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

                                   FORM 10-QSB

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

         For the quarterly period ended   December 31, 2000
                                          -----------------

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
         For the transition period from                     to
                                        -------------------    -----------------

                  Commission file number      033-23138-D
                                              -----------


                                 HEARTSOFT, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

          Delaware                                      87-0456766
------------------------------------        ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
        organization)

             3101 North Hemlock Circle, Broken Arrow, Oklahoma 74012
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (918) 362-3600
--------------------------------------------------------------------------------
                           (Issuer's Telephone Number)

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

As of December 31, 2000,  12,103,837  shares of  Heartsoft,  Inc.  Common Stock,
$0.0005 par value, were outstanding.

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


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<PAGE>
                                                                            PAGE
PART I.  FINANCIAL INFORMATION

Item 1:  Balance Sheet as of December 31, 2000                                3

         Statement of Operations For the Six Month Periods Ended
         December 31, 2000 and December 31, 1999                              5

         Statement of Operations For the Three Month Periods Ended
         December 31, 2000 and December 31, 1999                              6

         Statement of Cash Flows For the Six Month Periods Ended
         December 31, 2000 and December 31, 1999                              7

         Notes to Financial Statements                                        8

Item 2:  Management's Discussion, Analysis of Financial Condition,
         and Results of Operations                                           11

PART II.  OTHER INFORMATION

Item 2:  Changes in Securities and Use of Proceeds                           17

Item 6:  Exhibits and Reports on Form 8-K                                    18

Signature Page                                                               24


INTRODUCTORY STATEMENT REGARDING ADOPTION OF FISCAL YEAR:

On August 4, 2000, the Board of Directors of Heartsoft, Inc. changed the
Company's fiscal year end from March 31 to June 30 effective for the fiscal year
beginning July 1, 2000. Therefore, "Fiscal Year 2001" will be for the period
July 1, 2000 to June 30, 2001 and the three months ended September 30, 2000 and
the three months ended December 31, 2000 represents the first and second
quarters of Fiscal Year 2001, respectively.

                                       2
<PAGE>


PART I -- FINANCIAL INFORMATION

Item 1:  Financial Statements


                                  BALANCE SHEET
                             As of December 31, 2000
                                   (Unaudited)

Assets
Current assets:
   Cash                                                        $    17,931
   Accounts receivable, trade, net of allowance
      of $24,893                                                    34,079
   Note receivable - officer                                       250,254
   Inventories, at cost                                             53,482
   Other                                                           118,590
                                                               -----------

Total current assets                                               474,336

Property and equipment, at cost:
   Property and equipment                                          282,792
   Less accumulated depreciation                                  (133,056)
                                                               -----------

Property and equipment, net                                        149,736

Other assets:
   Developed software, net                                         966,222
   Other                                                             4,668
                                                               -----------

Total other assets                                                 970,890
                                                               -----------

Total assets                                                   $ 1,594,962
                                                               ===========




                                       3
<PAGE>

                                  BALANCE SHEET
                             As of December 31, 2000
                                   (Unaudited)


Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                            $   328,507
   Notes payable                                                   635,361
   Accrued expenses                                                358,681
                                                               -----------

Total current liabilities                                        1,322,549

Long term liabilities:
   Notes payable                                                    28,871
                                                               -----------

Total liabilities                                                1,351,420

Commitments and contingencies                                         --

Stockholders' equity:
   Preferred stock, $0.01 par value, 5,000,000 shares
     authorized, 827,000 shares issued                               8,270
   Common stock, $0.0005 par value, 30,000,000 shares
     authorized, 12,103,837 shares issued                            6,052
   Additional paid-in capital                                    6,765,331
   Accumulated deficit                                          (6,536,111)
                                                               -----------

Total stockholders' equity                                         243,542
                                                               -----------

Total liabilities and stockholders' equity                     $ 1,594,962
                                                               ===========





                                       4
<PAGE>

                             STATEMENT OF OPERATIONS
                                   (Unaudited)


                                           Six Month Periods Ended
                                                  December 31,
                                        -------------------------------
                                            2000                1999
                                        -----------         -----------

Net sales                               $   208,333         $   152,698

Costs and expenses:
   Cost of production                       101,920              57,277
   Sales and marketing                      435,399             211,401
   General and administrative               825,543             413,204
   Depreciation and amortization             73,652              58,573
                                        -----------         -----------

Total operating expenses                  1,436,514             740,455
                                        -----------         -----------

Operating loss                           (1,228,181)           (587,757)

Other income and expense:
   Interest expense                          84,530              37,128
   Other, net                                (3,778)             17,654
                                        -----------         -----------

                                             80,752              54,782
                                        -----------         -----------

Loss before income taxes                 (1,308,933)           (642,539)

Income taxes                                   --                  --
                                        -----------         -----------

Net income (loss)                       $(1,308,933)        $  (642,539)
                                        -----------         -----------

Earnings per share                      $     (0.11)        $     (0.06)
                                        -----------         -----------


                                       5
<PAGE>

                             STATEMENT OF OPERATIONS
                                   (Unaudited)


                                          Three Month Periods Ended
                                                 December 31,
                                         ---------------------------
                                            2000             1999
                                         ---------         ---------

Net sales                               $ 110,717         $  80,804

Costs and expenses:
   Cost of production                      54,306            32,260
   Sales and marketing                    234,105           153,127
   General and administrative             261,791           269,484
   Depreciation and amortization           35,908            29,286
                                        ---------         ---------

