<PAGE>

                        SECURITIES & EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[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

[ ]  TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 (No Fee Required)

Commission File No. 000-24551

                            COMPOSITE SOLUTIONS, INC.
                 (Name of Small Business Issuer in its Charter)

          FLORIDA                                                 65-0790758
------------------------------                                ------------------
State or other jurisdiction of                                 I.R.S. Employer
incorporation or organization                                 Identification No.

3655 NOBEL DRIVE, SUITE 440, SAN DIEGO, CALIFORNIA                    92122
--------------------------------------------------                  --------
Address of principal executive office                               Zip Code

Issuer's telephone number:  (858) 459-4843


--------------------------------------------------------------------------------
Former name and address, if changed since last report

Check whether the issuer has (1) filed all reports required by Section 13 or
15(d) of the Exchange Act during the past 12 months, and (2) been subject to
such filing requirements for the past ninety (90) days. Yes /X/ No / /


As of JUNE 30, 2000 10,868,333 SHARES OF COMMON STOCK THE ISSUER HAD
OUTSTANDING.

<PAGE>

                         PART 1 - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS


         The following unaudited financial statement contain information
       regarding the results of operations and balance sheet of Composite
              Solutions, Inc. a Florida corporation formerly known
          As JS Business Works, Inc., for the quarterly period ended as
                               of June 30, 2000.




                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<S>                                                                             <C>
Unaudited Balance Sheet for the quarterly period ended June 30, 2000............F-2

Unaudited Statements of Operations for the Nine Months Ended June 30, 2000
 and 1999 and period from inception to June 30, 2000............................F-3

Unaudited Statements of Changes in Stockholders' Equity ........................F-4

Unaudited Statements of Cash Flows for the Nine Months Ended June 30, 2000
 and 1999 and period from inception to June 30, 2000............................F-5

Notes to Financial Statements...................................................F-6

</TABLE>


                                      F-1

<PAGE>


                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETs


<TABLE>
<CAPTION>
                                                                                  June 30,          September 30,
                                                                                    2000                 1999
                                                                                 -----------        ------------
<S>                                                                              <C>                 <C>
                                     ASSETS
  CURRENT ASSETS
     Cash                                                                        $    68,808         $    8,811
     Accounts receivable, net of allowance for doubtful accounts
         of $0 at June 30, 2000 and September 30, 1999                                 2,513                  -
     Other receivables - related party                                                 5,151                  -
     Prepaid expenses                                                                  7,420              4,226
     Deposits                                                                          8,627                  -
                                                                                 -----------         ----------
           Total current assets                                                       92,519             13,037
                                                                                 -----------         ----------
  PROPERTY AND EQUIPMENT
     Telephone equipment                                                               6,855                  -
     Computer equipment                                                               20,897             14,798
     Less: Accumulated depreciation                                                   (6,580)            (1,655)
                                                                                 -----------         ----------
           Property and equipment, net                                                21,172             13,143
                                                                                 -----------         ----------
  INTANGIBLE ASSETS
     Technical licenses                                                              106,152             93,682
     Fire Test Data                                                                   13,979             13,979
     Software - related party                                                        420,000            420,000
                                                                                 -----------         ----------
           Total intangible assets                                                   540,131            527,661
                                                                                 -----------         ----------
                  Total Assets                                                   $   653,822         $  553,841
                                                                                 ===========         ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
  CURRENT LIABILITIES
     Accounts payable - trade                                                    $    53,143         $   90,630
     Income taxes payable                                                                800                  -
     Accrued payroll and related liabilities                                          16,930             17,999
                                                                                 -----------         ----------
           Total current liabilities                                                  70,873            108,629
                                                                                 -----------         ----------
  LONG-TERM OBLIGATIONS                                                                    -             13,773
                                                                                 -----------         ----------
           Total Liabilities                                                          70,873            122,402
                                                                                 -----------         ----------
  SHAREHOLDERS' EQUITY
  Preferred stock, $0.001 par value, authorized 10,000,000
        shares, 0 issued and outstanding                                                   -                  -
  Common stock, $0.001 par value, authorized 50,000,000
        shares, issued and outstanding 10,868,333 at
        June 30, 2000 and 14,500,000 at September 30, 1999                             1,087              1,450
  Additional paid-in capital                                                       1,765,202          1,004,839
  Deficit accumulated during the development stage                                (1,183,340)          (574,850)
                                                                                 -----------         ----------
           Total Shareholders' Equity                                                582,949            431,439
                                                                                 -----------         ----------
                  Total Liabilities and Shareholders' Equity                     $   635,822         $  553,841
                                                                                 ===========         ==========
</TABLE>

                 See accompanying notes and accountants' report.

