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, 1997


/   /    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.)


               25 West 45th Street, Suite 306, New York, NY 10036
                    (Address of Principal Executive Offices)

                                 (212) 768-7100
                (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 December 22, 1997
       --------------                             -----------------------
  Common Stock, $.01 Par Value                           8,019,555


Transitional Small Business Disclosure Format: Yes / /        No /X/

                                       1
<PAGE>
                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                           Page
Item 1   Financial Statements

         Consolidated Balance Sheets at November 30, 1997 and May 31, 1997    3

         Consolidated Statements of Operations for the three months 
         and six months ended November 30, 1997 and 1996                     4,5

         Consolidated Statements of Cash Flows for the six months ended 
         November 30, 1997 and 1996                                            6

         Notes to Financial Statements                                         7

Item 2.  Management's Discussion and Analysis of Financial 
         Condition and Results of Operations                                   8



PART II - OTHER INFORMATION

                                                                            Page
Item 1.           Legal Proceedings                                           11

Item 2.           Change in Securities                                        11

Item 3.           Defaults upon Senior Securities                             11

Item 4.           Submissions of Matters to a Vote by Security Holders        11

Item 5.           Other Information                                           11

Item 6.           Exhibits and Reports on Form 8-K                            11


SIGNATURES                                                                    12

                                       2
<PAGE>
                        ENTERACTIVE INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                November 30                 May 31
                                                                                   1997                      1997
ASSETS                                                                          (unaudited)
                                                                             ---------------------------------------------
<S>                                                                          <C>                        <C>              
Current Assets
      Cash and cash equivalents                                              $       1,351,500          $       4,952,900
      Accounts receivable                                                              232,200                    224,400
      Assets held for sale                                                              19,900                    100,000
      Prepaid expenses and other                                                       225,200                     93,800
                                                                             ------------------       --------------------
         Total current assets                                                        1,828,800                  5,371,100


Affiliation Rights, net                                                                562,500                    593,800
Property and equipment, net                                                            505,500                    154,900
Other                                                                                  119,300                     61,500
                                                                             ------------------       --------------------
                                                                                   $ 3,016,100          $       6,181,300
                                                                             ==================       ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities

      Accounts payable                                                                $415,900                   $287,900
      Accrued restructuring expenses                                                   336,300                          -
      Accrued payroll and related expenses                                              93,600                          -
      Other accrued expenses                                                           424,400                    623,900

      Deferred revenue                                                                       -                     69,500

      Current maturities of long-term debt                                             104,700                     40,200
                                                                             ------------------       --------------------
         Total current liabilities                                                   1,374,900                  1,021,500

     Long-term debt                                                                    104,300                          -
                                                                             ------------------       --------------------
         Total liabilities                                                           1,479,200                  1,021,500


Commitments and contingencies

Stockholders' Equity
    Preferred Stock $.01 par value,
    2,000,000 shares authorized and 6,720
    shares issued and outstanding                                                          100                        100

    Common Stock $.01 par value,  50,000,000
    shares  authorized;  8,019,555 and
    7,679,441 shares issued and outstanding for
    November 30, 1997 and May 31, 1997 respectively                                     80,200                     76,800

    Additional paid-in capital                                                      28,249,500                 28,038,400

    Accumulated deficit                                                            (26,792,900)               (22,955,500)
                                                                             ------------------       --------------------
          Total stockholders' equity                                                 1,536,900                  5,159,800

                                                                             $       3,016,100          $       6,181,300
                                                                             ==================       ====================
</TABLE>
See notes to consolidated financial statements

                                       3

<PAGE>
                        ENTERACTIVE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                 For the Three Months Ended November 30
                                                                                         1997                   1996
                                                                             -------------------------------------------
                                                                                     (unaudited)            (unaudited)

<S>                                                                              <C>                      <C>          
Net product sales                                                                $             -          $     441,500

Internet services revenues                                                               376,000                      -

