================================================================================
                                  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 June 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                      19,887,377 shares, as
    $0.01 per share.                             of August 7, 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, June 30,
                  2000 and December 31, 1999.................................1

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

                  Condensed Consolidated Unaudited Statements of
                  Cash Flows for the Six Months Ended June 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........................7

PART II. OTHER INFORMATION

         ITEM 1   Legal Proceedings.........................................12

         ITEM 2.  Changes in Securities.....................................12

         ITEM 3.  Defaults Upon Senior Securities...........................12

         ITEM 4.  Submission of Matters to a Vote of Security Holders.......12

         ITEM 5.  Other Information.........................................12

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

SIGNATURE...................................................................13




<PAGE>
                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   UNITED LEISURE CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      JUNE 30,     DECEMBER 31,
                                                        2000           1999
                                                    -----------    ------------
                                                    (Unaudited)      (Audited)
<S>                                                 <C>            <C>

ASSETS
Current assets
   Cash and cash equivalents....................      $9,216,667     $1,998,059
   Receivables..................................          78,449         88,540
   Deferred production cost.....................               -        115,027
   Prepaid expenses and other current assets....          86,837         75,208
                                                     ------------  -------------
Total current assets............................       9,381,953      2,276,834
                                                     ------------  -------------

Property and equipment, net.....................         388,773        181,765
                                                     ------------  -------------

Investments
   Investment in HEP II at equity - related party        100,000        100,000
   Investment in Grand Havana at fair value-related
   party........................................         135,913        101,500
                                                     ------------  -------------
Total investments...............................         235,913        201,500
                                                     ------------  -------------

Other Assets
   Loan receivable from Grand Havana - related party     812,013        779,680
   Loans receivable from other - related party..          71,387         46,387
   Patent costs ................................         147,208              -
   Capitalized development costs................         238,085              -
   Due from former officer......................           6,250         81,027
   Deposits and other assets....................          82,648         61,689
                                                     ------------  -------------
Total other assets..............................       1,357,591        968,783
                                                     ============  =============
                                                     $11,364,230     $3,628,882
                                                     ============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable and accrued expenses........       $ 671,997      $ 751,976
   Due to related parties.......................          71,529        141,774
   Deferred revenues............................           7,214        235,923
   Deposits and other...........................           2,912          2,612
                                                     ------------  -------------
Total current liabilities.......................         753,652      1,132,285
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 -
     19,681,827 shares in 2000 and 16,146,868
     shares in 1999.............................         196,818        161,468
   Additional paid-in capital...................      37,574,384     26,892,688
   Accumulated deficit..........................     (27,257,871)  (24,620,392)
   Accumulated other comprehensive income -
     unrealized gain on investment..............          97,247         62,833
                                                     ------------  -------------
Total stockholders' equity......................      10,610,578      2,496,597
                                                     ============  =============

                                                     $11,364,230     $3,628,882
                                                     ============  =============
</TABLE>
 See accompanying notes to condensed consolidated unaudited financial statements

                                       1
<PAGE>

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

<TABLE>
<CAPTION>

                                                             THREE MONTHS ENDED          SIX MONTHS ENDED
                                                          ------------------------  -------------------------
                                                           JUNE 30,     JUNE 30,     JUNE 30,      JUNE 30,
                                                             2000         1999         2000          1999
                                                          -----------  -----------  ------------  -----------
<S>                                                      <C>          <C>          <C>            <C>

Revenue
   Recreational and corporate activities.........        $  208,776   $  282,097   $   477,510    $  601,540
   Licensing fees................................             1,567      200,000       701,567       200,000
                                                         -----------  -----------  ------------  ------------
Total Revenue....................................           210,343      482,097     1,179,077       801,540

Expenses
   Direct operating expenses.....................           522,944      673,843     1,877,184     1,224,860
   Selling, general and administrative expenses..         1,068,862      492,400     2,085,442       890,072
   Non-cash compensation expense.................           384,201      203,512       615,260       237,700
   Depreciation and amortization.................            16,091       40,989        27,303        85,827
                                                        -------------  ----------   ------------  ------------
Total expenses...................................         1,992,098    1,410,744     4,605,189     2,438,459
                                                        -------------  ----------   ------------  ------------

Loss before other income (expense)...............        (1,781,755)    (928,647)   (3,426,112)   (1,636,919)