Total operating expenses                  586,110           484,157
                                        ---------         ---------

Operating loss                           (475,393)         (403,353)

Other income and expense:
   Interest expense                        80,566            27,981
   Other, net                              (1,740)           15,991
                                        ---------         ---------

                                           78,826            43,972
                                        ---------         ---------

Loss before income taxes                 (554,219)         (447,325)

Income taxes                                 --                --
                                        ---------         ---------

Net income (loss)                       $(554,219)        $(447,325)
                                        ---------         ---------

Earnings per share                      $   (0.05)        $   (0.04)
                                        ---------         ---------



                                       6
<PAGE>

                             STATEMENT OF CASH FLOWS
                      Six Month Periods Ended December 31,
                                   (Unaudited)


                                                      2000             1999
                                                  -----------      -----------
Cash Flows from Operating Activities
Net loss                                          $(1,308,933)     $  (642,539)
Adjustments to reconcile net loss to net cash
used in operating activities:
     Depreciation and amortization                     73,652           73,651
     Common stock issued for services                  55,909             --
     Changes in:
         Accounts receivable                           30,333           33,312
         Note receivable                                 --            (11,739)
         Other assets                                  38,469           (1,550)
         Inventories                                   (6,462)          (5,602)
         Accounts payable                              43,207           13,965
         Accrued expenses                             282,112             --
                                                  -----------      -----------

Net cash used in operating activities                (791,713)        (540,502)

Cash Flows from Investing Activities
Capitalized software development costs               (283,055)        (121,772)
Advances on note receivable                          (276,254)            --
Collection of note receivable                          26,000             --
Payments for the purchase of property                 (55,048)         (56,681)
                                                  -----------      -----------

Net cash used in investing activities                (588,357)        (178,453)


Cash Flows from Financing Activities
Proceeds from issuance of debt                        629,674           82,500
Principal payments of debt                            (31,993)        (226,361)
Proceeds from issuance of preferred stock                --               --
Proceeds from issuance of common stock                706,500          964,300
                                                  -----------      -----------
Net cash provided by financing activities           1,304,181          820,439
                                                  -----------      -----------

Net increase (decrease) in cash                       (75,889)         101,484
Cash at beginning of period                            93,820            4,177
                                                  -----------      -----------

Cash at end of period                             $    17,931      $   105,661
                                                  ===========      ===========

                                       7
<PAGE>

                                 HEARTSOFT, INC.
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (Unaudited)

         The accompanying unaudited financial statements have been prepared in
accordance with instructions to Form 10-QSB as prescribed by the Securities and
Exchange Commission. In the opinion of management, all adjustments required to
make a fair presentation of the results of operations of Heartsoft, Inc., a
Delaware corporation ("Heartsoft," or the "Company," including its subsidiary),
for the six and three month periods ended December 31, 2000 have been included.
The results of operations for the six month period ended December 31, 2000 are
not necessarily indicative of the results of operations that may be achieved for
the entire fiscal year.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CHANGE IN YEAR END

         On August 4, 2000, the Board of Directors of the Company changed the
Company's fiscal year end from March 31 to June 30 effective for the fiscal year
beginning July 1, 2000. Therefore, "Fiscal Year 2001" will be for the period
July 1, 2000 to June 30, 2001 and the three months ended September 30, 2000 and
the three months ended December 31, 2000 represents the first and second
quarters of Fiscal Year 2001, respectively.

NOTE 2 - NOTE RECEIVABLE

         On November 13, 2000, an officer of the Company borrowed $276,254 from
the organization. Per the promissory note the officer will repay the principal
amount together with interest at a per annum rate of 6.15% upon maturity. The
principal sum of the promissory note plus interest is due on November 13, 2001.
The officer may elect to pay all accrued interest on November 13, 2001 and
extend the promissory note until November 13, 2002. As of December 31, 2000 the
outstanding balance due the Company was $250,254.


NOTE 3 - NOTES PAYABLE

Notes payable consist of the following at December 31, 2000:

         Note payable to a finance company, $4,575 monthly,
           due June 2001, bearing interest at 14.82%,
           secured by property and equipment.                          $ 38,625

         Note payable to a finance company, $738 monthly, due
           July 2003, bearing interest at 14.82%, secured by
           property and equipment                                        16,923

                                        8
<PAGE>

         Note payable to an investment group, balloon
           payment due December 31, 2000, bearing interest
           at 8%. Investment group has elected to convert to
           common stock                                                  60,000

         Note payable to a finance company, $1,490 monthly,
           due October 2003, bearing interest at 14.82%,
           secured by property and equipment                             38,684

         Note payable to a trust, balloon payment due May 9,
           2001, bearing interest at 6.15%                              250,000

         Note payable to a limited partnership, balloon
           payment due May 9, 2001, bearing interest at
           6.15%                                                        250,000

         Note payable to investor, balloon payment due June
           20, 2001, bearing interest at 8%                              10,000
                                                                       --------

       Total                                                            664,232

       Current portion                                                  635,361
                                                                       --------

       Non-current portion                                             $ 28,871
                                                                       ========

         On November 9, 2000, the Company borrowed a total of $500,000 under two
separate promissory notes, each for the principal sum of $250,000. The principal
sum of both promissory notes plus interest at a per annum rate equal to 6.15%
are due on the earlier of May 9, 2001 or five business days after the Company
shall have received equity investments or debt financing in excess of $750,000.
In order to induce the parties to enter into the promissory notes, the Company
also issued the holders of each of the promissory notes 125,000 shares of common
stock of the Company. The discounted value of the 250,000 shares totaled
$150,000 and will be recorded as interest expense and amortized over the term of
the notes. For the three months ended December 31, 2000 the Company recorded
$46,797 in interest expense associated with this financing arrangement. The
notes may be pre-paid in whole or in part at any time without penalty, but with
interest to the date of payment on the amount prepaid.