Software licensing and royalty revenue                                                    98,000                197,600
                                                                             -------------------------------------------
       Total revenues                                                                    474,000                639,100


Cost of product sales                                                                          -                219,900

Amortization of capitalized software                                                           -                107,100

Cost of Internet services revenues                                                       319,300                      -
Cost of licensing and royalty revenue                                                     22,200                  9,400
Research and development expenses                                                        484,100                619,400
Marketing and selling expenses                                                           953,500              1,109,300
General and administrative expenses                                                      492,400                468,200

Restructuring expenses                                                                   427,700                      -
                                                                             -------------------------------------------
       Total costs and expenses                                                        2,699,200              2,533,300


Operating loss                                                                        (2,225,200)            (1,894,200)
                                                                             -------------------------------------------

Other income (expense):
      Interest expense                                                                    (3,400)                (4,800)

      Other income                                                                             -                  6,900
      Interest income                                                                     25,400                 26,400
                                                                             -------------------------------------------
            Loss before income taxes                                                  (2,203,200)            (1,865,700)


Income tax expense                                                                             -                      -
                                                                             -------------------------------------------

            Net loss                                                             $    (2,203,200)         $  (1,865,700)
                                                                             -------------------------------------------


            Loss per common and
               common equivalent share                                           $         (0.28)         $       (0.24)
                                                                             -------------------------------------------
            Weighted average shares of common
                stock and common stock equivalents                                     7,828,751              7,679,441
</TABLE>
See notes to consolidated financial statements

                                       4
<PAGE>
                        ENTERACTIVE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                For the Six Months Ended November 30
                                                                                    1997                    1996
                                                                              -----------------        ---------------
                                                                                (unaudited)             (unaudited)

<S>                                                                              <C>                      <C>        
Net product sales                                                                $           -            $   766,100

Product development revenue                                                                  -                 40,700

Internet revenues                                                                      518,300                      -

Software licensing and royalty revenue                                                 132,400                375,300
                                                                              ----------------------------------------
       Total revenues                                                                  650,700              1,182,100


Cost of product sales                                                                        -                348,900

Amortization of capitalized software                                                         -                214,200

Cost of internet revenues                                                              418,800                      -
Cost of licensing and royalty revenue                                                   22,200                 37,000
Research and development expenses                                                      883,600              1,440,200
Marketing and selling expenses                                                       1,752,500              1,805,800
General and administrative expenses                                                  1,058,800                907,500

Restructuring expenses                                                                 427,700                      -
                                                                              ----------------------------------------
       Total costs and expenses                                                      4,563,600              4,753,600


Operating loss                                                                      (3,912,900)            (3,571,500)
                                                                              ----------------------------------------

Other income (expense):
      Interest expense                                                                  (3,400)               (22,200)

      Other income (expense)                                                                 -                 83,400
      Interest income                                                                   78,900                  6,900
                                                                              ----------------------------------------

            Loss before income taxes                                                (3,837,400)            (3,503,400)


Income tax expense                                                                        -
                                                                              ----------------------------------------

            Net loss                                                             $  (3,837,400)           $(3,503,400)
                                                                              ========================================

            Loss per common and
               common equivalent share                                           $       (0.49)           $     (0.46)
                                                                              ========================================

            Weighted average shares of common
                stock and common stock equivalents                                   7,754,096              7,679,441
</TABLE>
See notes to consolidated financial statements


                                       5
<PAGE>
                        ENTERACTIVE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                            Six Months Ended November 30
                                                                                              1997              1996
                                                                                     ------------------------------------
                                                                                            (unaudited)       (unaudited)
<S>                                                                                       <C>               <C>          
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                                                  $   (3,837,400)   $ (3,503,400)
Adjustments to reconcile net loss to net cash used in operating activities
     Depreciation and amortization                                                               109,400         297,600
     Stock Option Consulting expense                                                                   -         237,500
Changes in assets and liabilities
     Accounts receivable                                                                          (7,800)       (499,000)
     Assets held for sale                                                                         80,100               -
     Inventories                                                                                       -        (156,300)
     Prepaid expenses and other                                                                 (131,400)       (232,100)
     Other assets                                                                                (57,800)              -
     Accounts payable                                                                            128,000         (61,600)
     Accrued expenses                                                                            230,400        (739,400)
     Deferred revenue                                                                            (69,500)              -
                                                                                     ------------------------------------
           Net cash used in operating activities                                              (3,556,100)     (4,656,700)