Other income (expense)
   Litigation settlement.........................                 -     (185,000)       (5,000)     (185,000)
   Equity in net loss of United Hotel............                 -      (96,476)            -       (46,335)
   Equity in net loss of Netcruise...............                 -            -             -      (210,133)
   Gain on sale of investment in Netcruise.......           600,000            -       600,000             -
   Interest income...............................           160,513       41,806       239,853        80,001
   Interest expense..............................           (34,434)     (96,766)      (69,790)     (212,501)
   Other, net....................................            11,110       30,810        23,571       (34,971)
                                                        -----------  -----------   -----------     -----------
Total other income (expense).....................           737,189     (305,626)      788,634      (608,939)
                                                        -----------  -----------   -----------     -----------

Net loss.........................................        (1,044,566)  (1,234,273)   (2,637,478)   (2,245,858)

Other comprehensive income
   Unrealized holding gain on securities arising
   during the period.............................           19,913             -        34,413             -
                                                       ============  ===========   ============   ============
Comprehensive loss...............................      $(1,024,653)  $(1,234,273)  $(2,603,065)   $(2,245,85)
                                                       ============  ============  ============   ============

Weighted average number of common
shares outstanding..............................        19,595,841    15,525,854    19,047,188    14,462,851
                                                       ============  ============  ============  =============

Basic and diluted loss per share................            $(0.05)       $(0.08)       $(0.14)       $(0.16)
                                                       ============  ============  ============  =============
</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>
                                                               SIX MONTHS ENDED
                                                          ----------------------------
                                                            JUNE 30,       JUNE 30,
                                                              2000           1999
                                                          -------------  -------------
<S>                                                       <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES

Net Loss...............................................   $(2,637,478)   $(2,245,858)
Adjustments to reconcile net loss to net cash used in
operating activities:
     Depreciation and amortization.....................         11,212         85,827
     Loss on termination of lease......................              -         45,333
     Fair value of options and warrants granted to
       non-employees...................................        615,260        237,700
     Equity in net loss of United Hotel................              -         46,335
     Equity in net loss of Netcruise...................              -        210,133
     Accrual of interest income from related parties...        (32,333)       (24,717)
Changes in operating assets and liabilities:
     Receivables.......................................         10,091         19,765
     Deferred production cost..........................        115,027              -
     Patent costs......................................       (147,208)             -
     Prepaid expenses and other current assets.........        (11,629)        31,470
     Deposits..........................................        (20,659)        (3,041)
     Accrued interest..................................             -         148,347
     Accounts payable and accrued expenses.............        (79,979)        66,385
     Accrued expenses due to related parties...........         74,777         60,000
     Deferred revenues.................................       (228,709)        86,465
     Litigation settlement.............................              -        185,000
                                                          -------------  -------------
Net cash used in operating activities..................     (2,331,628)    (1,050,856)
                                                          -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment....................       (218,220)       (37,257)
Loans receivable from Grand Havana.....................              -        (75,000)
Advances to related party..............................        (25,000)       (87,636)
Payments of advances from related party................        (70,245)             -
Development costs......................................       (238,085)             -
Deposits and other.....................................              -        (10,156)
                                                          -------------  -------------
Net cash used in investing activities..................       (551,550)      (210,049)
                                                          -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of common stock.....................      5,701,949      1,500,000
Common stock issued for warrants and options exercised.      4,399,837        186,300
                                                          -------------  -------------
Net cash provided by financing activities..............     10,101,786      1,686,300
                                                          -------------  -------------

Net increase in cash and cash equivalents..............      7,218,608        425,395
Cash and cash equivalents, beginning of period.........      1,998,059        799,369
                                                          -------------  -------------
Cash and equivalents, end of period....................     $9,216,667     $1,224,764
                                                          -------------  -------------
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                       3
<PAGE>

                           UNITED LEISURE CORPORATION
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                                  JUNE 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 six months ended June 30, 2000 and 1999,
(b) the consolidated  financial position at June 30, 2000 and December 31, 1999,
and (c) the  consolidated  cash flows for the six months ended June 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  financial  statements  and  notes  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 in 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,  1,099,959  Class A Warrants  were
exercised  at an  exercise  price  of  $4.00  each,  resulting  in  proceeds  of
$4,399,836 to the Company.

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.  Additionally,  in May and June 2000,  UIT
granted  options to purchase  1,302,500  shares of its common stock to employees
and members of the advisory board of UIT.

