<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 December 31, 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 December 31, 2000, 13,761,904 shares of Common Stock were outstanding.

                                       1

<PAGE>



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


PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

         The following un-audited financial statements contain information
regarding the results of operation and balance sheet of Composite Solutions,
Inc., a Florida corporation, for the quarter ended December 31, 2000.

The Company's revenues for the quarter ended December 31, 2000 were $121,493.



<TABLE>
<CAPTION>

INDEX TO FINANCIAL STATEMENTS

<S>                                                           <C>
Accountant's Review Report                                    F-2

Balance Sheets                                                F-3

Statements of Operations                                      F-4

Statements of Changes in Stockholders' Equity                 F-5

Statements of Cash Flows                                      F-6

Notes to Financial Statements                                 F-7

</TABLE>

                                       F-1

<PAGE>


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



ACCOUNTANTS' REVIEW REPORT

To the Board of Directors and Stockholders
Composite Solutions, Inc. and Subsidiaries

We have reviewed the accompanying consolidated balance sheet of Composite
Solutions, Inc. (a development stage company) and subsidiaries as of December
31, 2000, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the three months then ended and the
period October 1, 1999 to December 31, 2000, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these financial
statements is the representation of the management of Composite Solutions, Inc.
and subsidiaries.

A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the consolidated financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.

The consolidated financial statements of Composite Solutions, Inc. and
subsidiaries as of December 31, 1999 and the period October 20, 1997 (inception)
to September 30, 1999 were reviewed by other accountants, whose report dated
February 11, 2000, stated that they were not aware of any material modifications
that should be made to those statements in order for them to be in conformity
with generally accepted accounting principles.




                                                                  PETERSON & CO.

San Diego, California
February 18, 2001

                                       F-2
<PAGE>

                   COMPOSITE SOLUTIONS, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                                   DECEMBER 31,
                                                                                            2000                   1999
                                                                                    ---------------------  ---------------------
<S>                                                                                 <C>                    <C>
                                     ASSETS

CURRENT ASSETS
  Cash                                                                                          $ 52,364              $ 133,570
  Accounts receivable, net of allowance for doubtful
    accounts of $4,983 in 2000 and $0 in 1999                                                     61,191                      -
  Related party receivables                                                                        9,920                  3,889
  Inventory                                                                                      183,327                      -
  Prepaid expenses                                                                                 2,171                  1,690
  Prepaid income taxes                                                                               200                      -
                                                                                    ---------------------  ---------------------

     Total current assets                                                                        309,173                139,149

PROPERTY, PLANT AND EQUIPMENT, NET                                                                89,934                 11,910

OTHER ASSETS
  Intangible assets                                                                            1,497,563                529,657
  Deposit                                                                                         11,056                  7,373
                                                                                    ---------------------  ---------------------

     Total assets                                                                            $ 1,907,726              $ 688,089
                                                                                    =====================  =====================

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                               217,628                 74,425
  Line of credit                                                                                  50,968                      -
  Notes payable                                                                                   84,500                      -
  Accrued expenses                                                                                31,241                 22,576
  Income taxes payable                                                                             3,152                      -
                                                                                    ---------------------  ---------------------

     Total current liabilities                                                                   387,489                 97,001

LONG TERM OBLIGATIONS
  Convertible debenture                                                                          500,000                      -
  Other long term obligations                                                                          -                 13,773
                                                                                    ---------------------  ---------------------

     Total liabilities                                                                           887,489                110,774

SHAREHOLDERS' EQUITY
  Preferred stock; $0.0001 par value; 10,000,000
    shares authorized; 0 shares issued and outstanding                                                 -                      -
  Common stock; $0.0001 par value; 50,000,000 shares
    authorized; 13,761,904 and 10,520,000 shares issued and
    outstanding at December 31, 2000 and 1999, respectively                                        1,377                  1,052
  Additional paid in capital                                                                   3,140,591              1,337,430
  Accumulated deficit                                                                         (2,121,731)              (761,167)
                                                                                    ---------------------  ---------------------

     Total shareholders' equity                                                                1,020,237                577,315
                                                                                    ---------------------  ---------------------

     Total liabilities and shareholders' equity                                              $ 1,907,726              $ 688,089
                                                                                    =====================  =====================

</TABLE>

               See accompanying notes and accountants' review report.