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchases of property and equipment                                                       (428,700)        (33,700)
                                                                                     ------------------------------------
           Net cash (used in ) provided by investing activities                                 (428,700)        (33,700)

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from exercise of stock options                                                   214,500          73,800
       Proceeds from sale and leaseback of equipment                                             168,800               -
       Principal payments under long-term debt                                                         -        (110,400)

                                                                                     ------------------------------------
            Net cash provided by financing activities                                            383,400         (36,600)
                                                                                     ------------------------------------
            Net decrease in cash and cash equivalents                                         (3,601,400)     (4,727,000)

CASH AND CASH EQUIVALENTS
      Beginning of period                                                                      4,952,900       6,005,400
                                                                                     ------------------------------------
      End of period                                                                        $   1,351,500   $   1,278,400
                                                                                     ====================================
</TABLE>
See notes to consolidated financial statements

                                       6
<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, 1997, and the results of its operations and its cash
         flows for the six month and three  month  periods  ended  November  30,
         1997. 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, 1997 Annual Report on Form
         10-KSB.  The results for the six month period  ended  November 30, 1997
         are not  necessarily  indicative  of the results to be obtained for the
         full year.

2.       BUSINESS

         Headquartered in New York, New York, Enteractive,  Inc. (the "Company")
         offers products and services to customers for the design,  development,
         operation  and  maintenance  of  customer  Intranets  or  sites  on the
         Internet  and World  Wide Web and  publishes  multimedia  titles to the
         home.The Company sold its domestic  distribution rights,  inventory and
         certain accounts receivable from its interactive  multimedia publishing
         business  to a third  party.  The  Company's  address  is 25 West  45th
         Street, Suite 306, New York, New York 10036 and its telephone number is
         (212)    768-7100.    Its   World    Wide   Web   site    address    is
         http://www.crstone.com.

         Throughout  the first half of fiscal  1997 the  Company  was  primarily
         engaged in the  development,  publishing  and  marketing of  multimedia
         interactive  software  with an  emphasis on the CD-ROM  platform.  As a
         result  of a  rigorous  review  of the  CD-ROM  market,  the  Company's
         performance  and the related  risks of continuing to develop and market
         interactive  multimedia  titles,  the Company  concluded  that it could
         capitalize on what the Company believes to be a vibrant market and upon
         its expertise in  development  by  redirecting  its business to provide
         network and web-related solutions,  products and services to businesses
         and other entities.

         The Company,  directly or in cooperation  with third parties,  designs,
         develops,  installs, maintains and hosts customer Intranets or sites on
         the Internet and World Wide Web.  According to an August 1996 report by
         Forrester  Research  the number of Web sites is  projected to grow from
         43,000 at the end of 1996 to 657,000 at the end of 2000.  In  addition,
         businesses are demanding more complex Web sites,  as these sites become
         increasingly  important  first  points  of  contact  with  current  and
         prospective  customers.   Accordingly,  the  Company  believes  that  a
         company's  web site is  becoming a  mission-critical  component  of the
         enterprise.  Companies  are also  increasingly  deploying  Intranets to
         manage  their  internal  corporate  communications  because they enable
         employees and business associates to receive corporate  information and
         training  efficiently,  communicate  through  e-mail,  use the internal
         network's client  applications and access  proprietary  information and
         legacy databases.