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
<PAGE>

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


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
                                                  TECHNOLOGY  AND CORPORATE  CONSOLIDATED
                                                  ----------  -------------  -------------
<S>                                               <C>         <C>            <C>

SIX MONTHS ENDED JUNE 30, 2000
------------------------------
Revenue........................................   $  701,567  $    477,510   $  1,179,077
Direct Operating Expense.......................   (1,208,061)     (669,123)    (1,877,184)
Selling, General and Administrative Expense....   (1,610,793)     (474,649)    (2,085,442)
Non-Cash Compensation Expense..................     (615,260)            -       (615,260)
Loss from operations...........................   (2,027,515)     (609,963)    (2,637,478)
Assets.........................................    8,089,966     3,274,264     11,364,230

SIX MONTHS ENDED JUNE 30, 1999
------------------------------
Revenue........................................      200,000       601,540        801,540
Direct Operating Expense.......................      426,199       798,661      1,224,860
Selling, General and Administrative Expense....      211,219       678,853        890,072
Non-Cash Compensation Expense..................      237,700             -        237,700
Loss from operations...........................     (617,290)   (1,628,568)    (2,245,858)
Assets.........................................      142,871     8,399,359      8,542,230
</TABLE>


5.    INVESTMENT IN AND LOAN RECEIVABLE FROM GRAND HAVANA

On June 30, 2000,  the quoted market value of the Company's  investment in Grand
Havana was $135,913.  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.

An additional  $16,373 in Loan Receivable from Grand Havana  represents  accrued
interest income for the three months ended June 30, 2000.

6.    DUE FROM FORMER OFFICER

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

7.    DUE TO RELATED PARTIES

Changes in Due to Related Parties represent payments to Brian Shuster of $65,000
and additional advances from Grand Havana of $5,729.

                                       5
<PAGE>

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


8.    SUBSEQUENT EVENT

In  July  2000,  UIT  formed  a  European   subsidiary,   Interactive   Internet
Technologies  (IIT) GmbH, based in Hamburg,  Germany.  The subsidiary was funded
with $2 million in equity financing from private German investors. UIT retains a
61.1% share  ownership in IIT, the private  investors own 33.3% and the European
management of IIT will own the remaining 5.6%.


                                       6
<PAGE>

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

The following  discussion  contains forward looking statements  regarding events
and financial trends that may affect the Company's future operating  results and
financial  position.  Such statements can be identified by the use of such words
as "may," "expect," "believe,"  "anticipate,"  "intend" and similar expressions.
Such statements  involve risks and uncertainties  that could cause the Company's
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 the Company's liquidity
and financial  condition,  regulatory  policies,  competition from other similar
businesses,  and market and general economic factors.  The Company undertakes 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 the Company's condensed
consolidated  unaudited  financial  statements  and the notes thereto  appearing
elsewhere in this Quarterly Report on Form 10-QSB.

OVERVIEW

Through its subsidiary, United Internet Technologies,  Inc. ("UIT"), the Company
is primarily engaged in the business of developing technologies that control and
enable a wide range of devices,  such as household and business  appliances  and
medical  monitoring  devices to communicate  and be controlled over the Internet
and other digital systems,  cable, television and wireless networks. The Company
has  developed  two  proprietary   technologies:   (1)  an  Intelligent  Control
Interactive  TechnologyTM (I-C-ITTM) platform and (2) Digitally Integrated Video
OverlayTM ("DIVOTM").

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.

To date,  the  Company  has  generally  licensed  the DIVO  technology  to large
customers  as part of  turnkey  projects  custom-designed  for  each  individual
customer.  For  instance,  the Company has 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 Netcrusie.com,  Inc. (formerly
known as Genisys  Reservation  Systems,  Inc.). The Company currently intends to
begin offering a licensable software version of its DIVO technology in the third
quarter of 2000.

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


                                       7
<PAGE>

RESULTS OF OPERATIONS

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

Revenues

      The Company had total  revenues of $210,343 for the quarter ended June 30,
2000,  compared to total  revenues of  $482,097  for the quarter  ended June 30,
1999, a decrease of $271,754 or approximately  56%. This decrease  resulted from
an  approximately  26%  decrease  in revenue  from  recreational  and  corporate
activities and from a 99% decrease in licensing  revenue which resulted from the
Company's  decision to refocus its DIVO(TM)  technology  licensing strategy from
providing  customized  turnkey  licensing  projects  to  creating  a  licensable
software  product.  Management  determined  to focus its  efforts on  technology
development  and move away from inclusive  turnkey web  management  projects for
individual  customers.  Management  believes that the  development of licensable
versions of its DIVO(TM)  technologies  will lead to higher  margin  product and
service  offerings.  Turnkey  licensing  efforts were reduced  while the Company
focused its efforts on developing its new licensable software  application.  The
Company  currently plans to begin offering a licensable  software version of its
DIVO technology in the third quarter of 2000.

