  leases,
depreciation and maintenance ($77,300). During the quarter ended March 31, 1997,
the  costs  of  revenues  were  $310,374.  Such  costs  consisted  primarily  of
information and communication costs ($142,500),  personnel costs ($111,500), and
computer hardware leases, depreciation and maintenance ($45,100).

Product  development  expenses were $218,727 vs.  $427,955 for the quarter ended
March 31, 1997. Such costs consisted primarily of personnel costs ($125,500) and
computer systems consultants ($93,200). During the quarter ended March 31, 1997,
such  product  development  expenses  consisted  primarily  of  personnel  costs
($166,700) and systems consultants ($259,500).

During the quarter ended March 31, 1998, the Company incurred  selling,  general
and administrative expenses of $753,501 vs. $806,797 for the quarter ended March
31, 1997.  Such costs were incurred  primarily for personnel  costs  ($252,000),
facilities ($49,000), marketing and advertising costs ($33,000) and professional
fees ($310,000). Included in professional fees is an $80,980 non-cash charge for
the amortization of unearned compensation associated with the issuance of Common
Stock  Purchase  Warrants to a financial  consultant.  During the quarter  ended
March 31, 1997,  selling,  general and  administrative  expenses  were  incurred
primarily for advertising and marketing  ($187,000),  personnel costs ($274,000)
and professional fees ($229,200).

Interest  income for the quarter  ended  March 31, 1998  amounted to $10,883 vs.
$8,086 for the quarter ended March 31, 1997.  During the quarter ended March 31,
1998 such amounts  were earned from the  Company's  investments  in highly rated
bank  certificates of deposit while during the quarter ended March 31, 1997 such
amounts were earned  primarily  from the Company's  investments in highly liquid
commercial paper. During the quarter ended March 31, 1998 interest and financing
costs  included a non-cash  charge of $123,100  for the  revaluation  of certain
Common Stock Purchase  Warrants issued in connection with the Company's May 1997
line of credit facility.

NINE MONTHS ENDED MARCH 31, 1998 VS. NINE MONTHS ENDED MARCH 31, 1997

During the nine months ended March 31, 1998,  the Company  recorded  revenues of
$613,096, consisting primarily of $407,000 from the sale of subscriptions to its
information services, $127,000 from enhancement,  implementation,  and marketing
services  associated  with its arrangement  with Schroder,  and $76,000 from the
Company's relationship with Sprint. During the nine months ended March 31, 1997,
the  Company  recorded  revenues of  $228,035  from the sale of its  information
services  and the related  screen-based  telephones.  Additionally,  the Company
recorded  revenues of $239,748  related to the enhancement,  implementation  and
marketing of services associated with its arrangement with Schroder.

During the nine months  ended March 31,  1998,  the  Company  incurred  costs of
revenues of  $1,042,264.  Such costs  consisted  primarily  of  information  and
communication  costs  ($484,600),   personnel  costs  ($267,500),  and  computer
hardware leases, depreciation and maintenance ($259,800). During the nine months
ended March 31, 1997, the costs of revenues were $837,734.  Such costs consisted
primarily of information and  communication  costs  ($199,100),  personnel costs
($340,100),   and  computer   hardware  leases,   depreciation  and  maintenance
($121,600), and purchases of screen-based phones for resale ($95,500).  Included
in personnel costs in 1997 is a non-cash charge of $29,200 for the change in the
market value of employee stock options.

Product  development  expenses were $646,432  during the nine months ended March
31, 1998 vs.  $920,662  for the nine months  ended  March 31,  1997.  Such costs
consisted   primarily  of  personnel  costs   ($400,500)  and  computer  systems
consultants  ($226,000).  During the nine  months  ended  March 31,  



                                       13
<PAGE>




1997, such product  development  expenses consisted primarily of personnel costs
($509,100) and systems  consultants  ($395,900).  Included in personnel costs in
1997 is a  non-cash  charge of $43,800  for the  change in the  market  value of
employee stock options.

