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


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

                                   FORM 10-QSB

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


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                         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)

                                 (203) 353-5950
--------------------------------------------------------------------------------
                (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
                                                              ---     ---

THE NUMBER OF SHARES OF COMMON STOCK,  $.01 PAR VALUE,  OUTSTANDING AS OF MAY 5,
2002 WAS 6,305,240.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

          YES        NO X
             ---       ---

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

<PAGE>

                             SMARTSERV ONLINE, INC.

                                   FORM 10-QSB

                                      INDEX

PART 1.   FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements

          Consolidated Balance Sheets - March 31, 2002 (unaudited) and
          December 31, 2001....................................................2

          Consolidated Statements of Operations - three months ended
          March 31, 2002 and 2001
          (unaudited)..........................................................4

          Consolidated Statement of Changes in Stockholders' Equity
          (Deficiency) - three months ended March 31, 2002
          (unaudited)..........................................................5

          Consolidated Statements of Cash Flows - three months ended
          March 31, 2002 and 2001
          (unaudited)..........................................................6

          Notes to Unaudited Consolidated Financial
          Statements...........................................................7

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of
          Operations..........................................................13

PART II.  OTHER INFORMATION

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

Item 2.   Changes in Securities and Use of Proceeds...........................17

Item 6.   Exhibits and Reports on Form 8-K....................................18

          Signatures..........................................................19


                                        1

<PAGE>

                        SMARTSERV ONLINE, INC.

                      CONSOLIDATED BALANCE SHEETS

                                                         MARCH 31,  DECEMBER 31,
                                                           2002        2001
                                                       -----------   -----------
                                                       (UNAUDITED)
ASSETS
Current assets
  Cash and cash equivalents                            $ 3,036,655   $ 6,532,323
  Accounts receivable                                      103,521        40,798
  Prepaid expenses                                         381,426       531,028
                                                       -----------   -----------
Total current assets                                     3,521,602     7,104,149
                                                       -----------   -----------

Property and equipment, net                              3,137,857     3,408,776

Other assets
  Capitalized software development costs, net of
    accumulated amortization of $330,960 at
    March 31, 2002 and $268,619 at December 31, 2001       983,051       973,594
  Security deposits                                        491,538       474,545
  Notes receivable from officer                            500,000       500,000
                                                       -----------   -----------
                                                         1,974,589     1,948,139
                                                       -----------   -----------

Total Assets                                           $ 8,634,048   $12,461,064
                                                       ===========   ===========


                                        2

<PAGE>

                        SMARTSERV ONLINE, INC.

                      CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                      MARCH 31,     DECEMBER 31,
                                                                        2002            2001
                                                                    ------------    ------------
                                                                    (UNAUDITED)
<S>                                                                 <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
  Accounts payable                                                  $  1,315,259    $  1,329,105
  Accrued liabilities                                                    725,351         695,134
                                                                    ------------    ------------
Total current liabilities                                              2,040,610       2,024,239
                                                                    ------------    ------------

Deferred revenues                                                         82,000              --

Note payable                                                           6,723,156       6,723,156

COMMITMENTS AND CONTINGENCIES - NOTE 8

STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock - $0.01 par value
  Authorized - 1,000,000 shares
  Issued and outstanding - None                                               --              --
Common stock - $.01 par value
  Authorized - 40,000,000 shares
  Issued and outstanding - 6,304,040 shares at March 31, 2002 and
     6,263,783 shares at December 31, 2001                                63,040          62,638
Additional paid-in capital                                            69,572,362      69,680,059
Notes receivable from officers                                          (666,841)       (666,841)
Unearned compensation                                                   (249,099)       (540,354)
Accumulated deficit                                                  (68,931,180)    (64,821,833)
                                                                    ------------    ------------
Total stockholders' equity (deficiency)                                 (211,718)      3,713,669
                                                                    ------------    ------------

Total Liabilities and Stockholders' Equity (Deficiency)             $  8,634,048    $ 12,461,064
                                                                    ============    ============

</TABLE>

See accompanying notes.


                                        3

<PAGE>

                        SMARTSERV ONLINE, INC.

                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (UNAUDITED)

<TABLE>
<CAPTION>

                                                                  THREE MONTHS
                                                                 ENDED MARCH 31
                                                          --------------------------
                                                              2002          2001
                                                          -----------    -----------
<S>                                                       <C>            <C>
Revenues                                                  $    28,821    $ 1,224,971
                                                          -----------    -----------
Costs and expenses:
  Costs of services                                        (1,531,526)    (2,057,719)
  Sales and marketing expenses                             (1,243,354)    (1,347,737)
  General and administrative expenses                      (1,021,550)    (1,606,651)
  Stock-based compensation                                   (172,015)      (159,778)
                                                          -----------    -----------

Total costs and expenses                                   (3,968,445)    (5,171,885)
                                                          -----------    -----------

Loss from operations                                       (3,939,624)    (3,946,914)

Other income (expense)
  Interest income                                              22,684        193,363
  Interest expense and other financing costs                 (182,241)       (94,093)
  Foreign exchange loss                                       (10,166)       (16,010)
                                                          -----------    -----------

                                                             (169,723)        83,260
                                                          -----------    -----------

Net loss                                                  $(4,109,347)   $(3,863,654)
                                                          ===========    ===========

Basic and diluted loss per common share                   $     (0.66)   $     (0.68)
                                                          ===========    ===========

Weighted average shares outstanding - basic and diluted     6,255,960      5,705,629
                                                          ===========    ===========

</TABLE>

See accompanying notes.