NOTE 4  - ACCRUED EXPENSES

General and Administrative Expense:

         On September 27, 2000, the Company and the holder of the Series A
preferred stock entered into an amendment to the Stock Purchase Agreement (the
"Amendment"). Under the terms of the original Stock Purchase Agreement, the
Company agreed to cause a registration

                                       9
<PAGE>

statement relating to the common shares into which the Series A preferred stock
are convertible, and the common shares issuable upon exercise of certain
warrants to become effective by August 1, 2000. Also under the terms of the
original Stock Purchase Agreement, the Company would become liable under a
penalty provision in the Stock Purchase Agreement if the Company were unable to
cause such registration statement to become effective by August 1, 2000. Under
the Amendment to the Stock Purchase Agreement, the Company agreed to cause a
registration statement relating to the common shares into which the Series A
preferred stock are convertible, and the common shares issuable upon exercise of
certain warrants to become effective within a reasonable time after October 1,
2000. In addition, the Company agreed to issue 300,000 shares of common stock to
the Series A preferred stockholder in exchange for the stockholder's agreement
to release the Company from any and all current and future liability that the
Company might have under the penalty provision. A liability totaling $227,810
associated with the 300,000 shares was recorded. The stock was issued on January
3, 2001.

         In the quarter ended June 30, 2000, the Company sold 325,000 shares of
restricted common stock. In connection with the sale of the 325,000 shares,
Heartsoft agreed to file a registration statement. As of February 13, 2001 a
registration has not been filed. Starting October 1, 2000, a penalty of 10,000
shares per month was awarded until the 325,000 shares become free-trading. For
the three months ending December 31, 2000 the Company recorded a liability of
$14,251 in penalties. As of February 13, 2001, these shares have not been
issued.

NOTE 5  - EARNINGS PER SHARE

Basic and diluted EPS are computed as follows:

                                              Six month periods ended
                                                   December 31,
                                             2000                 1999
                                    --------------------------------------------
Basic EPS computation:

      Net loss                           $ (1,308,933)         $  (642,539)

      Weighted average
         Shares outstanding                11,505,391           10,562,949
                                    --------------------------------------------
      Basic and diluted
         Net loss per share              $      (0.11)         $     (0.06)
                                    ============================================

NOTE 6  - UNCERTAINTIES

         The Company has experienced recurring operating losses and negative
cash flows from operating activities, which increased to $1,308,933 and
$791,713, respectively, for the six months ended December 31, 2000. Management
implemented a program to increase the marketing and sales staff from previous
year's level, however, the expenses associated with staff increases are not
expected to have a substantial impact on revenues until later in fiscal year
2001.

                                       10
<PAGE>

         In order to finance these negative cash flows, the Company secured
approximately $1,294,000 in funding during the six months ended December 31,
2000 through placement of debt and common stock.

         While product development expenditures have been substantial for
INTERNET SAFARI(TM) - a full-featured secure Internet browser for children, its
final release did not occur as of December 31, 2000.

         Management released INTERNET SAFARI(TM) on February 7, 2001 and
anticipates introducing new products during fiscal 2001. With new products and a
strengthened sales staff, management believes revenues from product sales will
increase. In order to finance the continuing costs of product development and
operating losses, management intends to raise additional capital through equity
offerings. However, the Company has no formal commitments for equity placements.
The ability of the Company to implement its operating plan and to continue as a
going concern depends on its ability to raise equity capital and, ultimately, to
achieve profitable operations.

NOTE 7  - SUBSEQUENT EVENT

         To support the Company's policy of growth and to meet working capital
needs during the development and release of INTERNET SAFARI(TM), the Company
borrowed $75,000 on January 24, 2001 and $175,000 on February 5, 2001 under a
convertible promissory note for the principal sum of $250,000. The principal sum
of the convertible promissory note plus interest at a per annum rate equal to
6.15% are due on the earlier of August 5, 2001 or five business days after the
Company shall have received equity investments or debt financing in excess of
$1,500,000. In order to induce the party to enter into the convertible
promissory note, the Company issued the holder 125,000 shares of common stock of
the Company and agreed to pledge as collateral all intangible property. The
holder of the convertible promissory note may at his option convert the unpaid
principal amount into shares of Common Stock. The basic conversion rate shall be
one share of Common stock for each $.666666 in principal amount of the note
surrendered for conversion. The note may be pre-paid in whole or in part at any
time without penalty, but with interest to the date of payment on the amount
prepaid.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
----------------------------------------------------------

         This Form 10-QSB contains "forward-looking" statements regarding
potential future events and developments affecting the business of Heartsoft,
Inc., a Delaware Corporation ("Heartsoft" or the "Company," including its
subsidiary). Forward-looking statements may be indicated by the words "expects,"
"estimates," "anticipates," "intends," "predicts," "believes" or other similar
expressions. Forward-looking statements appear in a number of places in this
Form 10-QSB and may address the intent, belief or current expectations of
Heartsoft and its Board of Directors and Management with respect to Heartsoft
and its business. Heartsoft's ability to

                                       11
<PAGE>

predict results or the effect of any future events on Heartsoft's operating
results is subject to various risks and uncertainties.

