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


                                   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 SEPTEMBER 30, 2000
                                               ------------------

                         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 NOVEMBER
10, 2000 WAS 5,842,145.

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

<PAGE>

                             SMARTSERV ONLINE, INC.

                                   FORM 10-QSB

                                      INDEX

PART 1.       FINANCIAL INFORMATION
<TABLE>
<CAPTION>

Item 1.       Financial Statements
<S>                                 <C> <C>                <C> <C>                                               <C>
              Balance Sheets - June 30, 2000 and September 30, 2000 (unaudited)...................................2

              Statements of Operations - three months ended September 30, 2000
              and 1999 (unaudited)................................................................................4

              Statement of Changes in Stockholders' Equity - three months
              ended September 30, 2000 (unaudited)................................................................5

              Statements of Cash Flows - three months ended September 30, 2000 and
              1999 (unaudited)....................................................................................6

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

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

              and Results of Operations..........................................................................12


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings..................................................................................16

Item 2.       Changes in Securities and Use of Proceeds..........................................................16

Item 6.       Exhibits and Reports on Form 8-K...................................................................17

              Signatures.........................................................................................18
</TABLE>

                                       2
<PAGE>

                             SMARTSERV ONLINE, INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,              JUNE 30,
                                                                                 2000                     2000
                                                                          --------------------     -------------------
                                                                              (UNAUDITED)

ASSETS
Current assets
<S>                                                                         <C>                    <C>
   Cash and cash equivalents                                                $   21,668,505         $      24,016,345
   Accounts receivable                                                             129,006                   236,498
   Prepaid expenses                                                                330,548                   213,956
                                                                          --------------------     -------------------
Total current assets                                                            22,128,059                24,466,799
                                                                          --------------------     -------------------

Property and equipment, net                                                        858,859                   687,439

Other assets

   Capitalized software development costs,
      net of accumulated amortization of $639,397 at
      September 30, 2000 and $412,236 at June 30, 2000                           1,408,320                 1,475,212
   Security deposits                                                               200,374                    73,374
   Deferred financing costs                                                        200,000                        --
                                                                          --------------------     -------------------
                                                                                 1,808,694                 1,548,586
                                                                          --------------------     -------------------

Total Assets                                                                $   24,795,612           $    26,702,824
                                                                          ====================     ===================
</TABLE>


                                       3
<PAGE>

                             SMARTSERV ONLINE, INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                             SEPTEMBER 30,              JUNE 30,
                                                                                 2000                     2000
                                                                          --------------------     -------------------
                                                                              (UNAUDITED)
<S>                                                                          <C>                     <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                                                          $    1,359,970          $     1,482,019
   Accrued liabilities                                                              984,903                1,097,289
                                                                          --------------------     -------------------
Total current liabilities                                                         2,344,873                2,579,308
                                                                          --------------------     -------------------

Deferred revenues                                                                 3,543,350                4,141,579

COMMITMENTS AND CONTINGENCIES - NOTE 8

STOCKHOLDERS' EQUITY
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 - 5,814,840 shares at September 30,
      2000 and 5,576,894 shares at June 30, 2000                                     58,148                   55,768
Additional paid-in capital                                                       72,035,614               75,842,858
Notes receivable from officers                                                     (666,841)                (666,841)
Unearned compensation                                                            (2,039,029)              (2,310,284)
Accumulated deficit                                                             (50,480,503)             (52,939,564)
                                                                          --------------------     -------------------
Total stockholders' equity                                                       18,907,389               19,981,937
                                                                          --------------------     -------------------

Total Liabilities and Stockholders' Equity                                  $    24,795,612          $    26,702,824
                                                                          ====================     ===================
</TABLE>

See accompanying notes.