                                       F-2


<PAGE>



                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                Nine Months         Nine Months
                                                                   Ended               Ended          October 20,1997
                                                                  June 30,            June 30,          (Inception) to
                                                                   2000                1999            June 30, 2000
                                                               ------------        ------------       ----------------
<S>                                                            <C>                 <C>                  <C>
REVENUES                                                       $     2,513         $         -          $     2,513
COST OF SALES                                                        1,439                   -                1,439
                                                               -----------         -----------          -----------
    Gross Profit                                                     1,074                   -                1,074

EXPENSES

    Consulting fees                                                188,291              41,000              269,391
    Depreciation                                                     4,925                 530                6,580
    General and administrative expenses                            184,963              96,224              329,340
    Organizational fees                                                  -                   -                  514
    Professional fees - related party                                    -                   -               25,884
    Professional fees - other                                       33,232                   -               45,873
    Salaries - employees                                           199,468             174,473              520,129
                                                               -----------         -----------          -----------
        Total Expenses                                             610,879             312,227            1,197,711
                                                               -----------         -----------          -----------

Loss from operations                                              (609,805)           (312,227)          (1,196,637)

OTHER INCOME (EXPENSE)
    Interest income                                                  2,376               3,875                8,325
    Interest expense                                                  (261)            (17,825)             (18,086)
    Gain on forgiveness of debt                                          -                   -                4,861
    Interest income - forgiveness of note                                -                   -               17,825
    Loss on forgiveness of debt                                          -                   -              (11,021)
                                                               -----------         -----------          -----------
          Total other income (expense)                               2,115             (13,950)               1,904
                                                               -----------         -----------          -----------
Loss before provision for income taxes                            (607,690)           (326,177)          (1,194,733)
Provision for income taxes                                             800                   -                  800
                                                               -----------         -----------          -----------
NET LOSS                                                       $  (608,490)        $  (326,177)         $(1,195,533)
                                                               ===========         ===========          ===========
Basic net loss per weighted average share                      $     (0.06)        $     (0.02)
                                                               ===========         ===========
Weighted average number of shares                               10,783,333          14,500,000
                                                               ===========         ===========

</TABLE>


                 See accompanying notes and accountants'report.


                                       F-3




<PAGE>


                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                DEFICIT
                                                                                              ACCUMULATED
                                                            COMMON STOCK        ADDITIONAL     DURING THE         TOTAL
                                                      -----------------------    PAID-IN      DEVELOPMENT     SHAREHOLDERS'
                                                         SHARES       AMOUNT      CAPITAL         STAGE           EQUITY
                                                      ----------    ---------  -----------    -----------     -------------
<S>                                                   <C>           <C>        <C>            <C>             <C>
BALANCE, OCTOBER 20, 1997                                      -     $    -    $        -     $         -      $       -

   Common stock issued in exchange for services       14,777,031      1,476        (4,453)              -          (2,977)
   Common stock issued for cash                        5,962,500        599        18,335               -          18,934
   Common stock issued for services rendered             456,879         45         2,333               -           2,378
   Common stock contributed                           (7,896,410)      (790)          790               -               -
   Pre-acquisition income                                      -          -             -              47              47
   Common stock issued in acquisition                  1,000,000        100       (12,146)         12,146             100
   Common stock issued for payment of note payable       200,000         20       999,980               -       1,000,000

   Net loss                                                    -          -             -        (338,370)       (338,370)
                                                      ----------     ------    ----------     -----------      ----------
BALANCE, JUNE 30, 1999                                14,500,000      1,450     1,004,839        (326,177)        680,112

   Net Loss                                                    -          -             -        (248,673)       (248,673)
                                                      ----------     ------    ----------     -----------      ----------