                                        4
<PAGE>

                        SMARTSERV ONLINE, INC.

 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

                   THREE MONTHS ENDED MARCH 31, 2002
                              (UNAUDITED)

<TABLE>
<CAPTION>

                                                                 NOTES
                                        COMMON STOCK          RECEIVABLE     ADDITIONAL
                                                    PAR          FROM          PAID-IN        UNEARNED       ACCUMULATED
                                    SHARES         VALUE       OFFICERS        CAPITAL      COMPENSATION       DEFICIT
                                 ------------------------------------------------------------------------------------------
<S>                              <C>            <C>            <C>            <C>             <C>             <C>
Balances at December 31, 2001    6,263,783      $   62,638     $ (666,841)    $ 69,680,059    $   (540,354)   $ (64,821,833)

Issuance of common stock upon
   exercise of employee stock
   options                          12,400             124            --            11,821              --               --

Conversion of 39 prepaid
   common stock purchase
   warrants into common stock       27,857             278            --              (278)             --               --

Amortization of unearned
    compensation over the terms
    of consulting agreement             --              --            --                --         291,255               --

Change in market value of
   employee stock options               --              --            --          (119,240)             --               --

Net loss for the period                 --              --            --                --              --       (4,109,347)
                                 ------------------------------------------------------------------------------------------

Balances at March 31, 2002       6,304,040      $   63,040     $ (666,841)    $ 69,572,362    $   (249,099)   $ (68,931,180)
                                 ==========================================================================================

</TABLE>

See accompanying notes.


                                        5

<PAGE>

                        SMARTSERV ONLINE, INC.

                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (UNAUDITED)

<TABLE>
<CAPTION>

                                                            THREE MONTHS
                                                           ENDED MARCH 31
                                                    ----------------------------
                                                        2002            2001
                                                    ------------    ------------
<S>                                                 <C>             <C>
OPERATING ACTIVITIES
Net loss                                            $ (4,109,347)   $ (3,863,654)
Adjustments to reconcile net loss to net cash
   used for operating activities:
      Depreciation and amortization                      501,750         597,629
      Noncash compensation costs                        (119,240)       (146,777)
      Noncash consulting services                        291,255         306,555
      Amortization of deferred revenues                       --        (966,369)
      Amortization of deferred financing costs                --          50,000
      Changes in operating assets and liabilities
        Accounts receivable                              (62,723)         59,716
        Prepaid expenses                                 149,602         172,419
        Accounts payable and accrued liabilities          16,371         746,086
        Deferred revenues                                 82,000              --
        Security deposit                                 (16,993)             --
                                                    ------------    ------------
   Net cash used for operating activities             (3,267,325)     (3,044,395)
                                                    ------------    ------------

INVESTING ACTIVITIES
Purchase of equipment                                   (168,490)       (127,382)
Capitalization of software development costs             (71,798)       (153,151)
Due from officer                                              --        (500,000)
                                                    ------------    ------------
  Net cash used for investing activities                (240,288)       (780,533)
                                                    ------------    ------------

FINANCING ACTIVITIES
Proceeds from the issuance of note                            --         191,992
Issuance of common stock                                  11,945          14,839
                                                    ------------    ------------
  Net cash provided by financing activities               11,945         206,831
                                                    ------------    ------------

Decrease in cash and cash equivalents                 (3,495,668)     (3,618,097)
Cash and cash equivalents - beginning of period        6,532,323      19,172,118
                                                    ------------    ------------

Cash and cash equivalents - end of period           $  3,036,655    $ 15,554,021
                                                    ============    ============

</TABLE>

See accompanying notes.


                                        6

<PAGE>

                        SMARTSERV ONLINE, INC.

         NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                            MARCH 31, 2002

1.   NATURE OF BUSINESS

SmartServ Online,  Inc. commenced  operations on August 20, 1993. We provide Web
and wireless applications and infrastructure that allow financial  institutions,
network  service   providers  and  other   businesses  to  deliver  content  and
transaction-intensive  services  to  their  work  forces  and  customers  -  via
virtually  any  wired or  data-enabled  wireless  device.  SmartServ's  products
include  content,  transaction  processing  and alert engines,  proprietary  W2W
MiddlewareTM  that  optimizes  content  delivery  to a full array of present and
future devices,  and a suite of applications  designed to enable  businesses and
their   customers  to  exploit  the  benefits  of  wireless  data  exchange  and
transactional  capability.  Our  products  facilitate  stock  trading  and other
m-commerce transactions, as well as the dissemination of real-time stock quotes,
business and financial news,  sports  information,  national weather reports and
other business and entertainment information in a user-friendly manner.

