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, 1996

                         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  periods 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
12, 1996 was 3,695,000.





<PAGE>

                             SMARTSERV ONLINE, INC.

                                   FORM 10-QSB

                                      INDEX





PART 1.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Balance Sheets - June 30, 1996 and September 30, 1996 (unaudited)...2

           Statements of Operations - three months ended September 30, 1996
           and 1995 (unaudited)................................................3

           Statement of Changes in Stockholders' Equity - three months 
           ended September 30, 1996 (unaudited)................................4

           Statements of Cash Flows - three months ended September 30, 1996
           and 1995 (unaudited)................................................5

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

Item 2.    Management's Discussion and Analysis or Plan of Operation...........9


PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings..................................................12

Item 6.    Exhibits and Reports on Form 8-K...................................12

           Signatures.........................................................13



                                        1


<PAGE>
                             SMARTSERV ONLINE, INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,     JUNE 30,
                                                                     1996           1996
                                                                 -----------    -----------
                                                                 (Unaudited)
<S>                                                              <C>            <C>        
ASSETS

Current assets
    Cash and cash equivalents                                    $ 2,379,976    $ 3,460,850
    Accounts receivable                                               59,032         57,990
    Accrued interest receivable                                       26,381           --
    Prepaid expenses                                                 100,510         68,310
                                                                 -----------    -----------
Total current assets                                               2,565,899      3,587,150
                                                                 -----------    -----------

Property and equipment                                               341,171        258,899
                                                                 -----------    -----------

Other assets
    Deferred charges                                                  54,000         63,000
    Security deposit                                                  81,218         81,218
                                                                 -----------    -----------
                                                                     135,218        144,218
                                                                 -----------    -----------

Total Assets                                                     $ 3,042,288    $ 3,990,267
                                                                 ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable and accrued expenses                        $   376,572    $   482,851
    Payroll taxes payable                                             17,103         14,901
    Salaries payable                                                  32,851         44,654
                                                                 -----------    -----------
Total current liabilities                                            426,526        542,406
                                                                 -----------    -----------

STOCKHOLDERS' EQUITY
Common stock - $.01 par value
    Authorized - 15,000,000 shares
    Issued and outstanding - 3,695,000 shares at June 30, 1996
           and September 30, 1996                                     36,950         36,950
Additional paid-in capital                                         8,722,037      8,758,299
Accumulated deficit                                               (6,143,225)    (5,347,388)
                                                                 -----------    -----------
Total stockholders' equity                                         2,615,762      3,447,861
                                                                 -----------    -----------

Total Liabilities and Stockholders' Equity                       $ 3,042,288    $ 3,990,267
                                                                 ===========    ===========
</TABLE>

See accompanying notes.

                                      -2-
<PAGE>



                             SMARTSERV ONLINE, INC.

                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)



                                                THREE MONTHS
                                              ENDED SEPTEMBER 30,

                                              1996           1995
                                          -----------    -----------
Revenues:
    Online service revenues               $    13,852    $      --

Costs and expenses:
    Costs of revenues                         359,951           --
    Product development expenses                 --          172,547
    Selling, general and administrative
         expenses                             487,064        168,657
                                          -----------    -----------
    Total costs and expenses                  847,015        341,204
                                          -----------    -----------

Loss from operations                         (833,163)      (341,204)
                                          -----------    -----------

Other income (expense):
    Interest income                            40,339           --
    Interest expense                           (3,013)       (51,935)
                                          -----------    -----------
                                               37,326        (51,935)
                                          -----------    -----------

Net loss                                  $  (795,837)   $  (393,139)
                                          ===========    ===========

Net loss per share (Note 2)               $     (0.22)   $     (0.20)
                                          ===========    ===========

Weighted average shares outstanding
    (Note 2)                                3,695,000      1,926,650
                                          ===========    ===========

See accompanying notes.