During the nine months  ended March 31,  1998,  the  Company  incurred  selling,
general and administrative expenses of $1,913,728, primarily for personnel costs
($730,100),  facilities ($147,800),  marketing and advertising costs ($120,200),
and professional  fees ($646,300).  Included in professional  fees is a non-cash
charge of $63,000  for the  write-off  of prepaid  consulting  fees  incurred in
connection  with the Company's  Initial  Public  Offering of  Securities  and  a
$161,955   non-cash  charge  for  the  amortization  of  unearned   compensation
associated  with the issuance of Common Stock  Purchase  Warrants to a financial
consultant.  Selling,  general and  administrative  expenses for the nine months
ended  March  31,  1997 were  $2,247,696.  Such  costs  consisted  primarily  of
personnel costs  ($765,300),  facilities  ($123,700),  marketing and advertising
costs ($580,100), and professional fees ($486,600).  Included in personnel costs
for 1997 was a non-cash charge of  approximately  $115,000 related to the change
in value of employee stock options.

Interest income for the nine months ended March 31, 1998 amounted to $33,514 vs.
$73,271 for the nine months ended March 31,  1997.  During the nine months ended
March 31,  1998,  such  amounts were earned from the  Company's  investments  in
highly  rated bank  certificates  of deposit  while during the nine months ended
March  31,  1997,  such  amounts  were  earned   primarily  from  the  Company's
investments in highly liquid commercial paper.  Interest and financing costs for
the nine months ended March 31, 1998 were  $857,169.  Such amounts were incurred
primarily  in  connection  with the  issuance of  short-term  notes  payable and
associated  Common Stock Purchase  Warrants.  The Common Stock Purchase Warrants
have  been  recorded  in  the  financial   statements  in  accordance  with  the
Black-Scholes  pricing  methodology  as  prescribed  by  Statement  of Financial
Accounting Standard, No. 123, Accounting for Stock-Based Compensation.  Interest
costs for the nine months ended March 31, 1997 were incurred in connection  with
an insurance financing agreement and amounted to $8,160.


CAPITAL RESOURCES AND LIQUIDITY

Since  inception of the Company on August 20, 1993 through  March 21, 1996,  the
date of the IPO, the Company had funded its operations  through a combination of
private  debt  and  equity   financings   totaling   $2,900,000   and  $300,000,
respectively.

The IPO of 1,695,000 common shares and 1,725,000 common stock purchase  warrants
on March 21, 1996 provided the Company with gross proceeds of $8,647,500. Direct
costs associated with the IPO were approximately $1,589,000.

During the first half of the year ended June 30, 1997, the Company's  operations
were funded  through the proceeds of the March 1996 IPO and  revenues  generated
from the  Company's  marketing and  advertising  programs.  Commencing  with the
second half of 1997,  the Company  experienced  both equity and working  capital
constraints  resulting  from the  information  delivery  system's  inability  to
support and retain the volume of users generated by the Company's  marketing and
advertising  programs.  In May  1997,  the  Company  arranged  a line of  credit
facility with a financial institution.  Such line of credit was originated for a
maximum  borrowing amount of $550,000.  In July and September 1997, the facility
was amended to allow for additional borrowings of up to $222,222. In conjunction
with the origination of the line of credit facility,  the Company issued 250,000
Common  Stock  Purchase  Warrants  ("Warrants")  to the  financial  institution.
Similarly, the Company issued 50,500 Warrants for each of the July and September
amendments.  As a result of the  Company's  default on the note in  August,  the
Company was required to issue 300,500 "default" Warrants to such institution. At
March 31, 1998,  these 651,500  Warrants have exercise prices ranging from $0.75
to $1.375 and expire in  September  2002.  Pursuant to 



                                       14
<PAGE>




Statement of Financial  Accounting  Standard No. 123, Accounting for Stock-Based
Compensation,   the  Company  valued  these  warrants  in  accordance  with  the
Black-Scholes  pricing  methodology  at the time of issuance and  recorded  such
valuation in the statement of operations as financing  costs. At March 31, 1998,
certain of the Warrants contain variable exercise  provisions  predicated on the
price of the Company's  Common Stock upon the conclusion of certain events or at
the time of  exercise.  The  Warrants  have been  revalued  at March 31, 1998 in
accordance with the Black-Scholes  pricing  methodology giving  consideration to
facts and circumstances as they existed at that date.

