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 February 28, 1998


/   /    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 March 31, 1998
        --------------                             --------------------
  Common Stock, $.01 Par Value                         9,424,933

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


<PAGE>
                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                            Page
Item 1  Financial Statements

        Consolidated Balance Sheets at February 28, 1998 and May 31, 1997      3

        Consolidated Statements of Operations for the nine months
        and three month period ended February 28, 1998, and
        February 28, 1997  respectively.                                     4,5
       

        Consolidated Statements of Cash Flows for the nine months
        ended February 28, 1998 and  February 28, 1997.                        6
        

        Notes to Condensed Consolidated Financial Statements                   7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                    9


,
PART II - OTHER INFORMATION
                                                                            Page

Item 1. Legal Proceedings                                                     12

Item 2. Change in Securities                                                  12

Item 3. Defaults upon Senior Securities                                       12

Item 4. Submissions of Matters to a Vote by Security Holders                  12

Item 5. Other Information                                                     12

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


SIGNATURES                                                                    13


                                       2

<PAGE>
                        ENTERACTIVE INC. and Subsidiaries
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                        February 28, 1998
ASSETS                                                                     (unaudited)            May 31, 1997
                                                                        --------------------------------------
Current Assets
<S>                                                                       <C>                     <C>         
Cash and cash equivalents                                                 $  2,085,700            $  4,952,900
Investments                                                                    115,100                    --
Accounts receivable, net                                                       280,100                 224,400
Other Receivables                                                               56,100                    --
Assets held for sale                                                              --                   100,000
Prepaid expenses and other                                                     185,400                  93,800
                                                                          ------------            ------------
Total current assets                                                         2,722,400               5,371,100

Affiliation rights, net                                                        546,900                 593,800
Property and equipment, net                                                    550,500                 154,900
Other                                                                          125,500                  61,500
                                                                          ------------            ------------
                                                                          $  3,945,300            $  6,181,300
                                                                          ============            ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                          $    440,000            $    287,900
Accrued restructuring expenses                                                 221,600                    --
Accrued payroll and related expenses                                            83,700                  79,500
Other accrued expenses                                                         489,600                 544,500
Deferred revenue                                                                  --                    69,500
Current maturities of long-term debt                                           120,900                  40,200
                                                                          ------------            ------------
Total current liabilities                                                    1,355,800               1,021,500
Long-term debt                                                                 148,800                    --
                                                                          ------------            ------------
                                                                             1,504,600               1,021,500

Stockholders' Equity
Preferred Stock $.01 par value, 2,000,000 shares authorized:
  Series A 6,720 shares issued and outstanding                                     100                     100
  Series B 2,000 and no shares issued and outstanding at
  February 28, 1998 and May 31, 1997                                               100                    --

Common Stock $.01 par value, 50,000,000 shares authorized;
9,423,933 and 7,679,441 shares issued and outstanding at
February 28,1998 and May 31,1997                                                94,200                  76,800

Additional paid-in capital                                                  30,246,000              28,038,400
Unrealized Gain on marketable equity securities                                115,100
Accumulated deficit                                                        (28,014,800)            (22,955,500)
                                                                          ------------            ------------
Total stockholders' equity                                                   2,440,700               5,159,800
                                                                          ------------            ------------
Total Liabilities and Stockholders' equity                                $  3,945,300            $  6,181,300
                                                                          ============            ============
</TABLE>

See notes to consolidated financial statements

                                       3

<PAGE>
                        ENTERACTIVE INC. and Subsidiaries
                      Consolidated Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                              Three months ended
                                                                     February 28             February 28
                                                                         1998                     1997
                                                                     -----------------------------------

<S>                                                                   <C>                    <C>        
Net product sales                                                     $      --              $   115,200
Internet services revenues                                                426,200
Software licensing and royalty revenue                                     74,000                152,600
                                                                      -----------            -----------
       Total revenues                                                     500,200                267,800

Cost of product sales                                                        --                  113,600
Amortization of capitalized software                                         --                  107,000
Cost of Internet services revenues                                        617,000                   --
Cost of software licensing and royalty revenue                              6,100                   --
Research and development expenses                                            --                  686,200
Marketing and selling expenses                                            610,100                913,600
General and administrative expenses                                       494,700                504,700
                                                                      -----------            -----------
       Total costs and expenses                                         1,727,900              2,325,400
                                                                      ===========            ===========

