================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  ------------

                                   FORM 10-QSB

                                  ------------

(Mark One)

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

For the quarterly period ended September 30, 2000

                                       OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the transition period from __________ to _________.

COMMISSION FILE NUMBER 0-6106

                           UNITED LEISURE CORPORATION
             (Exact name of registrant as specified in its charter)


          DELAWARE                                  13 - 2652243
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

                       1990 WESTWOOD BOULEVARD, PENTHOUSE
                       LOS ANGELES, CALIFORNIA 90025-4650
          (Address, including zip code, of principal executive offices)


                                 (310) 441-0900
              (Registrant's telephone number, including area code)

         Indicate  by check mark  whether  the issuer (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  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 [__]

         Indicate the number of shares outstanding of each class of the issuer's
classes of common stock, as of the latest practicable date.

             CLASS                                         OUTSTANDING
             -----                                         -----------
          Common Stock, par value                          20,410,375 shares, as
          $0.01 per share.                                 of November 6, 2000

         Transitional Small Business Disclosure
         Format (Check one):                        Yes [_]     No [X]


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<PAGE>




                   UNITED LEISURE CORPORATION AND SUBSIDIARIES

                                      INDEX



                                                                            PAGE

PART I.    FINANCIAL INFORMATION

           ITEM 1.      Financial Statements...................................1

                        Condensed Consolidated Balance Sheets,
                        September 30, 2000 (unaudited)
                        and December 31, 1999 (audited)........................1

                        Condensed Consolidated Unaudited
                        Statements of Operations and Comprehensive
                        Income (Loss) for the Three Months
                        Ended September 30, 2000 and 1999 and
                        Nine Months Ended September 30, 2000 and 1999..........2

                        Condensed Consolidated Unaudited Statements
                        of Cash Flows for the Nine Months
                        Ended September 30, 2000 and 1999......................3

                        Notes to Condensed Consolidated
                        Unaudited Financial Statements.........................4

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

PART II.   OTHER INFORMATION

           ITEM 1       Legal Proceedings.....................................15

           ITEM 2.      Changes 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......................15

SIGNATURE.....................................................................16




<PAGE>



                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   UNITED LEISURE CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               SEPTEMBER 30,         DECEMBER 31,
                                                                                    2000                 1999
                                                                                (Unaudited)           (Audited)
<S>                                                                           <C>                  <C>
ASSETS

Current assets
     Cash and cash equivalents.........................................           $  9,725,952         $  1,998,059
     Receivables.......................................................                  4,917               88,540
     Deferred production cost..........................................                      -              115,027
     Prepaid expenses and other current assets.........................                194,438               75,208
                                                                              -----------------    -----------------
Total current assets...................................................              9,925,307            2,276,834
                                                                              -----------------    -----------------

Property and equipment, net............................................                809,890              181,765
                                                                              -----------------    -----------------

Investments
     Investment in HEP II at equity - related party....................                100,000              100,000
     Investment in Grand Havana at fair value - related party..........                105,753              101,500
                                                                              -----------------    -----------------
Total investments......................................................                205,753              201,500
                                                                              -----------------    -----------------

Other Assets
     Loan receivable from Grand Havana - related party.................                830,722              779,680
     Loans receivable from other - related party.......................                409,406               46,387
     Patent costs .....................................................                155,709                    -
     Capitalized development costs.....................................                488,507                    -
     Due from former officer...........................................                      -               81,027
     Deposits and other assets.........................................                 80,618               61,689
                                                                              -----------------    -----------------
Total other assets.....................................................              1,964,962              968,783
                                                                              -----------------    -----------------
Total assets...........................................................           $ 12,905,912         $  3,628,882
                                                                              =================    =================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
     Accounts payable and accrued expenses.............................            $   773,170          $   751,976
     Due to related parties............................................                 98,498              141,774
     Deferred revenues.................................................                  8,549              235,923
     Deposits and other................................................                  3,412                2,612
                                                                              -----------------    -----------------
Total current liabilities..............................................                883,629            1,132,285
Minority Interest......................................................                306,814                    -
Stockholders' Equity
     Preferred stock, $100 par value; authorized - 100,000 shares;
       issued and outstanding - none...................................                      -                    -
     Common Stock, $.01 par value;  authorized - 30,000,000  shares;
       issued and outstanding - 20,405,742 shares in 2000 and
       16,230,868 shares in 1999.......................................                202,766              161,468
     Additional paid-in capital........................................             41,129,392           26,892,688
     Accumulated deficit...............................................            (29,685,318)         (24,620,392)
     Accumulated other comprehensive income - unrealized gain on
       investment......................................................                 68,629               62,833
                                                                              -----------------    -----------------
Total stockholders' equity.............................................             11,715,469            2,496,597
                                                                              -----------------    -----------------

Total liabilities and stockholders; equity.............................           $ 12,905,912         $  3,628,882
                                                                              =================    =================
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                       1
<PAGE>





<TABLE>
<CAPTION>

                                              UNITED LEISURE CORPORATION AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)



                                                                THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                      -------------------------------------  ---------------------------------------
                                                       SEPTEMBER 30,      SEPTEMBER 30,       SEPTEMBER 30,         SEPTEMBER 30,
                                                            2000               1999               2000                  1999
                                                      -----------------   -----------------  -----------------    ------------------
<S>                                                   <C>                <C>                 <C>                  <C>
Revenue
     Recreational and corporate activities..........      $   222,539        $   295,575        $   700,049           $   897,115
     Licensing fees.................................                -             40,000            701,567               240,000
                                                      -----------------   -----------------  -----------------    ------------------
Total Revenue.......................................          222,539            335,575          1,401,616             1,137,115

Expenses
     Direct operating expenses......................          924,208            644,900          2,801,392             2,162,791
     Selling, general and administrative expenses...          601,888            936,914          2,687,330             1,771,655
     Non-cash compensation expense..................        1,222,567            237,700          1,837,827               237,700
     Depreciation and amortization..................           39,896             24,302             67,199               110,129
                                                      -----------------   -----------------  -----------------    ------------------
Total expenses......................................        2,788,559          1,843,816          7,393,748             4,282,275
                                                      -----------------   -----------------  -----------------    ------------------

