U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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


                For the quarterly period ended November 30, 1996


[   ]     TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

            For the transition period from           to
                                          -----------  -----------

            Commission file number:       1-13360


                                ENTERACTIVE, INC.
        (Exact name of small business issuer as specified in its charter)

                DELAWARE                              22-3272662
    (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)               Identification No.)

              110 West 40th Street, Suite 2100, New York, NY 10018
                    (Address of Principal Executive Offices)

                                 (212) 221-6559
                (Issuer's Telephone Number, Including Area Code)

            Check whether the issuer: (1) filed all reports required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.

YES  X   NO
   ----    ----

            State  the  number  of shares  outstanding  of each of the  issuer's
classes of common equity, as of the latest practicable date:

                                                  Number Outstanding
             Title of Class                     as of January 14, 1997
             --------------                     ----------------------

      Common Stock, $.01 Par Value                     7,679,441


Transitional Small Business Disclosure Format:  Yes      No  X
                                                   ----    ----
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
PART I -             Financial Information

Item 1 -             Financial Statements

                     Consolidated Balance Sheets at November 30, 1996        3
                     and May 31, 1996

                     Consolidated Statements of Operations for the six       4
                     month and three month periods ended November 30,
                     1996 and 1995, respectively

                     Consolidated Statements of Cash Flow for the six        5
                     months ended November 30, 1996 and November 30,
                     1995

                     Notes to Financial Statements                        6-10

Item 2 -             Management's Discussion and Analysis of             11-15
                     Financial Condition and Results of Operations


PART II -            OTHER INFORMATION

Item 1 -             Legal Proceedings                                      16

Item 2 -             Change in Securities                                   16

Item 3 -             Defaults upon Senior Securities                        16

Item 4 -             Submission of Matters to a Vote of Security Holders    16

Item 5 -             Other Information                                      16

Item 6 -             Exhibits and Reports on Form 8-K                       16

SIGNATURES                                                                  17
<PAGE>

                                ENTERACTIVE INC.

                           Consolidated Balance Sheets

                                                   November 30        May 31
                                                   ------------    ------------
                                                      1996             1996
                                                   ------------    ------------
ASSETS                                             (unaudited)
Current Assets
      Cash and cash equivalents                    $  1,278,400    $  6,005,400
      Accounts receivable                               646,400         147,400
      Income taxes receivable                            16,400          16,400
      Inventories                                       595,800         439,500
      Prepaid expenses and other                        242,300          10,200
                                                   ------------    ------------
         Total current assets                         2,779,300       6,618,900

Capitalized Software                                    856,500       1,070,600
Property and equipment, net                             181,500         231,300
Other                                                    24,200          24,200
                                                   ------------    ------------

                                                   $  3,841,500    $  7,945,000
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
      Accounts payable                             $  1,342,700    $  1,404,300
      Accrued expenses                                  155,900         895,300
      Current maturities of long-term debt              516,100         498,900
                                                   ------------    ------------
         Total current liabilities                    2,014,700       2,798,500

Long-term debt, excluding current maturities             40,200         167,800
                                                   ------------    ------------
          Total liabilities                           2,054,900       2,966,300

Commitments and contingencies

Stockholders' Equity
    Preferred Stock $.01 par value,
    2,000,000 shares authorized and none issued            --              --

    Common Stock $.01 par value, 30,000,000
    shares authorized; 7,679,441 and 7,656,435
    shares issued and outstanding for November
    30, 1996 and May 31, 1996
    respectively                                         76,800          76,600

    Additional paid-in capital                       19,932,000      19,620,900

    Accumulated deficit                             (18,222,200)    (14,718,800)
                                                   ------------    ------------
          Total stockholders' equity                  1,786,600       4,978,700

                                                   $  3,841,500    $  7,945,000
                                                   ============    ============

See notes to financial statements.
<PAGE>

                                ENTERACTIVE INC.