                                       4
<PAGE>

                             SMARTSERV ONLINE, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                          THREE MONTHS
                                                                                       ENDED SEPTEMBER 30
                                                                            ------------------------------------------
                                                                                   2000                  1999
                                                                            -------------------    -------------------
<S>                                                                           <C>                    <C>
Revenues                                                                      $    1,013,528         $      808,292
                                                                            -------------------    -------------------
Costs and expenses:
   Costs of services                                                              (1,010,710)              (232,866)
   Product development expenses                                                     (417,776)               (46,845)
   Selling, general and administrative
         expenses                                                                 (2,138,811)              (582,314)
   Stock-based compensation                                                        4,661,402               (272,951)
                                                                            -------------------    -------------------
Total costs and expenses                                                           1,094,105             (1,134,976)
                                                                            -------------------    -------------------
Income (loss) from operations                                                      2,107,633               (326,684)

Interest income                                                                      351,428                 11,017
                                                                            -------------------    -------------------

Net income (loss)                                                             $    2,459,061         $     (315,667)
                                                                            ===================    ===================

Basic earnings (loss) per share                                               $         0.47         $        (0.23)
                                                                            ===================    ===================

Diluted earnings (loss) per share                                             $         0.27         $        (0.23)
                                                                            ===================    ===================

Weighted average shares outstanding - basic                                        5,296,859              1,368,046
                                                                            ===================    ===================

Weighted average shares outstanding - diluted                                      9,091,970              1,368,046
                                                                            ===================    ===================
</TABLE>

See accompanying notes.

                                       5
<PAGE>

                             SMARTSERV ONLINE, INC.

                STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                      THREE MONTHS ENDED SEPTEMBER 30, 2000
                                   (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>               <C>             <C>
Balances at June 30, 2000      5,576,894    $ 55,768    $(666,841)   $ 75,842,858      $(2,310,284)    $(52,939,564)

Amortization of unearned
  compensation                                                                             331,255

Issuance of warrants to
   purchase 50,000 shares of
   common stock for consulting
   services                                                                60,000          (60,000)

Issuance of common stock
   upon exercise of warrants
   to purchase common stock      237,946       2,380                    1,125,413

Change in market value of
  employee stock options                                               (4,992,657)

Net income for the period                                                                                 2,459,061
                               ----------- ----------- ------------- ---------------- -------------- ----------------

Balances at September 30, 2000 5,814,840    $ 58,148    $(666,841)    $72,035,614      $(2,039,029)    $(50,480,503)

                               =========== =========== ============= ================ ============== ================
</TABLE>

See accompanying notes.

                                       6
<PAGE>

                                              SMARTSERV ONLINE, INC.
                                             STATEMENTS OF CASH FLOWS
                                                    (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                          THREE MONTHS
                                                                                       ENDED SEPTEMBER 30
                                                                            -----------------------------------------
                                                                                   2000                  1999
                                                                            -------------------    ------------------
<S>                                                                          <C>                     <C>
OPERATING ACTIVITIES
Net income (loss)                                                            $     2,459,061         $    (315,667)
Adjustments to reconcile net income (loss) to net cash
    used for operating activities:
       Depreciation and amortization                                                 322,844                96,266
       Noncash compensation                                                       (4,661,402)              272,951
       Amortization of deferred revenues                                            (598,229)             (414,156)
       Changes in operating assets and liabilities
          Accounts receivable                                                        107,492                79,427
          Prepaid expenses                                                          (116,592)                9,485
          Accounts payable and accrued liabilities                                  (434,435)             (500,554)
          Security deposit                                                          (127,000)                1,460
                                                                            -------------------    ------------------
    Net cash used for operating activities                                        (3,048,261)             (770,788)
                                                                            -------------------    ------------------

INVESTING ACTIVITIES
Purchase of equipment                                                               (267,103)              (24,385)
Capitalization of software development costs                                        (160,269)             (244,225)
                                                                            -------------------    ------------------
    Net cash used for investing activities                                          (427,372)             (268,610)
                                                                            -------------------    ------------------

FINANCING ACTIVITIES
Repayment of capital lease obligation                                                     --               (22,710)
Issuance of common stock                                                           1,127,793                    --
                                                                            -------------------    ------------------
    Net cash provided by (used for) financing activities                           1,127,793               (22,710)
                                                                            -------------------    ------------------

Decrease in cash and cash equivalents                                             (2,347,840)           (1,062,108)
Cash and cash equivalents - beginning of period                                   24,016,345             2,165,551
                                                                            -------------------    ------------------

Cash and cash equivalents - end of period                                    $    21,668,505         $   1,103,443
                                                                            ===================    ==================
</TABLE>

See accompanying notes.