GENERAL INFORMATION
-------------------

         Heartsoft is a publicly held Delaware Corporation, incorporated on
January 15, 1988, and traded in the Over the Counter Bulletin Board (OTCBB)
market under the symbol "HTSF." The Company is a provider of proprietary
educational computer software products distributed to the education and consumer
markets. Its products are sold through an internal sales organization, national
and international resellers, United States based catalogers with an annual
aggregate circulation in excess of 5,000,000 catalogs and online through four
corporate websites, www.heartsoft.com, www.internet-safari.com,
www.thinkology.com, and www.isafari.com.

         Through the six month period ended December 31, 2000, the Company's
product line was comprised of approximately 50 educational software programs
that assist young children in pre-kindergarten through the 6th grade to practice
and learn basic curriculum subjects. On February 7, 2001, the Company released
its new secure Internet browser for children, INTERNET SAFARI(TM) Version 1.0.
The release of INTERNET SAFARI(TM) will broaden the Company's product line to
include an Internet-based software solution.

         The Company intends to continue to expand its traditional educational
software business through internal growth as well as by focusing a substantial
portion of its resources on the introduction and sale of INTERNET SAFARI(TM).
Beginning in Fiscal Year 2001, the Company intends to use the Internet to expand
its geographic reach deeper into the consumer market both in the United States
and internationally.

         For the six-month period ended December 31, 2000, the Company
experienced a loss of $1,308,933 and accumulated a total deficit of $6,536,111.
This loss and accumulated deficit have been primarily caused by the Company's
efforts in positioning itself for the release of INTERNET SAFARI(TM) and are
related, for the most part, to marketing and general and administrative
expenses.

         To reach profitability, the Company plans, among other things, to do
the following:

           o   Release its secure Internet browser, INTERNET SAFARI(TM) on
               February 7, 2001;
           o   Expand the marketing of all of the Company's products for the
               consumer and school markets by utilizing additional marketing
               resources such as direct mail, on-line purchasing, demonstration
               versions of key products, magazine advertising and more;
           o   Establish strategic joint venture partners both in the United
               States and internationally.

         The Company plans to strengthen its brand name awareness and position
and to utilize its technological infrastructure and software development
capabilities to continue refining and upgrading its current and future products.
Accordingly, the Company intends to invest heavily in marketing and advertising,
new partnerships and strategic alliances, and its technology

                                       12
<PAGE>

infrastructure. The Company also anticipates that it will continue to experience
losses similar to those reflected in the statement of operations. Significant
increases in the Company's advertising and marketing campaigns will contribute
to such loss. The Company believes that this program of expansion is necessary
to continue building its brand recognition and ability to generate revenues.

         Further, if the investments mentioned above are successful, the Company
anticipates that it will see an increase in revenues and a narrowing of losses
as percentage of revenues. The Company expects that the combination of increased
revenues and decreased expenses as percentage of revenues will lead to
profitability.

         The Company believes that its investment in the development of INTERNET
SAFARI(TM) and the secure browser's release represents a key element of its
future and that the Company can become a leading player in the children's
Internet market.

RESULTS OF OPERATIONS
---------------------

SIX MONTH PERIOD ENDED DECEMBER 31, 2000  VS. SIX MONTH PERIOD ENDED
DECEMBER 31, 1999

NET REVENUE

         Revenue for the six months ended December 31, 2000 increased to
$208,333 from $152,698 for the six months ended December 31, 1999, an increase
of $55,635 or 36%. The increase is primarily the result of hiring a Vice
President of Sales and Marketing in late 1999, reorganizing and expanding the
education sales division from nine to fifteen employees, and continuing the
implementation of a broad-based marketing strategy. The marketing strategy
focused on adding quality sales personnel and directing their efforts in
promoting educational programs to schools while maintaining existing reseller
business. It also included higher attendance at trade shows and increased direct
mailings, both of which contributed to the increase in revenues.

COST OF PRODUCTION

         Cost of production includes all costs associated with the acquisition
of raw materials, assembly of finished products, warehousing, shipping, and
payroll associated with production and shipping of finished products. This
expense category also includes labor costs associated with maintaining and
implementing enhancements to existing educational programs as well as
miscellaneous costs related to the needs of the Production Department. Cost of
production for the six months ended December 31, 2000 was $101,920 compared to
$57,277 for the six months ended December 31, 1999, an increase of $44,643 or
78%. Cost for the acquisition of raw materials increased approximately $13,135
as a result of increased sales as noted in the Net Revenue discussion above.
Payroll cost increased $12,728 primarily from the addition of a technical
support employee coupled with annual increases for existing employees. Labor
costs associated with maintaining and enhancing existing educational programs
increased approximately $9,741. Expenses for office rent increased $8,505 as a
result of leasing additional office space in late 1999 and early 2000.