                                       -3-


<PAGE>



                             SMARTSERV ONLINE, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                      THREE MONTHS ENDED SEPTEMBER 30, 1996
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                        ADDITIONAL
                                   COMMON STOCK           PAID-IN      ACCUMULATED
                               SHARES       PAR VALUE     CAPITAL        DEFICIT        TOTAL
                            ---------------------------------------------------------------------
<S>                         <C>           <C>           <C>            <C>            <C>        
Balance at June 30, 1996    $ 3,695,000   $    36,950   $ 8,758,299    $(5,347,388)   $ 3,447,861

Change in market value of
employee options                   --            --         (36,262)          --          (36,262)

Net loss for the period            --            --            --         (795,837)      (795,837)
                            -----------   -----------   -----------    -----------    -----------

Balance at September 30,
1996                        $ 3,695,000   $    36,950   $ 8,722,037    $(6,143,225)   $ 2,615,762
                            ===========   ===========   ===========    ===========    ===========

</TABLE>
See accompanying notes.



                                       -4-
<PAGE>



                             SMARTSERV ONLINE, INC.

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                               ENDED SEPTEMBER 30
                                                           --------------------------
                                                               1996           1995
                                                           -----------    -----------
<S>                                                        <C>            <C>         
OPERATING ACTIVITIES
Net loss                                                   $  (795,837)   $  (393,139)
Adjustments to reconcile net loss to net cash used
      in operating activities:
           Depreciation and amortization                        16,901          2,621
           Changes in market value of employee options         (36,262)          --
           Amortization of deferred charges                      9,000           --
           Other changes that provided (used) cash
                Accounts receivable                             (1,042)          --
                Accrued interest receivable                    (26,381)          --
                Inventories                                       --           (1,976)
                Prepaid expenses                               (32,200)         3,428
                Accounts payable and accrued liabilities      (106,279)       (20,307)
                Accrued interest                                  --           51,935
                Payroll taxes payable                            2,202         27,691
                Salaries payable                               (11,803)       (15,154)
                                                           -----------    -----------
      Net cash used in operating activities                   (981,701)      (344,901)
                                                           -----------    -----------

INVESTING ACTIVITIES
Purchase of equipment                                          (99,173)       (12,874)
Software development costs                                        --           (3,076)
                                                           -----------    -----------
      Net cash used in investing activities                    (99,173)       (15,950)
                                                           -----------    -----------

FINANCING ACTIVITIES
Bank overdrafts                                                   --          117,548
Due from officers, net                                            --           13,303
Common stock subscribed                                           --          230,000
                                                           -----------    -----------
      Net cash provided by financing activities                   --          360,851
                                                           -----------    -----------

Decrease in cash and cash equivalents                       (1,080,874)          --
Cash and cash equivalents - beginning of period              3,460,850           --
                                                           -----------    -----------


Cash and cash equivalents - end of period                  $ 2,379,976    $      --
                                                           ===========    ===========
</TABLE>
See accompanying notes.


                                       -5-
<PAGE>

                             SMARTSERV ONLINE, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1996



1. ORGANIZATION

SmartServ Online,  Inc., formerly Smart Phone  Communications  (Delaware),  Inc.
(the  "Company"),  commenced  operations  on August 20, 1993.  The Company makes
available online information and transactional  services to subscribers  through
screen-based  telephones,   personal  computers,  personal  digital  assistants,
alpha-numeric  pagers, and interactive voice response systems.  The Company also
offers a range of  services  designed  to meet the  varied  needs of  clients of
potential  strategic   partners,   as  well  as  potential  direct  subscribers,
including: business credit information,  investment newsletters,  stock research
reports,  stock quotes,  nationwide business and residential directory services,
business and  financial  news,  sports  information,  electronic  bill  payment,
research  and  analysis  reports,   trading  activity  reports  by  insiders  of
corporations, online package tracking, electronic mail, and ordering flowers and
gifts. The Company's software  architecture and capabilities  format information
for a particular  device and present the information in a user friendly  manner.
The Company is in the initial stages of developing a subscriber base.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
---------------------
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
the instructions of Form 10-QSB and Rule 310 of Regulation SB and, therefore, do
not include all information and notes necessary for a presentation of results of
operations,  financial  position  and cash flows in  conformity  with  generally
accepted  accounting  principles.  The  balance  sheet at June 30, 1996 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, 1996. 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, 1996 are not
necessarily indicative of those expected for the year ending June 30, 1997.