         On  December  4, 1996,  the  Company  entered  into an  agreement  (the
         "Enteractive  Affiliates  Agreement") with USWeb Corporation  ("USWeb")
         pursuant to which the Company became an affiliate of USWeb and a member
         of USWeb's  network of independent  affiliates  (the "USWeb  Network").
         Under the Affiliates Agreement, the Company paid $625,000 for the right
         to operate USWeb affiliate  offices in certain  localities for 10 years
         as provided below. USWeb is a public company whose principal  investors
         include Intel, Softbank  Corporation,  which owns Comdex and Ziff-Davis
         Publishing, 21st Century Communications Partners L.P., Wheatly Partners
         L.P.  and  Reuters.  USWeb is  seeking  to  capitalize  on the  service
         opportunities  presented  by the  increasing  use of the  Internet  and
         Intranets as  commercial  tools.  The Company has formed a  subsidiary,
         Enteractive   Network   Solutions   Inc.,   doing   business  as  USWeb
         Cornerstone,  which 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.  The Company is obligated to pay USWeb monthly  royalty
         and service and marketing and  advertising  fees equal in the aggregate
         to 7% of Adjusted Gross Revenues from this business,  as defined in the
         agreement, but not less than certain contractual fee levels.

         The  Company  has been  granted  exclusive  rights to develop new USWeb
         Affiliate offices in Long Island (Nassau-Suffolk County), Philadelphia,
         Baltimore,  Stamford, CT, and Bergen County and Newark, NJ. The Company
         has established a USWeb  Affiliate  office in New York City and in each
         of the above  territories.  The exclusive rights granted to the Company
         are subject to certain minimum  performance  standards set forth in the
         Affiliates  Agreement.  If the Company is unable to meet these  minimum
         performance standards, its exclusive rights may be terminated.



                                       7
<PAGE>
3.       AFFILIATE RIGHTS

         Fees for  affiliation  rights  were paid to USWeb for the right to join
         the USWeb  network  and  operate  as an  affiliate  in the  territories
         indicated in note 2. The fee is being  amortized  over the 10 year life
         of the agreement with USWeb. Affiliate rights at November 30, 1997 were
         net of accumulated amortization of $62,500.

4.       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.  Actual results could differ
         from those estimates.

6.       WARRANT EXCHANGES

         On September 16, 1997,  the Company  offered to exchange (the "Exchange
         Offer") twenty of its  publicly-traded  Common Stock Purchase  Warrants
         (the   "Warrants")   expiring   October  20,  1997  for  one  share  of
         newly-issued Common Stock, $.01 par value. On September 16, 1997, there
         were 5,121,468 Warrants outstanding.  The purpose of the Exchange Offer
         was to (i) reduce the overhang to the market for the  Company's  Common
         Stock and (ii) offer Warrant  holders the opportunity to participate in
         any long term  appreciation of the Company's  securities,  since absent
         the Exchange  Offer,  it is likely that the Warrants have would expired
         unexercised on October 20, 1997. On October 14, 1997 the company issued
         248,864 shares of common stock, $.01 par value in exchange of 4,977,280
         warrants  which  were  exchanged  as part of the  Exchange  Offer.  The
         balance of the outstanding Warrants expired unexercised.

         On November  19, 1997 the Company  offered to the holders of  4,200,000
         common stock purchase warrants to issue one share of its par value $.01
         common stock for 2.8 warrants. The exchange offer is conditioned on all
         holders of the warrants agreeing to the exchange and expires on January
         20, 1998,  unless extended.  The warrants subject to the offer entitled
         the registered  holder to purchase  through December 13, 2001 one share
         of common  stock at $4.00 per share.  As a  condition  to  closing  the
         exchange  offer,  the Company is seeking the consent of all the holders
         of its  Convertible  Preferred  Stock to (1)  delay  the date  when the
         Preferred Stock can first be converted into Common Stock from April 30,
         1998 until any time after June 30,  1999 and (2) modify the  redemption
         feature so that  one-third,  rather than 50%, of the net proceeds  from
         any public equity offering  consummated by the Company prior to January
         1, 2000 will be used to redeem the  outstanding  Preferred Stock and if
         the closing price of the  Company's  common Stock is at least $6.00 for
         10 trading  days in any 30 day period,  the  Company  will use its best
         efforts to complete an underwritten  offering of its Common Stock.  All
         holders of Preferred Stock who approve the delay in the conversion date
         will receive a special monthly  interest payment equal to 12% per annum
         of the stated value of the  Preferred  Stock ($1,250 per share) for the
         period commencing April 30, 1998 and ending the earlier of (1) June 30,
         1999 or (2) the redemption  date, if any of the Preferred  Stock.  Such
         payment  may be  made,  at the  Company's  option  in  either  cash  or
         additional  shares of its Common Stock or a combination  thereof.  Such
         payments  will be made at the  later  of (1) the  time it  redeems  the
         Preferred  Stock,  or (2) July 10, 1999 (if the Company does not redeem
         the Preferred Stock on or before June 30, 1999)