Operating loss                                                         (1,227,700)            (2,057,600)
                                                                      -----------            -----------

Other income (expense):
      Interest expense                                                     (4,600)               (10,900)
      Other income/expense                                                   (900)
      Interest income                                                      11,300                 81,800
                                                                      -----------            -----------
Net Loss                                                              $(1,221,900)           $(1,986,700)
                                                                      ===========            ===========

Preferred stock preferences (1997 restated - Note 5)                   (3,596,900)              (932,100)

                                                                      -----------            -----------
Net loss to common shareholders (1997 restated - Note 5)              $(4,818,800)           $(2,918,800)
                                                                      -----------            -----------

Basic and diluted loss per common share (1997 restated - Note 5)
                                                                      $     (0.57)           $     (0.38)
                                                                      ===========            ===========

Weighted average shares of common stock outstanding                     8,380,656              7,679,441
                                                                      ===========            ===========
</TABLE>

See notes to consolidated financial statements

                                       4

<PAGE>
                        ENTERACTIVE INC. and Subsidiaries
                      Consolidated Statements of Operations
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                              Nine Months Ended
                                                                     February  28,          February  28,
                                                                          1998                  1997
                                                                     ------------------------------------
<S>                                                                  <C>                    <C>
Net product sales                                                            --                  881,300
Product development revenue                                                  --                   40,700
Internet services revenues                                                944,500                   --
Software licensing and royalty revenue                                    206,400                527,900
                                                                      ----------------------------------
       Total revenues                                                   1,150,900              1,449,900

Cost of product sales                                                        --                  462,500
Amortization of capitalized software                                         --                  321,200
Cost of development revenue                                                  --                   37,000
Cost of internet services revenues                                      1,919,400                   --
Cost of software licensing and royalty revenue                             28,300                   --
Research and development expenses                                            --                2,126,400
Marketing and selling expenses                                          2,362,600              2,719,900
General and administrative expenses                                     1,553,500              1,412,115
Restructuring expenses                                                    427,700
                                                                      ----------------------------------
       Total costs and expenses                                         6,291,500              7,079,000
                                                                      ----------------------------------

Operating loss                                                         (5,140,600)            (5,629,100)
                                                                      ----------------------------------

Other income (expense):
      Interest expense                                                     (8,000)               (33,100)
      Other income (expense)                                                 (900)                 6,900
      Interest income                                                      90,200                165,200
                                                                      ----------------------------------

            Net loss                                                   (5,059,300)            (5,490,100)
                                                                       ==================================

Preferred stock preferences (1997 restated - Note 5)                   (8,157,700)              (932,100)
                                                                      ----------------------------------
Net loss to common shareholders (1997 restated - Note 5)             $(13,217,000)          $ (6,422,200)
                                                                      ----------------------------------

Basic and diluted loss per common share (1997 restated - Note 5)     $      (1.66)          $      (0.84)
                                                                      ==================================

Weighted average shares of common stock outstanding                     7,965,846              7,679,295
                                                                      ==================================
</TABLE>

See notes to consolidated financial statements

                                       5

<PAGE>
                        ENTERACTIVE INC. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                  Nine Months Ended February 28,
                                                                                     1998               1997
                                                                                --------------------------------

Cash flows from Operating Activities
<S>                                                                             <C>                  <C>         
Net Loss                                                                        $(5,059,300)         $(5,490,100)
Adjustments to reconcile net loss to net cash used in operating activities
     Depreciation and amortization                                                  134,000              462,100
     Stock option consulting expense                                                   --                356,300
Changes in assets and liabilities
     Accounts receivable                                                            (55,700)             (77,400)
     Income taxes receivable                                                           --                 16,400
     Assets held for sale                                                            43,900                 --
     Inventories                                                                       --                (78,600)
     Prepaid expenses and other                                                     (91,600)                (200)
     Other assets                                                                   (64,000)                --
     Accounts payable                                                               152,100             (508,300)
     Accrued expenses                                                               171,000             (840,100)
     Deferred revenue                                                               (69,500)                --
                                                                                --------------------------------
           Net cash used in operating activities                                 (4,839,100)          (6,159,900)

Cash flows from investing activities
      Purchase of franchise rights                                                     --               (625,000)
      Purchases of property and equipment                                          (482,700)             (60,100)
                                                                                --------------------------------
           Net cash (used in) investing activities                                 (482,700)            (685,100)