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                    For the Three Months Ended November 30   For the Six Months Ended November 30
                                                    -----------------------------------        ------------------------------
                                                            1996               1995               1996                1995
                                                         ------------------------------        ------------------------------
                                                                   (unaudited)                          (unaudited)
<S>                                                      <C>                <C>                <C>                <C>        
Net product sales                                        $   441,500        $   204,100        $   766,100        $   229,600
Product development revenue                                     --              152,000             40,700            200,500
Royalty revenue                                              197,600            100,200            375,300            102,400
                                                         -----------        -----------        -----------        -----------
       Total revenues                                        639,100            456,300          1,182,100            532,500

Cost of product sales                                        219,900             47,000            348,900             55,300
Amortization of capitalized software                         107,100                  0            214,200
Cost of development revenue                                    9,400            150,000             37,000            188,200
Research and development expenses                            619,400            709,200          1,440,200          1,457,300
Marketing and selling expenses                             1,109,300            569,700          1,805,800          1,010,400
General and administrative expenses                          468,200            324,600            907,500            659,600
                                                         -----------        -----------        -----------        -----------
       Total costs and expenses                            2,533,300          1,800,500          4,753,600          3,370,800

Operating loss                                            (1,894,200)        (1,344,200)        (3,571,500)        (2,838,300)
                                                         -----------        -----------        -----------        -----------

Other income (expense):
      Interest expense                                        (4,800)              (100)           (22,200)              (700)
      Interest income                                         26,400             56,500             83,400             90,200
     Other                                                     6,900               (400)             6,900              8,900
                                                         -----------        -----------        -----------        -----------

            Loss before income taxes                      (1,865,700)        (1,288,200)        (3,503,400)        (2,739,900)
Income tax benefit                                              --                 --
                                                         -----------        -----------        -----------        -----------

            Net loss                                     $(1,865,700)       $(1,288,200)       $(3,503,400)       $(2,739,900)
                                                         ===========        ===========        ===========        =========== 


            Loss per common and
               common equivalent share                   $     (0.24)       $     (0.27)       $     (0.46)       $     (0.57)
                                                         ===========        ===========        ===========        =========== 

            Weighted average shares of common
                stock and common stock equivalents         7,679,441          4,775,489          7,679,222          4,775,489
</TABLE>

See notes to financial statements.
<PAGE>

                                ENTERACTIVE, INC.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                               Six Months Ended November 30
                                                               ---------------------------
                                                                   1996            1995
                                                                -----------    -----------
                                                                        (unaudited)
<S>                                                             <C>            <C>
Cash flows from operating activities
  Net loss                                                      $(3,503,400)   $(2,739,900)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization                                 297,600         92,500
      Gain on disposal of assets                                       --           (9,000)
      Stock option consulting expense                               237,500           --
  Changes in assets and liabilities:
      Accounts receivable                                          (499,000)      (218,300)
      Notes receivable                                                 --         (225,000)
      Inventories                                                  (156,300)      (154,400)
      Prepaid expenses and other                                   (232,100)        19,000
      Other assets                                                     --           (2,700)
      Accounts payable                                              (61,600)       609,200
      Accrued expenses                                             (739,400)      (213,200)
                                                                -----------    -----------
          Net cash used in operating activities                  (4,656,700)    (2,841,800)
                                                                -----------    -----------

Cash flows from investing activities
      Proceeds from sale of investments                                --          988,100
      Purchases of property and equipment                           (33,700)       (28,700)
                                                                -----------    -----------
          Net cash (used in) provided by investing activities       (33,700)       959,400
                                                                -----------    -----------

Cash flows from financing activities
      Exercise of stock options                                      73,800           --
      Principal payments under long-term debt                      (110,400)       (15,200)
      Principal payments under capital lease obligations               --           (1,600)
                                                                -----------    -----------
          Net cash used in financing activities                     (36,600)       (16,800)

          Net decrease in cash and equivalents                   (4,727,000)    (1,899,200)

Cash and equivalents
  Beginning of period                                             6,005,400      2,932,400
                                                                -----------    -----------

  End of period                                                 $ 1,278,400    $ 1,033,200
                                                                ===========    ===========
</TABLE>

See notes to financial statements.
<PAGE>

                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.          General

            The accompanying  unaudited financial  statements have been prepared
            in  accordance  with  the  instructions  to Form  10-QSB  and in the
            opinion of management  contain all  adjustments  (consisting of only
            normal recurring  entries) necessary to present fairly the Company's
            financial  position as of November 30, 1996,  and the results of its
            operations  and its cash flows for the six months ended November 30,
            1996 and 1995. Certain information and footnote disclosures normally
            included  in  financial   statements  prepared  in  accordance  with
            generally  accepted  accounting  principles  have been omitted.  The
            interim financial  statements should be read in conjunction with the
            Company's financial statements and related notes in the May 31, 1996
            Annual  Report on Form 10-KSB.  The results for the six month period
            ended  November  30,  1996  are not  necessarily  indicative  of the
            results to be obtained for the full year.