Our plan of operation focuses on the business-to-business  strategy of marketing
our services in partnership with those companies that have an economic incentive
to provide our  information  and  transaction  services to their  customers.  We
continue  to  focus  on two  primary  areas:  telecommunications  and  financial
services.  For the  telecommunications  sector,  SmartServ  provides  a suite of
solutions  to help the wireless  carriers,  handset  manufacturers  and Internet
service  providers rapidly expand the delivery of products and services to their
customers.   The   Company's   platform   supports  an  array  of  features  and
transaction-enabling  applications  designed to drive  service usage and network
revenues.  For the  financial  services  sector,  SmartServ  seeks to expand its
customer base among both institutional and retail financial services enterprises
by leveraging its transaction  routing engine and W2W MiddlewareTM  with a suite
of  applications  designed  to  meet  the  rigorous  demands  of  the  financial
community.  Management believes that SmartServ's primary source of revenues will
be derived from  consumers  who purchase the services  through  these  strategic
marketing partners.

Delays in the  build-out of carrier  data  networks  and the  unavailability  of
data-enabled  wireless  devices have caused the market for SmartServ's  data and
transaction  services to be virtually  non-existent  until now. Such delays have
resulted in the  Company's  inability to implement its business plan and related
marketing strategies. Consequently, the Company is in need of additional capital
to  compensate  for such delays and their impact on the  Company's  inability to
generate revenues.  The Company has engaged investment bankers to assist it with
the sale of equity to private  investors that  understand the wireless  industry
and the current state of the technology.

The Company's financial  statements have been prepared on a going concern basis,
which  contemplates  the realization of assets and the settlement of liabilities
and  commitments  in the normal course of business.  The Company  incurred a net
loss of  $4,109,347  for the three month period ended March 31, 2002, a net loss
of  $14,819,860  for the  year  ended  December  31,  2001,  and net  losses  of
$30,993,559  and  $7,124,126  for the  years  ended  June  30,  2000  and  1999,
respectively.  Additionally,  it had an  accumulated  deficit of  $68,931,180 at
March 31, 2002.  These conditions  raise  substantial  doubt about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of these uncertainties.


                                        7
<PAGE>

As carriers, such as Verizon Wireless, AT&T Wireless and Cingular,  complete the
build-out of data  networks (a process that is currently  underway),  management
believes  that the demand for the  Company's  services  will  increase  from the
enterprise customer, as well as the retail customers of the carriers themselves.
Notwithstanding  the  execution of several  contracts in the latter part of 2001
and the continual  discussions  with potential  strategic  partners about future
relationships,  the Company's  ability to generate  revenues and working capital
may not be sufficient to meet management's  objectives as presently  structured.
Additionally,  increasing  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.  Management
recognizes that the Company must generate additional revenues,  raise additional
capital,  consider modifications to its sales and marketing program or institute
cost  reductions  to  allow  it to  continue  to  operate  with  available  cash
resources.  There is no assurance that the Company will generate future revenues
or cash flow from operations,  raise additional  capital,  or that the Company's
products and services will continue to be accepted in the marketplace.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
---------------------

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
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 accounting  principles  generally  accepted in the
United States.  The balance sheet at December 31, 2001 has been derived from the
audited  financial  statements  at that date,  but does not  include  all of the
information and footnotes required by accounting  principles  generally accepted
in the United States for complete financial statements. The financial statements
should be read in  conjunction  with the Company's  Annual Report on Form 10-KSB
for the period  ended  December 31,  2001.  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 three months ended
March 31, 2002 are not  necessarily  indicative  of those  expected for the year
ending December 31, 2002.

PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated  financial  statements  include the accounts of the Company and
its  subsidiaries,  all of  which  are  wholly-owned.  Significant  intercompany
accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

REVENUE RECOGNITION
-------------------
Revenues are recognized as services are provided.  Deferred revenues,  resulting
from customer  prepayments,  are recognized as services are provided  throughout
the term of the  agreement  with the  respective  customers.  Deferred  revenues
resulting from our agreement with Data Transmission  Network Corporation ("DTN")
were  amortized  over the  anticipated  future  revenue  stream,  a period of 42
months,  commencing  June 1, 1999. We amended our agreement  with DTN such that,
effective  September 1, 2000,  SmartServ  performed  maintenance and enhancement
services  through  December 2000 and  operational  support  through August 2001.
Therefore,  commencing  September 1, 2000,  deferred  revenues were amortized to
income on a straight-line basis over the period through August 2001.


                                       8
<PAGE>

EARNINGS PER SHARE
------------------
Basic  earnings per share is computed on the weighted  average  number of common
shares  outstanding;  however,  it does not  include  the  unvested  portion  of
restricted shares in accordance with Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share".  Diluted earnings per share reflects the
increase in the weighted  average  common shares  outstanding  that would result
from the assumed  exercise of  outstanding  stock options  calculated  using the
treasury stock method when dilutive.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS
--------------------------------------
In  connection  with certain  contracts  entered into between  SmartServ and its
customers,  as well as other  development  projects,  we have capitalized  costs
related  to  certain  product   enhancements  and  application   development  in
accordance with SFAS No. 86,  "Accounting for the Costs of Computer  Software to
be Sold, Leased or Otherwise Marketed."