Cash flows from financing activities
       Proceeds from issuance of convertible preferred stock                      2,000,000            7,869,100
       Proceeds from exercise of stock options                                      225,100               73,500
       Proceeds from sale and leaseback of equipment                                250,100                 --
       Principal payments under long-term debt                                      (20,600)            (586,300)
                                                                                --------------------------------
            Net cash provided by financing activities                             2,454,600            7,356,300
                                                                                --------------------------------
            Net increase (decrease) in cash and cash equivalents                 (2,867,200)             511,300

Cash and cash equivalents
      Beginning of period                                                         4,952,900            6,005,400
                                                                                --------------------------------
      End of period                                                             $ 2,085,700          $ 6,615,700
                                                                                ================================
</TABLE>

See notes to consolidated financial statements

                                       6

<PAGE>
                               ENTERACTIVE, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

         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 financial position
         of  Enteractive,  Inc, (the  "Company") as of February 28, 1998 and the
         results of its  operations  and its cash flows for the nine month,  and
         three month periods ended February  28,1998.  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 nine month
         period ended  February 28, 1998 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")
         is a provider of business solutions based on internet technologies.  In
         August  1997,  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.

         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. ( significant
         stockholder of the Company),  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.  The Company will focus on three
         primary practice areas:

         Business  Applications  Practice  - Focuses on the  automation  of core
         internal and external  business  processes  through the use of internet
         technology.  Intranets  and  extranets  deliver  business  applications
         through secure  internet  technologies,  and they can greatly  increase
         productivity  and reduce  overall costs while  helping an  organization
         react quickly to changes in business and technology environments.

         Media Asset  Management  Practice - Enables  corporations to manage the
         rapidly  growing  volumes of digital  assets and to integrate them into
         business  processes.  Automating  the creative  and approval  workflow,
         ensuring  the  consistency  and  integrity of a brand,  repurposing  or
         reexpressing existing assets to support various functions (training and
         marketing for example)  provide  opportunities to reduce cycle time and
         costs.  The  use  of  Internet  technologies  tightly  integrated  with
         database  and storage  technologies  should  enable  clients to realize
         enormous returns in this area.

         Electronic  Commerce Practice- Building  electronic  commerce solutions
         requires  a  detailed  understanding  of  the  relative  strengths  and
         weaknesses of the competing  e-commerce  product and service offerings,
         internet  marketing  savvy,  and the skills to address  the  underlying
         financial,  technology and security issues involved. There is a need to
         provide a wide range of  e-commerce  solutions  from  catalog  merchant
         sites  to  large,  sophisticated  business  -  to  -  business  systems
         stretching across many value chains

         The  Company  is  obligated  to pay  USWeb  monthly  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.

                                       7

<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  its  affiliate
         offices in New Jersey,  Long Island,  NY Philadelphia,  PA , Baltimore,
         MA, and Stamford  CT.,  and operate  from  offices  located in New York
         City.  The  statement  of  operations  for the nine month  period ended
         February 28, 1998 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.

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.  Affiliation  rights at February  28,1998
         were net of accumulated amortization of $78,125.

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.

5.       Private Placement of Series A Preferred Stock and Common Stock Purchase
         Warrants 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  ("December  1996  Warrants")  to  purchase  in the  aggregate
         4,200,000  shares of common stock $0.01 par value (the "Common  Stock")
         at an  exercise  price of $4.00 per share.  The  Preferred  Stock has a
         stated value of $1,250 per share and each share was  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.  In a
         1997 announcement,  the staff of the Securities and Exchange Commission
         ("SEC")  indicated  that  when  preferred  stock  is  convertible  at a
         discount  from  the  then  current  common  stock  market  price,   the
         discounted  amount reflects at that time an incremental  yield,  e.g. a
         "beneficial conversion feature", which should be recognized as a return
         to the  preferred  shareholders.  Based  on  the  market  price  of the
         Company's Common Stock and the fair value of the December 1996 Warrants
         on the date of issuance,  the Preferred Stock had a non cash beneficial
         conversion feature of $13,390,000. The beneficial conversion feature is
         recognized solely in the calculation of loss per common share over a 17
         month period,  beginning  with the issuance of the  Preferred  Stock to
         April 30, 1998 the first date that conversion can occur.  The impact on
         loss per common  share is $ 0.42 and $1.01 in the three and nine months
         ended  February 28,  1998.  The loss per common share for the three and
         nine month  periods  ending  February  28,  1997 have been  restated to
         reflect an increase of $.12 as a result of the SEC announcement.