2.          Business

            Enteractive,  Inc. (the  "Company")  designs,  publishes and markets
            interactive multimedia titles to the home and school markets

            On February  29,  1996,  the Company  acquired  Lyriq  International
            Corporation  ("Lyriq"),  a developer  and  publisher of  interactive
            multimedia  software,  whereby Lyriq was merged into a  wholly-owned
            subsidiary  of the Company.  The merger was  accounted for under the
            purchase method of accounting and,  accordingly,  the net assets and
            operations  of Lyriq  are  included  in the  Company's  consolidated
            financial statements commencing February 29, 1996.

            The purchase price was determined as follows:

            725,212 shares of  Enteractive  common
            stock at fair value ($4.00 per share)                     $2,900,800
            Excess  of fair  value of  liabilities
            assumed over assets acquired of Lyriq                        625,400
            Acquisition costs                                             52,100
                                                                      ----------
                Total                                                 $3,578,300
                                                                      ==========

            In  connection  with  the   acquisition,   the  Company  recorded  a
            $2,293,500  expense  for  purchased  research  and  development  and
            $1,284,800 of  capitalized  software  which is being  amortized on a
            straight-line  basis over  three  years.  The  charge for  purchased
            research and development equaled the estimated current fair value of
            the  future  related  cash  flows to be  derived  from  specifically
            identified technologies  (discounted at a risk-adjusted rate of 30%)
            for which  technological  feasibility  had not yet been  established
            pursuant to SFAS No. 86 (consistent with management's  definition of
            internally developed software).  In addition, such technologies have
            no alternative future use.


                                       1
<PAGE>

                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(2)         Business (continued)

            The following unaudited pro forma consolidated results of operations
            reflects the results of the Company's  operations for the six months
            ending November 30, 1995 as if the merger with Lyriq had occurred at
            the  beginning of the period and reflect the  historical  results of
            operations  of  the  purchased   business   adjusted  for  increased
            amortization  expense and increased  common shares  outstanding from
            the acquisition.

                                                             Six months ended
                                                             November 30, 1995
                                                             -----------------
                         Total revenues                      $   1,126,645
                         Net loss                            $  (3,269,752)
                         Net loss per share                  $      (.59)

            The pro forma  information does not necessarily  indicate what would
            have occurred had the acquisition  been consummated at the beginning
            of the respective  periods,  or of the results that may occur in the
            future.

3.          Public Offerings of Common Stock

            On October 20, 1994, 2,300,000 units of interest in the Company were
            sold in an initial public  offering(IPO).  Each unit, which was sold
            for $4.00,  consisted of one share of the Company's common stock and
            one common stock purchase warrant, which entitles the warrant holder
            to  purchase  one  share of the  Company's  common  stock  for $4.00
            through October 20, 1997. Proceeds of approximately $7,600,000,  net
            of related expenses of approximately $1.6 million,  were received in
            exchange  for the  units  issued.  In  connection  with this sale of
            units, the Company sold to the underwriter, for an aggregate of $50,
            the right to purchase  200,000 units with  identical  terms to those
            sold in the initial public offering,  except that the exercise price
            of the warrants is $5.20.  Such units are  exercisable  at $6.60 per
            unit  through  October 20, 1999,  and have certain  "piggy back" and
            demand registration rights.

            In May,  1996,  the Company sold  2,415,000  shares of the Company's
            common stock to the public at a price of $3.375 per share.  Proceeds
            were   approximately   $6,791,600,   net  of  related   expenses  of
            approximately  $1,359,000.  In  connection  with this  offering  the
            Company sold to the underwriter, for an aggregate of $100, the right
            to purchase  210,000  shares of common stock at a price of $3.71 per
            share  through May 21,  2001.  In  connection  with this right,  the
            underwriter   also   received   certain   "piggyback"   and   demand
            registration rights.