                                       7
<PAGE>

                             SMARTSERV ONLINE, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

1.   NATURE OF BUSINESS

SmartServ  Online,  Inc.  commenced  operations  on August 20, 1993.  We deliver
Internet-based and wireless content, as well as "Web-to-Wireless"  applications,
such as  securities  trade order  routing,  that enable  e-commerce by providing
transactional  and  information  services to our alliance  partners or Strategic
Marketing Partners. We have developed online financial,  transactional and media
applications  using a unique  "device  independent"  delivery  solution and make
these services  available to wireless handsets and personal digital  assistants,
personal  computers  and the  Internet  through  our  application  software  and
communications  architecture.  Our services  facilitate  stock trading and other
e-commerce transactions, as well as the dissemination of real-time stock quotes,
business and financial  news,  sports  information,  private-labeled  electronic
mail, 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.
Management  believes that SmartServ's primary source of revenues will be derived
from  consumers  who purchase the services  through  these  Strategic  Marketing
Partners.  Through the use of this strategy,  the consumer is a customer of both
SmartServ and its Strategic  Marketing Partner. We also believe that the sale of
our  information  and transaction  services  through the cooperative  efforts of
Strategic  Marketing Partners with more recognizable brand names than our own is
important to our success.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
---------------------
The accompanying unaudited 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 generally accepted accounting  principles.  The balance sheet
at June 30, 2000 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 for the year ended June 30,  2000.  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  September 30, 2000 are not  necessarily  indicative of those expected for
the period ending December 31, 2000.

USE OF ESTIMATES
----------------
The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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.

                                       8
<PAGE>

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.  Deferred revenues  resulting from our agreement with
Data  Transmission  Network  Corporation  ("DTN") have been  amortized  over the
anticipated  future revenue  stream,  a period of 42 months,  commencing June 1,
1999. We have amended our agreement with DTN such that,  effective  September 1,
2000,  Smartserv  will perform  maintenance  and  enhancement  services  through
December 2000 and provide  operational  support through August 2001.  Therefore,
commencing  September 1, 2000,  deferred  revenues are being amortized to income
over the period through August 2001.

BASIC AND DILUTED EARNINGS PER SHARE
------------------------------------
The weighted  average shares  outstanding  are determined as the mean average of
the shares outstanding and assumed to be outstanding during the period.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS
--------------------------------------
In  connection  with certain  contracts  entered into between  SmartServ and its
Strategic  Marketing  Partners,  as well as other projects,  we have capitalized
costs related to certain product  enhancements  and  application  development in
accordance with Statement of Financial  Accounting Standards No. 86, "Accounting
for the Costs of Computer  Software to be Sold,  Leased or Otherwise  Marketed",
effective July 1, 1998.

PROPERTY AND EQUIPMENT
----------------------
Property and equipment are stated at cost.  Equipment  purchased under a capital
lease  has been  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.

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 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.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In December  1999, the SEC staff  released  Staff  Accounting  Bulletin No. 101,
"Revenue  Recognition  in Financial  Statements"  ("SAB 101").  SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in the financial statements. We do not believe that the adoption of SAB 101 will
have a material affect on our financial results.

RECLASSIFICATIONS
-----------------
Certain amounts in the 1999  presentation  have been  reclassified to conform to
the 2000 presentation.