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. On September 16, 1997, there were 5,121,468
         Warrants  outstanding.  The purpose of the Exchange Offer was to reduce
         the overhang to the market for the Company's  Common Stock.  On October
         14, 1997 the company  issued 248,864 shares of Common Stock in exchange
         for 4,977,280 Warrants. The balance of the outstanding Warrants expired
         unexercised.

         On November  19, 1997 the Company  offered to the holders of  4,200,000
         December  1996  Warrants  to issue one  share of  Common  Stock for 2.8
         December 1996 Warrants.  The exchange offer as amended was  conditioned
         on at least 90% of holders of the December  1996  Warrants  agreeing to
         the  exchange  and  expired on  February  4, 1998.  The  December  1996
         Warrants  subject  to the  offer  entitled  the  registered  holder  to
         purchase  through  December  13,  2001 one share of Common  Stock at an
         exercise  price of $4.00 per  share.  As a  condition  to  closing  the
         amended  exchange offer, the Company sought the consent of at least 90%
         of all the  holders of its  Preferred  Stock to (1) delay the date when
         the  Preferred  Stock would 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  would be used to  redeem  the  outstanding
         Preferred  Stock and (3) 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 approved the
         delay in the  conversion  date  will  receive  also a  special  monthly
         dividend  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

                                       8

<PAGE>
         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).  On  February  6, 1998 the company  issued  1,397,323  shares of
         Common Stock in exchange for 3,912,500  December  1996  Warrants  which
         were  exchanged  as  part  of  the  Exchange  Offer.   The  holders  of
         approximately  93% of the Preferred  Stock agreed to amend the terms of
         the Preferred Stock.

7.       Private Placement of Series B Preferred Stock
         On  February  20,  1998,  the  Company  closed  a  $2,000,000   private
         placement.  The  Company  issued  Series B par value  $.01  Convertible
         Preferred  Stock  (Series B  Preferred  Stock).  The Series B Preferred
         Stock has a stated per share  value of $1,000,  is  entitled to vote on
         all matters submitted to holders of the Common Stock, pays no dividends
         and is not redeemable. The Series B, Preferred Stock is not convertible
         until  March 1, 1999  unless the  Company  has a private  placement  or
         public offering of Common Stock where the gross proceeds to the Company
         are in excess of  $2,000,000  (the  Financing).  Upon the  closing of a
         Financing  all of the  Series B  Preferred  Stock  shall  automatically
         convert  into  shares  of  the  Company's  Common  Stock  equal  to the
         aggregate  stated  value of the Series B Preferred  Stock  ($2,000,000)
         divided by the  greater of (a) 90% of the per share  offering  price of
         the  financing or (b) $1.00.  Subsequent  to March 1, 1999 the Series B
         Preferred Stock is convertible into shares of Common Stock equal to the
         aggregate stated value of preferred  shares to be converted  divided by
         $1.00.  The maximum number of common shares issuable upon conversion of
         preferred stock is 2,000,000.

         In a 1997  announcement,  the  staff  of the  Securities  and  Exchange
         Commission  ("SEC")  indicated that when preferred stock is convertible
         at a discount  from the then current  common stock  market  price,  the
         discounted  amount reflects at that time an incremental  yield,  e.g. a
         "beneficial conversion feature", which should be recognized as a return
         to the  preferred  shareholders.  Based  on  the  market  price  of the
         Company's  common  stock on the date of issuance the Series B Preferred
         Stock had a non cash beneficial  conversion feature of $2,250,000.  The
         beneficial  conversion  feature is recognized solely in the calculation
         of loss per common share over the period,  beginning  with the issuance
         of the  Series B  Preferred  stock to March  1999 the  first  date that
         mandatory  conversion can occur. The impact on loss per common share is
         $0.01 in the three and nine months ended February 28, 1998.

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
         The Company 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.

         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  its  affiliate
         offices in New Jersey,  Long Island,  NY Philadelphia,  PA , Baltimore,
         MA, and Stamford  CT.,  and operate  from  offices  located in New York
         City.  The  statement  of  operations  for the nine month  period ended
         February 28, 1998 reflects expenses totaling $427,700 for 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.