      LICENSING  FEES.  Revenues from licensing fees were $1,567 for the quarter
ended June 30, 2000, compared to $200,000 for the quarter ended June 30, 1999, a
decrease of $198,433.  The decrease in licensing  revenue is attributable to the
Company's  decision to refocus its DIVO(TM)  technology  licensing strategy from
providing turnkey licensing projects to creating a licensable  software product.
The Company  currently plans to begin offering a licensable  software version of
its DIVO technology in the third quarter of 2000.

      RECREATIONAL  AND CORPORATE  ACTIVITIES.  Revenues from  recreational  and
corporate  activities were $208,776 for the quarter ended June 30, 2000 compared
to  $282,097  for the  quarter  ended June 30,  1999,  a decrease  of $73,321 or
approximately 26%. This is the result of the Company reorienting its business to
focus on its Internet  technology while moving away from its historical emphasis
on recreational and corporate  activities.  The Company expects its revenue from
recreational and corporate activities to continue to decline in future periods.

Operating Expenses

      Operating  expenses  were  $1,992,098  for the quarter ended June 30, 2000
compared  to  $1,410,744  for the  quarter  ended June 30,  1999 an  increase of
$581,354, or approximately 41%. Of this increase,  $384,201 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.  The  Company  also had  increased
expenses in connection with the development of the I-C-IT  technology  platform,
increased marketing expenditures related to UIT's DIVO technology, and increased
personnel  costs as a result  of a  significant  build-up  of  employees  in the
Internet technology business,  as well as increased legal and consulting fees in
connection with the  establishment of a new corporate and operational  framework
for the business.

      DIRECT OPERATING EXPENSES. Direct operating expenses were $522,944 for the
quarter  ended June 30, 2000 compared to $673,843 for the quarter ended June 30,
1999 a decrease of $150,894 or approximately 22%. This decrease is primarily due
to decreased  expenses  from  recreational  and corporate  activities  offset by
increased expenditures incurred in connection with the build-up of the Company's
Internet business described above.

      SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES.   Selling,  general  and
administrative  expenses  were  $1,068,862  for the quarter  ended June 30, 2000
compared to $492,400 for the quarter ended June 30, 1999 an increase of $576,462
or approximately  117%. This increase was primarily due to increased expenses in
connection with the  development of the I-C-IT  technology  platform,  increased
marketing   expenditures  related  to  the  DIVO(TM)  technology  and  increased
personnel  costs  as a result  of the  build-up  of  employees  in the  Internet
technology business.

                                       8
<PAGE>

      NON-CASH  COMPENSATION  EXPENSES.   Non-cash  compensation  expenses  were
$384,201  for the  quarter  ended June 30, 2000  compared  to  $203,512  for the
quarter ended June 30, 1999 an increase of $180,689 or  approximately  89%. This
increase was due to options to purchase  shares of UIT common  stock  granted to
members of UIT's advisory board.

      DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses were
$16,091 for the quarter  ended June 30, 2000 compared to $40,989 for the quarter
ended June 30, 1999 a decrease of $24,898 or  approximately  61%.  This decrease
was due to a reduced  depreciable  asset base in  connection  with  discontinued
operations from recreational and corporate activities.

Other Income

      Other income consists of interest income,  interest expense, gain on sale,
and litigation settlement.  During the quarter ended June 30, 2000, other income
was $737,189  compared to other  expense of $305,626 for the quarter  ended June
30, 1999, an increase of $1,042,815. This increase was primarily due to the gain
of $600,000  during the quarter ended June 30, 2000 on the sale of the Company's
investment in Netcruise.com, Inc (formerly known as Genisys Reservation Systems,
Inc.) UIT  received  the  Netcruise.com,  Inc.  shares as  compensation  for the
licensing of its  technology  in a prior year.  The remainder of the increase in
other income resulted from an increase in interest income of $118,707.