BALANCE, SEPTEMBER 30, 1999                           14,500,000      1,450     1,004,839        (574,850)     $  431,439

   Shares of common stock surrendered                 (4,300,000)      (430)          430               -               -
   Common stock issued in private placement,
      net of offering costs                              668,333         67       759,993               -         760,000

   Net loss                                                    -          -             -        (608,490)       (608,490)
                                                      ----------     ------    ----------     -----------      ----------
BALANCE, JUNE 30, 2000                                10,868,333     $1,087    $1,765,202     $(1,183,340)     $  582,949
                                                      ==========     ======    ==========     ===========      ==========

</TABLE>


                 See accompanying notes and accountants'report.

                                       F-4


<PAGE>



                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                             October 20,
                                                                           Nine Months    Nine Months           1997
                                                                              Ended          Ended         (Inception) to
                                                                             June 30,       June 30,          June 30,
                                                                              2000           1999               2000
                                                                          ------------   ------------      --------------
<S>                                                                       <C>            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                $(608,490)     $ (326,177)        $(1,195,533)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
         Depreciation                                                          4,925             530               6,580
         Stock issued for services                                                 -               -               2,635
         Stock issued in lieu of cash                                              -             100                 100
         Pre-acquisition income                                                    -               -                  47
         (Increase) decrease in operating assets
           Accounts receivable                                                (2,513)              -              (2,513)
           Other receivable - related party                                   (5,151)              -              (5,151)
           Prepaid expense                                                    (3,194)         (6,761)             (7,420)
           Deposits and other assets                                          (8,627)         (4,950)             (8,627)
         Increase (decrease) in operating liabilities
           Accounts payable                                                  (51,260)         23,147              53,143
           Accrued payroll and related liabilities                            (1,069)         25,828              16,930
           Other accrued liabilities                                             800          17,825                 800
                                                                           ---------      ----------         -----------
      Net cash used in operating activities                                 (674,579)       (270,458)         (1,139,009)
                                                                           ---------      ----------         -----------
CASH FLOW FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                        (12,954)         (9,096)            (27,752)
   Acquisition of intangible assets                                          (12,470)       (440,753)           (540,131)
                                                                           ---------      ----------         -----------
      Net cash used in investing activities                                  (25,424)       (449,849)           (567,883)
                                                                           ---------      ----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock, net                               760,000               -             775,700
   Proceeds from unsecured loan                                               25,000               -              25,000
   Payments of unsecured loan                                                (25,000)              -             (25,000)
   Proceeds from note payable                                                      -       1,000,000           1,000,000
                                                                           ---------      ----------         -----------
      Net cash provided by financing activities                              760,000       1,000,000           1,775,700
                                                                           ---------      ----------         -----------
Net increase in cash                                                          59,597         279,693              68,808

Cash, beginning of period                                                      8,811               -                   -
                                                                           ---------      ----------         -----------
Cash, end of period                                                        $  68,808      $  279,693          $   68,808
                                                                           =========      ==========         ===========
SUPPLEMENTAL DISCLOSURES
      Interest paid                                                        $     243      $        -          $      243
                                                                           =========      ==========         ===========
      Income taxes paid                                                    $       -      $        -          $        -
                                                                           =========      ==========         ===========
NON CASH FINANCING AND INVESTING ACTIVITIES
   Note payable paid by issuance of common stock                           $       -      $1,000,000          $1,000,000
                                                                           =========      ==========         ===========
   Investment in subsidiary                                                $       -      $  (12,046)         $  (12,046)
                                                                           =========      ==========         ===========
   Interest on note payable                                                $       -      $   17,825          $   17,825
                                                                           =========      ==========         ===========
   Forgiveness of interest on note payable                                 $       -      $  (17,825)         $  (17,825)
                                                                           =========      ==========         ===========
</TABLE>

                 See accompanying notes and accountants'report.


                                       F-5


<PAGE>



                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          THE COMPANY

          Composite Solutions, Inc. (the "Company"), formerly JS Business Works,
          Inc., was incorporated in the state of Florida on October 20, 1997.
          Composite Solutions, Inc. (the "Subsidiary") was incorporated in the
          state of Nevada on December 8, 1998. On June 30, 1999 the Subsidiary's
          shareholders exchanged all of their shares of common stock for shares
          in Company. The Company was organized to market unique, innovative,
          and affordable high technology products and processed in key areas of
          existing and new construction.