On an  ongoing  basis,  SmartServ  reviews  the  future  recoverability  of  its
capitalized  software  development  costs for  impairment or whenever  events or
changes  in  circumstances  indicate  that  the  carrying  amounts  may  not  be
recoverable. When such events or changes in circumstances do occur, we recognize
an  impairment  loss  if the  undiscounted  future  cash  flows  expected  to be
generated by the asset are less than its carrying  value.  The  impairment  loss
reduces the asset to its fair value.

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The carrying amounts of our financial instruments  approximate fair value due to
their terms and maturities.

SUPPLEMENTAL CASH FLOW DATA
---------------------------
We consider all highly liquid  investments  with a maturity date of three months
or less when purchased to be cash equivalents.

Interest, debt origination and other financing costs paid during the three month
periods ended March 31, 2002 and 2001 were $187,000 and $1,800, respectively.

CONCENTRATION OF CREDIT RISK
----------------------------
Financial  instruments that potentially  subject  SmartServ to concentrations of
credit risk consist  primarily of its commercial paper  investments and accounts
receivable.  It is management's  policy to invest in only those companies with a
AAA credit rating;  therefore,  our commercial paper  investments are short-term
and highly liquid. At March 31, 2002, accounts receivable consist principally of
amounts  due from  financial  services  companies.  We perform  periodic  credit
evaluations of our customers  and, if  applicable,  provide for credit losses in
the financial statements.

PROPERTY AND EQUIPMENT
----------------------
Property and equipment are stated at cost.  Equipment  purchased under a capital
lease is recorded at the present value of the future  minimum lease  payments at
the date of acquisition. Depreciation is computed using the straight-line method
over estimated useful lives of three to ten years.

ADVERTISING COSTS
-----------------
Advertising costs are expensed as incurred and were  approximately  $107,000 and
$24,000  during  the  three  month  periods  ended  March  31,  2002  and  2001,
respectively.

STOCK BASED COMPENSATION
------------------------
We maintain several stock option plans for employees and non-employee  directors
that provide for the granting of stock options for a fixed number of shares with
an exercise price equal to the fair value of the


                                        9
<PAGE>

shares at the date of grant.  We account for these stock  compensation  plans in
accordance  with  Accounting  Principles  Board Opinion No. 25,  "Accounting for
Stock Issued to Employees" ("APB No. 25"). Accordingly,  compensation expense is
recognized  to the extent that the fair value of the stock  exceeds the exercise
price of the option at the measurement  date.  Certain options,  which have been
repriced,  are subject to the  variable  plan  requirements  of APB No. 25, that
requires us to record compensation  expense for changes in the fair value of our
common stock.

FOREIGN CURRENCY TRANSLATION
----------------------------
The financial  statements of foreign subsidiaries have been translated into U.S.
dollars in accordance with FASB Statement No. 52, Foreign Currency  Translation.
All balance sheet  accounts  have been  translated  using the exchange  rates in
effect at the balance sheet date.  Income statement amounts have been translated
using the average rate for the year. Gains and losses resulting from the changes
in exchange rates from year to year are reported in other comprehensive income.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  ("SFAS")  No.  144,  Accounting  for the  Impairment  or  Disposal of
Long-Lived  Assets,  which  provides  a single  accounting  model for  measuring
impairment of long-lived assets and the disposal of such assets. The adoption of
SFAS No. 144 had no impact on the  Company's  results of  operations,  financial
position or cash flows.

RECLASSIFICATIONS
-----------------
Certain amounts reported in the financial  statements for the three month period
ended March 31, 2001 have been reclassified to conform to the 2002 presentation.

3.   PROPERTY AND EQUIPMENT

Property and equipment consist of the following:


<TABLE>
<CAPTION>

                                                                 MARCH 31,   DECEMBER 31,
                                                                  2002          2001
                                                              -----------    -----------
<S>                                                           <C>            <C>
Data processing equipment                                     $ 5,187,705    $ 5,033,498
Data processing equipment purchased under a capital lease         246,211        246,211
Office furniture and equipment                                    151,263        151,263
Display equipment                                                  71,335         71,335
Leasehold improvements                                             69,852         55,570
                                                              -----------    -----------

                                                                5,726,366      5,557,877
Accumulated  depreciation,  including $242,107 at March 31,
 2002 and $229,797 at December 31, 2001 for equipment
 purchased under a capital lease                               (2,588,509)    (2,149,101)
                                                              -----------    -----------
                                                              $ 3,137,857    $ 3,408,776
                                                              ===========    ===========

</TABLE>

4.   NOTE RECEIVABLE FROM OFFICER

The Company's Board of Directors  authorized the issuance of a line of credit to
Sebastian  Cassetta,  SmartServ's Chief Executive Officer,  for an amount not to
exceed  $500,000.  Such amount  bears  interest at the prime rate and matures on
March 20, 2004.  Interest for the period  January 2, 2001 to June 30, 2002 shall
accrue and be  payable  at  maturity.  Commencing  July 1, 2002 until  maturity,
interest shall be payable semi-annually in arrears on January 1st and July 1st.