Loss before other income (expense) .................       (2,566,020)        (1,508,241)        (5,992,132)           (3,145,160)

Other income (expense)
     Litigation settlement..........................                 -           (57,789)            (5,000)             (242,789)
     Equity in net loss of United Hotel.............                 -           (87,597)                  -             (133,932)
     Equity in net loss of Netcruise................                 -                  -                  -             (210,133)
     Loss on sale of assets.........................                 -          (705,265)                  -             (705,265)
     Gain on sale of investment in Netcruise........                 -                  -           600,000                      -
     Interest income................................          136,051             42,514            375,904               122,515
     Interest expense...............................           (2,126)          (157,961)           (71,916)             (370,462)
     Other, net.....................................            4,647            136,917             28,218               101,946
                                                      -----------------   ----------------   -----------------    ------------------
Total other income (expense)........................          138,572           (829,181)           927,206            (1,438,120)
                                                      -----------------   ----------------   -----------------    ------------------

Net loss............................................       (2,427,448)        (2,337,422)        (5,064,926)           (4,583,280)

Other comprehensive income
     Foreign currency translation adjustment........            1,543                   -             1,543                      -
     Unrealized holding gain on securities
       arising during the period....................          (30,160)                  -             4,253                      -
                                                      -----------------   ----------------   -----------------    ------------------
Comprehensive loss..................................     $ (2,456,065)      $ (2,337,422)      $ (5,059,130)        $  (4,583,280)
                                                      =================   ================   =================    ==================

Weighted average number of common shares outstanding       20,216,903         16,090,193         19,493,093            15,390,966
                                                      =================   ================   =================    ==================

Basic and diluted loss per share....................       $    (0.12)        $    (0.15)      $      (0.26)          $     (0.30)
                                                      =================   ================   =================    ==================


</TABLE>


See accompanying notes to condensed consolidated unaudited financial statements.

                                       2


<PAGE>




                   UNITED LEISURE CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                                NINE MONTHS ENDED
                                                                                       SEPTEMBER 30,          SEPTEMBER 30,
                                                                                            2000                  1999

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                                    <C>                    <C>
Net Loss........................................................................         $   (5,064,926)       $   (4,583,280)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization..............................................                 67,199               110,129
     Loss on termination of lease...............................................                      -                45,333
     Non-cash compensation expense..............................................              1,837,827               237,700
     Loss on sale of assets.....................................................                      -               705,265
     Equity in net loss of United Hotel.........................................                      -               133,932
     Equity in net loss of Netcruise............................................                      -               210,133
     Accrual of interest income from related parties............................                (51,042)                    -
Changes in operating assets and liabilities:
     Receivables................................................................                 83,623                17,191
     Deferred production cost...................................................                115,027                     -
     Prepaid patent defense costs...............................................               (155,709)                    -
     Prepaid expenses and other current assets..................................               (119,230)              (33,150)
     Deposits...................................................................                (18,129)               (3,041)
     Accrued interest...........................................................                      -               (20,438)
     Accounts payable and accrued expenses......................................                 21,194               627,756
     Accrued expenses due to related parties....................................                 81,027                63,414
     Deferred revenues..........................................................               (227,374)                8,888
     Litigation settlement......................................................                      -               176,842
                                                                                     -------------------    ------------------
Net cash used in operating activities...........................................             (3,430,513)           (2,303,326)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment.............................................               (695,324)              (65,584)
Distribution from United Hotel..................................................                      -               149,999
Collections from disposition of assets held for sale and from fixed assets                            -             1,092,088
Loans receivable from Grand Havana..............................................                      -              (113,473)
Advances to related party.......................................................               (363,019)               88,690
Payments of advances from related party.........................................                (43,276)                    -
Development costs...............................................................               (488,507)                    -
Deposits and other..............................................................                      -                10,757
Minority Interest...............................................................                308,357                     -
                                                                                     -------------------    ------------------
Net cash used in investing activities...........................................             (1,281,769)            1,162,477

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock..............................................              5,701,949             1,500,000
Payment on long term debt.......................................................                      -              (842,000)
Common stock issued for warrants and options exercised..........................              6,738,226               186,300
                                                                                     -------------------    ------------------
Net cash provided by financing activities.......................................             12,440,175               844,300

Net increase in cash and cash equivalents.......................................              7,727,893              (296,549)
Cash and cash equivalents, beginning of period..................................              1,998,059               799,369
                                                                                     -------------------    ------------------
Cash and equivalents, end of period.............................................          $   9,725,952           $   502,820
                                                                                     ===================    ==================

</TABLE>



See accompanying notes to condensed consolidated unaudited financial statements.

                                       3
<PAGE>



                           UNITED LEISURE CORPORATION
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000

1        BASIS OF PRESENTATION

The interim condensed consolidated unaudited financial statements presented have
been prepared by United  Leisure  Corporation  (the  "Company" or "ULC") without
audit and, in the opinion of  management,  reflect all  adjustments  of a normal
recurring  nature  necessary  for a fair  presentation  of (a) the  consolidated
results of operations for the three and nine months ended September 30, 2000 and
1999, (b) the consolidated financial position at September 30, 2000 and December
31,  1999,  and (c) the  consolidated  cash  flows  for the  nine  months  ended
September 30, 2000 and 1999. The results of operations  for the interim  periods
are not  necessarily  indicative of results for the full year. The  consolidated
balance  sheet of the Company at December  31, 1999 was derived from the audited
consolidated  balance sheet at that date. The condensed  consolidated  unaudited
financial  statements and notes are condensed as permitted by Form 10-QSB and do
not contain  certain  information  included in the Annual Report of the Company.
The condensed  consolidated  unaudited  financial  statements and notes included
herein should be read in  conjunction  with the financial  statements  and notes
thereto  included  in the  Company's  Annual  Report on Form 10-KSB for the year
ended December 31, 1999.