          The Company is in the development stage and its efforts through June
          30, 200 have been principally devoted to raising additional capital
          and negotiating with potential key personnel and facilities. There is
          no assurance that any benefit will result from such activities. The
          Company will not receive any operating revenues until the commencement
          of operations, but will nevertheless continue to incur expenses, and
          losses as it pursues its development efforts.

          BASIS OF PRESENTATION

          The consolidated financial statements include the accounts of the
          Company and its wholly owned subsidiary. All significant intercompany
          transactions have been eliminated in consolidation.

          USE OF ESTIMATES

          The presentation of consolidated financial statements in conformity
          with generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts of
          assets and liabilities, disclosure of contingent assets and
          liabilities at the date of the financial statements, and the reported
          amounts of revenues and expenses during the periods presented. Actual
          results may differ significantly from those estimates.

          START-UP COSTS

          Costs of start-up activities, including organization costs, are
          expensed as incurred, in accordance with Statement of Position (SOP)
          98-5.

          NET INCOME (LOSS) PER SHARE

          Basic loss per share is computed by dividing the net income (loss) by
          the weighted average number of common shares outstanding during the
          period.

          PROPERTY AND EQUIPMENT

          Property and equipment are recorded at cost less depreciation.
          Depreciation is accounted for on the straight-line method based on the
          estimated useful lives of the related asset. Betterments and large
          renewals, which extend the life of an asset, are capitalized; whereas,
          repairs and maintenance, which do not increase the useful lives of
          property and equipment are charged to operations as incurred.

          Depreciation expense was $4,925 and $530 for the nine months ended
          June 30, 2000 and 1999, respectively and $6,580 for the period October
          20, 1997 (inception) to June 30, 2000.


                                       F-6


<PAGE>


                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          INTANGIBLE ASSETS

          Intangible assets are recorded at historical cost less amortization.
          Amortization is accounted for on the straight-line method, beginning
          on the date the assets are placed in service, over their estimated
          useful lives. The cost of software intended to be sold or licensed to
          others has been capitalized in accordance with Statement of Financial
          Accounting Standards No. 86, and amortization is accounted for at the
          greater of a ratio equal to current revenue divided by estimated
          future gross revenue or the straight-line method.

          REVENUE RECOGNITION

          Contracts are accounted for on the percentage-of-completion method of
          accounting. Revenue is recognized based on a ratio of the actual cost
          of work performed to a current estimate of the total cost to complete
          a respective contract.

          Expected profits realized on contracts are based on the difference
          between estimates of total contract revenues and costs of completion.
          These estimates are reviewed and revised periodically throughout the
          contract term, and adjustments to profits resulting from such
          revisions are recorded in the accounting period in which the revisions
          are made. Profits are recognized as the contract phase of the work is
          completed. Losses on contracts are recorded in full as they are
          identified. Estimated costs and earnings in excess of billings on
          uncompleted contracts comprise revenues recognized on contract for
          which billings have not been presented. Expected revenues are billed
          and collected generally within one year. Billings in excess of
          estimated costs and earnings on uncompleted contracts represent
          amounts that have been billed to customers for which related costs
          have not been incurred or revenue recognized.

          INTERIM FINANCIAL INFORMATION

          The financial statements for the nine months ended June 30, 2000 and
          1999 are unaudited and include all adjustments which in the opinion of
          management are necessary for fair presentation, and such adjustments
          are of a normal and recurring nature. The results for the nine months
          are not indicative of a full year results.

          INCOME TAXES

          The Company accounts for income taxes under Statement of Financial
          Accounting Standards No. 109, "Accounting for Income Taxes". This
          statement requires an asset and liability approach to account for
          income taxes. The Company provides deferred income taxes for temporary
          differences that will result in taxable or deductible amounts in
          future years based on the reporting of certain costs in different
          periods for financial and income tax purposes.