                                       F-3
<PAGE>

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

<TABLE>
<CAPTION>

                                                             THREE MONTHS ENDED                   OCTOBER 20, 1997
                                                                DECEMBER 31,                       (INCEPTION) TO
                                                ---------------------------------------------       DECEMBER 31,
                                                        2000                    1999                    2000
                                                ----------------------  ---------------------   ---------------------
<S>                                             <C>                     <C>                     <C>
REVENUES                                                    $ 121,493                    $ -               $ 169,506
COST OF SALES                                                  52,717                      -                  61,923
                                                ----------------------  ---------------------   ---------------------

     Gross profit                                              68,776                      -                 107,583

EXPENSES
  Consulting fees                                             106,147                      -                 464,732
  Depreciation and amortization                                57,707                  1,233                 109,954
  General and administrative expenses                          77,284                 93,456                 509,439
  Organizational expenses                                           -                      -                     514
  Professional fees - related party                                 -                 10,153                  25,884
  Professional fees - other                                    58,047                  2,500                 310,434
  Salaries                                                    199,126                 68,035                 782,251
                                                ----------------------  ---------------------   ---------------------

     Total expenses                                           498,311                175,377               2,203,208
                                                ----------------------  ---------------------   ---------------------

Loss from operations                                         (429,535)              (175,377)             (2,095,625)

OTHER INCOME (EXPENSE)
  Interest income                                                   2                  1,253                   8,364
  Interest income - forgiveness of debt                             -                      -                  17,825
  Gain on forgiveness of debt                                       -                      -                   4,861
  Interest expense                                            (14,440)                     -                 (39,783)
  Loss on forgiveness of debt                                       -                      -                 (11,021)
                                                ----------------------  ---------------------   ---------------------

     Total other income (expense)                             (14,438)                 1,253                 (19,754)
                                                ----------------------  ---------------------   ---------------------

Loss before provision for income taxes                       (443,973)              (174,124)             (2,115,379)

Provision for income taxes                                          -                      -                   6,352
                                                ----------------------  ---------------------   ---------------------

NET LOSS                                                   $ (443,973)            $ (174,124)           $ (2,121,731)
                                                ======================  =====================   =====================

Basic net loss per share                                      $ (0.03)               $ (0.01)                $ (0.13)
                                                ======================  =====================   =====================

Weighted average number of shares                          12,952,255             13,807,826              16,060,389
                                                ======================  =====================   =====================

</TABLE>

               See accompanying notes and accountants' review report.


                                       F-4
<PAGE>

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

<TABLE>
<CAPTION>

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

Common stock issued in exchange for services        15,233,910          1,521             (2,120)               -            (599)
Common Stock issued for cash                         5,962,500            599             18,335                -          18,934
Common stock contributed                            (7,896,410)          (790)               790                -               -
Pre-acquisition income                                       -              -                  -               47              47
Common stock issued in acquisition                   1,000,000            100                 47              (47)            100
Common stock issued for payment of note payable        200,000             20            999,980                -       1,000,000

Net loss                                                     -              -                  -         (587,043)       (587,043)
                                                    ------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 1999                         14,500,000          1,450          1,017,032         (587,043)        431,439

Common stock surrendered                            (4,300,000)          (430)               430                -               -
Common Stock issued for cash                           320,000             32            319,968                -         320,000

Net loss                                                     -              -                  -         (174,124)       (174,124)
                                                    ------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 1999                          10,520,000          1,052          1,337,430         (761,167)        577,315

Common Stock issued for cash                           348,333             35            439,965                -         440,000
Pre-acquisition income                                                                                     50,877          50,877
Common stock issued in acquisitions                  1,103,371            110            808,668          (50,877)        757,901
Common stock issued in exchange for services           300,000             30            173,970                -         174,000
Common stock issued for finder's fee                   100,000             10                (10)               -               -

Net loss                                                     -              -                  -         (916,591)       (916,591)
                                                    ------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 2000                         12,371,704          1,237          2,760,023       (1,677,758)      1,083,502

Common Stock issued for compensation                   340,200             34             85,674                -          85,708
Common Stock issued for cash                           850,000             86            294,914                -         295,000
Common stock issued for finder's fee                   200,000             20                (20)               -               -

Net loss                                                     -              -                  -            #REF!           #REF!
                                                    ------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000                          13,761,904        $ 1,377         $3,140,591            #REF!           #REF!
                                                    ==============================================================================

</TABLE>

               See accompanying notes and accountants' review report.