2.       STOCKHOLDERS' EQUITY

In January  2000,  the Company  sold a total of  2,240,000  shares of its common
stock for a total  consideration  of  $5,600,000,  or $2.50 per  share,  to five
accredited  investors.  The offer and sale of the  shares  was  exempt  from the
registration  provisions of the  Securities Act of 1933, as amended (the "Act"),
pursuant to Section 4(2) of the Act. No general forms of  advertising  were used
in  connection  with the  issuance of the shares.  The  purchasers  acquired the
shares  for their own  account.  Each  purchaser  was,  prior to the sale of the
Company's  securities,  fully informed and advised about such matters concerning
the Company as its business, financial affairs and other matters.

From  February  2000 to March 2000,  options and warrants to purchase a total of
195,000  shares of common stock of the Company were  exercised at prices ranging
from $0.23 to $1.50 per share for a total of $126,950.  The options and warrants
were  granted  between  1988 and 1999 to employees of the Company and to certain
third  parties in  connection  with  certain  services  rendered  by them to the
Company. The issuance of shares of common stock upon exercise of the options and
warrants  was exempt from the  registration  provisions  of the Act  pursuant to
Section 4(2)  thereof.  The option and warrant  holders  acquired the shares for
their own account.

During the three  months ended June 30, 2000,  1,049,959  Class A Warrants  were
exercised  at an  exercise  price  of  $4.00  each,  resulting  in  proceeds  of
$4,199,836 to the Company.

During the three months ended September 30, 2000,  591,762 Class A Warrants were
exercised  at an  exercise  price  of  $4.00  each,  resulting  in  proceeds  of
$2,367,048  to the Company.  During the three months ended  September  30, 2000,
options to purchase a total of 50,000 shares of common stock of the Company were
exercised  at  prices  ranging  from  $0.30 to $0.75  per  share  for a total of
$26,250.  The  options  were  granted  in  1988  and  1990 to an  individual  in
connection with services rendered to the Company.

During the three  months  ended  September  30,  2000,  in a cashless  exercise,
options and warrants  exercised by a consultant  of the company  resulted in the
issuance  of 48,153  shares.  The  options  and  warrants  were  granted  to the
consultant of the Company in connection  with certain  services  rendered by the
consultant to the Company.  The issuance of shares of common stock upon exercise
of the options and warrants was exempt from the  registration  provisions of the
Act pursuant to Section 4(2) thereof. The option and warrant holder acquired the
shares for his own account.

In November 1999 and January 2000,  the Company's  subsidiary,  United  Internet
Technologies,  Inc.  ("UIT"),  granted options to purchase  4,250,000 shares and
665,000 shares, respectively,  of its common stock to employees,  officers and a
member of the advisory board of UIT. In May and June 2000,  UIT granted  options
to purchase an aggregate  of  1,302,500  shares of its common stock to employees
and  members  of the  advisory  board of UIT.  During  the  three  months  ended


                                        4
<PAGE>

                           UNITED LEISURE CORPORATION
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000

September 30, 2000, UIT granted options to purchase 370,000 shares of its common
stock  to its  employees  and to the  management  and  employees  of its  German
subsidiary.

3.       LITIGATION

The  Company  and UIT are  parties to two  patent  infringement  lawsuits,  both
involving  Hyperlock  Technologies,  Inc. In the first action, Case No. 99C3776,
filed  on June 7,  1999 by  Hyperlock  in the  Northern  District  of  Illinois,
Hyperlock has alleged  infringement  by UIT of U.S.  Patents Nos.  5,892,825 and
5,937,164. In the second action,  originally filed by UIT on February 7, 2000 in
the Central  District of California,  UIT has alleged  infringement by Hyperlock
and Broadbridge  Media, LLC of UIT's U.S. Patent No.  5,996,000.  The California
case has been  transferred  to the Northern  District of Illinois,  and has been
consolidated with the earlier filed Illinois case. On June 28, 2000, in response
to representations made by Broadbridge's counsel, the court dismissed Count I of
the  complaint  against UIT  (alleging  infringement  by UIT of U.S.  Patent No.
5,892,825) without prejudice.

4.       SEGMENT INFORMATION

The Company operates in two business segments: developing and licensing Internet
technology and recreational and corporate activities. Recreational and corporate
activities  consist of summer  day camps and  children's  play-learning  centers
known as Planet Kids. Segment operating loss is defined as total segment revenue
reduced by operating expenses  identifiable to that business segment.  Corporate
expenses include general corporate administrative costs. The accounting policies
of the  reportable  segments  are the same as those  described in the summary of
significant accounting policies. There are no intersegment sales.

<TABLE>
<CAPTION>

                                                                  INTERNET         RECREATIONAL AND        CONSOLIDATED
                                                                  TECHNOLOGY       CORPORATE

<S>                                                              <C>                 <C>                  <C>
NINE MONTHS ENDED SEPTEMBER 30, 2000
Revenue.................................................         $   701,567         $     700,049        $    1,401,616
Direct Operating Expense................................          (1,689,287)           (1,112,105)           (2,801,392)
Selling, General and Administrative Expense.............          (2,071,976)             (615,354)           (2,687,330)
Non-Cash Compensation Expense...........................          (1,837,827)                     -           (1,837,827)
Loss from operations....................................          (4,213,368)           (1,778,764)           (5,992,132)
Assets..................................................           9,988,342             2,917,570            12,905,912

NINE MONTHS ENDED SEPTEMBER 30, 1999
Revenue.................................................             240,000               897,115             1,137,115
Direct Operating Expense................................            (716,558)           (1,446,233)           (2,162,791)
Selling, General and Administrative Expense.............            (816,041)             (955,614)           (1,771,655)
Non-Cash Compensation Expense...........................            (209,250)              (28,450)             (237,700)
Loss from operations....................................          (1,709,983)           (1,435,177)           (3,145,160)
Assets..................................................             498,374             5,245,319             5,743,693

</TABLE>

5        INVESTMENT IN AND LOAN RECEIVABLE FROM GRAND HAVANA

On September 30, 2000,  the quoted  market value of the Company's  investment in
Grand Havana was $105,753.  The Company  recorded changes in the market value in
Other Comprehensive Income. The valuation represents a mathematical  calculation
based on the  closing  quotation  published  by the OTC  Bulletin  Board for the
common stock of Grand  Havana and is not  necessarily  indicative  of the amount
that could be realized upon sale.