In May 1997, the Company entered into a three year  noncancelable  capital lease
for certain computer equipment used to provide information services. The cost of
this equipment  ($246,211) is being financed through the manufacturer's  finance
division.

On September  30, 1997,  The Zanett  Securities  Company  ("Zanett"),  acting as
placement agent for the Company,  completed a private placement ("Placement") of
$4 million of the Company's  Prepaid  Common Stock Purchase  Warrants  ("Prepaid
Warrants").  The sale of these Prepaid Warrants was exempt from the registration
requirements  of the Securities Act of 1933, as amended,  pursuant to Regulation
D. Each Prepaid Warrant entitles the holder to purchase that number of shares of
Common Stock that is equal to $1,000 divided by the applicable  exercise  price.
Such exercise  price is determined  initially as 70% of the average  closing bid
price of the  Common  Stock for the 10 trading  days  ending on the day prior to
exercise of the Prepaid Warrants.  Additionally,  the exercise discount shall by
increased  by 1% for each  subsequent  60 day period that the  Prepaid  Warrants
remain unexercised.  The exercise price, however,  shall never exceed $1.40. The
Prepaid  Warrants  became  exercisable  on December 29, 1997. The sale of Common
Stock issued upon  exercise of the Prepaid  Warrants is  restricted to one-third
for the first 60, 90 and 120 days  subsequent to February 27, 1998, the date the
registration  statement  became  effective.   The  Prepaid  Warrants  expire  on
September 30, 2000.

As compensation for the successful completion of the Placement,  Zanett received
a  placement  fee  and  an  unaccountable  expense  allowance  of  10%  and  3%,
respectively, of the gross proceeds of the Placement.  Additionally, the Company
issued 600,000 Common Stock Purchase  Warrants to Zanett that are exercisable at
$1.125 per share of Common Stock.

Also in conjunction  with the Placement,  the Company  entered into an agreement
with a financial  consultant who is an affiliate of Zanett  Lombardier,  Ltd, an
investor in the Prepaid  Warrants.  During the  five-year  term of the agreement
this  consultant  will provide the Company with  advisory  services  relating to
financial and strategic  ventures and alliances,  investment banking and general
financial advisory services, and advice and assistance with the Company's market
development  activities.   As  compensation  for  these  services,  the  Company
authorized the issuance of 3,555,555 Common Stock Purchase Warrants ("Consulting
Warrants") to this consultant that are exercisable at $1.125 per share of Common
Stock.  Of such  amount,  the  issuance of  3,055,555  Consulting  Warrants  was
contingent upon the approval of the Company's shareholders which was received on
April 24, 1998. At September 30, 1997,  the Company  valued these warrants using
the  Black-Scholes  pricing  methodology at approximately  $4,400,000.  However,
since the issuance of 3,055,555 of such Consulting  Warrants was uncertain until
April 24, 1998, the Company has revalued these Consulting Warrants in accordance
with  the   Black-Scholes   pricing   methodology  at  March  31,  1998,  giving
consideration  to the facts and  circumstances  as they  existed  at that  date.
Accordingly,  unearned compensation has been adjusted to $4,528,500 at March 31,
1998.  Such  amount  has been  recorded  in  stockholders'  equity  as  unearned
compensation  and will be  amortized  to income over the  five-year  term of the
agreement. These warrants expire on September 30, 2002.

As part of the Placement,  Zanett  converted  notes payable of $772,222,  issued
pursuant to a Line of Credit  Agreement  dated May 29,  1997,  as  amended,  and
accrued interest thereon of $63,837 into Prepaid  




                                       15
<PAGE>




Warrants.  The net proceeds of the  Placement of  $2,643,941  have been used for
general working capital requirements.

The  licensing  agreement  with DTN  provides  that the Company  will  receive a
minimum of $2 million  during the twelve month period ended April 30, 1999,  and
up to 40% of revenues generated from the subscriber base after the attainment of
a  1,000  customer  threshold.  Additionally,  DTN  will  assume  the  Company's
telecommunications and information costs, as well as the system's hardware costs
associated  with  expansion  of the  subscriber  base.  This  will  result  in a
significant reduction in the Company's infrastructure and overhead costs.