ITEM 2   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.  On  December  4, 1996 the
         Company  signed an  agreement  with USWeb  Corporation  under which the
         Company has  established  a  subsidiary  to operate in New York and the
         exclusive rights in Long Island, Philadelphia,  Baltimore, Stamford, CT
         and Bergen County and Newark,  NJ. USWeb  Cornerstone,  the subsidiary,
         provides  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,   and
         Web-related strategic consulting and marketing.

         QUARTERLY RESULTS
         Since  signing the  affiliate  agreement  with USWeb  Corporation,  the
         Company has been building  infrastructure to support anticipated sales.
         The Company  monitors and adjusts expense levels to support the revenue
         stream.  By May 31, 1997,  the Company no longer  utilized  significant
         resources  for  development  or  marketing of  multimedia  products and
         consequently  most  comparisons to the previous  years' periods are not
         applicable.





                                       8
<PAGE>
         By November 30, 1997 the Company,  with the approval of USWeb,  decided
         that it could more cost  effectively  service the  territories  covered
         under the  franchise  agreement  with USWeb by  closing  offices in New
         Jersey,  Long Island,  NY Philadelphia,  PA and Stamford CT and operate
         from  offices  located in New York City and  Baltimore,  Maryland.  The
         statement of operations  for the three month period ended  November 30,
         1997  reflects  expenses  totaling  $427,700 to reflect  the  Company's
         estimated  losses from  subleasing the closed offices and the severance
         associated with eliminating positions deemed unnecessary by management.

         The Company expects its quarterly results to vary  significantly in the
         future.   The  number  of  customer   contracts  signed  and  fulfilled
         significantly  influence  revenues.  Further  market  acceptance of the
         Company's  offerings is dependent on (1) the growth and  utilization of
         the  Internet  as a  medium  for  commerce,  (2) the  success  of USWeb
         establishing  and positioning the USWeb brand in the territories  where
         the Company  operates and (3) the success of offerings by  competitors.
         The  Company  does not  expect  seasonal  factors  to be a  significant
         influence on revenues.

         RESULTS OF OPERATIONS - QUARTER AND SIX MONTHS ENDED NOVEMBER 30, 1997
         Net product sales for the three and six month  periods  ended  November
         30, 1997 were $0 compared to $441,500  and  $766,100  for the three and
         six month periods ended  November 30, 1996.  The decrease is due to the
         Company's  decision  to license  others to market and  distribute  it's
         interactive multimedia products.  Revenues from these relationships are
         reflected as royalties.  Prospectively, the Company does not expect any
         revenues from CD-ROM title sales other than royalty income as discussed
         below.

         Internet  services  revenue for the three and six month  periods  ended
         November 30, 1997 were $376,000 and $518,300  respectively  compared to
         $0 and $0 for the three and six month periods ended  November 30, 1996.
         These are  consulting  and services  revenues  from USWeb  Cornerstone,
         which began operations in the current fiscal year.