                                       F-5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED                   OCTOBER 20, 1997
                                                                       DECEMBER 31,                      (INCEPTION) TO
                                                       --------------------------------------------        DECEMBER 31,
                                                               2000                   1999                    2000
                                                       ---------------------  ---------------------   ---------------------
<S>                                                    <C>                    <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                         $ (443,973)            $ (174,124)           $ (2,121,731)
Adjustments to reconcile net loss to
  net cash used in operating activities:
     Depreciation and amortization                                   57,707                  1,233                 109,954
     Common stock issued in exchange for services                    85,708                      -                 262,343
     Common stock issued in lieu of cash                                  -                      -                     100
     Pre-acquisition income                                               -                      -                      47
(Increase) decrease in operating assets
  Accounts receivable                                                17,986                      -                  33,826
  Related party receivable                                                -                 (3,889)                      -
  Shareholder accrued interest                                            -                      -                       -
  Inventory                                                         (16,326)                     -                 (18,381)
  Prepaid expenses                                                     (802)                 2,536                  (2,171)
  Deposit                                                            (3,379)                (7,373)                (11,056)
Increase (decrease) in operating liabilities                                                                             -
  Accounts payable                                                   39,994                (16,205)                180,943
  Accrued expenses                                                    8,991                  4,577                  18,623
  Income taxes payable                                               (3,200)                     -                   3,152
                                                       ---------------------  ---------------------   ---------------------

     Net cash used in operating activities                         (257,294)              (193,245)             (1,544,351)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property, plant and equipment                          (2,446)                     -                 (30,150)
  Acquisition of intangible assets                                   (1,270)                (1,996)               (545,830)
  Loans made to related party                                             -                      -                 (10,000)
  Repayments of loans to related party                                    -                      -                  10,000
  Acquisition of subsidiaries                                             -                      -                (500,000)
  Cash of acquired subsidiaries                                           -                      -                  17,261
                                                       ---------------------  ---------------------   ---------------------

     Net cash used in investing activities                           (3,716)                (1,996)             (1,058,719)

CASH FLOWS FROM FINANCING ACTIVITIES
  Bank overdraft                                                     (1,214)                     -                       -
  Increase (decrease) in line of credit                                (526)                     -                     234
  Proceeds from note payable to officer                               5,680                      -                  32,180
  Payments of note payable to officer                               (30,496)                     -                 (32,180)
  Proceeds from convertible debenture                                     -                      -                 500,000
  Proceeds from notes payable                                        20,000                      -               1,084,500
  Proceeds from issuance of common stock, net                       295,000                320,000               1,070,700
                                                       ---------------------  ---------------------   ---------------------

     Net cash provided by financing activities                      288,444                320,000               2,655,434
                                                       ---------------------  ---------------------   ---------------------

Net increase in cash                                                 27,434                124,759                  52,364

Cash, beginning of period                                            24,930                  8,811                       -
                                                       ---------------------  ---------------------   ---------------------

Cash, end of period                                                $ 52,364              $ 133,570                $ 52,364
                                                       =====================  =====================   =====================
SUPPLEMENTARY DISCLOSURES
  Interest paid                                                       $ 686                    $ -                 $ 2,191
  Income taxes paid                                                 $ 3,200                    $ -                 $ 3,200

NON-CASH FINANCING AND INVESTING ACTIVITIES
  Note payable paid by issuance of common stock                         $ -                    $ -             $ 1,000,000
  Investment in subsidiary                                              $ -                    $ -               $ 796,732
  Interest on note payable                                              $ -                    $ -                $ 17,825
  Forgiveness of interest on note payable                               $ -                    $ -               $ (17,825)
</TABLE>

               See accompanying notes and accountants' review.