The  Company  has also  entered  into a three year  contract  with Sprint and is
currently  negotiating an agreement,  in partnership  with Sprint,  with a major
stock brokerage firm. Additionally,  the Company is in negotiations with several
major  telecommunications  companies.  Management continues to believe that upon
the successful implementation of its marketing plan, sufficient revenues will be
generated to meet  operating  requirements.  Management  also  believes that the
successful execution of its proposed plan of operations will generate sufficient
cash flow from  operations  to enable the  Company to offer its  services  on an
economically  sound basis;  however,  no assurance  can be given that such goals
will  be  obtained  or  that  any  expected  revenues  or  cash  flows  will  be
forthcoming,  except for those  previously  described in connection with the DTN
licensing agreement.

The Company has been  notified by Nasdaq that it is not in  compliance  with the
net  tangible  assets   requirement  as  set  forth  in  NASD  Marketplace  Rule
4310(c)(2). Such rule requires the maintenance of a minimum of $2 million of net
tangible  assets for  continued  listing on The Nasdaq Small Cap Market.  If the
Company were to be delisted  from The Nasdaq Small Cap Market the Company  would
be subject to financial penalties resulting from its default pursuant to Article
V of the Prepaid Warrants.  Additionally, such event would allow Zanett Capital,
Inc. the right to name a majority of the directors of the Company.

The Company is currently seeking additional sources of capital through a private
placement;  however, there can be no assurance that additional financing will be
available on acceptable terms or at all.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
----------------------------------------------

From time to time,  information provided by the Company,  statements made by its
employees  or  information  included  in its  filings  with the  Securities  and
Exchange  Commission  (including this Form 10-QSB) may contain  statements which
are  not  historical  facts,  so-called  "forward  looking  statements".   These
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation  Reform Act of 1995.  The  Company's  actual
future results may differ significantly from those stated in any forward-looking
statements.   Forward-looking   statements   involve   a  number  of  risks  and
uncertainties,  including,  but not limited to, product demand,  pricing, market
acceptance,  litigation,  intellectual  property  rights,  risks in product  and
technology development,  product competition,  limited number of customers,  key
personnel,  and other risk  factors  detailed in this  Quarterly  Report on Form
10-QSB and in the Company's other Securities and Exchange Commission filings.




                                       16
<PAGE>





PART II.  OTHER INFORMATION


                             SMARTSERV ONLINE, INC.



ITEM 1.    LEGAL PROCEEDINGS

On or about  December 15, 1997,  Steven T.  Francesco,  then President and Chief
Operating  Officer  of the  Company,  filed a  complaint  against  the  Company,
Sebastian E. Cassetta (its Chairman of the Board and Chief  Executive  Officer),
Bruno Guazzoni,  Claudio Guazzoni,  Zanett Securities,  Inc. and Zanett Capital,
Inc. in the Supreme  Court of the State of New York,  County of New York. In the
amended complaint, which was served on or about December 29, 1997, Mr. Francesco
alleged,  among  other  things,  that  the  Company  breached  the  terms of its
employment  agreement with him. The amended  complaint seeks damages against the
Company in an unspecified  amount and injunctive relief. On February 6, 1998 the
Board of Directors terminated Mr. Francesco's employment with the Company as its
President  and  Chief  Operating  Officer.  The  Company  has moved the Court to
dismiss certain of the claims against it. That motion is currently  pending.  No
disclosure  in this  action has yet been  noticed  or taken.  The  Company  will
vigorously defend this action.

By letter dated April 10, 1998, Michael Fishman,  then a Vice President of Sales
for the Company,  resigned his position. On or about April 24, 1998, Mr. Fishman
filed a complaint against the Company,  Sebastian E. Cassetta, Claudio Guazzoni,
Zanett  Securities Co.,  Zanett Capital Corp. and Zanett  Lombardier Ltd. in the
United States District Court for the District of Connecticut.  In the complaint,
Mr.  Fishman  alleges,  among  other  things,  that the  Company  constructively
discharged him by breaching of the terms of its  employment  agreement with him.
The complaint seeks to assert claims for (i) fraud under the federal  securities
laws,  (ii) breach of various terms of the Company's  employment  agreement with
Mr.  Fishman,  (iii) breach of the implied duty of good faith and fair  dealing,
(iv)  fraudulent  misrepresentation,   (v)  negligent  misrepresentation,   (vi)
intentional misrepresentation,  (vii) failure to pay wages and (viii) promissory
estoppel.  The  complaint  seeks damages  against the Company in an  unspecified
amount.  The Company has not yet answered or moved against the complaint and the
time for it to do so has not yet  expired.  No  discovery in this action has yet
been noticed or taken. The Company will vigorously defend this action.