                                       9
<PAGE>

3.   PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
<TABLE>
<CAPTION>

                                                                              SEPTEMBER 30,             JUNE 30,
                                                                                   2000                    2000
                                                                            -------------------      -----------------
<S>                                                                         <C>                      <C>
   Data processing equipment                                                $     1,257,387          $     1,109,828
   Data processing equipment purchased under a capital lease                        246,211                  246,211
   Office furniture and equipment                                                   138,984                   81,140
   Display equipment                                                                 71,335                    9,635
   Leasehold improvements                                                            36,678                   36,678
                                                                            -------------------      -----------------

                                                                                  1,750,595                1,483,492
   Accumulated depreciation, including $168,244 at September
     30, 2000 and $155,933 at June 30, 2000 for equipment
     purchased under a capital lease                                               (891,736)                (796,053)
                                                                            -------------------      -----------------
                                                                            $       858,859          $       687,439
                                                                            ===================      =================
</TABLE>

4.   NOTE PAYABLE

On September  28, 2000, we entered into a  $20,000,000  line of credit  facility
with  Hewlett-Packard  Company.  The agreement provides for the financing of the
acquisition  of  approved  hardware,  software  and  services,  subject  to  our
continuing  compliance  with  certain  financial  covenants.   The  facility  is
evidenced  by a note that  bears  interest  at 11% per annum and is  secured  by
SmartServ's  tangible assets.  The note matures in three years from issuance and
may be converted into common stock at $33.56 per share.

5.   EQUITY TRANSACTIONS

During the period ended  September 30, 2000, we issued  237,946 shares of common
stock to certain investors at prices ranging from $2.63 to $14.64 per share upon
exercise of warrants to purchase such shares.  Net proceeds from the exercise of
these warrants were $1,127,793.

During the period  ended  September  30,  2000,  we issued  warrants to purchase
50,000  shares  of  our  common  stock  to a  financial  consultant  as  partial
consideration  for services to be rendered to  SmartServ.  The warrants  have an
exercise price of $49.50 per share and expire in April 2003.

6.   STOCK-BASED COMPENSATION

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

The following table shows the amount of stock-based compensation that would have
been recorded in the

                                       10
<PAGE>

categories of the statement of operations had stock-based  compensation not been
separately stated therein:
<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED SEPTEMBER 30
                                                               ----------------------------------------
                                                                     2000                  1999
                                                               ------------------    ------------------
<S>                                                            <C>                    <C>
Costs of revenues                                              $    (1,112,161)       $           --

Selling, general and administrative expenses                        (3,549,241)              272,951
                                                               ------------------    ------------------
                                                               $    (4,661,402)       $      272,951
                                                               ==================    ==================
</TABLE>

7.   EARNINGS PER SHARE

The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share:
<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED SEPTEMBER 30
                                                               ----------------------------------------
                                                                     2000                  1999
                                                               ------------------    ------------------
Numerator:
<S>                                                            <C>                   <C>
   Net income (loss)                                           $    2,459,061        $       (315,667)
                                                               ==================    ==================
Denominator:
   Weighted average shares - basic                                  5,296,859               1,368,046
                                                               ==================    ==================
   Weighted average shares - diluted                                9,091,970               1,368,046
                                                               ==================    ==================
Basic earnings (loss) per common share                         $        0.47         $          (0.23)
                                                               ==================    ==================
Diluted earnings (loss) per common share                       $        0.27         $          (0.23)
                                                               ==================    ==================
</TABLE>

At September 30, 2000,  $612,000 of our Prepaid  Warrants were  outstanding.  At
that date, the Prepaid  Warrants were  convertible into 437,142 shares of common
stock.  Additionally,  there were warrants to purchase  2,572,815  shares of our
common stock outstanding.  Such warrants have exercise prices ranging from $0.60
to $72.00 per share and expire from March 2001 through  January  2005.  Based on
the closing sale price ($35.75) of our common stock at September 30, 2000, there
were,  exclusive of the Prepaid  Warrants,  currently  exercisable  in-the-money
warrants  outstanding  for the  purchase of  2,522,000  shares of common  stock.
Additionally,  we have  established  several  employee  stock  option  plans and
granted options thereunder to our employees,  directors, and consultants.  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 May 29, 2010.  At September 30, 2000,  there
were options  outstanding  for the  purchase of  1,322,781  shares of our common
stock.