                                       5
<PAGE>
                           UNITED LEISURE CORPORATION
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000

An additional  $18,699 in Loan Receivable from Grand Havana  represents  accrued
interest income for the three months ended  September 30, 2000 and  reimbursable
health insurance premiums and information technology costs paid by the Company.

6        DUE FROM FORMER OFFICER

Changes in Due from Former  Officer  represent net changes in amounts due to and
from  Harry  Shuster,  which  arose from  accrued  interest  income and  accrued
interest expense.

<TABLE>
<CAPTION>
7        DUE FROM RELATED PARTIES

<S>                                                                             <C>          <C>
Due from Related Parties is composed of the following items at September 30:     2000         1999
Due from 1990 Westwood Boulevard, Inc........................................   $ 32,131     $ 31,387
Due from Grand Havana Enterprises, Inc.......................................          -       (5,000)
Due from Officer.............................................................     20,000            -
Due from IIT Shareholder.....................................................    337,275            -
Due from Consultant..........................................................     20,000       20,000
                                                                                -----------  ----------
Total Due from Related Parties...............................................   $409,406     $ 46,387
                                                                                ===========  ==========
</TABLE>

8.       DUE TO RELATED PARTIES

Changes in Due to Related Parties represent payments to Brian Shuster of $65,000
for  consulting  fees earned in 1999, but not paid at that time, and advances to
Grand Havana of $21,724.

9.       CAPITALIZATION OF DEVELOPMENT COSTS FOR SOFTWARE HELD FOR SALE

Costs incurred in creating  computer software products held for sale are charged
to expense  when  incurred  as  research  and  development  until  technological
feasibility has been established for the product.  Technological  feasibility is
established upon the completion of a working prototype. Thereafter, all software
production  costs are  capitalized  and  subsequently  reported  at the lower of
unamortized cost or net realizable value.  Capitalized costs are amortized based
on current and future  revenue for each product with an annual  minimum equal to
the straight-line amortization over the remaining estimated economic life of the
product.

10.      PATENTS, TRADEMARKS, PROPRIETARY TECHNOLOGY AND OTHER INTANGIBLES

Patents, trademarks, proprietary technology and other intangibles are carried at
cost less accumulated amortization, which is calculated on a straight-line basis
over the  estimated  useful lives of the assets,  not to exceed 17 years.  Legal
fees and other costs to defend  these  assets are  charged as prepaid  until the
final  outcome  of the  defense  and  are  capitalized  only if the  defense  is
successful; otherwise, these fees and costs are expensed as incurred.


                                       6
<PAGE>


11.      SUBSEQUENT EVENTS

On October 3, 2000, the Company  extended the expiration  date of its issued and
outstanding  Class A Redeemable  Common Stock Purchase Warrants to 5 p.m. EDT on
May 9, 2002. As of October 2, 2000, 3,303,279 Class A Warrants were outstanding.
The exercise price of the Class A Warrants is $4.00.

In October 2000,  management determined to divest all of the Company's remaining
non-technology  businesses.  Management concluded that these operations were not
strategically compatible with the Company's core  internet-technology  business.
Management  believes that the opportunity in its core business requires singular
focus of management  time and resources.  As a result,  the decision was made to
divest non-core  businesses.  These non-core businesses consist of the Company's
Planet  Kids  business  and its  investments  in  Grand  Havana, HEP II  Limited
Partnership and certain other investments.  The Company is currently  evaluating
various alternatives for disposition of these businesses.

Net assets and  liabilities  related to the operations to be  discontinued  were
$1,170,781 and $341,865, respectively, at September 30, 2000, and $5,000,054 and
$2,819,838,  respectively,  at December 31, 1999. Net loss from operations to be
discontinued  was  $(1,778,764)  for the nine months ended  September  30, 2000.
Revenues  generated by the operations to be  discontinued  were $700,049 for the
nine months ended September 30, 2000.






























                                       7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS
         -----------------------------------------------------------

         This  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations includes a number of forward-looking statements  regarding
events and  financial  trends that may affect our future  operating  results and
financial position.  These statements can be identified by the use of such words
as "may," "expect," "believe,"  "anticipate,"  "intend" and similar expressions.
These  statements  involve risks and  uncertainties  that could cause our actual
results to differ  materially.  Factors that could cause or  contribute  to such
differences include, but are not limited to, costs and uncertainties  associated
with  future  developments,  concerns  regarding  our  liquidity  and  financial
condition,  regulatory policies,  competition from other similar businesses, and
market and general  economic  factors.  We undertake no  obligation  to publicly
release  the  result of any  revision  of these  forward-looking  statements  to
reflect events or  circumstances  after the date they are made or to reflect the
occurrence of unanticipated  events. The following  discussion should be read in
conjunction with our condensed  consolidated  unaudited financial statements and
the notes thereto appearing elsewhere in this Quarterly Report on Form 10-QSB.

         Quarterly  operating results have varied  significantly in the past and
can be expected to vary in the future.  Results of operations for any particular
quarter are not necessarily indicative of results of operations for a full year.

OVERVIEW

         Through our subsidiary, United Internet Technologies,  Inc. ("UIT"), we
are primarily  engaged in the business of developing  technologies  that control
and enable a wide range of devices,  such as household  and business  appliances
and monitoring  devices to communicate  and be controlled  over the Internet and
over other digital systems, such as cable,  television and wireless networks. We
have  developed  two  proprietary  technologies:   (1)  an  Intelligent  Control
Interactive  Technology(TM)  (I-C-IT(TM))  platform and (2) Digitally Integrated
Video Overlay(TM) ("DIVO(TM)").