                                       10

<PAGE>

5.   NOTE PAYABLE

In May 2000, we entered into a Business Alliance Agreement with  Hewlett-Packard
Company ("HP") whereby the companies  agreed to jointly market their  respective
products and services,  and to work on the build-out of SmartServ's domestic and
international infrastructure. In furtherance of these objectives, HP provided us
with a line of credit  of up to  $20,000,000  for the  acquisition  of  approved
hardware,  software and services.  As of September 28, 2001, the expiration date
of the facility,  SmartServ had borrowed $6,723,156.  The debt is evidenced by a
note,  bearing  an  interest  rate  of 11%,  secured  by the  Company's  assets,
exclusive of its internally  developed software products,  may be converted into
our common stock at $33.56 per share and matures on September 28, 2003.

6.   STOCK-BASED COMPENSATION

In  connection  with the grant of  certain  stock  options,  warrants  and other
compensation arrangements, we have recorded charges to earnings that are noncash
in nature. Certain of these stock option grants are subject to the variable plan
requirements  of APB No. 25 that require us to record  compensation  expense for
changes in the fair value of our common stock.

The   following   table   shows   the   amount   of   stock-based   compensation
(charges)/credits  that  would  have  been  recorded  in the  categories  of the
statement of operations had stock-based  compensation not been separately stated
therein:

                                                   THREE MONTHS ENDED MARCH 31
                                                   ---------------------------
                                                       2002           2001
                                                   ----------      -----------

Costs of services                                  $   26,735     $   27,760

Selling, general and administrative expenses         (198,750)      (187,538)
                                                   ----------     ----------

                                                   $ (172,015)    $ (159,778)
                                                   ==========     ==========

Stock-based  compensation  for the three  months  ended  March 31, 2002 and 2001
consists of the impact of changes in the market  value of the  Company's  common
stock on the value of options to purchase  common stock issued to employees,  as
well as the amortization of deferred costs associated with the prior issuance of
warrants to purchase common stock.

7.   EARNINGS PER SHARE

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

                                                   THREE MONTHS ENDED MARCH 31
                                                   ---------------------------
                                                       2002           2001
                                                   ----------      -----------
Numerator:
   Net loss                                      $  (4,109,347)   $ (3,863,654)
                                                 =============    ============
Denominator:
   Weighted average shares - basic and diluted       6,255,960       5,705,629
                                                 =============    ============

Basic and diluted loss per common share          $       (0.66)   $      (0.68)
                                                 =============    ============


                                       11

<PAGE>

Outstanding  employee  stock options and other warrants to purchase an aggregate
of  4,032,000  shares of common stock at March 31, 2002 were not included in the
computation  of diluted  earnings per share because the Company  reported a loss
for the period and, therefore their inclusion would be antidilutive.

8.   COMMITMENTS AND CONTINGENCIES

On or about June 4, 1999,  Michael Fishman,  our former Vice President of Sales,
commenced an action against us, Sebastian E. Cassetta (our Chairman of the Board
and Chief Executive  Officer),  Steven Francesco (our former President) and four
others  in  the  Connecticut   Superior  Court  for  the  Judicial  District  of
Stamford/Norwalk at Stamford alleging breach of his employment contract,  breach
of duty of good faith and fair dealing, fraudulent misrepresentation,  negligent
misrepresentation,  intentional  misrepresentation and failure to pay wages. The
defendants  have answered the complaint and filed  counterclaims  for fraudulent
inducement and breach of contract.  The fraud and misrepresentation  claims have
been  dismissed.  Plaintiff has responded to the  counterclaim  and discovery is
proceeding.  Although we are vigorously  defending this action,  there can be no
assurance that we will be successful.

On or about February 29, 2000, Commonwealth  Associates,  L.P.  ("Commonwealth")
filed a  complaint  against  us in the  Supreme  Court of the State of New York,
County of New York.  The  complaint  alleges  that on or about  August 19, 1999,
Commonwealth and SmartServ  entered into an engagement  letter pursuant to which
Commonwealth was to provide financial  advisory and investment  banking services
to SmartServ in connection  with a possible  combination  between  SmartServ and
Data  Link  Systems   Corporation.   The  engagement   letter   provided  for  a
nonrefundable  fee of  $15,000  payable in cash or common  stock at  SmartServ's
option. The complaint alleges that SmartServ elected to pay the fee in stock and
seeks  13,333  shares  of  common  stock or at least  $1,770,000  together  with
interest and costs. In our answer to the complaint,  we have denied the material
allegations of the complaint, including the allegation that we elected to pay in
stock.  Discovery  has  commenced.  Although we are  vigorously  defending  this
action, there can be no assurance that we will be successful.

While we intend to vigorously defend these actions,  the unfavorable  outcome of
either  such  action  could  have a  material  adverse  effect on our  financial
condition, results of operations and cash flows.

9.   SUBSEQUENT EVENT

In May 2002, in an effort to reduce  expenses the Company  reduced its personnel
from 66 to 55, or 17%, which  management  believes will be sufficient to support
its operations  during the year ending  December 2002. The Company  expects this
event to result in a charge of  approximately  $65,000 for  severance  and other
employee related costs which will be recorded in the second quarter of 2002.


                                       12

<PAGE>

ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

SmartServ  is a Web  and  wireless  applications  developer  providing  wireless
applications,  transaction  platforms and middleware to financial  institutions,
network  service   providers  and  other   commercial   enterprises  that  drive
device-independent,  real-time,  transaction-intensive wireless data services to
their  workforces  and customers.  SmartServ's  breadth of products and services
ensures that  businesses  and their  customers  can fully  exploit the merits of
wireless  data  exchange,  using  virtually  any wired or mobile  device to make
informed  decisions  and execute  transactions  based on real-time  information.
SmartServ's solutions,  which may be hosted or installed,  speed time-to-market,
anticipate ever-changing technologies and lower costs.