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 contract, breach of duty of good
faith    and   fair    dealing,    fraudulent    misrepresentation,    negligent
misrepresentation,  intentional  misrepresentation and

                                       11
<PAGE>

failure to pay wages.  The  defendants  have  answered the  complaint  and filed
counterclaims  for fraudulent  inducement and breach of contract.  Plaintiff has
responded to the counterclaim,  and in compliance with direction from the court,
has filed an  amended  complaint.  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. 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 EVENTS

Subsequent  to September  30, 2000,  we issued  27,305 shares of common stock to
employees  upon the exercise of options to purchase  such shares.  Proceeds from
the exercise of these options were $28,385.

On  November  3, 2000,  the Board of  Directors  increased  the number of shares
available for issuance under the 2000 Employee Stock Option Plan by 600,000 to a
maximum of 1,525,000. Additionally, the Board authorized the issuance of options
to purchase 638,750 shares to employees and to non-employee  directors at $19.00
per share, the fair value of the common stock at that date.

                                       12
<PAGE>

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



SmartServ  is a  business-to-business  Web  and  wireless  application  services
provider    specializing    in   building   and   hosting    content-rich    and
transaction-intensive  applications  for both mobile wireless and fixed wireline
users. We deliver Internet-based  content and trade order routing solutions,  as
well as "Web-to-Wireless"  applications  designed to facilitate  e-commerce.  We
have developed online financial,  transactional and media  applications  using a
unique  "device-independent"  delivery  solution and have designed  applications
that enable the receipt of  information  and the  execution of  transactions  on
wireless handsets, computers and personal digital assistants.

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,   carriers  and  other
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 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.

Management   anticipates   that  staffing   requirements   associated  with  the
implementation of its plan of operation will result in the addition of a minimum
of  twenty-five  people during the period ending June 30, 2001.  Such  personnel
will be added to assist primarily with the programming requirements of Strategic
Marketing  Partners'  product  offerings,  for  customer  support  and sales and
marketing.

RESULTS OF OPERATIONS

QUARTER ENDED SEPTEMBER 30, 2000 VERSUS QUARTER ENDED SEPTEMBER 30, 1999

During the quarters ended  September 30, 2000 and 1999,  the Company's  revenues
were $1,013,528 and $808,292,  respectively.  Substantially all of such revenues
were obtained  from the Company's  licensing  agreement  with Data  Transmission
Network  Corporation  ("DTN").  During the quarters ended September 30, 2000 and
1999, we recognized $598,200 and $414,200,  respectively,  from the amortization
of deferred revenues associated with this agreement.

                                       13
<PAGE>

During the quarter  ended  September  30, 2000,  the Company  incurred  costs of
services of $1,010,710.  Such costs consisted  primarily of systems  consultants
($598,000),  information and  communication  costs  ($122,700),  personnel costs
($236,200) and computer  hardware  lease,  depreciation  and  maintenance  costs
($53,400).  During the quarter ended  September 30, 1999,  the Company  incurred
costs of services of $232,866. Such costs consisted primarily of information and
communication  costs ($48,400),  personnel costs ($55,800) and computer hardware
lease,  depreciation and maintenance costs ($84,600).  Product development costs
were  $417,776 and $46,845 for the quarters  ended  September 30, 2000 and 1999,
respectively.  During the quarter ended September 30, 2000, such costs consisted
primarily of the amortization of capitalized  software development costs related
to certain  product  enhancements  in  accordance  with  Statement  of Financial
Accounting  Standards No. 86,  "Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed" ("Statement 86") ($227,200) and personnel
costs  ($182,900).  During the quarter  ended  September  30,  1999,  such costs
consisted  primarily of the  amortization  of capitalized  software  development
costs  related to  certain  product  enhancements.  During  the  quarters  ended
September  30, 2000 and 1999,  the Company  capitalized  $160,300 and  $244,200,
respectively, of development costs in accordance with Statement 86.