                                       13
<PAGE>

SALES AND MARKETING

         Sales and marketing expenses for the six months ended December 31, 2000
were $435,399 versus $211,401 for the six months ended December 31, 1999, an
increase of $223,998 or 106%. As noted previously, in the Net Revenue
discussion, a Vice President of Sales and Marketing was hired in late 1999, the
education sales division was reorganized and expanded, as the Company's
broad-base marketing strategy continues to be implemented. This strategy
involves active utilization of temporary personnel to fill selected positions,
then upon satisfactory completion of work responsibilities the hiring of these
individuals as full-time employees. All of the above factors, coupled with
direct mail campaigns targeted at schools, new advertising materials and higher
attendance at industry trade-shows lead to increased expenses in sales and
marketing. An approximate breakdown by component of the major increases in sales
and marketing expense follows: payroll and benefits $144,276; travel and
conferences $40,241; and contract labor $18,185.

GENERAL AND ADMINISTRATIVE

         Total general and administrative (G&A) expense for the six months ended
December 31, 2000 was $825,543 compared to $413,204 for the same period in 1999,
an increase of $412,339. The primary reason for this increase relates to
accruing penalties totaling $227,810 and $14,251, respectively. The first amount
in connection with amending a Stock Purchase Agreement whereby the Company
agreed to issue 300,000 shares of Common Stock in order to eliminate any
liability the Company might have under a penalty provision in that Stock
Purchase Agreement and the second amount for recording a penalty provision for
the three months ending December 31, 2000 relating to another Agreement (see
Financial Statement Note 4 - Accrued Expenses).

         Additional factors causing the increase in G&A expense can be
attributed to taking the necessary steps to build the Company's infrastructure.
These factors include the addition of a Chief Financial Officer, assuming full
reporting status to become compliant with SEC regulations, and strengthening
strategic customer and investor relationships, all of which are critical to
minimizing risks to the Company and execution of its business plan. Further, on
a historical basis, executive management focused primarily on the development of
educational programs resulting in capitalization of appropriate executive
salaries. This focus shifted from development to more of an administrative role
resulting in the expensing of appropriate executive salaries and an increase in
related G&A payroll costs. An approximate breakdown by component (excluding the
late registration filing penalty expense noted above) of other major increases
in G&A expense follows: payroll and benefits $77,498; professional costs related
to accounting, legal fees, and investment service fees $72,837; and
miscellaneous expenses $12,471 which includes cost associated with the Vice
President of Sales and Marketing relocation to Heartsoft's Corporate Office in
Broken Arrow, Oklahoma.

                                       14
<PAGE>

INTEREST EXPENSE

         Interest expense for the six months ended December 31, 2000 was $84,530
compared to $37,128 for the same period in 1999, an increase of $47,402. The
primary reason for this increase relates to recording interest for financing
agreements made on November 9, 2000. The Company borrowed a total of $500,000
under two separate promissory notes and issued 250,000 shares of common stock to
induce the parties to enter into the promissory notes (see Financial Statement
Note 3 - Notes Payable).

THREE MONTH PERIOD ENDED DECEMBER 31, 2000 VS. THREE MONTH PERIOD ENDED
DECEMBER 31, 1999

NET REVENUE

         Revenue for the three months ended December 31, 2000 increased to
$110,717 from $80,804 for the three months ended December 31, 1999, an increase
of $29,913 or 37%. As noted previously the increase is primarily the result of
hiring a Vice President of Sales and Marketing in late 1999, reorganizing and
expanding the education sales division and continuing the implementation of a
broad-based marketing strategy.

COST OF PRODUCTION

         Cost of production includes all costs associated with the acquisition
of raw materials, assembly of finished products, warehousing, shipping, and
payroll associated with production and shipping of finished products. This
expense category also includes labor costs associated with maintaining and
implementing enhancements to existing educational programs as well as
miscellaneous costs related to the needs of the Production Department. Cost of
production for the three months ended December 31, 2000 was $54,306 compared to
$32,260 for the three months ended December 31, 1999, an increase of $22,046 or
68%. Cost for the acquisition of raw materials increased approximately $7,280 as
a result of increased sales as noted in the Net Revenue discussion above. Labor
costs associated with maintaining and enhancing existing educational programs
increased approximately $7,475. Expenses for office rent increased $5,820 as a
result of leasing additional office space in late 1999 and early 2000.

SALES AND MARKETING

         Sales and marketing expenses for the three months ended December 31,
2000 were $234,105 versus $153,127 for the three months ended December 31, 1999,
an increase of $80,978 or 53%. As noted previously, in the Net Revenue
discussion, a Vice President of Sales and Marketing was hired in late 1999, the
education sales division was reorganized and expanded, as the Company's
broad-base marketing strategy continues to be implemented. An increase in
headcount coupled with higher attendance at industry trade-shows lead to
increased expenses in sales and marketing. An approximate breakdown by component
of the major increases in sales and marketing expense follows: payroll and
benefits $70,164; and travel and conferences $17,430.