SmartServ's plan of operation  includes programs for the sale of its information
and  transactional  application  services through strategic  marketing  partners
utilizing a "business-to-business"  strategy. Such a strategy provides access to
a large number of  potential  subscribers  and allows  SmartServ to maximize its
market  reach  at  minimal  operating  costs.  The  flexibility  of  SmartServ's
application  software and communications  architecture enables the customization
of each information package offered to each strategic marketing partner,  and in
turn to their end users.

As an early  entrant in the dynamic  market for the  distribution  of  financial
information  and  transaction  services  via  wireless  telephones  and personal
digital  assistants,  or  PDAs,  SmartServ  is  developing  strategic  marketing
relationships   with  wireless   equipment   manufacturers,   telecommunications
carriers,  value-added  service  providers  and  potential  corporate  partners.
SmartServ  continuously  seeks to  increase  product  performance  and widen its
distribution  by building and  maintaining  this network of strategic  marketing
partners.  Combining SmartServ's  application development and data platform with
the core competencies of its strategic marketing partners, SmartServ is offering
a packaged  turnkey  solution  for  extending  content and  transactions  to the
wireless  environment.  Management  believes  the wireless  area has  tremendous
potential for distribution of SmartServ's  information  products and as a source
of revenues from "fee based"  transactions  such as routing stock order entries;
however, we have yet to derive any revenues from such efforts.

Management  believes  that most of  SmartServ's  revenues  will  continue  to be
derived from  consumers who purchase its services  through  strategic  marketing
partners. SmartServ anticipates that strategic marketing partners will brand its
information  and  transaction  services with their own private label and promote
and distribute SmartServ's packaged offering to their clients. SmartServ has the
ability to customize  the  information  package to be offered to each  strategic
marketing partner by device.

In May 2002, in an effort to reduce  expenses the Company  reduced its personnel
from 66 to 55, or 17%, which  management  believes will be sufficient to support
its operations  during the year ending  December 2002. The Company  expects this
event to result in a charge of  approximately  $65,000 for  severance  and other
employee related costs which will be recorded in the second quarter of 2002.


                                       13

<PAGE>

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 2002 VERSUS QUARTER ENDED MARCH 31, 2001

During the  quarters  ended  March 31, 2002 and 2001,  we  recorded  revenues of
$28,821 and $1,224,971,  respectively.  Revenues  generated in 2002 were derived
from the licensing of our wireless data products.  Substantially all revenues in
2001 were earned through our licensing agreement with Data Transmission  Network
Corporation.  During the quarters  ended March 31, 2002 and 2001,  we recognized
$-0- and $966,369,  respectively,  from the  amortization  of deferred  revenues
associated with this agreement.

During the  quarter  ended  March 31,  2002,  we  incurred  costs of services of
$1,531,526.  Such costs  consisted  primarily of information  and  communication
costs ($193,000),  personnel costs ($706,700),  systems  consultants  ($40,300),
computer hardware leases,  depreciation and maintenance  costs  ($510,000),  and
amortization   expenses  relating  to  capitalized  software  development  costs
($62,300).  During the  quarter  ended  March 31,  2001,  we  incurred  costs of
services of  $2,057,719.  Such costs  consisted  primarily  of  information  and
communication costs ($210,800),  personnel costs ($561,600), systems consultants
($584,000),   computer  hardware  leases,  depreciation  and  maintenance  costs
($411,500),   and  amortization   expenses  relating  to  capitalized   software
development costs ($230,400). During the quarters ended March 31, 2002 and 2001,
we  capitalized  $71,800 and $153,200,  respectively,  of  development  costs in
accordance with Statement of Financial  Accounting Standards No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed".

During the quarter ended March 31, 2002, we incurred general and  administrative
expenses of $1,021,550.  Such costs were incurred  primarily for personnel costs
($336,800),  professional  fees  ($257,100),  facilities  ($130,700),  insurance
($145,300) and computer  hardware  leases,  depreciation  and maintenance  costs
($54,300).  During the quarter  ended March 31,  2001,  we incurred  general and
administrative  expenses of $1,606,651.  Such costs were incurred  primarily for
personnel costs ($718,400), professional fees ($340,200), facilities ($162,200),
insurance ($114,300) and communications costs ($42,200).

During the  quarter  ended  March 31,  2002,  we  incurred  sales and  marketing
expenses of $1,243,354.  Such costs were incurred  primarily for personnel costs
($602,100),  advertising  and  trade  shows  ($366,800),  facilities  ($39,900),
professional  fees  ($76,600)  and travel  and  lodging  ($121,600).  During the
quarter  ended March 31,  2001,  we  incurred  sales and  marketing  expenses of
$1,347,737.  Such costs were incurred  primarily for personnel costs ($318,000),
marketing consultants ($574,000) and travel and lodging ($166,600).