                                       F-6

<PAGE>


                   COMPOSITE SOLUTIONS, INC. AND SUBSIDIARIES
                          (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. The
         Company has three wholly owned subsidiaries: Composite Solutions, Inc.,
         incorporated in the state of Nevada on December 8, 1998, Trans-Science
         Corporation, incorporated in the state of California on September 15,
         1980, and Penultimo, Inc. dba Anchor Reinforcements, incorporated in
         the state of California on January 13, 1992. Composite Solutions Inc.
         and subsidiaries were organized to develop, manufacture and market high
         technology products and processes in key areas of existing and new
         construction.

         The Company is in the development stage and its efforts through
         December 31, 2000 have been principally devoted to raising additional
         capital and negotiating with potential key personnel and leasing
         facilities. There is no assurance that any benefit will result from
         such activities. The Company will 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 subsidiaries. All significant intercompany
         transactions have been eliminated in consolidation.

         START-UP COSTS

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

         ADVERTISING

         Advertising costs are charged to expense as incurred.

         INVENTORIES

         Inventories are valued at lower of the first-in, first-out (FIFO) cost
         or market.

                                       F-7

<PAGE>

         PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are recorded at cost less depreciation.
         Depreciation is accounted for on the straight-line and accelerated
         methods based on the estimated useful lives of the related assets.
         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.

         INTANGIBLE ASSETS

         Other assets include intangibles such as licensed technology, computer
         software and goodwill. Intangible assets are recorded at historical
         cost less amortization. Goodwill is amortized on the straight-line
         method based on an estimated useful life of five years. Other
         intangibles are amortized on the straight-line method beginning on the
         date the assets are placed in service, over their estimated useful
         lives. The cost of software has been capitalized in accordance with
         SFAS 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD,
         LEASED, OR OTHERWISE MARKETED and amortization is accounted for at the
         greater of a ratio equal to current revenue divided by estimated future
         gross revenue or on the straight-line method over a period of five
         years.

         REVENUE RECOGNITION

         Revenue from the sale of product is recognized in the financial
         statements when materials are shipped from stock.

         Revenues derived from 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.


                                       F-8

<PAGE>

         INCOME TAXES

         The Company accounts for income taxes under SFAS 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.

         USE OF ESTIMATES

         The presentation of 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.

         STOCK-BASED COMPENSATION

         In accordance with the provisions of SFAS 123, the Company follows the
         intrinsic value based method of accounting as prescribed by APB 25,
         ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, for its stock-based
         compensation.

NOTE 2 - ACQUISITIONS

         On June 17, 1999 the Company entered into a Share Exchange Agreement.
         On June 30, 1999 according to the terms of the agreement, the Company
         issued 1,000,000 shares of its common stock for all of the shares of
         the outstanding stock of Composite Solutions, Inc. (the "Subsidiary"),
         a Nevada corporation. The exchange of shares has been accounted for as
         a reverse merger, under the purchase method of accounting. Accordingly,
         the combination of Company and the 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.

         On June 23, 2000 the Company entered into a Share Exchange Agreement
         with Trans-Science Corporation, a California corporation, a company
         under common control. On July 7, 2000 the Company completed its
         acquisition. The acquisition, recorded under the purchase method of
         accounting, included the purchase of all of the outstanding shares of
         common stock of Trans-Science Corporation in exchange for 953,371
         shares of the Company's common stock at $0.75 per share which resulted
         in a purchase price of $715,028. The liabilities assumed were in excess
         of the historical cost of the assets acquired at the date of
         acquisition and the total amount of the purchase price was recorded as
         goodwill and is


                                       F-9
<PAGE>

         being amortized over five years using the straight-line
         method.
















                                       F-10
<PAGE>

         On August 16, 2000 the Company entered into a Share Exchange Agreement
         with Penultimo, Inc. dba Anchor Reinforcements. On August 31, 2000 the
         Company completed the acquisition. The acquisition, recorded under the
         purchase method of accounting, included the purchase of all of the
         outstanding shares of common stock of Penultimo, Inc. in exchange for
         150,000 shares of the Company's common stock at $0.625 per share plus
         $500,000 in cash which resulted in a total purchase price of $593,750.
         A portion of the purchase price has been allocated to assets acquired
         and liabilities assumed based on estimated fair market value at the
         date of acquisition while the balance of $291,050 was recorded as
         goodwill and is being amortized over five years using the straight-line
         method.