                                       15
<PAGE>

GENERAL AND ADMINISTRATIVE

         Total general and administrative (G&A) expense for the three months
ended December 31, 2000 was $261,791 compared to $269,484 for the same period in
1999, a decrease of $7,693. During this period, payroll and benefits increased
approximately $35,068 primarily from the addition of a Chief Financial Officer,
and a shifting of executive salaries from a product development to an
administrative role. This increase was more than offset by decreases in personal
property taxes and professional fees versus previous year expenses.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         To support the Company's policy of growth and to meet working capital
needs during the development of INTERNET SAFARI(TM), the Company secured
approximately $1,294,000 in funding during the six months ended December 31,
2000 through private placements of debt and common stock. A breakdown of this
funding is as follows:

o    On August 18, 2000, the Company borrowed $100,000 under a convertible
     promissory note agreement. On September 27, 2000, the Company amended this
     agreement to issue 80,000 shares of restricted common stock in lieu of a
     payment of $40,000. This stock issuance reduced the promissory note to
     $60,000.

o    On November 9, 2000, the Company borrowed $500,000 under two separate
     promissory notes, each for the principal sum of $250,000. The principal sum
     of both promissory notes plus interest at a per annum rate equal to 6.15%
     are due on the earlier of May 9, 2001 or five business days after the
     Company shall have received equity investments or debt financing in excess
     of $750,000.

o    On December 20, 2000 the Company received a loan from a private investor
     for $10,000. The loan bears interest at 8% and is due and payable on June
     20, 2001.

o    During the six months ended December 31, 2000, the Company sold 760,500
     shares of restricted common stock. Proceeds of the sale aggregated $684,000
     less offering expenses of $17,500. As of December 31, 2000, 280,500 shares
     remain to be issued.

         In order to maintain current level of operations, the Company will need
to secure additional funding sources to meet its operating expenses. Such
funding sources may include, but are not limited to, additional private
placements of common or convertible equities, placement of debt with banks,
private or public investors, or other lending institutions and/or licensing
agreements with strategic partners. The Company believes that through a
combination of outside sources of capital and revenues generated from product
sales it can produce sufficient sources of capital to meet its operating needs.
However, any substantial delays in receipt of or failure to obtain such capital
may prevent the Company from operating as a going concern, given its limited
revenues and capital reserves.


                                       16
<PAGE>

SUMMARY OF RISK FACTORS
-----------------------

         To date, the Company has funded its operations primarily through
revenues generated by various products and equity financings. The Company will
need additional capital before INTERNET SAFARI(TM) begins generating a
sufficient cash flow to sustain operations and anticipated growth. Additionally,
Heartsoft is subject to other risks and uncertainties. A summary of risk factors
is discussed in Part III of Heartsoft's Form 10-KSB for the transition period
April 1, 2000 to June 30, 2000, which was filed on September 28, 2000.

PART II -- OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES

RECENT SALES OF UNREGISTERED SECURITIES
---------------------------------------

         During the six months ended December 31, 2000, the Company has issued
the following securities without registering the securities under the Securities
Act of 1933:

------------------------------ -------------------------------------------------
      Class of Persons                             Consideration
------------------------------ -------------------------------------------------
Individuals and Investment      An  aggregate of 760,500 shares of common stock
Partnerships                    was sold for an aggregate cash consideration of
                                $684,000. As of December 31, 2000, 280,500
                                shares remain to be issued.
------------------------------ -------------------------------------------------
Investment Partnerships         A total of 250,000 shares of common stock were
                                issued to induce parties to enter into two
                                separate promissory notes.
------------------------------ -------------------------------------------------
Individuals                     A total of 194,500 shares of common stock were
                                issued for investor relation's, marketing and
                                financial services as well as finder fees
                                associated with financing arrangements.
------------------------------ -------------------------------------------------
Investment Group                A total of 80,000 shares of common stock were
                                issued in exchange for satisfaction of debt.
------------------------------ -------------------------------------------------
Employees                       A total of 11,000 shares of common stock were
                                granted for services.
------------------------------ -------------------------------------------------
Individual                      A total of 8,000 shares of common stock were
                                granted for conversion of convertible preferred
                                stock.
------------------------------ -------------------------------------------------

         The Company has agreed to issue a total of 330,000 shares of common
stock associated with penalty provisions resulting from delays in filing a
registration statement (see Financial Statement Note 4 - Accrued Expenses).
Additionally, as noted in Part II of Heartsoft's Form 10-KSB, filed on September
28, 2000, 325,000 shares of common stock were sold to an investor. As of
December 31, 2000, the above noted shares have not been issued.

                                       17
<PAGE>

         The Company relied on the exemption set forth in Section 4(2) of the
Securities Act of 1933, as amended, in connection with the issuances of stock
set forth above. All parties listed above are sophisticated persons or entities,
performed services for the Company or had prior or existing relationships with
members of Company's management staff at the time of the transactions listed
above.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

    EXHIBIT NO.                             DESCRIPTION
--------------------------------------------------------------------------------

         3.1         Articles of Incorporation of the Company. (Incorporated by
                     reference to the Company's Form 10-KSB/A for the period
                     ended March 31, 1999, which was filed on January 22, 2000.)

         3.2         By-Laws of the Company. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         4.1         Specimen of Certificate for Heartsoft, Inc. Common Stock.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.1        Equipment Lease with Auto & Equipment Leasing by Flex, Inc.
                     dated February 12, 1998. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         10.2        Software Agreement dated May 16, 1997 between Heartsoft,
                     Inc. and Heartsoft 1997 Limited Partnership. (Incorporated
                     by reference to the Company's Form 10-KSB/A for the period
                     ended March 31, 1999, which was filed on January 22, 2000.)

