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, 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.)


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

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


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

YES  / X /   NO   /   /

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

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

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


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

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
PART I -    Financial Information

Item 1 -    Financial Statements

            Consolidated Balance Sheets at February 28, 1997               3
            and May 31, 1996

            Consolidated Statements of Operations for the nine             4
            month and three month periods ended February 28,
            1997 and February 29, 1996, respectively

            Consolidated Statements of Cash Flow for the nine              5
            months ended February 28, 1997 and February 29,
            1996

            Notes to Financial Statements                                6-9

Item 2 -    Management's Discussion and Analysis of                    10-14
            Financial Condition and Results of Operations


PART II -   OTHER INFORMATION

Item 1 -    Legal Proceedings                                             15

Item 2 -    Change in Securities                                          15

Item 3 -    Defaults upon Senior Securities                               15

Item 4 -    Submission of Matters to a Vote of Security Holders           15

Item 5 -    Other Information                                             15

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

SIGNATURES                                                                17

<PAGE>

                                ENTERACTIVE INC.

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                   February 28                           May 31
                                                                 --------------------------------------------------
                                                                       1997                               1996
                                                                 --------------------------------------------------
ASSETS                                                              (unaudited)
Current Assets
<S>                                                               <C>                               <C>           
      Cash and cash equivalents                                   $  6,516,700                      $    6,005,400
      Accounts receivable                                              224,800                             147,400
      Income taxes receivable                                                -                              16,400
      Inventories                                                      518,100                             439,500
      Prepaid expenses and other                                        10,400                              10,200
                                                                 --------------------------------------------------
         Total current assets                                        7,270,000                           6,618,900

Capitalized Software                                                   749,500                           1,070,600
Affiliation Rights                                                     609,400                                   -
Property and equipment, net                                            166,000                             231,300
Other                                                                   24,200                              24,200
                                                                 --------------------------------------------------

                                                                  $  8,819,100                      $    7,945,000
                                                                 --------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
      Accounts payable                                            $    896,000                      $    1,404,300
      Accrued expenses                                                  55,200                             895,300
      Current maturities of long-term debt                              40,200                             498,900
                                                                 --------------------------------------------------
         Total current liabilities                                     991,400                           2,798,500

Long-term debt, excluding current maturities                            40,200                             167,800
                                                                 --------------------------------------------------
          Total liabilities                                          1,031,600                           2,966,300

Commitments and contingencies

Stockholders' Equity
    Preferred Stock $.01 par value,
    2,000,000 shares authorized;  6,720 and 0                                                                    -
    shares issued and outstanding for February 28, 1997
    and May 31, 1996, respectively                                         100

    Common Stock $.01 par value, 30,000,000 shares
    authorized; 7,679,441 and 7,656,435 shares issued
    and  outstanding  for February 28, 1997 and May 31, 1996,
    respectively                                                        76,800                              76,600

    Additional paid-in capital                                      27,919,500                          19,620,900

    Accumulated deficit                                            (20,208,900)                        (14,718,800)
                                                                 --------------------------------------------------
          Total stockholders' equity                                 7,787,500                           4,978,700

                                                                  $  8,819,100                      $    7,945,000
                                                                 --------------------------------------------------
</TABLE>

See notes to financial statements.
<PAGE>

                                ENTERACTIVE INC.

                      Consolidated Statements of Operations


<TABLE>
<CAPTION>

                                                          For the Three Months Ended             For the Nine Months Ended
                                                     ------------------------------------------------------------------------------
                                                     February 28, 1997   February 29, 1996    February 28, 1997   February 29, 1996
                                                     ------------------------------------------------------------------------------
                                                               (unaudited)                              (unaudited)

<S>                                                  <C>                 <C>                   <C>                  <C>        
Net product sales                                    $   115,200         $     95,200          $   881,300          $   324,800
Product development revenue                                    -               57,200               40,700              257,700
Royalty revenue                                          152,600                  900              527,900              103,300
                                                     -------------------------------------     --------------------------------
       Total revenues                                    267,800              153,300            1,449,900              685,800

Cost of product sales                                    113,600               22,300              462,500               77,600
Amortization of capitalized software                     107,000                    -              321,200                    -
Cost of development revenue                                    -               37,300               37,000              225,500
Research and development expenses                        542,000              844,200            1,982,200            2,301,500
Marketing and selling expenses                           835,500              344,300            2,641,300            1,354,700
Internet services expense                                516,700                    -              516,700                    -
General and administrative expenses                      210,600              587,300            1,118,100            1,246,900
Acquired in-process research and development                   -            1,915,100                    -            1,915,100
                                                     -------------------------------------      -------------------------------
       Total costs and expenses                        2,325,400            3,750,500            7,079,000            7,121,300