         Royalty  revenue for the three and six month periods ended November 30,
         1997 were  $98,000 and $132,400  respectively  compared to $197,600 and
         $375,300 for the three and six month periods  ended  November 30, 1996.
         The  decrease is the result of the  Company's  decision to focus on the
         Internet business of USWEB  Cornerstone.  The royalties relate to sales
         of titles all of which were first  marketed  over 12 months  ago.  This
         revenue  stream is  expected  to  continue  to  diminish  as the titles
         continue to age.

         Cost of Internet  services  revenue for the three and six month periods
         ended  November  30,  1997  were  $319,300  and  $418,800  respectively
         compared to $0 for the three and six month periods  ended  November 30,
         1996.  These costs include the labor (salary and benefits) and overhead
         related to the provision of  consulting  and  development  services and
         cost of equipment resold to clients.

         Research and  development  expenses for the three and six month periods
         ended  November  30,  1997  were  $484,100  and  $883,600  respectively
         compared to $619,400 and $1,440,200 for the three and six month periods
         ended  November  30,  1996.  The  decrease is due to the  reduction  in
         interactive  multi-media product development and fewer number of people
         performing  development.  These amounts may increase in the short term,
         but,  relative to revenue,  should  decrease  over time as  development
         resources are utilized to fulfill contracts.

         Marketing  and  selling  expenses  for the three and six month  periods
         ended  November  30, 1997 were  $953,500  and  $1,752,500  respectively
         compared  to  $1,109,300  and  $1,805,800  for the  three and six month
         periods ended November 30, 1996.  Throughout  most of the quarter ended
         November  30,  1997,  the  Company  incurred  costs to staff  and equip
         multiple sales offices.  However, as mentioned earlier, the Company has
         recently  consolidated  its sales  operations and selling  expense as a
         percentage of revenues should decrease.

         General and administrative expenses for the three and six month periods
         ended  November  30, 1997 were  $492,400  and  $1,058,800  respectively
         compared to $468,200 and  $907,500 for the three and six month  periods
         ended November 30, 1996.  General and  administrative  expenses include
         costs for accounting,  information  systems,  human  resources,  legal,
         general facilities and senior executives.

         Interest and other income  includes  interest and dividend  payments on
         cash  balances.  Interest  and other income for the three and six month
         periods ended  November 30, 1997 were $25,400 and $78,900  respectively
         compared to $33,300  and  $90,300  for the three and six month  periods
         ended November 30, 1996 due to lower cash balances.


                                       9
<PAGE>
         No income tax benefit was recorded for the quarter  ended  November 30,
         1997. The Company does not believe it will generate  taxable income for
         the period ending May 31, 1998.  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,   if  any.
         Accordingly,  the Company has established a valuation allowance against
         its deferred tax asset.

         LIQUIDITY AND CAPITAL RESOURCES
         Since June 1, 1995,  the  Company's  principal  sources of capital have
         been as follows:

         On December  12, 1996 the Company  completed a private  placement of 84
         units each consisting of 80 shares of Preferred Stock and 50,000 Common
         Stock Purchase  Warrants to purchase in the aggregate  4,200,000 shares
         of common stock at an exercise price of $4.00 per share.  Proceeds were
         approximately  $7,869,000,  net of related  expenses of  $531,000.  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 50% of the  proceeds  from any
         equity  financing,  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.  Under  the  purchase  agreement  as
         amended,  the  Company  paid all but $40,200 of the  purchase  price by
         November 30, 1997.

         During the second quarter of fiscal 1998, the Company completed a three
         year sale/leaseback agreement with a leasing company secured by the net
         book value of specific  equipment.  The Company received $168,800 which
         approximated  the net book value of the equipment.  The current portion
         of the $168,800 is $104,700.  The effective  interest rate of the lease
         is 8 1/2% and the monthly payment is $6,400.

         At November  30,  1997,  the Company had cash and cash  equivalents  of
         $1,351,500.  The decrease of  $3,601,400  in cash and cash  equivalents
         from May 31, 1997  reflects  the  funding of  operating  activities  of
         $3,556,100 and the purchase of fixed assets of $428,700.