         UIT  has  developed  Intelligent  Control  Interactive   Technology(TM)
("I-C-IT(TM)"),  a proprietary  platform of hardware and software for networking
devices through various digital  delivery  systems such as the Internet,  cable,
television  and wireless  networks.  Devices  empowered  with I-C-IT  technology
become networkable.  This means that these devices can communicate with the user
and/or other devices and be accessed and controlled by the user or other devices
from a remote location. The I-C-IT enabled products are built to function in low
bandwidth environments suitable for consumer markets.  Management's intention is
to expand the I-C-IT  platform by  developing  new  applications  for  different
industry sectors serving specific business needs.

         Digitally Integrated Video Overlay(TM)  (DIVO(TM)) is a technology that
allows high-quality video to be delivered over the Internet while connected with
a standard dial-up telephone line. DIVO files are activated by a server that can
instruct any computer's CD-ROM or DVD-ROM drive and have it activate video files
that have been locally  stored on a CD-ROM or DVD-ROM.  This process  integrates
video material into a website. Once the DIVO software has been downloaded to the
personal  computer,  the video  content  can be updated by passive  download  or
through the distribution of additional  CD-ROMs/DVDs.  DIVO technology  enhances
the web presentation  experience and management believes that it is suitable for
the entertainment, travel, shopping, corporate and educational markets.

         In the past, we have  generally  licensed the DIVO  technology to large
customers  as part of  turnkey  projects  custom-designed  for  each  individual
customer.  For instance,  we licensed an application of the DIVO  technology for
television to NBC, an  application  of the  technology for wrestling and related
activities to World  Championship  Wrestling,  Inc.  ("WCW") and  travel-related
applications  of the  technology  to  Netcruise.com.,  Inc.  (formerly  known as
Genisys Reservation  Systems,  Inc.). We have determined to focus our efforts on
technology  development  and licensing and move away from inclusive  turnkey web
management projects for individual customers. We believe that the development of
licensable  versions of our  DIVO(TM)  technologies  will lead to higher  margin
product and service  offerings.  Turnkey licensing efforts were reduced while we
focused our efforts on developing our new licensable DIVO software  application.
We began offering a licensable software version of our DIVO technology in August
2000.

         In July 2000 we formed a subsidiary  in Germany,  Interactive  Internet
Technologies  GmbH  ("IIT").  We have invested  US$28,302 in, and  contributed a
non-exclusive  license  to market  our  technologies  in Europe  to,  IIT and we


                                       8
<PAGE>


retained a 61.11% ownership interest.  IIT raised total capital of $964,496. IIT
is primarily  engaged in the marketing of our DIVO  technology in Europe.  IIT's
investors,  not including us, have  committed to funding a further  US$1,000,000
into IIT.

         Before  February 1997,  our primary  business was to act as a developer
and manager of facilities for recreational and corporate activities.  As part of
our  decision  to  reorient  our  business  to  developing   and  licensing  our
technology,  we closed some of these  facilities.  In August 1999,  we sold real
property located in El Cajon, California,  which was previously used for some of
our  recreational  and corporate  activities.  In October 1999, we sold our real
estate holdings in Las Vegas, Nevada.

         In  October  2000,  we  determined  to  divest  all  of  our  remaining
non-technology   businesses.   We  concluded  that  these  operations  were  not
strategically compatible with our core internet-technology  business. We believe
that the  opportunity in our core business  requires  singular focus of our time
and resources. As a result, we decided to divest our non-core businesses.  These
non-core  businesses consist of our Planet Kids business and our  investments in
Grand Havana, HEP II, Limited Partnership and certain other investments.  We are
currently evaluating various alternatives for disposition of these businesses.

CLASS A WARRANT EXTENSION

On October 3, 2000 we extended the expiration date of our issued and outstanding
Class A Redeemable  Common Stock Purchase Warrants to 5 p.m. EDT on May 9, 2002.
As of October 2, 2000,  there were 3,303,279 Class A Warrants  outstanding.  The
exercise price of the Class A Warrants is $4.00.



















                                       9

<PAGE>


RESULTS OF OPERATIONS

                THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
                      THREE MONTHS ENDED SEPTEMBER 30, 1999

Revenues

         We had total  revenues of $222,539 for the quarter ended  September 30,
2000, compared to total revenues of $335,575 for the quarter ended September 30,
1999,  a  decrease  of  $113,036  or   approximately   34%.  This  decrease  was
attributable to recreational and corporate activities,  which we have determined
to discontinue.

         We have  determined to focus our efforts on technology  development and
licensing  and move away from  inclusive  turnkey web  management  projects  for
individual customers.  We believe that the development of licensable versions of
our  DIVO(TM)  technologies  will  lead to higher  margin  product  and  service
offerings.  Turnkey  licensing efforts were reduced while we focused our efforts
on developing our new licensable DIVO software application.  We began offering a
licensable  software  version of our DIVO  technology in August 2000. In October
2000, we announced a restructuring to focus on our core technology business.  We
intend to divest all of our remaining  non-technology  assets, which include our
recreational  and corporate  activities.  Accordingly,  these businesses will be
classified as discontinued operations in our future financial statements and are
not indicative of future revenue streams.

         LICENSING  FEES. We had no revenues from licensing fees for the quarter
ended September 30, 2000, compared to $40,000 or for the quarter ended September
30,  1999.  This is a  direct  consequence  of our  change  in  business  model,
involving a  refocusing  of our  DIVO(TM)  technology  licensing  strategy  from
providing turnkey licensing projects to creating a licensable  software product.
We  believe  that  the  development  of  licensable  versions  of  our  DIVO(TM)
technologies  will lead to higher  margin  product and service  offerings in the
future.  Turnkey  licensing efforts were reduced while we focused our efforts on
developing our new  licensable  DIVO software  application.  We began offering a
licensable software version of our DIVO technology in August 2000.