Operating loss                                        (2,057,600)          (3,597,200)          (5,629,100)          (6,435,500)
                                                     -------------------------------------      -------------------------------

Other income (expense):
      Interest expense                                   (10,900)             (57,500)             (33,100)             (58,200)
      Interest income                                     81,800               19,800              165,200              110,000
     Other                                                     -               (4,000)               6,900                4,900
                                                     -------------------------------------      -------------------------------

            Loss before income taxes                  (1,986,700)          (3,638,900)          (5,490,100)          (6,378,800)
Income tax benefit                                             -                    -                    -                    -
                                                     -------------------------------------     --------------------------------

            Net loss                                 $(1,986,700)         $(3,638,900)         $(5,490,100)         $(6,378,800)
                                                     -------------------------------------     --------------------------------

            Loss per common and
               common equivalent share               $     (0.26)               (0.76)         $     (0.71)         $     (1.34)
                                                     -------------------------------------     --------------------------------

            Weighted average shares of common
                stock and common stock equivalents     7,679,441            4,775,489            7,679,295            4,775,489
</TABLE>

See notes to financial statements.


<PAGE>

                               ENTERACTIVE, INC.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                             Nine Months Ended
                                                                             -------------------------------------------------------
                                                                               February 28, 1997                 February 29, 1996
                                                                             -------------------------------------------------------
                                                                                                 (unaudited)

Cash flows from operating activities
<S>                                                                            <C>                              <C>                
       Net loss                                                                $(5,490,100)                     $       (6,378,800)
       Adjustments to reconcile net loss to net
         cash used in operating activities:
           Depreciation and amortization                                           462,100                                 287,400
           Acquired in-process research and development                                                                  1,915,100
           Gain on disposal of assets                                                    -                                  (9,000)
           Stock option consulting expense                                         356,300                                       -
       Changes in assets and liabilities:
           Accounts receivable                                                     (77,400)                               (101,000)
           Notes receivable                                                              -                                       -
           Income Taxes Receivable                                                  16,400                                  13,700
           Inventories                                                             (78,600)                               (140,200)
           Prepaid expenses and other                                                 (200)                                 30,400
           Other assets                                                                  -                                  (2,800)
           Accounts payable                                                       (508,300)                                271,400
           Accrued expenses                                                       (840,100)                               (194,000)
                                                                             ------------------------------------------------------
               Net cash used in operating activities                            (6,159,900)                             (4,307,800)
                                                                             ------------------------------------------------------

Cash flows from investing activities
           Proceeds from sale of investments                                             -                               1,085,700
           Notes receivable                                                                                               (285,800)
           Cash acquired from Lyriq acquisition                                                                             11,300
           Purchase of franchise rights                                           (625,000)
           Purchases of property and equipment                                     (60,100)                                (35,700)
                                                                             ------------------------------------------------------
               Net cash (used in) provided by investing activities                (685,100)                                775,500
                                                                             ------------------------------------------------------

Cash flows from financing activities
           Exercise of stock options                                                73,500                                       -
           Repayment of short-term borrowings                                                                              (15,200)
           Net proceeds from issuance of convertible preferred stock             7,869,100                               2,460,000
           Principal payments under long-term debt                                (586,300)                                      -
           Principal payments under capital lease obligations                            -                                  (2,900)
                                                                             ------------------------------------------------------
               Net cash used in financing activities                             7,356,300                               2,441,900

               Net  increase (decrease) in cash and equivalents                    511,300                              (1,090,400)

Cash and equivalents
       Beginning of period                                                       6,005,400                               2,932,400
                                                                             ------------------------------------------------------
  
       End of period                                                           $ 6,516,700                      $        1,842,000
                                                                             ------------------------------------------------------
</TABLE>

See notes to financial statements.
<PAGE>

                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.          General

            The accompanying  unaudited financial  statements have been prepared
            in  accordance  with  the  instructions  to Form  10-QSB  and in the
            opinion of management  contain all  adjustments  (consisting of only
            normal recurring  entries) necessary to present fairly the Company's
            financial  position as of February 28, 1997,  and the results of its
            operations and its cash flows for the nine months ended February 28,
            1997 and 1996. Certain information and footnote disclosures normally
            included  in  financial   statements  prepared  in  accordance  with
            generally  accepted  accounting  principles  have been omitted.  The
            interim financial  statements should be read in conjunction with the
            Company's financial statements and related notes in the May 31, 1996
            Annual Report on Form 10-KSB.  The results for the nine month period
            ended  February  28,  1997  are not  necessarily  indicative  of the
            results to be obtained for the full year.