Net Loss

      For the reasons  stated above,  for the quarter  ended June 30, 2000,  the
Company had a net loss of ($1,044,566) or ($0.05) per share as compared to a net
loss of ($1,234,273) or ($0.08) per share for the quarter ended June 30, 1999.

                   SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO
                         SIX MONTHS ENDED JUNE 30, 1999

Revenues

      The Company had total revenues of $1,179,077 for the six months ended June
30, 2000,  compared to total  revenues of $801,540 for the six months ended June
30, 1999, an increase of $377,537 or approximately  47%. This increase  resulted
primarily  from  $700,000 in  revenues  generated  in the first  quarter of 2000
pursuant to licensing  agreements  related to interactive  CD-ROMs utilizing the
Company's DIVO  technology  which were created for Teen People  Magazine and for
Nordstrom, Inc.

      LICENSING  FEES.  Revenues from  licensing  fees were $701,567 for the six
months ended June 30,  2000,  compared to $200,000 for the six months ended June
30,  1999,  an  increase  of $501,567 or  approximately  251%.  The  increase in
licensing revenue is primarily from $700,000 in revenues  generated in the first
quarter of 2000 pursuant to licensing  agreements related to interactive CD-ROMs
utilizing the Company's DIVO  technology,  which were created by the Company for
Teen  People  Magazine  and  Nordstrom,   Inc.   Licensing   revenues  decreased
significantly  during the second  quarter of 2000.  This  decrease in  licensing
revenue is  attributable  to the  Company's  decision to refocus  it's  DIVO(TM)
technology  licensing  strategy  from  providing  customized  turnkey  licensing
projects for  individual  customers  to  development  of a  licensable  software
product.  The Company  currently  plans to begin offering a licensable  software
version of its DIVO technology in the third quarter of 2000.

      RECREATIONAL  AND  CORPORATE  ACTIVITIES.  Revenue from  recreational  and
corporate  activities  for the six  months  ended  June 30,  2000 were  $477,510
compared  to  $601,540  for the six  months  ended June 30,  1999 a decrease  of
$124,030 or approximately 21%. This is the result of the Company reorienting its
business  to  focus  on its  Internet  technology  while  moving  away  from its
historical  emphasis  on  recreational  and  corporate  activities,  the Company
expects its revenue from  recreational  and corporate  activities to continue to
decline in future periods.

                                       9
<PAGE>

Operating Expenses

      Total operating  expenses increased to $4,605,189 for the six months ended
June 30,  2000,  from  $2,438,459  for the six months  ended June 30,  1999,  an
increase of $2,116,730 or approximately  89%. Of this increase,  $615,260 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.  The balance of the
increase was  primarily  due to the increase in expenses  incurred in connection
with the refocusing of the Company's Internet technology  licensing strategy and
development of the I-C-IT technology platform,  increased marketing expenditures
related to UIT's DIVO technology, and increased personnel costs as a result of a
significant build-up of employees in the Internet technology  business,  as well
as increased  legal and consulting  fees in connection  with the build-up of the
Company and the  establishment of a new corporate and operational  framework for
the business.

      DIRECT OPERATING  EXPENSES.  Direct operating expenses were $1,877,184 for
the six months  ended June 30, 2000  compared to  $1,224,860  for the six months
ended June 30, 1999 an increase of $652,324 or approximately  53%. 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  $2,085,442 for the six months ended June 30, 2000
compared to  $890,072  for the six months  ended June 30,  1999,  $1,195,370  or
approximately  134%.  This increase was  primarily due to increased  expenses in
connection with the  development of the I-C-IT  technology  platform,  increased
marketing   expenditures  related  to  the  DIVO(TM)  technology  and  increased
personnel  costs  as a  result  of a  build-up  of  employees  in  the  Internet
technology business.

      DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses were
$27,303 for the six months  ended June 30, 2000  compared to $85,827 for the six
months  ended June 30, 1999 a decrease  of $58,524 or  approximately  68%.  This
decrease  was  due to a  reduced  depreciable  asset  base  in  connection  with
discontinued operations from recreational and corporate activities.

      NON-CASH  COMPENSATION  EXPENSES.   Non-cash  compensation  expenses  were
$615,260 for the six months  ended June 30,  2000,  compared to $237,700 for the
six months ended June 30, 1999, an increase of $377,560 or  approximately  159%.
This  increase is due to options to purchase  shares of UIT common stock granted
to members of UIT's advisory board.