NOTE 2 - ACQUISITIONS

          On June 17, 1999, the Company entered into a Share Exchange Agreement
          with the Subsidiary. On June 30, 1999, the Company issued 1,000,000
          shares of its common stock for all of the shares of the outstanding
          stock of the Subsidiary. This exchange of shares has been accounted
          for as a reverse merger, under the purchase method of accounting.
          Accordingly, the combination of Company and Subsidiary is recorded as
          a recapitalization of the shareholders' equity of the Subsidiary, the
          surviving corporation and for accounting purposes the financial
          statements presented are those of the Subsidiary.


                                       F-7

<PAGE>


                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE 3 -  INTANGIBLE ASSETS

          In April 1999, the Company entered into a license agreement with the
          Regents of the University of California-San Diego (UCSD) for a license
          under patent rights to make, use, sell, offer for sale, import
          licensed products, practice licensed methods, and use technology. A
          license fee of $40,000 was paid upon execution of the agreement. Under
          certain terms of the agreement, the Company must pay to the licensor a
          royalty of 1.5% on net sales of the licensed products. The Company
          must also pay for one half of all past and future patent costs.
          Payments under the license agreement totaled $6,663 and $46,774 for
          the nine months ended June 30, 2000 and 1999, respectively and a total
          of $54,025 for the period October 20, 1997 (inception) to June 30,
          2000. In addition, the Company is obligated to pay certain fees and
          royalties for any executed sub-license arrangements. As of June 30,
          2000, there were no such arrangements.

          In August 1999, the Company entered into a second license agreement
          with UCSD for a license under patent rights to make, use, sell, offer
          for sale, and import licensed products, to practice licensed methods
          and to use technology. A license fee in the amount of $5,000 was paid
          upon execution of the agreement. Under the terms of the agreement, the
          Company must pay to the licensor a royalty of 1.5% on net sales of
          licensed products and certain fees and royalties for any executed
          sub-license agreements. In addition, the Company is obligated to pay
          for one-half of all past and future patent costs. Payments under the
          license agreement totaled $32,496 and $0 for the nine months ended
          June 30, 2000 and 1999, respectively and a total of $37,496 for the
          period October 20, 1997 (inception) to June 30, 2000. At June 30, 2000
          and September 30, 1999, there were past and future patent costs
          payable as follows:

<TABLE>
<CAPTION>

                                                             2000         1999
                                                           -------      -------
              <S>                                          <C>          <C>
              Included in accounts payable                 $14,631      $27,547
              Included in long-term obligation                   -       13,773
                                                           -------      -------
                                                           $14,631      $41,320
                                                           =======      =======
</TABLE>

          In January 1999, the Company acquired certain intangible assets from
          Trans-Science Corporation (TSC), a company under common control. Fire
          test data concerning overlay systems in the form of technical reports
          prepared by an independent laboratory in New York performed prior to
          the Company's inception, was purchased from TSC, at it's cost, for the
          amount of $13,979.

          Also, in January 1999, TSC sold, assigned and transferred all of its
          rights, title and interest in the Earthquake Retrofit Design Software
          to the Company for cash in the amount of $330,000. In addition, during
          the nine month period ended June 30, 1999, the Company paid TSC
          $90,000 for upgrade services on this software.

          At June 30, 2000, no intangible assets were placed in service.
          Accordingly, there was no amortization expense incurred during the
          period October 20, 1997 (inception) to June 30, 2000.

NOTE 4 - STOCKHOLDERS' EQUITY

          PREFERRED STOCK

          The company has authorized the issuance of ten million (10,000,000)
          shares of preferred stock, having one hundredth of a cent ($.0001) par
          value per share. The Board of Directors of the Company has discretion
          to determine the rights, preferences, and privileges of this preferred
          stock. There are no shares of preferred stock issued and outstanding
          at June 30, 2000 and September 30, 1999, respectively.


                                      F-8
<PAGE>

                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - STOCKHOLDERS' EQUITY (Continued)

          COMMON STOCK

          The Company has authorized fifty million (50,000,000) shares of common
          stock, having one hundredth of a cent ($.0001) par value per share. On
          October 21, 1997, the Company issued 1,601,000 shares to its President
          for the value of services rendered in connection with the organization
          of the Company. In April 1998, the Company issued 646,000 shares of
          common stock under Regulation D offerings in exchange for $18,934 in
          cash, net of offering costs. Also in April 1998, the Company issued
          49,500 shares, to its Executive Vice President for value of services
          rendered of $2,378.