2.          Business

            Enteractive,  Inc. (the  "Company")  designs,  publishes and markets
            interactive  multimedia  titles for the entertainment and recreation
            markets.  On  December 4, 1996 the Company  signed  multiple  market
            affiliate  agreements  with USWeb  Corporation and paid $625,000 for
            the right to  operate  USWeb  affiliate  offices  in New York,  Long
            Island, Philadelphia,  Baltimore, Stamford, CT and Bergen County and
            Newark,  NJ.,  for a ten  year  period.  The  Company  has  formed a
            subsidiary,  which is named 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.

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

            The purchase price was determined as follows:

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

            In  connection  with  the   acquisition,   the  Company  recorded  a
            $2,293,500  expense  for  purchased  research  and  development  and
            $1,284,800 of  capitalized  software

                                       1
<PAGE>
                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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

            The following unaudited pro forma consolidated results of operations
            reflects the results of the Company's operations for the nine months
            ending February 29, 1996 as if the merger with Lyriq had occurred at
            the  beginning of the period and reflect the  historical  results of
            operations  of  the  purchased   business   adjusted  for  increased
            amortization  expense and increased  common shares  outstanding from
            the acquisition.

                                                            Nine months ended
                                                            February 29, 1996
                                                            -----------------
           Total revenues                                    $ 1,548,200
           Net loss                                         $ (5,086,400)
           Net loss per share                                    $  (.92)

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

3.         Public Offerings of Common Stock

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

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

                                       2
<PAGE>
                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

4.          Software Development Costs

            Capitalization   of  costs  associated  with  internally   developed
            software begins upon the determination by the Company of a product's
            technological   feasibility,   as  evidenced  by  a  working  model.
            Capitalized  software  development  costs are amortized over related
            sales on a per-unit  basis based on estimated  total  sales,  with a
            minimum  amortization  based on a  straight-line  method  over three
            years.  Capitalized  software at February 28, 1997 resulted from the
            Lyriq  acquisition  and  is  net  of  accumulated   amortization  of
            $535,500.


5.          Affiliation 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
            noted in Note 2. The fee is being amortized over the 10 year life of
            the agreement with USWeb.  Fees for  affiliation  rights at February
            28, 1997 were net of accumulated amortization of $15,600.


6.          Use of Estimates

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and  assumptions  that  affect  the  reported  amount of assets  and
            liabilities and disclosures of contingent  assets and liabilities at
            the date of the  financial  statements  and the  reported  amount of
            revenues and expenses  during the reporting  period.  Among the more
            significant estimates included in these financial statements are the
            estimated allowance for doubtful accounts  receivable,  reserves for
            returns  and  exchanges  and  charges  for  purchased  research  and
            development. Actual results could differ from those estimates.


7.          Private Placement

            On December 12, 1996 the Company completed a private placement of 84
            units each consisting of 80 shares of Class A Convertible  Preferred
            Stock ("Preferred  Stock") and 50,000 Common Stock Purchase Warrants
            to purchase in the aggregate  4,200,000 shares of Common Stock at an
            exercise  price of $4.00  per  share.  Proceeds  were  approximately
            $7,869,100,  net of  related  expenses.  The  Preferred  Stock has a
            stated  value of $1,250 per share and each share is  convertible  at
            any time after  April 30,  1998 into such whole  number of shares of
            Common Stock equal to the  aggregate  stated value of the  Preferred
            Stock to be converted divided by the lesser of (i) $2.00 or (ii) 50%
            of the average  closing sale price for the Common Stock for the last
            ten trading days in the fiscal  quarter of the Company prior to such
            conversion.  The Company must use the proceeds, if any, derived from
            the exercise of the Company's  currently  outstanding  public Common
            Stock Warrants, which expire in October 1997, or 50% of the proceeds
            from any other  equity  financing to redeem the  Preferred  Stock at
            110% of stated value. The Company also has the option to redeem all,
            or any portion of, on a pro-rata  basis,  the Preferred Stock at any
            time upon 30 days prior written notice,  at a redemption price equal
            to 110% of the stated value.

                                       3

<PAGE>
                                ENTERACTIVE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

            The  Conversion  Rate  of  the  Convertible  Preferred  Stock  (when
            calculated  on the basis of dividing the Stated Value by $2.00 only)
            will be subject to  adjustment  to protect  against  dilution in the
            event of stock dividends,  stock splits,  combinations,  subdivision
            and reclassifications.