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

(a)         Date of Annual Meeting of Stockholders - April 24, 1998

(b)         Directors Elected at Annual Meeting
            Mario F. Rossi
            Robert H. Steele

            Continuing Directors
            Sebastian E. Cassetta
            Steven T. Francesco
            L. Scott Perry
            Claudio Guazzoni
            Catherine Cassel Talmadge



                                       17
<PAGE>




(c)        Election of Mario F. Rossi as Director

           SHAREHOLDER VOTES
           -----------------
           For:                                               3,014,734
           Withheld:                                            860,395

           Election of Robert H. Steele as Director

           SHAREHOLDER VOTES
           -----------------
           For:                                               3,014,734
           Withheld:                                            860,395

            Amendment  of the  Company's  1996 Stock Option Plan to increase the
           number of  shares  available  for grant  from  400,000  to  1,500,000
           shares,   eliminate  mandatory  grants  of  options  to  non-employee
           directors  and  grant  the   compensation   committee   discretionary
           authority  to  grant  options  to  both  employee  and   non-employee
           directors.

           SHAREHOLDER VOTES
           -----------------
           For:                                               1,129,954
           Against:                                           1,023,501
           Abstentions:                                           4,150
           Broker non-votes:                                  1,717,524

           Amendment of the Company's  Certificate of  Incorporation to increase
           the number of authorized  shares of the Company's  Common Stock,  par
           value $0.01 per share, from 15,000,000 shares to 40,000,000 shares.

           SHAREHOLDER VOTES
           -----------------
           For:                                               3,684,328
           Against:                                             184,096
           Abstentions:                                           6,705
           Broker non-votes:                                         --

           Amendment of the Company's  Certificate of  Incorporation to create a
           class of  1,000,000  shares of Preferred  Stock,  par value $0.01 per
           share.

           SHAREHOLDER VOTES
           -----------------
           For:                                               1,129,699
           Against:                                           1,021,001
           Abstentions:                                           6,905
           Broker non-votes:                                  1,717,524

           Approval of the issuance of Consultant Warrants to purchase 3,055,555
           shares  of the  Company's  Common  Stock  to Mr.  Bruno  Guazzoni,  a
           consultant to the Company.

           SHAREHOLDER VOTES
           -----------------
           For:                                               1,750,854
           Against:                                             402,146
           Abstentions:                                           4,605
           Broker non-votes:                                  1,717,524



                                       18
<PAGE>



           Ratification of the appointment of Ernst & Young LLP as the Company's
           independent auditors for the fiscal year ending June 30, 1998.

           SHAREHOLDER VOTES
           -----------------
           For:                                               3,858,329
           Against:                                              11,850
           Abstentions:                                           4,950
           Broker non-votes:                                         --


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8 - K

(a)    The following exhibits are included herein:

           Exhibit 10.26     Asset Purchase Agreement between SmartServ  Online,
                             Inc. and Data Transmission Network Corporation, 
                             dated April 23, 1998

           Exhibit 27        Financial Data Schedule

(b)    REPORTS ON FORM 8-K

           During the quarter  ended March 31, 1998 the Company  filed a Current
           Report on Form 8-K, dated  February 11, 1998,  reporting Item 5. Such
           report did not contain any financial information.






                                       19
<PAGE>




                             SMARTSERV ONLINE, INC.


                                   SIGNATURES



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



                                        SmartServ Online, Inc.
                                        (Registrant)

Date:  MAY 19, 1998                     By:   /S/  SEBASTIAN E. CASSETTA
       ------------                           --------------------------
                                              Sebastian E. Cassetta
                                              Chairman of the Board, Chief 
                                              Executive Officer




Date:  MAY 19, 1998                           /S/  THOMAS W. HALLER
       ------------                           --------------------------
                                              Thomas W. Haller
                                              Chief Financial Officer, Treasurer