          On June 25, 1999, the Company completed a 9.229876 shares for 1 share
          forward split. Retroactive effect to this split has been given in the
          accompanying financial statements. On June 25, 1999, the Company
          received 7,896,410 shares contributed back to the Company. On June 30,
          1999, the Company issued 1,000,000 shares to acquire 100% of the
          issued and outstanding common stock of the Subsidiary. On June 30,
          1999, the Company issued 200,000 shares in settlement of its
          Subsidiary's note payable with a principal balance of $1,000,000 and
          accrued interest of $17,825. In December 1999, a trustee shareholder
          surrendered 4,300,000 shares which have been canceled. During the
          period December 1999 to June 2000, the Company issued 668,333 shares
          of common stock under a private placement in exchange for $760,000 in
          cash, net of offering costs. There are 10,868,333 and 14,500,000
          shares of common stock issued and outstanding at June 30, 2000 and
          September 30, 1999, respectively.

NOTE 5 -COMMITMENTS

          In November 1999, the Company and TSC, a company under common control,
          entered into an operating lease for its offices. The lease term ends
          November 2002. Future minimum payments under the lease are as follows:

<TABLE>
<CAPTION>

                          <S>                            <C>
                          Fiscal Year 2000               $ 18,144
                          Fiscal Year 2001                 85,367
                          Fiscal Year 2002                 88,013
                          Fiscal Year 2003                 14,746
                                                         --------
                                                         $206,151
                                                         ========
</TABLE>

          Rental expense for the nine months ended June 30, 2000 and 1999 were
          $44,208 and $25,200, respectively.

NOTE 6 - INCOME TAXES

          At June 30, 2000 the Company has a net operating loss carry-forward
          for income tax purposes of approximately $1,200,000 which expires
          through the year 2020.

          Net deferred tax assets at June 30, 2000 and September 30, 1999 were
          approximately $453,000 and $221,000, respectively, which represent the
          amount of tax benefits of the loss carry-forwards. The Company has
          established a valuation allowance against this net deferred tax assets
          because it is more than likely that the deferred tax benefits will not
          be utilized.

                                       F-9

<PAGE>

                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - RELATED PARTY TRANSACTIONS

          In January 1999, the Company acquired certain intangible assets from
          Trans-Science Corporation (TSC), a company under common control. Also,
          in January 1999, TSC sold, assigned and transferred all of its rights,
          title and interest in the Earthquake Retrofit Design Software to the
          Company. See Note 3.

          On October 21, 1997, the Company issued 1,601,000 shares to its
          President for the value of services rendered in connection with the
          organization of the Company. Also in April 1998, the Company issued
          49,500 shares to its Executive Vice President for services. See Note
          4.

          In June 1999, the Company advanced funds in the amount of $4,950 to an
          officer of the Company for certain moving expenses. At September 30,
          1999, the amount was repaid. At September 30, 1999, the Company owed
          certain of its officers a total of $2,179 for reimbursement of certain
          Company related expenses. At June 30, 2000, the amount was repaid.

          In January 1999, the Company began sharing office space and certain
          related expenses with TSC, a company under common control. The Company
          remits their portion of the lease payment directly to an independent
          lessor. Rent expense was $44,208 and $25,200 for the nine months ended
          June 30, 2000 and 1999, respectively and $82,008 for the period
          October 20, 1997 (inception) to June 30, 2000. Total payments to TSC
          for office expenses was $3,804 and $959 for the nine months ended June
          30, 2000 and 1999, respectively and $6,538 for the period October 20,
          1997 (inception) to June 30, 2000. At September 30, 1999, the Company
          owed TSC a total of $730 for utilities. At June 30, 2000, the amount
          was repaid. At June 30, 2000, TSC owed the Company a total of $5,151
          for office expenses.

          In October 1999, the Company entered into a consulting agreement with
          a shareholder for management, marketing and technical services. During
          the nine months ended June 30, 2000, the Company made payments of
          $129,000 to a shareholder and a member of the board of directors for
          management consulting services.