         RECREATIONAL  AND CORPORATE  ACTIVITIES.  In October 2000, we announced
our intention to  restructure  our  operations by divesting all of our remaining
non-technology  assets, which include our recreational and corporate activities.
Accordingly,  these businesses will be classified as discontinued  operations in
our  future  financial  statements  and are not  indicative  of  future  revenue
streams.  Revenues from recreational and corporate  activities were $222,539 for
the quarter ended September 30, 2000, compared to $295,575 for the quarter ended
September 30, 1999, a decrease of $73,036 or approximately 25%.

Operating Expenses

     Total  operating  expenses were  $2,788,559 for the quarter ended September
30, 2000  compared to $1,843,816  for the quarter  ended  September 30, 1999, an
increase of $944,743, or approximately 51%. Of this increase,  $1,222,567 is due
to a non-cash  compensation  charge related to options to purchase shares of UIT
common stock granted to members of UIT's advisory board. Excluding this non-cash
compensation  charge,  operating  expenses were $1,565,992 for the quarter ended
September 30, 2000 compared to  $1,606,116  for the quarter ended  September 30,
1999, a decrease of $40,124.

     DIRECT OPERATING EXPENSES.  Direct operating expenses were $924,208 for the
quarter  ended  September  30, 2000  compared to $644,900 for the quarter  ended
September 30, 1999, an increase of $279,308 or approximately  43%. This increase
is  primarily  due to increased  expenditures  incurred in  connection  with the
build-up of our Internet technology  business.  Increased expenses in connection
with our  recreational and corporate  activities  contributed to the increase in
direct operating expenses. As previously stated, in connection with our decision
to  restructure  and divest our remaining  non-technology  assets,  the expenses
incurred in connection with our  recreational  and corporate  activities are not
indicative of the future.


                                       10
<PAGE>


         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses were $601,888 for the quarter ended  September 30, 2000
compared to  $936,914  for the quarter ended  September  30, 1999, a decrease of
$335,026 or  approximately  36%.  This  decrease was  primarily due to decreased
expenses in connection with our recreational and corporate activities and to the
decrease of expenses in connection with expenses  connected to turnkey licensing
projects.  These  decreases  were  partially  offset by our  increased  selling,
general and  administrative  expenses in connection  with the development of our
I-C-IT technology  platform,  increased  marketing  expenditures  related to our
DIVO(TM) technology and increased personnel costs as a result of the build-up of
employees in our Internet technology business.

         NON-CASH  COMPENSATION  EXPENSES. We had non-cash compensation expenses
of  $1,222,567  for the quarter ended  September 30, 2000,  compared to $237,700
non-cash  compensation  expenses for the quarter ended  September 30, 1999. This
increase of  $984,867,  or  approximately  414%,  was due to options to purchase
shares of our  subsidiary's  common stock  granted to members of UIT's  advisory
board and other  consultants.  The  expense was  determined  by use of the Black
Scholes valuation method.

         DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expenses
were $39,896 for the quarter  ended  September  30, 2000 compared to $24,302 for
the quarter ended  September  30, 1999, an increase of $15,594 or  approximately
64%. This increase was due to increased capital  expenditures by our subsidiary,
UIT,  partially offset by a reduced  depreciable  asset base and a result of the
sale of certain assets from our recreational and corporate activities.

Other Income

         Other income consists of interest  income,  interest  expense,  gain on
sale, and litigation  settlement.  During the quarter ended  September 30, 2000,
other income was $138,572  compared to other expense of $829,181 for the quarter
ended  September 30, 1999, an increase of $967,753.  This increase was primarily
due to an increase  in  interest  income of $93,537 and the absence in the third
quarter of 2000 of an approximately  $700,000 loss on sale of assets,  which had
been recorded in the third quarter of 1999.

Net Loss

         For the reasons stated above, for the quarter ended September 30, 2000,
the Company had a net loss of ($2,427,448) or ($0.12) per share as compared to a
net loss of  ($2,337,422)  or ($0.15) per share for the quarter ended  September
30, 1999.


                NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
                      NINE MONTHS ENDED SEPTEMBER 30, 1999

Revenues

         We had total revenues of $1,401,616 for the nine months ended September
30, 2000,  compared to total  revenues of  $1,137,115  for the nine months ended
September 30, 1999, an increase of $264,501 or  approximately  23%. The increase
in total revenue was  attributable to increased  licensing  revenues.  We earned
$700,000  in  licensing  revenues  in the first  quarter of 2000  pursuant  to a
licensing   agreement  related  to  interactive   CD-ROM's  utilizing  our  DIVO
technology,  which we created for Teen People  Magazine and  Nordstrom,  Inc. As
part of a change in strategy, we have decided to focus our efforts on technology
development  and move  away  from  inclusive  turnkey  projects  for  individual
customers.  We  believe  that the  development  of  licensable  versions  of our
DIVO(TM)  technology  will lead to higher margin product and service  offerings.
Turnkey  licensing  efforts  were  reduced  while we  refocused  our  efforts on
developing  our  DIVO  licensable  software  application.  We began  offering  a
licensable  software  version of our DIVO  technology in August 2000. In October
2000, we announced a restructuring to focus on our core technology business.  We
intend to divest all of our remaining  non-technology  assets, which include our
recreational  and corporate  activities.  Accordingly,  these businesses will be
classified as discontinued operations in our future financial statements and are
not indicative of future revenue streams.


                                       11
<PAGE>


         LICENSING FEES. Revenues from licensing fees were $701,567 for the nine
months ended September 30, 2000,  compared to $240,000 for the nine months ended
September 30, 1999, an increase of $461,567 or approximately  192%. The increase
is primarily from $700,000 in licensing  revenues generated in the first quarter
of 2000 pursuant to a licensing agreement for interactive CD-ROM's utilizing our
DIVO technology,  which we created for Teen People Magazine and Nordstrom,  Inc.
We had no licensing  revenues  during the third  quarter of 2000.  This resulted
from our decision to refocus our licensing  strategy from  providing  customized
turnkey  licensing  projects  for  individual  customers  to  development  of  a
licensable  DIVO  software  product.  We began  offering a  licensable  software
version of our DIVO technology in August 2000.