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

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


                                      -6-
<PAGE>

Company's  ability to compete in the future  depends on its  ability to maintain
the  technological  and  performance  advantages  of  its  current  distribution
platform and to introduce new applications that achieve market acceptance.

Management  believes  that the  Company's  primary  source of  revenues  will be
derived from consumers who purchase the services through its Strategic Partners.
The Company has also  commenced  development  of a direct  subscriber  base.  At
November 8, 1996, the Company has a subscriber base of  approximately  500 users
which is  projected  to grow to  approximately  14,000  users by June 30,  1997;
however,  there can be no assurance that the Company's  product offering will be
accepted in the marketplace.

STOCK BASED COMPENSATION
------------------------
The Company grants stock options for the purchase of a fixed number of shares to
employees  with an  exercise  price equal to the fair value of the shares at the
date of grant.  The Company accounts for these stock option grants in accordance
with APB  Opinion  No.  25,  "Accounting  for Stock  Issued to  Employees"  and,
accordingly, where terms are fixed and determinable,  recognizes no compensation
expense.

EARNINGS (LOSS) PER SHARE
-------------------------
On March 21, 1996, the Company completed an Initial Public Offering of 1,695,000
shares of $.01 par value  common stock at $5.00 per share and  1,725,000  common
stock purchase  warrants at $.10 per warrant.  The Company  received  $7,058,648
from the Offering,  net of the costs of issuing these  securities of $1,588,852.
In connection with the Initial Public Offering,  the Board of Directors voted to
increase the aggregate  number of shares that the Company is authorized to issue
to 15,000,000.

Net loss per share is computed  based on the weighted  average  number of common
shares and common  equivalents  outstanding during the period using the treasury
stock method.  Shares from the assumed  exercise of options and warrants granted
by the Company have been included in the  computations of loss per share for all
periods, unless their inclusion would be antidilutive.  However, for purposes of
computing net loss per share, options and warrants granted by the Company during
the 12 months  preceding the Initial Public  Offering date have been included in
the calculation of common and common  equivalent  shares  outstanding as if they
were outstanding for all periods prior to the Initial Public Offering, using the
treasury stock method and the Initial Public Offering price of $5.00 per share.


3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:


                                          SEPTEMBER 30,   JUNE 30,
                                                1996         1996
                                             ---------    ---------
Data processing equipment                    $ 352,927    $ 280,814
Office furniture and equipment                  38,944       37,051
Display equipment                                9,635        9,635
Leasehold improvements                          25,167         --
                                             ---------    ---------

                                               426,673      327,500

Accumulated depreciation                       (85,502)     (68,601)
                                             ---------    ---------
                                             $ 341,171    $ 258,899
                                             =========    =========

                                      -7-
<PAGE>

4. COMMITMENTS

On August 21, 1995, the Company entered into an agreement with Strategica, Inc.,
a financial intermediary,  for the arrangement of a $2,500,000 secured revolving
credit facility. As compensation for this proposed credit facility ("Proposal"),
the Company issued  116,550 shares of common stock to Strategica.  Additionally,
the  Proposal  contemplated  that the  Company  would  enter  into a  consulting
agreement,  whereby Strategica would provide consulting  services with regard to
operational, management and strategic issues. As consideration for these ongoing
services, the Company would pay $72,000 per annum over the four year term of the
agreement.  The Company subsequently received a commitment letter which differed
significantly  from the  original  Proposal,  which  management  believed  to be
unacceptable.  Negotiations  between  management  and Strategica to resolve this
matter in a mutually  satisfactory  manner have been unsuccessful.  See Part II,
Item 1 for a discussion of the Company's complaint against Strategica.