During the quarter  ended March 31, 2002,  net noncash  charges for  stock-based
compensation  amounted to $172,015 compared to $159,778 during the quarter ended
March 31, 2001. Such noncash  amounts are primarily  related to the valuation of
stock-based  compensation in accordance with Accounting Principles Board Opinion
No. 25,  "Accounting  for Stock Issued to  Employees"  ("APB No.  25").  Certain
options are subject to the  variable  plan  requirements  of APB No. 25, as they
were repriced, and therefore,  compensation expense is recognized for changes in
the fair value of our common stock.  Noncash charges for  professional  fees for
the  quarters  ended  March  31,  2002 and 2001,  were  $291,255  and  $306,500,
respectively,  resulting  primarily  from the  amortization  of  deferred  costs
associated  with the prior  issuance of warrants  to  purchase  common  stock to
various   financial,   marketing  and  technical   consultants.   The  value  of
substantially  all of such common stock  purchase  warrants has been recorded in
accordance with the Black-Scholes pricing methodology.

Interest  income for the  quarters  ended  March 31,  2002 and 2001  amounted to
$22,684 and $193,363,  respectively. Such amounts were earned primarily from our
investments in highly liquid  commercial  paper and money fund accounts.  During
the quarters ended March 31, 2002 and 2001,  interest and other


                                       14

<PAGE>

financing  costs  were  $182,241  and  $94,093,  respectively.  Such  costs were
incurred  primarily in connection  with the $20 million line of credit  facility
with Hewlett-Packard Company.

Basic and diluted loss per share was $0.66 for the quarter  ended March 31, 2002
compared to $0.68 per share for the quarter  ended March 31, 2001.  The weighted
average  shares  outstanding  increased  to  6,255,960  at March  31,  2002 from
5,705,629 at March 31, 2001.

CAPITAL RESOURCES AND LIQUIDITY

In January 2000,  America First Associates Corp.,  acting as placement agent for
SmartServ,  completed a private  placement of 233,000  shares of common stock at
$15.00 per share. We also completed a private placement of an additional 100,000
shares of common  stock at $15.00 per share  without the services of a placement
agent.  The net  proceeds of the two  placements  were used for general  working
capital requirements.

In May 2000,  Chase  Securities  Inc.,  acting as placement agent for SmartServ,
completed  a private  placement  of 353,535  shares of common  stock at $49.50 a
share.  The net proceeds of the placement of  $16,750,000  were used for general
working capital requirements.

In May 2000, we entered into a Business Alliance Agreement with  Hewlett-Packard
Company whereby the companies agreed to jointly market their respective products
and  services  and  to  work  on  the  build-out  of  SmartServ's  domestic  and
international infrastructure. In furtherance of these objectives Hewlett-Packard
provided us with a line of credit of up to  $20,000,000  for the  acquisition of
approved  hardware,  software  and  services.  As of  September  28,  2001,  the
expiration  date  of the  facility,  Hewlett-Packard  Company  had  advanced  us
$6,723,156  thereunder.  The debt is  evidenced  by a secured  note,  bearing an
interest rate of 11%, may be converted into our common stock at $33.56 per share
and matures on September 28, 2003.

During the period  January 1, 2000 through March 31, 2002,  we issued  1,687,580
shares of common  stock to  investors  upon the exercise of warrants to purchase
such shares. Proceeds from the exercise of these warrants were $3,257,700.

At March 31,  2002,  we have  1,725,000  public  warrants  (SSOLW)  and  300,000
warrants with terms  identical to the public warrants  outstanding.  In February
2002, the Company's Board of Directors  modified the terms of, and extended such
warrants which were due to expire on March 20, 2002. These warrants which had an
exercise  formula  requiring the surrender of 1.933  warrants and the payment of
$7.731 for each share of common stock were modified to provide for the surrender
of 2.5  warrants and the payment of $10.50 for each share of common  stock.  The
modified  warrants will expire on March 20, 2003 and are redeemable by SmartServ
on not less than 30 days  written  notice at the  redemption  price of $0.10 per
warrant,  provided  the average  closing bid  quotation  of the common  stock as
reported on the Nasdaq  Stock  Market has been at least  187.5%  ($19.69) of the
current  exercise price of the warrants for a period of 20  consecutive  trading
days  ending  on the  third  day  prior to the date on which we give  notice  of
redemption.  Proceeds  from the exercise of the warrants by the holders  thereof
would provide us with approximately $8,500,000.

Delays in the  build-out of carrier  data  networks  and the  unavailability  of
data-enabled  wireless  devices have caused the market for SmartServ's  data and
transaction  services to be virtually  non-existent  until now. Such delays have
resulted in the  Company's  inability to implement its business plan and related
marketing strategies. Consequently, the Company is in need of additional capital
to  compensate  for such delays and their impact on the  Company's  inability to
generate revenues.  The Company has engaged


                                       15

<PAGE>

investment  bankers  to assist it with the sale of equity to  private  investors
that  understand the wireless  industry and the current state of the technology;
however,  no  assurance  can be  given  that the  Company  will be able to raise
additional capital on satisfactory terms.