4.          Revenue Recognition

            Revenue from product sales is recognized upon shipment,  provided no
            significant   vendor   obligations  remain  and  collection  of  the
            resulting  receivable is deemed probable.  Revenue under fixed price
            product development  contracts is recognized using the percentage of
            completion  method  based on progress to date,  which is


                                       2
<PAGE>

                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


            measured  by  comparing  costs  to date to  total  estimated  costs.
            Royalty revenue is recognized when earned.

            The  Company's  agreements  with certain  product  distributors  and
            retailers  permit them to exchange or return  products for which the
            Company  provides an allowance  reflected as a reduction of accounts
            receivable in the accompanying balance sheets.

5.          Cost of  Product Sales

            Cost of product  sales  consist  of  manufacturing,  packaging,  and
            customer support costs.

6.          Software Development Costs

            Capitalization   of  costs  associated  with  internally   developed
            software begins upon the determination by the Company of a product's
            technological   feasibility,   as  evidenced  by  a  working  model.
            Capitalized  software  development  costs are amortized over related
            sales on a per-unit  basis based on estimated  total  sales,  with a
            minimum  amortization  based on a  straight-line  method  over three
            years.  Capitalized  software at November 30, 1996 resulted from the
            Lyriq  acquisition  and  is  net  of  accumulated   amortization  of
            $428,400.

7.          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  reported  amount of assets  and
            liabilities and disclosures of contingent  assets and liabilities at
            the date of the  financial  statements  and the  reported  amount of
            revenues and expenses  during the reporting  period.  Among the more
            significant estimates included in these financial statements are the
            estimated allowance for doubtful accounts  receivable,  reserves for
            returns  and  exchanges  and  charges  for  purchased  research  and
            development. Actual results could differ from those estimates.

8.          Subsequent Events

            (a) USWeb Affiliation

            On  December  4, 1996 the  Company  signed an  agreement  with USWeb
            Corporation  and  paid  $625,000  for the  right  to  operate  USWeb
            affiliate offices in New York, Long Island, Philadelphia, Baltimore,
            Stamford,  CT and Bergen  County  and  Newark,  NJ.,  for a ten year
            period.  The  Company has formed a  subsidiary,  which will be named
            USWeb  Cornerstone,  and is  intended  to  provide  a full  range of
            Internet and Intranet-based  business solutions;  including Web site
            design,  hosting  and  management,   design  and  implementation  of
            database  and  e-commerce   solutions,   educational   programs  and
            Web-related strategic consulting and marketing.

            (b)   Private Placement


                                       3
<PAGE>

                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


            On December 12, 1996 the Company completed a private placement of 84
            units each consisting of 80 shares of Class A Convertible  Preferred
            Stock ("Preferred  Stock") and 50,000 Common Stock Purchase Warrants
            to purchase in the  aggregate  50,000  shares of Common  Stock at an
            exercise  price of $4.00  per  share.  Proceeds  were  approximately
            $7,872,000, net of related expenses of $528,000. The Preferred Stock
            has a stated value of $1,250 per share and each share is convertible
            at any time after April 30, 1998 into such whole number of shares of
            Common Stock equal to the  aggregate  stated value of the  Preferred
            Stock to be converted divided by the lesser of (i) $2.00 or (ii) 50%
            of the average  closing sale price for the Common Stock for the last
            ten trading days in the fiscal  quarter of the Company prior to such
            conversion.  The Company must use the proceeds, if any, derived from
            the exercise of the Company's  currently  outstanding  public Common
            Stock  Warrants,  which  expire  in  October  1997,  to  redeem  the
            Preferred  Stock at 110% of stated  value.  The Company also has the
            option to redeem the Preferred  Stock at any time upon 30 days prior
            written  notice,  at a redemption  price equal to 110% of the stated
            value.

            (c)Early extinguishment of debt

            As  a  result  of  agreements  among  the  Company,  certain  former
            employees and GKN  Securities  Corp.,  in January,  1997 the Company
            repaid   $475,800  of  it's  long-term  debt  plus  related  accrued
            interest.


                                       4
<PAGE>

ITEM 6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
            RESULTS OF OPERATIONS.


The  discussion  and  analysis  below  should  be read in  conjunction  with the
Financial  Statements  of  Enteractive  and the  Notes to  Financial  Statements
included elsewhere in this Form 10-QSB.