NOTE 3 - INVENTORIES

         Inventories consist of the following at December 31, 2000 and 1999:

<TABLE>
<CAPTION>

                                                    2000             1999
                                              ---------------  ----------------
<S>                                           <C>              <C>
              Raw material                    $       118,618  $             --
              Work in process                              --                --
              Finished goods                           64,709                --
                                              ---------------  ----------------

                                              $       183,327  $             --
                                              ===============  ================

</TABLE>

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of the following at December 31,
         2000 and 1999:

<TABLE>
<CAPTION>

                                                    2000             1999
                                              ---------------  ----------------
<S>                                           <C>              <C>
              Leasehold improvements          $         1,407  $             --
              Office furniture and equipment          197,502            14,798
              Machinery                                65,902                --
                                              ---------------  ----------------
                                                      264,811            14,798
              Less accumulated depreciation          (174,877)           (2,888)
                                              ---------------  ----------------

                                              $        89,934  $         11,910
                                              ===============  ================

</TABLE>

         Depreciation expense for the three months ended December 31, 2000, and
         1999 was $7,403 and $1,233, respectively and $19,050 for the period
         October 27, 1997 (inception) to December 31, 2000.


                                       F-11
<PAGE>

NOTE 5 - 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 to use certain technology. A
         license fee of $40,000 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 the licensed products. The Company must
         also pay for one half of all past and future patent costs. Payments
         under the license agreement totaled $0 and $7,811 for the three months
         ended December 31, 2000 and 1999, respectively and $54,782 for the
         period October 20, 1997 (inception) to December 31, 2000. In addition,
         the Company is obligated to pay certain fees and royalties for any
         executed sub-license arrangements. At December 31, 2000 this intangible
         asset has not been placed in service. Accordingly, there were no such
         arrangements and no amortization expense has been incurred during the
         period October 20, 1997 (inception) to December 31, 2000.

         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, import licensed products, to practice licensed methods, and to
         use certain 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. There were no
         payments made under the license agreement for the three months ended
         December 31, 2000 and 1999, respectively and $33,354 for the period
         October 20, 1997 (inception) to December 31, 2000.

         At December 31, 2000 and 1999 there were past and future patent costs
         payable as follows:

<TABLE>
<CAPTION>

                                                            2000             1999
                                                      ---------------  ----------------
<S>                                                   <C>              <C>
              Included in accounts payable            $        19,472  $         27,547
              Included in long-term obligations                    --            13,773
                                                      ---------------  ----------------

                                                      $        19,472  $         41,320
                                                      ===============  ================

</TABLE>


                                       F-12
<PAGE>

         In January 1999 the Company acquired certain intangible assets from
         Trans-Science Corporation, a company under common control and
         subsequently acquired on July 7, 2000. 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 for cash in the amount of $13,979 from
         Trans-Science Corporation at its cost. At December 31, 2000 these
         intangible assets were not placed in service. Accordingly, there was no
         amortization expense incurred during the period October 20, 1997
         (inception) to December 31, 2000.

         In January 1999 Trans-Science Corporation 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 year ended September 30, 1999, the
         Company paid Trans-Science Corporation $90,000 for upgrade services on
         this software. At December 31, 2000 this intangible asset was not
         placed in service. Accordingly, there was no amortization expense
         incurred during the period October 20, 1997 (inception) to December 31,
         2000.

         On July 7, 2000 the Company acquired 100% of the outstanding shares of
         common stock of Trans-Science Corporation, a company under common
         control through July 7, 2000. The Company recorded goodwill in the
         amount of $715,028 representing the excess of the cost to acquire
         Trans-Science Corporation over the historical cost of the net assets
         acquired.

         On August 31, 2000 the Company acquired 100% of the outstanding shares
         of common stock of Penultimo, Inc. dba Anchor Reinforcements. The
         Company recorded goodwill in the amount of $291,050 representing the
         excess of the cost to acquire Penultimo, Inc. over the sum of the
         amounts assigned to identifiable net assets acquired.

         Amortization expense for the three months ended December 31, 2000 and
         1999 was $50,304 and $0, respectively and $90,904 for the period
         October 27, 1997 (inception) to December 31, 2000.


                                       F-13
<PAGE>

NOTE 6 - CAPITALIZATION

         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
         December 31, 2000 and 1999, respectively.