                                       9

<PAGE>
         Results of Operations - Quarter and Nine Months Ended February 28, 1998
         Net product sales for the three and nine month  periods ended  February
         28, 1998 were $0 compared to $115,200  and  $881,300  for the three and
         nine month periods ended  February 28, 1997. The decrease is due to the
         Company's  decision  to  license  others to market and  distribute  its
         interactive  multimedia products.  Revenues from these relationships in
         fiscal 1998 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 nine month  periods ended
         February 28, 1998 were $426,200 and $944,500  respectively  compared to
         $0 for the three and nine month periods ended February 28, 1997.  These
         revenues  consist  of  consulting  and  services  revenues  from  USWeb
         Cornerstone, which began operations in the current fiscal year.

         Software  Licensing  and  Royalty  revenue for the three and nine month
         periods ended February 28, 1998 were $74,000 and $206,400  respectively
         compared to $152,600 and $527,900 for the three and nine month  periods
         ended  February 28, 1997.  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 nine month periods
         ended  February  28, 1998 were  $617,000  and  $1,919,400  respectively
         compared to 0 for the three and nine month periods  ended  February 28,
         1997.  The  Company's   Internet  Services  revenues   increased  as  a
         percentage  of cost from 40% through the six months ended  November 30,
         1997 to 69% for the three months ended February 28, 1998. This increase
         is  principally  the result of higher  revenues.  For the three months,
         ended February 28, 1998 revenues  averaged  $142,000 per month compared
         to $86,000 per month for the 6 months ended November 30, 1997.

         Research and  Development  expenses were $0 in the three and nine month
         periods ended  February 28, 1998,  compared to $686,200 and  $2,126,400
         for the three and nine month  periods  ended  February  28,  1997.  The
         decrease  is due to the  Company's  decision  to focus on the  Internet
         business  of  USWeb   Cornerstone   and   elimination   of  interactive
         multi-media product development.

         Marketing  and selling  expenses  for the three and nine month  periods
         ended  February  28, 1998 were  $610,100  and  $2,362,600  respectively
         compared  to  $913,600  and  $2,719,900  for the three  and nine  month
         periods  ended  February  28,  1997.  Year  over  year  comparisons  of
         marketing  and selling  are not  meaningful  because  the current  year
         expenses relate to the Internet Services business of USWeb Cornerstone.
         The costs in  fiscal  1997  relate  to the  selling  and  marketing  of
         interactive multi-media products. During the quarter ended February 28,
         1998,  average  monthly  marketing  expenses were $203,000  compared to
         $318,000 for the quarter ended November 30, 1997.  This decrease is the
         result of the Company's  decision to consolidate  its sales  facilities
         and operations and eliminate redundant positions.

         General  and  administrative  expenses  for the  three  and nine  month
         periods  ended   February  28,  1998  were   $494,700  and   $1,553,500
         respectively compared to $504,700 and $1,412,115 for the three and nine
         month  periods  ended  February  28,1997.  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 nine month
         periods ended  February 28, 1998 were $11,300 and $90,200  respectively
         compared to $81,800 and $165,200  for the three and nine month  periods
         ended February 28, 1997 due to lower cash balances.

         No income tax  benefit was  recorded  for the  quarter  ended  February
         28,1998.  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.

                                       10

<PAGE>
         Liquidity and Capital Resources
         Since June 1, 1995,  the  Company's  principal  sources of capital have
         been as follows:

         a) On  February  20,  1998  the  Company  closed a  $2,000,000  private
         placement.  The  Company  issued  Series B par value  $.01  Convertible
         Preferred  Stock ("Series B Preferred  Stock").  The Series B Preferred
         Stock has a stated per share  value of $1,000,  is  entitled to vote on
         all matters submitted to holders of the Company's Common Stock, pays no
         dividends and is not  redeemable.  The Series B Preferred  Stock is not
         convertible  until  March 1,  1999  unless  the  Company  has a private
         placement or public  offering of common stock where the gross  proceeds
         to the Company are in excess of $2,000,000 (the "Financing").  Upon the
         closing  of a  Financing  all of the  Series B  Preferred  Stock  shall
         automatically  convert into shares of the Company's  Common Stock equal
         to  the  aggregate  stated  value  of  the  Series  B  Preferred  Stock
         ($2,000,000)  divided  by the  greater  of (a)  90%  of the  per  share
         offering  price of the  financing or (b) $1.00.  Subsequent to March 1,
         1999 the Series B Preferred Stock is convertible  into shares of common
         stock equal to the  aggregate  stated value of  preferred  shares to be
         converted  divided  by $1.00.  The  maximum  number  of  common  shares
         issuable upon conversion of preferred stock is 2,000,000.