5. EMPLOYEE STOCK OPTION PLAN

In April 1996, the Board of Directors  approved the establishment of an Employee
Stock Option Plan ("Plan")  authorizing  stock option  grants to directors,  key
employees and consultants of the Company.  The exercise of options granted under
the  Plan  was  contingent  upon  the  approval  of the  Plan  by the  Company's
stockholders  which was  obtained  at the  Annual  Meeting  of  Stockholders  on
November 4, 1996. The options are intended to qualify as incentive stock options
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended, or as nonqualified stock options. The Plan provides for the exercise of
such  options at not less than the fair value of the stock on the date of grant.
The options are generally  exercisable  after one year from date of grant and no
options may be granted after April 15, 2006.  Pursuant to the terms of the Plan,
each  nonemployee  director of the Company received an initial grant to purchase
5,000 shares of common stock and will receive an  additional  option to purchase
5,000 shares of common stock immediately  following each annual meeting at which
directors are elected.  An aggregate of 400,000  shares of common stock has been
reserved  for  issuance  under the Plan  which is  administered  by a  committee
designated by the Board of Directors of the Company.

Also in April 1996, the Board  approved,  subject to the approval of the Plan by
the Company's stockholders, the grant of stock options to employees and officers
of the Company  for the  purchase  of 311,550  shares of common  stock at prices
ranging from $6.44 to $7.08 per share. In the financial  statements for the year
ended  June 30,  1996,  the  Company  recorded  a  non-cash  charge of  $165,773
reflecting  the  compensatory  nature of such  issuance in  accordance  with APB
Opinion No. 25,  "Accounting  for Stock Issued to  Employees." On July 16, 1996,
the Compensation  Committee of the Board of Directors  approved the cancellation
of these  options and the  issuance of a like number and type of options for the
purchase of common stock at $5.06 per share ($5.56 per share for  employees  who
own more than 10% of the Company's common stock), representing the fair value of
the Company's common stock on that date. On September 30, 1996, the Compensation
Committee  of the  Board of  Directors  approved  the  issuance  of  options  to
employees  and  officers  of the Company  for the  purchase of 65,425  shares of
common stock at $5.56 per share,  the fair market value of the Company's  common
stock at that date.  Included in the results of operations  for the three months
ended  September  30,  1996,  is a  non-cash  credit in the  amount of  $36,262,
representing  an  adjustment to  compensation  expense for changes in the market
value of the underlying stock.


                                       -8-
<PAGE>



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


PLAN OF OPERATION

The Company  provides online  information  and  transactional  services  through
screen-based  telephones,   personal  computers,  personal  digital  assistants,
alpha-numeric  pagers,  and  interactive  voice  response  systems to clients of
potential Strategic Partners, as well as to prospective direct subscribers.  The
Company has recently  emerged from the development  stage with the completion of
the SmartServ  information platform and communications  software.  The Company's
product  offering is available to meet the needs of subscribers  and the Company
is in the initial stages of implementing its marketing strategies.

On March 21, 1996, the Company completed an Initial Public Offering of 1,695,000
shares of common  stock and  1,725,000  common  stock  purchase  warrants  which
provided the Company with approximately $7,059,000, net of the costs of issuance
of approximately $1,589,000.  The proceeds from this Offering are expected to be
sufficient to allow the Company to implement its marketing  plan, and to satisfy
its cash requirements through June 1997.

The Company's plan of operation  includes programs for marketing  simultaneously
at two separate levels. At the first level, the Company is developing  strategic
relationships  with  key  partners  that  provide  access  to large  numbers  of
potential subscribers for its monthly services.  These partners include regional
telephone  operating  companies,  long distance  carriers,  telephone  equipment
manufacturers and others who distribute screen telephone equipment, market local
screen telephone services or otherwise benefit from the increased  acceptance of
these  devices.  To these  partners,  the Company's  services are perceived as a
means of  increasing  interest in and sales of screen  telephones,  and there is
thus a strong incentive to promote the Company's services.