During the quarter  ended  September  30, 2000,  the Company  incurred  selling,
general and  administrative  expenses of $2,138,811 vs. $582,314 for the quarter
ended September 30, 1999. Such costs were incurred primarily for personnel costs
($1,208,300),  marketing and  advertising  costs  ($79,200),  professional  fees
($578,700),  and  facilities  ($54,900).  Selling,  general  and  administrative
expenses for the quarter ended  September  30, 1999 were incurred  primarily for
personnel  costs   ($202,700),   marketing  and  advertising   costs  ($76,400),
professional fees ($177,500),  facilities ($50,000) and telecommunications costs
($17,000).

During the quarter ended  September 30, 2000,  noncash  credits for  stock-based
compensation  amounted to $4,661,402 compared to noncash charges of $272,951 for
the quarter ended  September 30, 1999. In 2000,  such noncash  adjustments  were
primarily related to personnel costs resulting from 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  adjustments are recognized for changes in the fair
value of common stock during  reporting  dates.  In 1999,  such noncash  charges
resulted  primarily  from the  amortization  of costs  ascribed to common  stock
purchase warrants previously issued to financial consultants.

Interest  income for the quarters ended  September 30, 2000 and 1999 amounted to
$351,428 and $11,017, respectively.  Such amounts were earned primarily from the
Company's investments in short-tern commercial paper and cash balances.

                                       14
<PAGE>

CAPITAL RESOURCES AND LIQUIDITY

In June 1999,  SmartServ and DTN entered into a License  Agreement  that amended
their previous agreement.  In consideration of the receipt of $5.175 million, we
granted DTN an exclusive  perpetual  worldwide license to our Internet-based (1)
real-time stock quote product, (2) online trading vehicle for customers of small
and medium sized brokerage companies,  (3) administrative  reporting package for
brokers  of  small  and  medium  sized   brokerage   companies   and  (4)  order
entry/routing  system.  Additionally,  we received  $324,000 in exchange  for an
agreement to issue warrants to purchase 300,000 shares of our common stock at an
exercise  price of $8.60 per share.  In  November  2000,  we amended the License
Agreement to provide that in consideration for a copy of the application  source
code, Data Transmission  Network will return both the domestic and international
marketing  rights of the  software  applications  to  SmartServ.  As part of our
strategy for providing  information  and  transaction  capabilities  with device
independence,  SmartServ  will be  able to  market  these  applications  in both
wireline and wireless platforms in conjunction with Strategic Marketing Partners
worldwide.  Pursuant  to this  amendment,  SmartServ  will  continue  to perform
maintenance  and  enhancement   services  through  December  2000,  and  provide
operational  support through August 2001.  Revenues earned by SmartServ pursuant
to this amendment will be $83,000 per month through August 2001.

In  November  1998,  we  completed a financing  for  $550,000.  We sold five and
one-half (5.5) units,  each  consisting of a secured  convertible 8% note in the
principal  amount of $100,000 and warrants to purchase  common stock.  The notes
and the warrants were initially  convertible and exercisable,  respectively,  at
$.60 per share of common stock. Such notes were repaid in June 1999.

In July 1999, we entered into an agreement with Arnhold & S. Bleichroeder,  Inc.
("ASB") to settle our  obligation  to ASB pursuant to the default  provisions of
the Prepaid Warrants. In accordance with that agreement, we paid ASB $325,000 to
redeem the Prepaid  Warrants  held by them and issued  180,000  shares of common
stock in full settlement of all obligations.

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.

During the year ended June 30, 2000, we issued  1,855,509 shares of common stock
to  investors  upon the exercise of warrants to purchase  such shares.  Proceeds
from the exercise of these warrants were $3,650,200.  Additionally,  we received
$1,127,800  from the  exercise of warrants  to  purchase  237,946  shares of our
common stock during the period quarter ended September 30, 2000.