         b) On December 12, 1996 the Company completed a private placement of 84
         units  each  consisting  of 80 shares  of  Preferred  Stock and  50,000
         December 1996 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.  As further
         described  in  Note  6 to  the  Consolidated  Financial  Statements  on
         February 6, 1998 the Company  completed a Warrant  Exchange offer under
         which the Company issued  1,397,323  shares of Common Stock in exchange
         for 3,912,500 warrants and amended the terms of the Preferred Stock for
         holders who participated in the Warrant Exchange.

         In May 1996,  the Company  consummated an agreement with certain of its
         former  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 has paid all but $40,200 of the purchase price,
         which is due in May 1998.

         During the third  quarter of fiscal  1998,  the Company sold and leased
         back  equipment  under a  three-year  sale/leaseback  agreement  with a
         leasing  company  secured  by the  company's  accounts  receivable  and
         equipment.  The Company  received  $250,000 which  approximated the net
         book value of the equipment.  The effective  interest rate of the lease
         is 8 1/2% and the monthly payment is $10,080.

         At February  28,  1998,  the Company had cash and cash  equivalents  of
         $2,085,700.  The decrease of $2,867,300 in cash,  and cash  equivalents
         from May 31, 1997  reflects  the  funding of  operating  activities  of
         $4,926,000,  and the  purchase of fixed  assets of  $483,000  partially
         offset by the proceeds from the February 1998 private  placement,  sale
         and  leaseback  of equipment  discussed  above,  and proceeds  from the
         exercise of stock options.

         Capital  expenditures  were $482,700 for the nine months ended February
         28, 1998  compared to $60,100 for the nine months  ended  February  28,
         1997. 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.

         In August 1997,  Nasdaq  enacted new  standards  for the listing of its
         member companies on its Small Cap Market.  These standards,  which took
         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 February  28,1998,  the Company
         meets the financial  criterion  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.  There can be no  assurances  that the Company  will be able to
         maintain  compliance with the Nasdaq listing standards.  The failure to
         meet the  maintenance  criteria  in the future may result in the Common
         Stock no longer being eligible for quotation on Nasdaq and trading,  if
         any,  of  the  Common  Stock  would  thereafter  be  conducted  in  the
         non-nasdaq over - the -counter market. As a result of such delisting of
         the Common Stock from Nasdaq, it may be more difficult for investors to
         dispose of, or to obtain accurate quotations as to the market value of,
         the Common Stock.

         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,

                                       11

<PAGE>
         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 with respect to
         the December 1996 Warrants during the quarter ended February 28, 1998.

         On  February  20,  1998,  the  Company  closed a private  placement  of
         $2,000,000 of Series B Preferred  Stock.  The sale was made pursuant to
         the exemption  contained in Section 4(2) of the  Securities Act of 1933
         as amended.  The Company  engaged no underwriter or placement  agent in
         connection with the private placement. For further information relating
         to the  private  placement,  please  see  note  7 to  the  consolidated
         financial statements.

         Item 3.     Defaults upon Senior Securities

         None

         Item 4.     Submissions of Matters to a Vote Security Holders

         None

         Item 5.     Other Information

         Item 6.     Exhibits and Reports on Form 8-K
         (a)         Exhibits - Exhibit 27 Financial Data Schedule
         (b)         Reports on Form 8-K - The Company filed two reports on form
                     8-K under Item 5 during the quarter ended February 28, 1998
                     as follows:

         On  February 6, 1998,  the  Company  completed  the  exchange  offer to
         exchange 2.8 December  1996  Warrants  expiring  December 13, 2001 (the
         "Warrants")  into one  share of its  common  stock,  $.01 par value per
         share.

         On February  19,  1998,  the company  completed a private  placement of
         $2,000,000 of newly issued Series B preferred stock.


                                       12

<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 April 17, 1998     /s/ Kenneth Gruber
                                    ------------------
                                    Kenneth Gruber
                                    Chief Financial Officer and
                                    Principal Accounting Officer




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