OVERVIEW

Enteractive  was  formed  in  December  1993  to  develop,  publish  and  market
interactive  multimedia software products, and consummated the merger with Sonic
Images  Productions,   Inc.  ("Sonic"),   an  established   multimedia  software
developer,  in May 1994.  Prior to fiscal 1996, the Company derived the majority
of its  revenues  from grants or contracts to develop  specific  titles.  In the
fiscal year ended May 31, 1995,  the Company  undertook a  transition  from such
externally-funded development projects to developing, either by itself or with a
co-publisher,  its own titles and,  accordingly,  planned to derive its revenues
principally  from  product  sales  and  royalties.   The  Company  is  currently
evaluating the extent to which,  it will continue to incur  additional  costs in
connection with developing and marketing its own titles.

On February 29, 1996, the Company  completed the  acquisition of Lyriq,  whereby
Lyriq was  merged  into a  wholly-owned  subsidiary  of the  Company.  The Lyriq
acquisition  was accounted for under the purchase  method of accounting with the
Company as the acquiring entity. See footnote 1 to the accompanying consolidated
financial statements.

REORGANIZATION

On July 15,  1996 the  Company  announced a  restructuring,  comprised  of a 45%
reduction of its Washington DC based  development  staff,  and changes in senior
management.  In connection with the downsizing,  John Ramo,  president and chief
operating officer and Jolie Barbiere, a vice president, resigned as officers and
members of the Company's Board of Directors.

AFFILIATION WITH USWEB

On December 4, 1996 the Company signed an agreement with USWeb Corporation under
which the  Company has  established  a  subsidiary  to operate  USWeb  affiliate
offices in New York and subject to regulatory approval,  the exclusive rights to
develop new USWeb  affiliate  offices in Long Island,  Philadelphia,  Baltimore,
Stamford,  CT and Bergen County and Newark,  NJ. The  subsidiary,  which will be
named USWeb  Cornerstone,  is  intended to provide a full range of Internet  and
Intranet-based  business  solutions;  including  Web site  design,  hosting  and
management,  design and  implementation  of database and  e-commerce  solutions,
educational programs and Web-related strategic consulting and marketing.

QUARTERLY RESULTS

The Company's  quarterly  operating  results from its sales of entertainment and
recreational  software  have in the past and are  likely  in the  future to vary
significantly  depending  on  factors  such as the  timing of new  hardware  and
software title introductions, the degree of market acceptance of such titles and
the introduction of titles  competitive with those of the Company.  In addition,
the home  recreation and  entertainment  software  business is highly  seasonal.
Typically, revenues are highest during the last calendar quarter (which includes
the holiday buying season), decline in the first calendar quarter and are lowest
in the  second  and  third  calendar  quarters.  This  seasonal  pattern  is due
primarily to the increased demand for home recreation and entertainment software
titles during the year-end holiday buying season. The Company expects its future
software revenues and operating results will reflect these seasonal factors.


                                       1
<PAGE>

For the quarters  ended  November  30, 1996 and November 30, 1995  approximately
68.2% and 71.0% of the Company's  costs and expenses were incurred in connection
with the development  and/or marketing of specific  titles.  The Company's costs
vary  significantly  based on the  number  of  titles  being  developed  for and
marketed by the Company.  Accordingly,  adjustments in the level of expenditures
can be readily implemented.

The Company expects that the operating results from its USWeb related operations
will reflect the costs of establishing  offices,  hiring personnel and marketing
its services.  Cost will exceed  related  revenues  during the start up phase of
this business.  However,  management believes that since a significant component
of the business cost will be personnel  related it can quickly  adjust  staffing
levels to correspond to anticipated demand.

RESULTS OF  OPERATIONS  FOR THE SIX AND THREE MONTHS ENDED  NOVEMBER 30, 1996 V.
NOVEMBER 30, 1995.

The Company  recognized  product sales, net of estimated returns of $766,100 and
$441,500, in the six and three months ended November 30, 1996, respectively,  an
increase of $536,500  and  $237,400  over the six and three month  period  ended
November 30, 1995. This significant  increase is due to increased  volumes.  The
increases in both accounts receivable and inventory are related to the Company's
software publishing operations.