Other Income

      Other income consists of interest income,  interest expense, gain on sale,
and  litigation  settlement.  During the six months ended June 30,  2000,  other
income was  $788,634  compared to other  expense of $608,939  for the six months
ended June 30, 1999, an increase of $1,397,573.  This increase was primarily due
to the gain of $600,000 during the six months ended June 30, 2000 on the sale of
the  Company's  investment  in  Netcruise.com,  Inc  (formerly  known as Genisys
Reservation  Systems,  Inc.).  UIT received the  Netcruise.com,  Inc.  shares as
compensation  for the licensing of its technology in a prior year. The remainder
of the increase in other income  resulted from an increase in interest income of
$159,852.

Net Loss

      For the reasons stated above,  for the six months ended June 30, 2000, the
Company had a net loss of ($2,637,478)  or ($0.14) per share,  compared to a net
loss of  $(2,245,858)  or ($0.16)  per share for the six  months  ended June 30,
1999.

LIQUIDITY AND FINANCIAL CONDITION

      The  Company is  experiencing  operating  losses.  At June 30,  2000,  the
Company had cash and cash  equivalents  of  $9,216,667  and  working  capital of
$8,628,301,  compared to cash and cash  equivalents  of  $1,998,059  and working


                                       10
<PAGE>

capital of $1,144,549  at December 31, 1999,  an increase in working  capital of
approximately  653%.  This  increase is  primarily  due to the  increase in cash
generated from issuances of common stock and a reduction in current  liabilities
during the six months ended June 30, 2000.

      Net cash used in operating  activities  was  $2,331,628 for the six months
ended June 30, 2000 as compared to $1,050,856  for the six months ended June 30,
1999.   This  increase  is  primarily  due  to  higher   selling,   general  and
administrative and direct operating expenses in connection with restructuring of
the Company's Internet technology business, development of the I-C-IT technology
platform,  increased  marketing  expenditures  related to UIT's DIVO 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  $551,550  for the six months
ended June 30,  2000,  compared  to $210,049  for the six months  ended June 30,
1999.  This  increase is primarily due to an increase in purchases of equipment,
organizational  build up of UIT and capitalized  development costs in connection
with the Company's Internet technology business.

      Net cash  provided by financing  activities  was  $10,101,786  for the six
months ended June 30, 2000, compared to $1,686,300 for the six months ended June
30, 1999.  This increase is due to a private  placement of the Company's  common
stock in  January  2000 and to  issuances  of  common  stock  upon  exercise  of
outstanding Class A Warrants and stock options.

      The Company's future capital  requirements  will depend on various factors
including:

      1.    The number of applications  using the Company's  technology that the
            Company determines to develop; and

      2.    United  Internet's need to hire  additional  technical and marketing
            personnel.

      If the Company is unable to raise  additional  funds when needed,  through
the private  placement of its securities,  it may seek financing from affiliated
or unaffiliated  third parties.  There can be no assurance,  however,  that such
financing would be available to the Company when and if it is needed, or that if
it is available,  that it will be available on terms  acceptable to the Company.
If the Company is unable to sell its securities or obtain  financing to meet its
working  capital needs,  the Company may have to consider such  alternatives  as
selling or pledging portions of its assets, among other possibilities,  in order
to meet such obligations.

      The  Company  believes  that its  primary  sources  for cash over the next
twelve  months will be its current  cash and income  from  investments,  and the
exercise of outstanding  warrants.  Although the Company  believes these sources
will provide the Company with sufficient funds to meet the Company's anticipated
working capital and capital  expenditures needs for at least the next 12 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 the Company.

      The Company wishes to expand its  development  and marketing  capabilities
for  its  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,  the  Company  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 the Company will be able to
acquire additional financing on favorable terms, or at all.

YEAR 2000 COMPLIANCE

      The Company 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  problem  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.


                                       11
<PAGE>

                           PART II. OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

      The Company and its wholly-owned subsidiary, United Internet Technologies,
Inc. ("UIT"),  are parties in 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. Patent 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.

ITEM  2. CHANGES IN SECURITIES

      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.


                                       12
<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)


August 11, 2000                     BY: /S/ BRIAN SHUSTER
                                    ---------------------------------
                                    Brian Shuster
                                    Chairman of the Board and
                                    Chief Executive Officer
                                    (Principal Executive Officer and
                                    Principal Financial Officer)


                                       13
<PAGE>


EXHIBIT INDEX

      NO.   DESCRIPTION
      --    -----------
      27    Financial Data Schedule


                                       14