         COMMON STOCK

         The Company has authorized fifty million (50,000,000) shares of common
         stock, having one hundredth of a cent ($0.0001) 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 the net 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
         Composite Solutions, Inc., a Nevada corporation. On June 30, 1999 the
         Company issued 200,000 shares in settlement of a 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. On
         July 7, 2000 the Company issued 953,371 shares of common stock valued
         at $715,028 in exchange for 100% of the outstanding shares of common
         stock of Trans-Science Corporation. On August 31, 2000 the Company
         issued 150,000 shares of common stock valued at $93,750 plus $500,000
         in cash in exchange for 100% of the outstanding shares of common stock
         of Penultimo, Inc. dba Anchor Reinforcements. On September 15, 2000 the
         Company issued 100,000 shares of common stock as finder's fees. On
         September 28, 2000 the Company issued 300,000 shares of common stock
         valued at $174,000 in exchange for services. During the three months
         ended December 31, 2000 the Company issued shares of common stock in
         non-cash transactions as follows: 340,200 shares as compensation valued
         at $85,708 and 200,000 shares as finders' fees. The Company issued
         additional shares of common stock in cash transactions: 850,000 shares
         for cash in the amount of $295,000. There are 13,761,904 and 10,520,000
         shares of common stock issued and outstanding at December 31, 2000 and
         1999, respectively.


                                       F-14






<PAGE>

         STOCK INCENTIVE PLAN

         On December 1, 2000 the Company and subsidiaries' Board of Directors
         adopted the 2000 Stock Incentive Plan pursuant to which incentive stock
         options or nonstatutory stock options to purchase up to 1,000,000
         shares of common stock may be granted to employees, directors and
         consultants. Stock options may be exercisable up to ten years from the
         grant date. Stock options vest over service periods that range from
         zero to five years. Vesting period commences April 2001.

<TABLE>
<CAPTION>

                                                         Exercise         Number of          Vested
                                                           Price            Shares           Shares
                                                     ----------------  ---------------  ----------------
<S>                                                  <C>               <C>              <C>
                  Outstanding, October 20, 1997                                     --                --
                      Granted                           $.40 - $.50            120,000                --
                                                        Fair Value
                      Exercised                                                     --                --
                      Cancelled                                                     --                --
                                                                       ---------------  ----------------

                  Outstanding, December 31, 2000                               120,000                --
                                                                       ===============  ================

</TABLE>

         The Company accounts for stock-based compensation using the intrinsic
         value method prescribed by Accounting Principles Board Opinion No. 25,
         "Accounting for Stock Issued to Employees," under which no compensation
         cost for stock options is recognized for the stock options awards
         granted at or above fair market value. For the three months ended
         December 31, 2000, the Company did not recognize any compensation
         expense.

NOTE 7 - LINE OF CREDIT

         The Company has a business secured open line of credit with a bank in
         the amount of $50,000. The line of credit bears interest at the prime
         rate, as published in the WALL STREET JOURNAL, plus 2.5% (12.0% at
         December 31, 2000). At December 31, 2000 there was a balance due in the
         amount of $50,968 plus accrued interest in the amount of $526.

NOTE 8 - NOTES PAYABLE

         On September 19, 2000 the Company entered into a demand note payable in
         the amount of $44,500, with interest at 12% per annum. At December 31,
         2000 there was a balance due in the amount of $44,500 plus accrued
         interest in the amount of $1,492.

         On August 29, 2000 the Company entered into a demand note payable in
         the amount of $20,000, with interest at 12% per annum. At December 31,
         2000 there was a balance due in the amount of $20,000 plus accrued
         interest in the amount of $809.


                                       F-15
<PAGE>

         On November 2, 2000 the Company entered into a demand note payable in
         the amount of $20,000, with interest at 12% per annum. At December 31,
         2000 there was a balance due in the amount of $20,000 plus accrued
         interest in the amount of $388.