         Capital  expenditures  were $428,700 for the six months ended  November
         30,1997 compared to $33,700 for the six months ended November 30, 1996.
         The  Company's  higher  fiscal 1998  capital  expenditures  result from
         acquiring  equipment  required for the US Web affiliate  sales offices.
         The Company does not anticipate  significant  capital  expenditures for
         the remaining of the fiscal year other than for the development  center
         which will grow relative to sales volume.

         In August 1997,  Nasdaq  enacted new  standards  for the listing of its
         member companies on its Small Cap Market.  These standards,  which take
         effect on February  23,  1998,  require  listed  companies  to maintain
         certain  financial  and  corporate  governance  criterion for continued
         listing on the SmallCap  market.  As of November 30, 1997,  the Company
         would  not meet one of the  financial  criterion  which  require  it to
         maintain  certain minimum  tangible net asset amounts and, thus,  would
         not  meet the new  standards  for  continued  listing  on the  SmallCap
         market.  After such standards  take effect,  companies that do not meet
         the new  standards  could be subject to de  listing  from the  SmallCap
         market.  The Company is actively pursuing its options to ensure that it
         attains at least the minimum  standards  for  continued  listing on the
         SmallCap Market before the six month period expires, however, there can
         be no  assurances  that the Company will be successful in achieving the
         new standards and maintaining its SmallCap listing.

         Given the Company's  anticipation  of continued  losses and its need to
         attain compliance with the new SmallCap listing standards,  the Company
         is assessing  alternative ways to raise capital.  The Company will seek
         to enter into a transaction or transactions to raise additional capital
         during  January and  February of 1998 to ensure that it has  sufficient
         capital  resources  to carry it through the end of 1998.  The can be no
         assurances that additional financing will be available to the Company.



                                       10
<PAGE>
         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-QKSB   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.

         Item 1.  Legal Proceedings

         None

         Item 2.  Change in Securities

         As  described in Note 6 to Notes to  Condensed  Consolidated  Financial
         Statements, the Company completed the Exchange Offer during the quarter
         ended November 30, 1997.

         Item 3.  Defaults upon Senior Securities

         None

         Item 4.  Submissions of Matters to a Vote Security Holders

         None

         Item 5.  Other Information

         On December  17, 1997,  the Company  announced  that Ed  Schroeder  was
         promoted  to  President  and Chief  Executive  Officer and named to the
         Company's Board of Directors.  Since  September 1997 Mr.  Schroeder has
         been a Vice President and General Manager of USWEB Cornerstone.  Before
         joining  Enteractive,  Mr.  Schroeder  had  been  affiliated  with  IBM
         Corporation for over 25 years. Most recently he was the Vice President,
         Northeast  Area.  In this  capacity he directed 250  employees  and 150
         contractors  which  generated  $450  million in services  and  hardware
         revenues.  Prior to that he was General Manager of IBM Long Island with
         P&L  responsibility  for an  annual  $250  million  business  providing
         hardware,  software and professional  services.  Mr. Andrew Gyenes will
         continue as the Chairman of the Board focusing on acquisitions  and the
         long term strategic direction of the Company.

         The Company also announced that in addition to Mr. Schroeder, Ronald E.
         Cuneo has joined the Company's  Board of Directors.  They are replacing
         Messrs.  Michael  Alford and Randal  Hujar who have  resigned  from the
         Board.  Mr. Cuneo has  experience  as a CEO working with  acquisitions,
         growing and  transitioning  businesses.  Most  recently  Mr.  Cuneo was
         President of Wang Federal,  Inc. a major worldwide  systems  integrator
         and  provider  of  software   services  and  products  to  the  Federal
         Government.  Prior to that Mr. Cuneo had 25 years of increasing  senior
         management experience in various divisions of Honeywell.

         Item 6.  Exhibits and Reports on Form 8-K

         None


                                       11
<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 14, 1997              /s/ Kenneth Gruber
                                            ------------------------------
                                            Kenneth Gruber
                                            Chief Financial Officer and
                                            Principal Accounting Officer