The Company's financial  statements have been prepared on a going concern basis,
which  contemplates  the realization of assets and the settlement of liabilities
and  commitments  in the normal course of business.  The Company  incurred a net
loss of  $4,109,347  for the three  months  ended March 31,  2002, a net loss of
$14,819,860  for the year ended December 31, 2001, and net losses of $30,993,559
and  $7,124,126  for the  years  ended  June 30,  2000 and  1999,  respectively.
Additionally,  it had an  accumulated  deficit of $68,931,180 at March 31, 2002.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern.  The financial  statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of these uncertainties.

As carriers, such as Verizon Wireless, AT&T Wireless and Cingular,  complete the
build-out of data  networks (a process that is currently  underway),  management
believes  that the demand for the  Company's  products  will  increase  from the
enterprise customer, as well as the retail customers of the carriers themselves.
Management  also believes  that the  combination  of additional  capital and the
successful  execution of its business plan will generate sufficient revenues and
cash  flow  from  operations  to  enable  the  Company  to  meet  its  operating
requirements. No assurance can be given that such goals will be obtained or that
any expected revenues or cash flows will be achieved.

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

Forward-looking  statements in this document and those made from time-to-time by
our  employees  are  made  under  the  safe  harbor  provisions  of the  Private
Securities Litigation Reform Act of 1995.  Forward-looking statements concerning
future plans or results are necessarily  only estimates and actual results could
differ  materially  from  expectations.  Certain  factors  that  could  cause or
contribute  to such  differences  include,  and are not  limited  to,  potential
fluctuations in quarterly results, the size and timing of awards and performance
on contracts,  dependence on large  contracts and a limited number of customers,
dependence on wireless and/or  internet  networks of  third-parties  for certain
products and services, lengthy sales and implementation cycles, availability and
cost of key  components,  market  acceptance  of new or  enhanced  products  and
services,   proprietary   technology   and  changing   technology,   competitive
conditions, system performance,  management of growth, the risk that our current
and future  products and services may contain errors or be affected by technical
problems that would be difficult and costly to detect and correct, dependence on
key personnel and general  economic and political  conditions  and other factors
affecting  spending by customers,  and other risks  described in this  Quarterly
Report on Form 10-QSB and our other  filings  with the  Securities  and Exchange
Commission.


                                       16

<PAGE>

PART 2.   OTHER INFORMATION

                             SMARTSERV ONLINE, INC.

ITEM 1.   LEGAL PROCEEDINGS

On or about June 4, 1999,  Michael Fishman,  our former Vice President of Sales,
commenced an action against us, Sebastian E. Cassetta (our Chairman of the Board
and Chief Executive  Officer),  Steven Francesco (our former President) and four
others  in  the  Connecticut   Superior  Court  for  the  Judicial  District  of
Stamford/Norwalk at Stamford alleging breach of his employment contract,  breach
of duty of good faith and fair dealing, fraudulent misrepresentation,  negligent
misrepresentation,  intentional  misrepresentation and failure to pay wages. The
defendants  have answered the complaint and filed  counterclaims  for fraudulent
inducement and breach of contract.  The fraud and misrepresentation  claims have
been  dismissed.  Plaintiff has responded to the  counterclaim  and discovery is
proceeding.  Although we are vigorously  defending this action,  there can be no
assurance that we will be successful.

On or about February 29, 2000, Commonwealth  Associates,  L.P.  ("Commonwealth")
filed a  complaint  against  us in the  Supreme  Court of the State of New York,
County of New York.  The  complaint  alleges  that on or about  August 19, 1999,
Commonwealth and SmartServ  entered into an engagement  letter pursuant to which
Commonwealth was to provide financial  advisory and investment  banking services
to SmartServ in connection  with a possible  combination  between  SmartServ and
Data  Link  Systems   Corporation.   The  engagement   letter   provided  for  a
nonrefundable  fee of  $15,000  payable in cash or common  stock at  SmartServ's
option. The complaint alleges that SmartServ elected to pay the fee in stock and
seeks  13,333  shares  of  common  stock or at least  $1,770,000  together  with
interest and costs. In our answer to the complaint,  we have denied the material
allegations of the complaint, including the allegation that we elected to pay in
stock.  Discovery  has  commenced.  Although we are  vigorously  defending  this
action, there can be no assurance that we will be successful.

While we intend to vigorously defend these actions,  the unfavorable  outcome of
either  such  action  could  have a  material  adverse  effect on our  financial
condition, results of operations and cash flows.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

In March 2002, 39 Prepaid  Warrants were  converted  into an aggregate of 27,857
shares of our common stock.  No sales  commissions  were paid in connection with
such  conversion.  The shares were issued in reliance  upon the  exemption  from
registration provided by Section 3 (a) (9) of the Securities Act.


                                       17

<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits:

          None

(b)    REPORTS ON FORM 8-K

          The  Company  did not file any  reports  on Form 8-K  during the three
months ended March 31, 2002.


                                       18

<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)

                          By:


Date: May 17, 2002        /s/  SEBASTIAN E. CASSETTA
      ------------        ------------------------------------------------------
                          Sebastian E. Cassetta
                          Chairman of the Board, Chief Executive Officer


Date: May 17, 2002        /s/  THOMAS W. HALLER
      ------------        ------------------------------------------------------
                          Thomas W. Haller
                          Sr. Vice President, Chief Financial Officer, Treasurer


                                       19