NOTE 9 - LONG TERM OBLIGATIONS

         CONVERTIBLE DEBENTURE

         On August 17, 2000 the Company issued an 8% convertible debenture note
         in the amount of $500,000, which is due on August 17, 2003. Interest at
         the rate of 8% per annum is due on January 1 and July 1 each year until
         the principal amount of the note is paid in full. Interest is
         convertible into shares of common stock at the lesser of the principal
         conversion price or eighty percent (80%) of the average closing bid
         price of the Company's common stock for the five (5) trading days
         immediately prior to the interest due date. Principal is convertible
         into restricted and unrestricted shares of common stock at seventy-five
         cents ($.75) for each restricted share of common stock plus the
         issuance of one unrestricted share of common stock for each two dollars
         ($2) converted. After December 31, 2000 the Company may redeem all or a
         portion of the note by paying all unpaid principal and interest, or
         force conversion at the effective conversion price, subject to the
         performance of the Company's common stock. There is no beneficial
         conversion feature. At December 31, 2000 there was a balance due in the
         amount of $500,000 plus accrued interest in the amount of $15,054.

NOTE 10 - COMMITMENTS

         The Company and subsidiaries lease certain offices, facilities and
         equipment under non-cancelable operating leases. The lease terms end
         between November 2002 and September 2003. Future minimum payments under
         the lease at December 31, 2000 are as follows:


<TABLE>
<CAPTION>

                            Year Ending
                            December 31,
                            ----------------
                            <S>               <C>
                            2001              $       135,444
                            2002                      120,325
                            2003                       32,424
                            2004                           --
                                              ---------------
                                              $       288,193
                                              ===============

</TABLE>

         Rental expense was $31,866 and $12,646 for the three months ended
         December 31, 2000 and 1999, respectively and was $140,397 for the
         period October 27, 1997 (inception) to December 31, 2000.


                                       F-16
<PAGE>

NOTE 11 - EARNINGS PER SHARE

         The computations of basic and diluted earnings per share from
         continuing operations for the three months ended December 31, 2000 and
         1999, and the period October 27, 1997 (inception) to December 31, 2000
         were as follows:

<TABLE>
<CAPTION>
                                                                                             October 20,
                                                                                                1997
                                                                    December 31,           (Inception) to
                                                       ---------------------------------     December 31,
                                                             2000              1999              2000
                                                       ----------------  ---------------  -----------------
<S>                                                    <C>               <C>              <C>
         Loss per share-basic
         Numerator:
         Net loss                                      $       (443,973) $      (174,124) $     (2,121,731)

         Denominator:
         Weighted average
           number of shares                                  12,952,255       13,807,826        16,060,389
                                                       ----------------  ---------------  ----------------
         Loss per share-basic                          $          (0.03) $         (0.01) $          (0.13)
                                                       ================  ===============  ================

</TABLE>

NOTE 12 - INCOME TAXES

         At December 31, 2000 the Company has a net operating loss carryforward
         for tax purposes of approximately $359,000 which expires though the
         year 2019. Net deferred tax assets at December 31, 2000 and 1999 were
         approximately $849,400 and $195,000, respectively, which represent the
         amount of tax benefits of start-up, organization and syndication costs.
         The Company has established a valuation allowance against these net
         deferred tax assets because it is more than likely that the deferred
         tax benefits will not be utilized.

NOTE 13 - RELATED PARTY TRANSACTIONS

         INTANGIBLE ASSETS

         In January 1999 the Company acquired certain intangible assets from
         Trans-Science Corporation, a company under common control through July
         7, 2000. Also in January 1999, Trans-Science Corporation sold, assigned
         and transferred all of its rights, title and interest in the Earthquake
         Retrofit Design Software to the Company.

         STOCK-BASED COMPENSATION

         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.


                                       F-17
<PAGE>

         NOTE PAYABLE

         On July 20, 2000 the director advanced the Company $25,000. On August
         18, 2000 the director advanced the Company an additional $1,316 and the
         Company repaid $1,500. On October 20, 2000 and November 21, 2000 the
         director advanced the Company additional $1,480 and $4,200,
         respectively. On December 11, 2000 the Company paid principal in the
         amount of $30,496 plus interest of $686.