         RECREATIONAL  AND CORPORATE  ACTIVITIES.  In October 2000, we announced
our intention to  restructure  our  operations by divesting all of our remaining
non-technology  assets, which include our recreational and corporate activities.
Accordingly,  these businesses will be classified as discontinued  operations in
the  future  financial  statements  and are not  indicative  of  future  revenue
streams.  Revenue from recreational and corporate activities for the nine months
ended September 30, 2000 were $700,049  compared to $897,115 for the nine months
ended September 30, 1999, a decrease of $197,066 or  approximately  22%. This is
the result of our  reorientation  to focus on our Internet  technology  business
while moving away from our  historical  emphasis on  recreational  and corporate
activities.

Operating Expenses

         Total  operating  expenses  increased to $7,393,748 for the nine months
ended  September 30, 2000,  from  $4,282,275 for the nine months ended September
30, 1999,  an increase of  $3,111,473 or  approximately  73%. Of this  increase,
$1,600,127  is due to a  non-cash  compensation  charge  related  to  options to
purchase  shares of UIT common stock granted to members of UIT's  advisory board
and consultants. Excluding this non-cash compensation charge, operating expenses
were  $5,555,921  for the nine  months  ended  September  30,  2000  compared to
$4,044,575  for the nine  months  ended  September  30,  1999,  an  increase  of
$1,511,346 or  approximately  37%. The balance of the increase was primarily due
to increased expenses incurred in connection with the refocusing of our Internet
technology  licensing  strategy and  development  of the  I-C-IT(TM)  technology
platform,  increased marketing  expenditures related to our DIVO(TM) technology,
and increased personnel costs as a result of a significant build-up of employees
in the Internet technology  business.  For the nine months, the headcount in our
Internet  technology business grew by nineteen people to a total of thirty-seven
at September 30, 2000.

         DIRECT OPERATING  EXPENSES.  Direct operating expenses were $2,801,392
for the nine months ended September 30, 2000 compared to $2,162,791 for the nine
months ended September 30, 1999, an increase of $638,601 or  approximately  30%.
This increase is primarily due to expenses  incurred in connection with the Teen
People Magazine project in the first quarter of 2000.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses were $2,687,330 for the nine months ended September 30,
2000  compared to  $1,771,655  for the nine months ended  September 30, 1999, an
increase of $915,675 or  approximately  52%.  This increase was primarily due to
increased  expenses  in  connection  with  the  development  of  the  I-C-IT(TM)
technology  platform,  increased marketing  expenditures related to our DIVO(TM)
technology and increased  personnel costs as a result of a build-up of employees
in our Internet technology business.

         DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expenses
were $67,199 for the nine months ended  September  30, 2000 compared to $110,129
for the nine  months  ended  September  30,  1999,  a  decrease  of  $42,930  or
approximately 39%. This decrease was due to a reduced  depreciable asset base as
a result  of a sale of  certain  assets  from  our  recreational  and  corporate
activities.

         NON-CASH  COMPENSATION  EXPENSES.  Non-cash  compensation expenses were
$1,837,827  for the nine months ended  September 30, 2000,  compared to $237,700
for the nine months ended  September  30,  1999,  an increase of  $1,600,127  or
approximately  673%.  This increase is due to options to purchase  shares of UIT
common stock granted to members of UIT's  advisory  board and  consultants.  The
expense was determined by use of the Black Scholes valuation method.


                                       12
<PAGE>


Other Income

         Other income consists of interest  income,  interest  expense,  gain on
sale,  and  litigation  settlement.  During the nine months ended  September 30,
2000, other income was $927,206  compared to other expense of $1,438,120 for the
nine months ended  September 30, 1999, an increase of $2,365,326.  This increase
was primarily due to the gain of $600,000 during the nine months ended September
30, 2000 on the sale of our investment in Netcruise.com,  Inc (formerly known as
Genisys Reservation Systems,  Inc.). We received the Netcruise.com,  Inc. shares
as  compensation  for the  licensing  of our  technology  in a prior  year.  The
remainder of the increase in other income resulted from the absence, in the nine
months ended  September 30, 2000, of an  approximately  $700,000 loss on sale of
assets,  which had been recorded in the nine months ended September 30, 1999 and
an increase in interest income of $253,389.

Net Loss

         For the reasons stated above,  for the nine months ended  September 30,
2000, we had a net loss of ($5,064,926) or ($0.26) per share,  compared to a net
loss of  $(4,583,280)  or ($0.30) per share for the nine months ended  September
30, 1999.

LIQUIDITY AND FINANCIAL CONDITION

         We are  experiencing  operating  losses.  At September 30, 2000, we had
cash and cash  equivalents  of  $9,725,952  and working  capital of  $9,041,678,
compared to cash and cash  equivalents  of  $1,998,059  and  working  capital of
$1,144,549 at December 31, 1999.  These  increases were in cash of $7,727,893 or
approximately  387% and in working capital of $7,897,129 or approximately  690%.
These  increases are primarily  due to the increase in cash  generated  from the
sale of common  stock and the  exercise of warrants and options for common stock
and a reduction in current  liabilities  during the nine months ended  September
30, 2000.

         Net cash  used in  operating  activities  was  $3,430,513  for the nine
months ended  September  30, 2000,  compared to  $2,303,326  for the nine months
ended  September 30, 1999.  This  increase is primarily  due to higher  selling,
general and  administrative and direct operating expenses in connection with the
build up of our Internet  technology  business,  development  of the  I-C-IT(TM)
technology  platform,  increased marketing  expenditures related to our DIVO(TM)
technology,  increased  personnel  costs related to the build-up of employees in
the Internet technology business and increased legal and consulting expenses.

         Net cash  used in  investing  activities  was  $1,281,769  for the nine
months ended  September 30, 2000,  compared to net cash generated from investing
activities of  $1,162,477  for the nine months ended  September  30, 1999.  This
increase in cash used in investing activities is primarily due to an increase in
purchases  of  equipment,   organizational  build  up  of  UIT  and  capitalized
development  costs  in  connection  with  our  Internet   technology   business.
Additionally, $337,275 of this increase is attributable to a shareholder loan in
connection with our German subsidiary, IIT.