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  products  and
services, and to work on the build-out of SmartServ's domestic and international
infrastructure.  In furtherance of these objectives Hewlett-Packard will provide
us with up to $20,000,000 in secured  financing for the  acquisition of approved
hardware,  software and services,  subject to SmartServ's  continuing compliance
with certain financial  covenants.  The debt is evidenced by a note,  bearing an
interest rate of 11%,  with a three year maturity and may be converted  into our
common stock at $33.56 per share.

At September 30, 2000, we have  1,725,000  public  warrants  (SSOLW) and 300,000
warrants with terms identical to the public warrants outstanding. These warrants
are currently  convertible into our common stock at the ratio of one warrant per
 .5174  share of common  stock at an  exercise  price of $7.73 per  share.

                                       15
<PAGE>

These  warrants  are  redeemable  by  SmartServ on not less than 30 days written
notice at the redemption price of $.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% 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 $8,000,000.

While we reported net income from operations of $2,107,600 for the quarter ended
September  30,  2000,  our net loss from  operations  exclusive  of  stock-based
compensation costs was $2,553,800. Cash used in operations was $3,048,300, while
cash used for investing activities was $427,400.

We are currently involved in two lawsuits.  Although we are vigorously defending
these  actions,  there  can be no  assurance  that we will  be  successful.  The
unfavorable  outcome of either of these  actions  could have a material  adverse
effect on our  financial  condition  and cash flows.  See Note 8 of the Notes to
Unaudited Financial Statements for a more detailed discussion of these actions.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In December  1999, the SEC staff  released  Staff  Accounting  Bulletin No. 101,
"Revenue  Recognition  in Financial  Statements"  ("SAB 101").  SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in the financial  statements.  The Company does not believe that the adoption of
SAB 101 will have a material affect on the Company's financial results.

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,  changes in
management's  estimates  incident to accounting for contracts,  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 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.  Plaintiff has responded to the counterclaim,
and in compliance with direction from the court, has filed an amended complaint.
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. 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 July 2000,  we issued  200,000  shares of common  stock to Steven  Rosner,  a
financial  advisor to  SmartServ,  upon  exercise of  warrants to purchase  such
shares.  Proceeds  from the exercise of the  warrants  were  $625,000.  No sales
commission was paid in connection with such transaction.  The shares were issued
in reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act.

In  August  2000,  we  issued  7,615  shares  of our  common  stock to  Wireless
Acquisition Partners,  LLC, at prices ranging from $12 to $24 per share upon the
cashless  exercise of warrants to purchase such shares.  No sales commission was
paid in  connection  with such  transaction.  The shares were issued in reliance
upon the exemption from registration  provided by Section 4(2) of the Securities
Act.

In  September  2000,  we issued  35,000  shares of our common  stock to Wireless
Acquisition  Partners,  LLC upon  exercise of warrants to purchase  such shares.
Proceeds from the exercise of these warrants were $512,264.  No sales commission
was paid in connection with such transaction. The shares were issued in reliance
upon the exemption from registration  provided by Section 4(2) of the Securities
Act.

                                       17
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    The following exhibit is included herein:

           Exhibit 27 - Financial Data Schedule

(b)    REPORTS ON FORM 8-K

           The  Company  did not file any  reports  on Form 8-K during the three
months ended September 30, 2000.

                                       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.
<TABLE>
<CAPTION>

                                                     SmartServ Online, Inc.
                                                     (Registrant)

                                                     By:


<S>            <C> <C>
Date: November 14, 2000                              /S/  SEBASTIAN E. CASSETTA
      -----------------                              ---------------------------------------------------------
                                                     Sebastian E. Cassetta

                                                     Chairman of the Board, Chief Executive Officer

Date: November 14, 2000                              /S/  ALAN G. BOZIAN
      -----------------                              ---------------------------------------------------------
                                                     Executive Vice President, Chief Financial Officer

Date: November 14, 2000                              /S/  THOMAS W. HALLER
      -----------------                              ---------------------------------------------------------
                                                     Thomas W. Haller
                                                     Sr. Vice President, Chief Accounting Officer, Treasurer
</TABLE>

                                       19