          On February 14, 2000, the Company issued a promissory note in exchange
          for an unsecured loan of $25,000 from a director. The note bears an
          interest rate of 7%. The principal plus interest of $243 was paid in
          April 2000.

NOTE 8 - GOING CONCERN

          The accompanying consolidated financial statements have been prepared
          assuming that the Company will continue as a going concern. The
          Company's financial position and operating results raise substantial
          doubt about the Company's ability to continue as a going concern, as
          reflected by the net loss of $1,195,533 accumulated from October 20,
          1997 (inception) to June 30, 2000. The ability of the Company to
          continue as a going concern is dependent upon commencing operations,
          developing sales and obtaining additional capital and financing. The
          consolidated financial statements do not include any adjustments that
          might be necessary if the Company is unable to continue as a going
          concern. The Company is currently seeking additional capital to allow
          it to begin its planned operations.

          In October 1999, the Company began efforts to raise $2,000,000 through
          a private placement limited offering of 2,000,000 shares of common
          stock priced at $1.00 per share. The private placement was closed on
          February 27, 2000 after raising $425,000 net of offering costs. On
          March 10, 2000, the Company created a new private placement offering
          300,000 shares of common stock at $1.50 per share. The private
          placement was closed on May 22, 2000 after raising $335,000 net of
          offering costs.

                                      F-10

<PAGE>

                            COMPOSITE SOLUTIONS, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - SUBSEQUENT EVENTS

          ACQUISITION

          On July 14, 2000 the Company entered into a Share Exchange Agreement
          with the shareholders of Trans-Science Corporation (TSC), a company
          under common control. The Company will acquire 100% of the issued and
          outstanding shares of TSC in exchange for 953,371 shares of common
          stock of the Company. TSC specializes in the development of computer
          simulation programs, sophisticated design analysis related to complex
          structures, and in the development of design software for the use of
          advanced composite materials.

          LETTERS OF INTENT TO ACQUIRE

          On June 29, 2000, the Company entered into a Letter of Intent to
          acquire a company that manufactures non-woven unidirectional fabrics,
          comprised of carbon, aramid and/or glass fibers. The manufacturing
          company would become a wholly owned subsidiary of the Company upon
          finalization of the acquisition.

          On July 6, 2000, the Company signed a Letter of Intent to acquire a
          consulting engineering firm that provides civil and structural
          engineering services, including earthquake engineering and engineering
          related to the effects of explosions.

                                      F-11
<PAGE>

ITEM 2. PLAN OF OPERATION

     In June 2000 The company booked revenues of about $2000 from 2 small
projects. For the first project, the company performed engineering design and
field inspection services for general contractor Ace Restoration, as part of a
$12,000 seismic upgrade of a City of Inglewood, California parking garage. The
interior columns of the garage were strengthened by wrapping them with carbon
fiber sheets, thereby enhancing their seismic resistance. For the second project
the company supplied and installed a carbon strengthening system to a concrete
ramp at the Waikiki Sand Villa Hotel in Honolulu, Hawaii. The subcontract was
part of a $300,000 hotel renovation that required modifications to the structure
for compliance with current legislation associated with the Americans with
Disabilities Act.

     On June 30, 1999, the Company consummated a reverse acquisition pursuant to
which the Company acquired Composite Solutions, Inc., a Nevada corporation ("CSI
Nevada"), a developer of certain construction technology described below. Since
the date of such acquisition, the Company's business activities have consisted
of research and development and marketing activities relating to the development
of the Company's construction technology and services.

     Utilizing the technology of CSI - Nevada Company, the Company intends to
complete CSI - Nevada's development an affordable high-technology method for the
retrofit/repair of buildings and other structures. This technology is based upon
the application of a composite material that is layered over existing surfaces.
This "composite overlay" is designed to be applied to key areas of buildings and
other structures to repair damage or to add structural integrity. The Company
believes that the simplicity of the overlay applications, and the reduced cost
and time to apply such applications have the potential to revolutionize the way
retrofit/repairs are done and will provide a solution to many structures that
would have otherwise been torn down or rebuilt completely. This overlay, which
is created by impregnating a carbon or glass fabric with a chemical resin and
"wallpapering" this combination to a structural surface, is appropriate for
concrete, masonry and wood, and can be used to accomplish a variety of
structural objectives including: earthquake retrofit and damage repair, defect
repair, load capacity increase, and structural hardening to protect against bomb
blasts.