         10.3        Acquisition Note dated May 16, 1997 from Heartsoft 1997
                     Limited Partnership. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         10.4        Assumption Agreement dated April 30, 1997 by and among
                     Heartsoft 1997 Limited Partnership, Heartsoft, Inc. and
                     Limited Partners. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

                                       18
<PAGE>

         10.5        Joint Venture Agreement dated May 16, 1997 between
                     Heartsoft, Inc. and Heartsoft 1997 Limited Partnership.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.6        Software Agreement dated July 30, 1997 between Heartsoft,
                     Inc. and Heartsoft II 1997 Limited Partnership.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.7        Acquisition Note dated July 30, 1997 from Heartsoft II 1997
                     Limited Partnership. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         10.8        Assumption Agreement dated July 30, 1997 by and among
                     Heartsoft II Limited Partnership, Heartsoft, Inc. and
                     Limited Partners. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         10.9        Joint Venture Agreement dated July 30, 1997 between
                     Heartsoft, Inc. and Heartsoft II 1997 Limited Partnership.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.10       Software Agreement dated October 28, 1997 between
                     Heartsoft, Inc. and Heartsoft III 1997 Limited Partnership.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.11       Acquisition Note dated October 28, 1997 from Heartsoft III
                     1997 Limited Partnership. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

         10.12       Assumption Agreement dated July 30, 1997 by and among
                     Heartsoft III 1997 Limited Partnership, Heartsoft, Inc. and
                     Limited Partners. (Incorporated by reference to the
                     Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

                                       19
<PAGE>

         10.13       Joint Venture Agreement dated October 28, 1997 between
                     Heartsoft, Inc. and Heartsoft III 1997 Limited Partnership.
                     (Incorporated by reference to the Company's Form 10-KSB/A
                     for the period ended March 31, 1999, which was filed on
                     January 22, 2000.)

         10.14       Letter Agreement by and between Heartsoft, Inc. and the
                     Weather Channel Enterprises, Inc. dated September 1, 1999.
                     (Incorporated by reference to the Company's Form 10-KSB for
                     the period ended March 31, 2000, which was filed on July
                     14, 2000.)

         10.15       Co-branding Program Agreement by and between Heartsoft,
                     Inc. and Ask Jeeves, Inc. dated September 16, 1999.
                     (Incorporated by reference to the Company's Form 10-KSB for
                     the period ended March 31, 2000, which was filed on July
                     14, 2000.)

         10.16       Lease dated November, 1999 for commercial office space in
                     Broken Arrow, Oklahoma. (Incorporated by reference to the
                     Company's Form 10-KSB for the period ended March 31, 2000,
                     which was filed on July 14, 2000.)

         10.17       Lease dated January, 2000 for commercial office space in
                     Broken Arrow, Oklahoma. (Incorporated by reference to the
                     Company's Form 10-KSB for the period ended March 31, 2000,
                     which was filed on July 14, 2000.)

         10.18       Stock Purchase Agreement by and between Heartsoft, Inc. and
                     Hi-Tel Group, Inc. dated March 1, 2000 with Certificate of
                     Designation of the Series A Convertible Preferred Stock
                     attached as Exhibit A and Common Share Purchase Warrant
                     between Heartsoft, Inc. attached as Exhibit B.
                     (Incorporated by reference to the Company's Form 10-KSB for
                     the period ended March 31, 2000, which was filed on July
                     14, 2000.)

         10.19       Web Service Agreement by and between Heartsoft, Inc. and
                     Gaggle, Inc. dated June 9, 2000. (Incorporated by reference
                     to the Company's Form 10-KSB for the period ended March 31,
                     2000, which was filed on July 14, 2000.)

         10.20       Amendment to Stock Purchase Agreement by and between
                     Heartsoft, Inc. and Hi-Tel Group, Inc. dated September 27,
                     2000. (Incorporated by reference to the Company's Form
                     10-KSB for the transition period ended June 30, 2000 which
                     was filed on September 28, 2000.)

                                       20
<PAGE>

         10.21       Amendment to Heartsoft, Inc. Common Share Purchase Warrant
                     by and between Heartsoft, Inc. and Hi-Tel Group, Inc. dated
                     September 27, 2000 (Incorporated by reference to the
                     Company's Form 10-KSB for the transition period ended June
                     30, 2000, which was filed on September 28, 2000.)

         10.22       Original Equipment Manufacturing (OEM) Licensing Agreement
                     by and between Heartsoft, Inc. and International Academy of
                     Science dated April 28, 2000. (Incorporated by reference to
                     the Company's Form 10-QSB for the period ended September
                     30, 2000, which was filed on November 14, 2000.)

         10.23       Co-Branding License Agreement by and between Heartsoft Inc
                     and Merriam-Webster, Incorporated dated August 14, 2000.
                     (Incorporated by reference to the Company's Form 10-QSB for
                     the period ended September 30, 2000, which was filed on
                     November 14, 2000.)

         10.24       Promissory Note dated August 18, 2000 between Heartsoft,
                     Inc. and Hi-Tel Group, Inc. (Incorporated by reference to
                     the Company's Form 10-QSB for the period ended September
                     30, 2000, which was filed on November 14, 2000.)

         10.25       Equipment Lease with Auto & Equipment Leasing by Flex, Inc.
                     dated July 31, 2000. (Incorporated by reference to the
                     Company's Form 10-QSB for the period ended September 30,
                     2000, which was filed on November 14, 2000.)