8.          Early extinguishment of debt

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


9.          Subsequent Events

            On  April  3,  1997  the  Company's  shareholders  approved  (1)  an
            amendment  to  the  Certificate  of  Incorporation   increasing  the
            authorized  number  of shares of  common  stock to  50,000,000  from
            30,000,000  and (2) an amendment to the Company's 1994 Incentive and
            Stock  Option Plan  increasing  the number of shares of Common Stock
            authorized  for  issuance  upon  exercise  of  the  options  granted
            pursuant to the plan to 2,500,000 from 1,500,000.

                                       4
<PAGE>

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

On February 29, 1996, the Company  completed the  acquisition of Lyriq,  whereby
Lyriq was  merged  into a  wholly-owned  subsidiary  of the  Company.  The Lyriq
acquisition  was accounted for under the purchase  method of accounting with the
Company as the acquiring  entity.  See Note 2 to the  accompanying  consolidated
financial statements.

Reorganization

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

Affiliation with USWeb

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

Quarterly results

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


<PAGE>

For the quarters  ended  February  28, 1997 and February 29, 1996  approximately
65.3% and 59.2% of the Company's  costs and expenses were incurred in connection
with the development  and/or marketing of specific  titles.  The Company's costs
vary  significantly  based on the  number  of  titles  being  developed  for and
marketed by the Company.  Accordingly,  adjustments in the level of expenditures
can be readily implemented.

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

Results of operations  for the nine and three months ended February 28, 1997 vs.
February 29, 1996.

The Company recognized product sales, net of estimated returns of $881,300 and
$115,200, in the nine and three months ended February 28, 1997, respectively, an
increase of  $556,500  and $20,000  over the nine and three month  period  ended
February 29, 1996. This significant  increase is due to increased  volumes.  The
increases in both accounts receivable and inventory are related to the Company's
software publishing operations.

Royalty  revenue was  $527,900  and  $152,600 in the nine and three months ended
February 28, 1997,  respectively,  an increase of $424,600 and $151,700 over the
nine and three month period ended February 29, 1996, respectively.  The increase
is primarily due to greater royalties from international licenses.

Cost of product  sales was  $462,500  and  $113,600 in the nine and three months
ended February 28, 1997, respectively,  an increase of $384,900 and $91,300 over
the nine and three month period  ended  February  29,  1996,  respectively.  The
increase in cost of product  sales in absolute  dollars is due to  increases  in
sales  volume.  The increase in the  percentage  of cost of product sales to net
product  sales in the current  year  reflects  the  increase in  allowances  for
returns and other sales  credits which is recorded as a reduction in net product
sales.

Amortization  of capitalized  software was $321,200 and $107,000 in the nine and
three months  ended  February 28, 1997,  respectively.  This  amortization  is a
result  of the  capitalized  software  acquired  in  connection  with the  Lyriq
acquisition.

Research and  development  expenses were $1,982,200 and $542,000 in the nine and
three months ended February 28, 1997,  respectively,  a decrease of $319,300 and
$302,200  over the  nine  and  three  month  period  ended  February  29,  1996,
respectively.  This decrease reflects lower spending on development of fewer new
titles.

Marketing  and selling  expenses  were  $2,641,300  and $835,500 in the nine and
three months ended  February 28, 1997,  respectively,  an increase of $1,286,600
and  $491,200  over the nine and three month  period  ended  February  29, 1996,
respectively.  This increase  reflects a greater number of titles being marketed
and the Company's shift to entertainment and recreational products which require
higher levels of marketing  support to generate  sales.  The quarterly  increase
also reflects trade and consumer  cooperative  advertising  allowances to secure
shelf space for product.

Internet  Services  Expenses  were  $516,700 in the nine and three  months ended
February 28, 1997. These expenses represent  start-up costs,  including staffing
and payroll  related,  as well as costs  associated with opening new offices for
the USWeb Cornerstone subsidiary.

General and administrative expenses were $1,118,100 and $210,600 in the nine and
three months ended February 28, 1997,  respectively,  a decrease of $128,800 and
$376,700  over the  nine  and  three  month  period  ended  February  29,  1996,
respectively.


<PAGE>

Interest  expense was $33,100  and  $10,900 in the nine and three  months  ended
February 28, 1997, respectively, a decrease of $25,100 and $46,600 over the nine
and three month period ended February 29, 1996,  respectively.  This decrease is
due to the repayment of the majority of the loans for repurchased  shares of the
Company Common Stock.

Interest  income was  $165,200  and $81,800 in the nine and three  months  ended
February  28,  1997,  respectively,  an increase of $55,200 and $62,000 over the
nine and three month period ended February 29, 1996, respectively. This increase
reflects  higher cash  balances  resulting  from the  proceeds  from the private
placement of preferred stock completed on December 12, 1996.