The  Company  is also  working  with  businesses  which  desire to  provide  new
services, such as those provided by the Company, to an existing base of clients.
Examples include brokerage firms, such as Bear Stearns & Co., Inc. and Schroeder
Wertheim & Co., and other disseminators of financial information,  whose clients
can benefit from the  efficiency,  convenience  and  timeliness  of the services
provided by the Company.  The Company will co-brand with its Strategic  Partners
or offer its services  under its Strategic  Partners'  name.  By providing  this
branding  flexibility,  the  Company  has been  able to  expand  the  number  of
businesses  interested in forming  relationships with it, and has the ability to
market its services under far more recognizable brand names than its own.

At the second  level,  the Company  will be working with  Strategic  Partners to
assure  awareness  of  the  Company's  services  by  consumers.  Programs  under
development with existing Strategic Partners, such as Northern Telecom and CIDCO
Incorporated,   include  direct   marketing,   package  inserts,   and  in-store
promotions.

Management  believes  that most of the  Company's  revenues  will  ultimately be
derived from end users who purchase the  Company's  services  through  Strategic
Partners with such mass distribution capabilities.  The Company anticipates that
Strategic Partners will brand the Company's information services,  acquired from
the Company's "information platform",  with their own private label, promote the
packaged  offering and then  distribute  the  Company's  information  package on
screen-based  phones, PCs, PDAs, and interactive voice response systems to their
clients  for use.  The  Company has the  ability to  customize  the  information
package to be offered to each Strategic Partner, and in turn to their end users.
The  Company is also in the initial  stages of  developing  a direct  subscriber
base. It is  anticipated  that the monthly base 


                                      -9-

<PAGE>


charge will vary, between $7.00 and $29.95 per month, depending upon the product
offering and specific market segment.

Management   anticipates   that  staffing   requirements   associated  with  the
implementation of its plan of operation will result in the addition of a minimum
of 6 to 8 personnel  during the fiscal year ending June 30, 1997. Such personnel
will be added to assist with the programming requirements of Strategic Partners'
product offerings and for customer support.


RESULTS OF OPERATIONS

During  the  year  ended  June 30,  1996,  the  Company  was in the  process  of
completing   its   information   platform  and   communications   software  and,
accordingly,  did not generate any  significant  revenues  from  operations.  In
September  1996,  the Company  commenced a national  advertising  campaign in an
effort to increase the number of direct subscribers to the SmartServ information
platform.  As of November  8, 1996,  the  Company  has  approximately  500 users
online.

QUARTER ENDED SEPTEMBER 30, 1996 VS. QUARTER ENDED SEPTEMBER 30, 1995

During  the  quarter   ended   September   1996,   the  Company   commenced  the
implementation  of its  marketing  plan and earned  revenues of $13,852 from the
sale of its information services.

Also during the quarter ended September 30, 1996, the Company incurred  selling,
general  and  administrative  expenses  of  $487,064,  primarily  for  salaries,
facilities,   marketing  costs  and  professional  fees.  Selling,  general  and
administrative  costs increased by $318,407 over the corresponding period of the
prior  year as a result  of the  Company's  efforts  to build an  infrastructure
capable  of  supporting  its  operations  and  the  marketing  and  sale  of its
information product offering.  The necessary funds to support these efforts were
provided by the Company's Initial Public Offering of securities in March 1996.

With the Company's  recent  departure from the  development  stage,  it incurred
costs of  revenues of  $359,951,  consisting  primarily  of  salaries,  systems'
consultants,  and information and communication  costs. During the corresponding
period of the prior year, the Company incurred product  development  expenses of
$172,547  consisting  primarily  of  salaries.   Such  costs  were  incurred  in
connection  with the  development  of the  Company's  information  platform  and
communications delivery system.

Interest  income for the period ended  September  30, 1996  amounted to $40,339.
Such amounts were earned  primarily  from the  Company's  investments  in highly
liquid  commercial  paper.  Interest  expense for the period ended September 30,
1996 was incurred in  connection  with an insurance  financing  arrangement  and
amounted to $3,013.  Interest  expense for the period ended  September 30, 1995,
incurred in connection with the senior and subordinated notes outstanding during
the period, was $51,935.