         10.26       Trademark License Agreement by and between Heartsoft, Inc.
                     and Ask Jeeves dated September 8, 2000. (Incorporated by
                     reference to the Company's Form 10-QSB for the period ended
                     September 30, 2000, which was filed on November 14, 2000.)

         10.27       Letter Agreement granting Benjamin Shell, CEO of Heartsoft,
                     Inc., a non-exclusive license to use the Yahooligans logo
                     dated September 19, 2000. (Incorporated by reference to the
                     Company's Form 10-QSB for the period ended September 30,
                     2000, which was filed on November 14, 2000.)

         10.28       Amendment to Promissory Note between Heartsoft, Inc. and
                     Hi-Tel Group, Inc. dated November 8, 2000. (Incorporated by
                     reference to the Company's Form 10-QSB for the period ended
                     September 30, 2000, which was filed on November 14, 2000.)

                                       21
<PAGE>

         10.29       Promissory Note dated November 9, 2000 between Heartsoft,
                     Inc. and Alan W. Carlton Revocable Living Trust.
                     (Incorporated by reference to the Company's Form 10-QSB for
                     the period ended September 30, 2000, which was filed on
                     November 14, 2000.)

         10.30       Letter Agreement dated November 9, 2000 between Heartsoft,
                     Inc. and Alan W. Carlton Revocable Living Trust.
                     (Incorporated by reference to the Company's Form 10-QSB for
                     the period ended September 30, 2000, which was filed on
                     November 14, 2000.)

         10.31       Promissory Note dated November 9, 2000 between Heartsoft,
                     Inc. and June Limited Partnership. (Incorporated by
                     reference to the Company's Form 10-QSB for the period ended
                     September 30, 2000, which was filed on November 14, 2000.)

         10.32       Letter Agreement dated November 9, 2000 between Heartsoft,
                     Inc. and June Limited Partnership. (Incorporated by
                     reference to the Company's Form 10-QSB for the period ended
                     September 30, 2000, which was filed on November 14, 2000.)

         10.33       Joint Security Agreement dated November 9, 2000 between
                     Heartsoft, Inc., Benjamin Shell, Alan W. Carlton Revocable
                     Living Trust, and June Limited Partnership. (Incorporated
                     by reference to the Company's Form 10-QSB for the period
                     ended September 30, 2000, which was filed on November 14,
                     2000.)

         10.34       Amended and Restated Engagement Agreement by and between
                     Heartsoft, Inc. and Juanita Seng dated September 7, 1999.

         10.35       Employment Agreement by and between Heartsoft, Inc. and
                     Rodger Graham dated August 28, 2000.

         10.36       Amended and Restated Engagement Agreement by and between
                     Heartsoft, Inc. and Dana Swift dated October 6, 2000.

         10.37       Promissory Note by and between Benjamin P. Shell and
                     Heartsoft, Inc., dated November 13, 2000.

         10.38       Electronic Agreement Summary dated November 14, 2000
                     granting Heartsoft, Inc. permission to use Binney & Smith's
                     Crayola logo and link to it's web sight.

         10.39       Equipment Lease with Auto & Equipment Leasing by Flex, Inc.
                     dated November 15, 2000.

                                       22
<PAGE>

         10.40       Letter Agreement dated November 20, 2000 granting
                     Heartsoft, Inc., a non-exclusive license to use CBS
                     Sportsline.com (SPLN) logos.

         10.41       Electronic Agreement Summary dated November 27, 2000
                     granting Heartsoft, Inc. permission to use
                     Timeforkids.com's logo and link to it's web sight.

         10.42       Non-Qualified Stock Option Agreement by and between
                     Heartsoft, Inc. and Rodger Graham dated December 4, 2000.

         10.43       Non-Qualified Stock Option Agreement by and between
                     Heartsoft, Inc. and Juanita Seng dated December 4, 2000.

         10.44       Non-Qualified Stock Option Agreement by and between
                     Heartsoft, Inc. and Dana Swift dated December 4, 2000.

         10.45       Letter Agreement by and between Heartsoft, Inc., and The
                     Glenn A. Chalker Revocable Trust dated January 24, 2001.

         10.46       Security Agreement by and between Heartsoft, Inc. and The
                     Glenn A. Chalker Revocable Trust dated January 24, 2001.

         10.47       Convertible Promissory Note by and between Heartsoft, Inc.
                     and The Glenn A. Chalker Revocable Trust dated January 24,
                     2001.

         21.1        Subsidiaries of Heartsoft. (Incorporated by reference to
                     the Company's Form 10-KSB/A for the period ended March 31,
                     1999, which was filed on January 22, 2000.)

(b)      Reports on Form 8-K:

     No reports  on Form 8-K were filed  during  the  three-month  period  ended
December 31, 2000.








                                       23
<PAGE>

SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                                  HEARTSOFT, INC.
                                    --------------------------------------------
                                                   (Registrant)

Date:    2/14/01                    /s/  Benjamin P. Shell
      ---------------------         --------------------------------------------
                                    Benjamin P. Shell, Chairman of the Board,
                                    President, and Chief Executive Officer
                                    (Principal Executive Officer)

Date:    2/14/01                    /s/ Rodger Graham
      ---------------------         --------------------------------------------
                                    Rodger Graham, Chief Financial Officer
                                    (Principal Financial Officer)





























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