Royalty  revenue was  $375,300  and  $197,600 in the six and three  months ended
November  30, 1996,  respectively,  an increase of $272,900 and $97,400 over the
six and three month period ended November 30, 1995,  respectively.  The increase
is primarily due to greater royalties from international licenses.

Cost of product  sales was  $348,900  and  $219,900 in the six and three  months
ended November 30, 1996, respectively, an increase of $293,600 and $172,900 over
the six and three month  period  ended  November  30,  1995,  respectively.  The
increase in cost of product  sales in absolute  dollars is due to  increases  in
sales  volume.  The increase in the  percentage  of cost of product sales to net
product  sales in the current  year  reflects  the  increase in  allowances  for
returns and other sales  credits which is recorded as a reduction in net product
sales.

Amortization  of  capitalized  software was $214,200 and $107,100 in the six and
three months  ended  November 30, 1996,  respectively.  This  amortization  is a
result  of the  capitalized  software  acquired  in  connection  with the  Lyriq
acquisition.

Research and  development  expenses were  $1,440,200 and $619,400 in the six and
three months ended  November 30, 1996,  respectively,  a decrease of $17,100 and
$89,800  over  the  six  and  three  month  period  ended   November  30,  1995,
respectively.  This  decrease  reflects  lower  spending  as  a  result  of  the
previously announced reorganization, which was completed by the beginning of the
quarter ended November 30, 1996.

Marketing and selling  expenses were  $1,805,800  and  $1,109,300 in the six and
three months ended November 30, 1996, respectively,  an increase of $795,400 and
$539,600  over  the  six  and  three  month  period  ended  November  30,  1995,
respectively.  This increase  reflects a greater number of titles being marketed
and the company's shift to entertainment and recreational products which require
higher levels of marketing  support to generate  sales.  The quarterly  increase
also reflects trade and consumer  cooperative  advertising  allowances to secure
shelf space for product.

General and  administrative  expenses  were $907,500 and $468,200 in the six and
three months ended November 30, 1996, respectively,  an increase of $247,900 and
$143,600  over  the  six  and  three  month  period  ended  November  30,  1995,
respectively.   This  increase  primarily  results  from  non-cash  charges  for
consulting expenses incurred to implement the company's business strategy.


                                        2
<PAGE>

Interest  expense  was  $22,200  and  $4,800 in the six and three  months  ended
November 30, 1996, respectively,  an increase of $21,500 and $4,700 over the six
and three month period ended November 30, 1995,  respectively.  This increase is
due to the interest on the loans for repurchased shares of Company Common Stock.

Interest  income  was  $83,400  and  $26,400 in the six and three  months  ended
November 30, 1996,  respectively,  a decrease of $6,800 and $30,100 over the six
and three month period ended November 30, 1995,  respectively.  This decrease is
due to lower cash balances during the current fiscal year.

No income  tax  provisions  are  necessary  as the  Company is in a net tax loss
carryforward position.

The Company does not believe it will generate  taxable  income during the period
ending  May 31,  1997.  Beyond  such  time,  using  the  standards  set forth in
Financial  Accounting  Standard No. 109,  management cannot currently  determine
whether the Company  will  generate  taxable  income  during the period that the
Company's net operating loss carry forward may be applied  towards the Company's
taxable income.  Accordingly,  the Company has established a valuation allowance
against its deferred tax asset.


                                       3
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Since 1995, the Company's principal sources of capital have been as follows:

            (i)  In a bridge financing  consummated in January 1996, the Company
                 received approximately $2,460,000 in net proceeds from the sale
                 of  convertible  notes and  warrants.  Simultaneously  with the
                 closing on May 21, 1996 of the pubic offering  described  below
                 convertible  notes with an aggregate  principal  of  $2,250,000
                 were  converted  into  740,734  shares of Common  Stock,  while
                 $450,000 of convertible notes were repaid.

            (ii)  On May 21, 1996, the Company  consummated a public offering by
                  issuing  2,415,000  shares of Common Stock to the public.  The
                  net proceeds from this offering were $6,791,600.