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

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


<PAGE>

Liquidity and Capital Resources

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

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

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

            (iii) On December 12, 1996 the Company completed a private placement
                  of  84  units  each   consisting  of  80  shares  of  Class  A
                  Convertible  Preferred  Stock  ("Preferred  Stock") and 50,000
                  Common Stock  Purchase  Warrants to purchase in the  aggregate
                  4,200,000 shares of Common Stock at an exercise price of $4.00
                  per share.  Proceeds  were  approximately  $7,869,100,  net of
                  related  expenses.  The Preferred  Stock has a stated value of
                  $1,250  per share and each  share is  convertible  at any time
                  after  April  30,  1998 into  such  whole  number of shares of
                  Common  Stock  equal  to the  aggregate  stated  value  of the
                  Preferred  Stock to be converted  divided by the lesser of (i)
                  $2.00 or (ii) 50% of the  average  closing  sale price for the
                  Common  Stock  for the last  ten  trading  days in the  fiscal
                  quarter of the Company prior to such  conversion.  The Company
                  must use the  proceeds,  if any,  derived from the exercise of
                  the  Company's  currently   outstanding  public  Common  Stock
                  Warrants, which expire in October 1997, or 50% of the proceeds
                  from any other 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.  As a result of agreements  among the Company,  certain  former
employees and GKN Securities Corp. in January,  1997 the Company repaid $475,800
of it's  long-term  debt plus  related  accrued  interest.  At February 28, 1997
$919,600 of the purchase price had been paid. Interest will accrue on the unpaid
balances at the prime rate and is payable quarterly.

At February 28, 1997, the Company had cash and  equivalents  of $6,516,700.  The
increase of  $511,300 in cash and  equivalents  from May 31, 1996  reflects  the
receipt of  approximately  $7,869,100 in net proceeds  from a private  placement
consummated  in December  1996,  partially  offset by the  funding of  operating
activities,  as described above, and a $625,000 payment for affiliate rights The
increase in both accounts  receivable and inventory are related to the Company's
software publishing operation.

Capital expenditures were $60,100 and $26,400 in the nine and three months ended
February  28,  1997,  respectively,  an increase of $28,000 and $22,000 from the
nine and three month period ended February 29, 1996,  respectively.  The Company
expects capital expenditures in the fiscal year ending May 31, 1997 to be higher
than the  average of both fiscal  1996 and 1995  principally  as a result of the
cost of acquiring the equipment required for the US Web Cornerstone  offices and
development center.

The Company  believes that its existing cash and  equivalents,  and  anticipated
revenues will be sufficient to meet its liquidity and cash  requirements  for at
least the next 15 months. However, these funds may not be sufficient to meet the
Company's longer term cash  requirements  for operations.  Based on management's
assessment of the future

<PAGE>

marketability of its titles and demand for Web related services, the Company may
significantly  alter the level of  expenses  both  within the next 15 months and
thereafter.

Forward looking statements

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

Inflation

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


<PAGE>

Part II - OTHER INFORMATION

Item 1.   Legal Proceedings

          None.

Item 2.   Changes in Securities

          On December 12,  1996,  the Company  completed a private  placement to
          accredited investors of 84 units each consisting of 80 shares of Class
          A Convertible  Preferred Stock  ("Preferred  Stock") and 50,000 Common
          Stock Purchase Warrants to purchase in the aggregate  4,200,000 shares
          of Common Stock at an exercise price of $4.00 per share. Proceeds were
          approximately $7,864,100, net of related expenses.

          GKN  Securities  Corp.  acted as the  placement  agent in the  private
          placement  and  received  a  placement  agent  fee of  $432,000  and a
          non-accountable  expense  allowance  equal  to  $83,000.  The  private
          placement was completed in reliance on the private offering exemptions
          contained  in  Sections  3 (b) and/or 4 (2) of the  Securities  Act of
          1933, as amended,  and in reliance on similar exemptions under certain
          appplicable state laws. For information relating to the redemption and
          conversion  of the  Preferred  Stock see "Note 9 to Notes to Condensed
          Consolidated Financial Statements."

Item 3.   Defaults Upon Senior Securities

          None.

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

None

Item 5.   Other Information

          None.

<PAGE>
Item 6.  Exhibits and Reports on Form 8-K.

         (a) None

         (b) The  Company  filed  one form 8-K under  Item 5. ---  Other  Events
         during the quarter ended February 28, 1997.


<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 21, 1997                    /s/ Kenneth Gruber
                                       ------------------------------
                                       Kenneth Gruber
                                       Chief Financial Officer and
                                       Principal Accounting Officer