         Net cash provided by financing  activities was $12,440,175 for the nine
months ended September 30, 2000,  compared to $844,300 for the nine months ended
September 30, 1999.  This  increase is due to a private  placement of our common
stock in  January  2000 and to  issuances  of  common  stock  upon  exercise  of
outstanding Class A Warrants and stock options.

         Our  future  capital  requirements  will  depend  on  various  factors,
including:

         1.     The  number  of  applications   using  our  technology  that  we
                determine to develop; and

         2.     Our need to hire additional  executive,  technical and marketing
                personnel in connection with our Internet technology business.

         If we are unable to raise  additional  funds when  needed,  through the
private  placement of our  securities,  we may seek financing from affiliated or
unaffiliated  third  parties.  There  can be no  assurance,  however,  that such


                                       13
<PAGE>


financing  would be available  to us when and if it is needed,  or that if it is
available, that it will be available on terms acceptable to us. If we are unable
to sell our securities or obtain financing to meet our working capital needs, we
may have to consider such  alternatives  as selling or pledging  portions of our
assets, among other possibilities, in order to meet such obligations.

         We  believe  that our  primary  sources  for cash over the next  twelve
months will be our current cash and income from investments, and the exercise of
outstanding  warrants.  Although we believe  these  sources will provide us with
sufficient   funds  to  meet  our   anticipated   working  capital  and  capital
expenditures  needs  for at  least  the  next  twelve  months,  there  can be no
assurance that this will be the case. With respect to the warrants, there can be
no assurance  that holders of warrants will  exercise in a sufficient  number to
generate significant cash for us.

         We wish to expand our  development and marketing  capabilities  for our
Internet technology. While the continued development of some applications can be
funded from internal  sources,  more  aggressive  development  and marketing may
require  additional   financing  from  either  public  or  private  sources.  To
accomplish this, we may raise additional capital by borrowing money or through a
public or private sale of debt or equity securities.  There can be no assurance,
however,  that we will be able to  acquire  additional  financing  on  favorable
terms, or at all.

YEAR 2000 COMPLIANCE

         We did not experience any material business interruption as a result of
the Year 2000 issue.  Our own software  applications  functioned well and we did
not experience any problems with the software  applications of our suppliers and
vendors.  We  will  continue  to  monitor  our  critical  computer  applications
throughout the Year 2000 to ensure that any Year 2000 matters that may arise are
addressed promptly.

NEW ACCOUNTING STANDARDS

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133 ("SFAS  No.  133"),  "Accounting  for  Derivative  Investments  and  Hedging
Activities,"  which  establishes  standards for the  accounting  for  derivative
transactions and the derivative portion of certain other contracts. SFAS No. 133
will become effective for our fiscal year beginning  January 1, 2001. We believe
that SFAS No. 133 will not have a material effect on our financial statements.

         In December 1999, the Securities and Exchange  Commission  issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  "Revenue  Recognition  in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition in financial statements. We adopted SAB 101 as
required  in the second  quarter of 2000.  We have  evaluated  the effect of the
adoption and have  determined  that  financial  results for the fiscal year 2000
will not be materially affected.

EURO CONVERSION

         A single  currency  called the Euro was introduced in Europe on January
1, 1999.  Eleven of the fifteen  member  countries of the European Union adopted
the Euro as their common legal currency as of that date.  Fixed conversion rates
between  these   participating   countries'  existing  currencies  (the  "legacy
currencies")  and the Euro were also  established  as of that  date.  The legacy
currencies will remain legal tender as  denominations of the Euro until at least
January  1, 2002  (but not later  than July 1,  2002).  During  this  transition
period,   parties  may  settle   transactions  using  either  the  Euro  or  the
participating country's legacy currency.

         We will convert our European operations to the Euro prior to January 1,
2002. We do not anticipate any business  interruption during this conversion and
do not anticipate a material cost of conversion.

FOREIGN CURRENCY

         We  are  exposed  to the  effect  of  foreign  currency  exchange  rate
fluctuations on the U.S. dollar value of foreign currency-denominated  operating
revenues and expenses.  Our largest exposure comes from the Deutsch Mark and the
Euro. We have not hedged our exposure in foreign currency exchange rate risk.


                                       14
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         For a  discussion  of  legal  proceedings  see Item 1 of Part II of our
Quarterly   Report  on  Form  10-QSB  for  the  quarter  ended  June  30,  2000,
incorporated herein by reference.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS


                  (a)      Not Applicable.

                  (b)      Not Applicable.

                  (c) During the quarter ended  September 30, 2000,  consultants
to the Company exercised options and warrants to purchase an aggregate of 48,153
shares of common stock  previously  granted to them by the Company.  The options
were  exercised in a cashless  exercise and resulted in no cash  proceeds to the
Company.  These sales were made in reliance on the exemption  from  registration
provided  by  Section  4(2)  of the  Securities  Act,  on  the  basis  that  the
transactions did not involve a public offering. The agreements pursuant to which
the options and warrants were granted to the employees and consultants contained
representations   as  to  their  investment   intent  and  imposed   substantial
restrictions upon transfer of the securities received upon exercise.

                  (d)      Not Applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable.

ITEM 5.  OTHER INFORMATION

         Not Applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS

         27 Financial Data Schedule

         (b)  REPORTS ON FORM 8-K

         Not Applicable.











                                       15


<PAGE>


                                           SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.


                                           UNITED LEISURE CORPORATION
                                           (Registrant)


November 13, 2000                              BY: /S/ BRIAN SHUSTER
                                                   --------------------------
                                                   Brian Shuster
                                                   Chairman of the Board and
                                                   Chief Executive Officer
                                                   (Principal Executive
                                                   Officer and Principal
                                                   Financial Officer)










                                       16

<PAGE>


EXHIBIT INDEX

         NO.      DESCRIPTION

         27       Financial Data Schedule