     Subsequent to the end of the Third Quarter, the Company acquired control of
Trans-Science Corporation (TSC) as reported in the 8K filing dated July 14,
2000. This acquisition will allow the Company to participate in the Defense
Threat Reduction Agency program to mitigate damage to US installations from bomb
blast. The protection of the structural elements of installations such as
embassies can be accomplished by the use of composite materials.

     Also, during the Third Quarter the Company entered into detailed
negotiation to acquire the assets and business of Anchor Reinforcements, Inc.
(Anchor). Anchor manufactures various types of fabric from glass carbon, and
aramid fibers. By having its own "custom" fabrics made from specific composite
materials, the Company will be better able to compete for projects in the
repair/retrofit category, as well as for projects involving blast mitigation.

     The Company intends to market a method for new construction, called the
Carbon Shell System ("CSS"). CSS combines conventional civil construction
techniques and advanced carbon fiber reinforced polymer matrix composites to
provide a pre-manufactured advanced composite tube which is filled with concrete
depending on the strength, stiffness and stability requirements for the
structural component. In CSS, the carbon shells are joined and filled with
concrete on site. The lightweight tubes will allow for rapid field construction
without the need for heavy lifting equipment. This, as well as the lack of
cumbersome rebar cages, offers the potential for reduced construction costs and
time. The Company believes CSS is applicable for a variety of common structural
components, including columns, girders and beams.

                                       12
<PAGE>

     In 2000, the Company has continued the development of its technology and
has started the marketing of its technology and services to the construction
industry. The two projects mentioned above are examples of such services. In
order to facilitate such marketing efforts, the Company expects to seek
additional capital through the sale of debt or equity securities or a
combination thereof. The Company may also seek to add more sales and marketing
personnel in order to accelerate the marketing of its products and services.

     The Company's financial position and operating results raise substantial
doubt about its ability to continue as a going concern, as reflected by the net
losses accumulated from inception through June 30, 2000. The Company currently
does not have sufficient capital resources to effectively pursue its plan of
operation or continue its operations over the next twelve months. The ability of
the Company to continue as a going concern will be dependent upon obtaining
additional capital and financing in order to support its marketing and sales
activities. The Company is currently seeking additional capital to allow it to
implement its business plan. However, no assurances can be given that the
Company will be successful in raising such additional capital or other financing
or that the Company will be successful in implementing its business plan even if
adequate financing is obtained.

     To the extent that the Company is successful in its financing activities,
the Company intends to devote substantially all of its financial resources
towards the continued development and marketing of its technology and services
to the construction industry. Capital will also be used for corporate and
administrative expenses and general working capital.

FORWARD-LOOKING STATEMENTS

     When included in this Quarterly Report on Form 10-QSB, the words "expects,"
"intends," "anticipates," "plans," "projects" and "estimates," and analogous or
similar expressions are intended to identify forward-looking statements. Such
statements, which include statements contained in Item 2 hereof, are inherently
subject to a variety of risks and uncertainties that could cause actual results
to differ materially from those reflected in such forward-looking statements.
For a discussion of certain of such risks, see the subsection of Item 1 entitled
"Risk Factors" in the Annual Report 10KSB for September 30, 1999.

     These forward-looking statements speak only as of the date of this
Quarterly Report on Form 10-QSB. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.

                                 13
<PAGE>

PART II

ITEM 1.  LEGAL PROCEEDINGS.

     The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.

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

a.   The exhibits required to be filed herewith by Item 601 of Regulation S-B,
     as described in the following index of exhibits, are incorporated herein by
     reference, as follows: Form 8K filed June 26, 2000 Trans-Science
     Corporation acquisition.


27.1     * Financial Data Schedule

-------------------
*    Filed herewith


                                   SIGNATURES

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

Date: August 11, 2000

                                        Composite Solutions, Inc.


                                    By: /s/ GILBERT HEGEMIER
                                       ---------------------------------------
                                        Gilbert Hegemier, Chairman and CEO


                                    By: /s/ MARK OLSON
                                       ---------------------------------------
                                        Mark Olson, President and COO

                                     14