            (iii) On December 12, 1996 the Company completed a private placement
                  of  84  units  each   consisting  of  80  shares  of  Class  A
                  Convertible  Preferred  Stock  ("Preferred  Stock") and 50,000
                  Common Stock  Purchase  Warrants to purchase in the  aggregate
                  50,000  shares of Common  Stock at an exercise  price of $4.00
                  per share.  Proceeds  were  approximately  $7,872,000,  net of
                  related expenses of $528,000. The Preferred Stock has a stated
                  value of $1,250 per share and each share is convertible at any
                  time after April 30, 1998 into such whole  number of shares of
                  Common  Stock  equal  to the  aggregate  stated  value  of the
                  Preferred  Stock to be converted  divided by the lesser of (i)
                  $2.00 or (ii) 50% of the  average  closing  sale price for the
                  Common  Stock  for the last  ten  trading  days in the  fiscal
                  quarter of Company prior to such conversion.  The Company must
                  use the  proceeds,  if any,  derived  from the exercise of the
                  Company's currently  outstanding public Common Stock Warrants,
                  which expire in October 1997, to redeem the Preferred Stock at
                  110% of the stated  value.  The company also has the option to
                  redeem  the  Preferred  Stock at any time  upon 30 days  prior
                  written  notice,  at a  redemption  price equal to 110% of the
                  stated value.

In May 1996 the Company  consummated  an agreement  with certain of its officers
pursuant to which the Company  repurchased  1,000,000  shares of Common Stock at
$1.00 per share.  At November 30, 1996  $443,700 of the purchase  price had been
paid. As a result of agreements among the Company,  certain former employees and
GKN  Securities  Corp.  in  January,  1997 the Company  repaid  $475,800 of it's
long-term debt plus related accrued interest. Interest will accrue on the unpaid
balances at the prime rate and is payable quarterly.

At November 30, 1996, the Company had cash and  equivalents  of $1,278,400.  The
decrease of  $4,727,000  in cash and  equivalents  from May 31, 1996 was used to
fund  operating   activities.   As  described   above,   the  Company   received
approximately $7,872,000 in net proceeds from a private placement consummated in
December  1996.  The increase in both  accounts  receivable  and  inventory  are
related to the Company's software publishing operations.

Capital  expenditures were $33,700 and $19,200 in the six and three months ended
November 30, 1996, respectively,  an increase of $5,000 and a decrease of $1,000
from the six and three month period ended November 30, 1995,  respectively.  The
Company expects  capital  expenditures in the fiscal year ending May 31, 1997 to
be higher than the average of both fiscal 1996 and 1995  principally as a result
of the cost of acquiring the equipment required for the US Web affiliate offices
and development center.

The Company believes that its existing cash and  equivalents,  net proceeds from
the December 1996 financing and anticipated  revenues will be sufficient to meet
its liquidity and cash  requirements  for at least the next 18 months.  However,
these  funds  may not be  sufficient  to meet the  Company's  longer  term  cash
requirements  for  operations.  Based on  management's  assessment of the future
marketability of its titles and demand for Web


                                       4
<PAGE>

related services, the Company may significantly alter the level of expenses both
within the next 18 months and thereafter.

FORWARD LOOKING STATEMENTS

This Form 10-QSB contains certain forward-looking  statements within the meaning
of Section 27A of the  Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the  safe  harbors   created   thereby.   Investors  are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of the Company to develop its products,  the success of
its  USWeb  Cornerstone   subsidiary  as  well  as  general  market  conditions,
competition  and pricing.  Although the Company  believes  that the  assumptions
underlying the forward-looking  statements contained herein are reasonable,  any
of the assumptions could be inaccurate, and therefore, there can be no assurance
that the  forward-looking  statements included in this Form 10-QSB will prove to
be   accurate.   In  light  of   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

INFLATION

The past and expected future impact of inflation on the financial  statements is
not significant.


                                       5
<PAGE>

Part II - Other Information
---------------------------

Item 1.     Legal Proceedings

            None.

Item 2.     Changes in Securities

            None.

Item 3.     Defaults Upon Senior Securities

            None.

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

            None

Item 5.     Other Information

            None.

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

            Exhibit 10.1 --  Affiliate Agreement by and between USWeb
                             Corporation and Enteractive Web Services

            Exhibit 27
<PAGE>

                                   SIGNATURES


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


                                        ENTERACTIVE, INC.
                                        ----------------------------------------
                                        (Registrant)




Date January 21, 1997

                                        /s/ Kennth Gruber
                                        ----------------------------------------
                                        Kenneth Gruber
                                        Chief Financial Officer and
                                        Principal Accounting Officer