CAPITAL RESOURCES AND LIQUIDITY

The  Company  estimates  that it has  sufficient  cash  resources  to  fund  its
operations  through June 30, 1997. The Company  anticipates  that  approximately
$1,080,000  will  be  used to  support  costs  for  additional  programming  and
supervisory  personnel  necessary to integrate the  Company's  software with the
information  systems  of its  Strategic  Partners,  and  for  marketing  support
personnel  necessary  to  fulfill  subscriber  needs and  inquiries.  It is also
anticipated that hardware and software purchases of 


                                      -10-
<PAGE>


approximately  $100,000  will be required  during the year ending June 30, 1997.
The Company expects to augment its capital  formation through the realization of
revenues from the sale of its information and transactional  services;  however,
there can be no assurance that the Company's  product  offering will be accepted
in the marketplace.

The Company may also have access to  additional  funding  because as part of the
Offering,  the Company issued 1,725,000 common stock purchase warrants entitling
the holders  thereof to purchase one share of common stock at an exercise  price
of $4.00 per share,  subject to certain  adjustments,  at any time commencing on
March 21, 1997 through March 20, 2001. The warrants are subject to redemption by
the  Company at $.10 per  warrant  commencing  March 21,  1997,  on thirty  days
written notice,  provided the average closing bid quotation for the common stock
as reported on The NASDAQ Stock Market or other national securities exchange, if
traded  thereon,  has been at least  $7.50 for a period of 20  consecutive  days
ending on the third day prior to the date on which the Company  gives  notice of
redemption.  Exercise  of these  warrants by the  holders or  redemption  by the
Company could provide additional capital of approximately  $6,600,000;  however,
such exercise or redemption can not be assured.

The Company intends to seek additional  sources of capital and liquidity through
collaborative agreements, through the redemption of the outstanding common stock
purchase warrants or through public or private financing;  however, there can be
no assurance that additional  financing will be available on acceptable terms or
at all.

Management  believes  that  upon  full  implementation  of  its  business  plan,
sufficient revenues will be generated to meet operating requirements. Management
further  believes that the Company's  plan of  operations  will, if  successful,
generate  adequate cash flow from  operations to enable the Company to offer its
proposed services on an economically sound basis;  however,  no assurance can be
given that such goals will be attained.

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

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


                                      -11-


<PAGE>



PART 2.    OTHER INFORMATION


                             SMARTSERV ONLINE, INC.



ITEM 1.    LEGAL PROCEEDINGS

There are no pending  material legal  proceedings to which the Company or any of
its properties is a defendant.

In August  1996,  the Company  commenced  an action in the Supreme  Court of the
State of New York, New York County,  against  Strategica Inc. and its affiliated
entities ("Strategica"). The complaint arose out of the proposal entered into in
August 1995 by the Company and Strategica (the  "Proposal")  whereby  Strategica
agreed to act as the Company's agent for the arrangement of a secured  revolving
credit facility in the amount of $2,500,000. Additionally, the Company agreed to
retain  Strategica as a financial  consultant  to the Company.  The Proposal was
subject to the delivery and  execution of definitive  documentation.  In January
1996, Strategica forwarded to the Company a proposed commitment letter which was
unacceptable  to the Company.  The  complaint  alleges  breach of the  Proposal,
breach of the implied  covenants of good faith and fair dealing,  and fraud. The
complaint seeks damages of not less than  $2,500,000,  punitive  damages and the
rescission of the Proposal and of the issuance by the Company of 116,550  shares
of its Common Stock to Strategica thereunder.


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8 - K

(a)        The following exhibits are included herein:

                  Exhibit 11 - Statement re: computation of earnings per share

                  Exhibit 27 - Financial Data Schedule

(b)        The  Company  did not file any  reports  on Form 8-K during the three
           months ended September 30, 1996.



                                      -12-

<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:  NOVEMBER 13, 1996      /S/ SEBASTIAN E. CASSETTA
       -----------------      ---------------------------------
                              Sebastian E. Cassetta
                              Chairman of the Board, Chief Executive Officer




Date:  NOVEMBER 13, 1996      /S/ THOMAS W. HALLER
       -----------------      --------------------
                              Thomas W. Haller
                              Chief Financial Officer, Treasurer


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