         OFFICE LEASE AND OFFICE EXPENSES

         In January 1999, the Company began sharing office space and certain
         related expenses with Trans-Science Corporation, a company under common
         control through July 7, 2000. The Company remitted the lease payment
         directly to an independent lessor. Rent expense was $53,907 for the
         period October 1, 1999 to July 7, 2000, $12,646 for the three months
         ended December 31, 1999 and $91,707 for the period October 20, 1997
         (inception) to July 7, 2000. Total payments to Trans-Science
         Corporation for office expenses were $4,432 for the period October 1,
         1999 to July 7, 2000, $1,810 for the three months ended December 31,
         1999 and $7,896 for the period October 20, 1997 (inception) to July 7,
         2000. At December 31, 1999, Trans-Science Corporation owed the Company
         $3,883 for its share of rent and office expense. At July 7, 2000 the
         amount was repaid. On July 7, 2000 the Company purchased 100% of the
         shares of outstanding common stock of Trans-Science Corporation and at
         December 31, 2000 and for the period July 8, 2000 to December 31, 2000
         all significant intercompany transactions have been eliminated in
         consolidation.

         AGREEMENTS

         In October 1999, the Company entered into a consulting agreement with a
         shareholder for management, marketing and technical services. Under the
         terms of the agreement, for the three months ended December 31, 2000
         and 1999 the Company made payments of $24,000 and $42,000,
         respectively, for management consulting services.

         In July 2000, the Company entered into a consulting agreement with an
         officer for management and technical services. Under the terms of the
         agreement, for the three months ended December 31, 2000 the Company
         made payments of $30,450 for management consulting services.


                                       F-18
<PAGE>

NOTE 14 - AGREEMENTS

         GLOBAL ALLIANCE AND SUBSCRIPTION AGREEMENT

         On December 7, 2000 the Company entered into a Global Alliance
         Agreement with The Prime Group located in Seoul, Korea. According to
         the terms of the Agreement, the Company will receive a 15% equity
         position in The Prime Group. In addition, The Prime Group entered into
         a Subscription Agreement to purchase between 4,166,667 to 5,000,000
         shares of the Company's common stock for cash in the amount of
         $2,000,000. The first 2,500,000 shares of common stock will be issued
         quarterly at $0.40 per share for a total of $1,000,000. An additional
         2,500,000 shares of common stock will be issued at $0.40 per share if
         payment is received by May 31, 2001 or an additional 1,666,667 will be
         issued at $0.60 per share if payment is received after May 31,2001. The
         Prime Group has an option to purchase 1,000,000 shares of common stock
         between October 31, 2001 to October 31, 2003 at an exercise price equal
         to 35% of the fair value of the shares issued. During the three months
         ended December 31, 2000, the Company issued 625,000 shares of common
         stock corresponding to the first quarterly payment of $250,000.

NOTE 15 - SUBSEQUENT EVENTS

         SUBCONTRACT

         On January 12, 2001 the Company was awarded a subcontract with
         Karagozian & Case (K&C). The subcontract for development of retrofit
         design methodology in the amount of $288,309 will begin in May 2001 and
         will support K&C's contract with the United States Department of
         Defense, Defense Threat Reduction Agency, Office of Special Technology.




                                       F-19
<PAGE>




ITEM 2. PLAN OF OPERATION

         The Company's primary business focus is toward composite overlay
technology solutions, which can be applied to the retrofit and
rehabilitation/repair of structures that are subject to seismic or blast loads
as well as the upgrade of aging bridges, buildings and other structures for
increased service loads. In addition, these technology solutions, which include
computational analysis tools, design procedures and software, composite material
systems and application methods, can be applied to new construction as well.

         The key element of the Company's composite overlay technology consists
of an aerospace-type advanced composite material system, such as carbon or glass
fabric impregnated with a chemical resin. For retrofit/repairs, the composite
overlay system is in the form of cured-in-place structural "wallpaper" for
application to walls, columns, floors and other structural elements. For new
construction, composite stay-in-place forms are utilized for columns, beams,
girders, etc. These forms are structural, and they allow the elimination of most
steel reinforcement in concrete structures.

         As reported in the Company's Annual Report on Form 10-KSB for fiscal
year 2000 on January 16, 2001, with the recent acquisition of Trans-Science
Corporation and Anchor Reinforcements and Global Strategic Alliance with the
Prime Group in Korea, the Company expects to market a wide range of value-priced
services/technology to commercial and governmental customers as well as
composite overlay solution services to construction and A&E firms through
technology licenses.

         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 and strategic partner in order to accelerate the
marketing of its products and services.

         To the extent that the Company is successful in its financing
activities, the Company intends to devote substantial portion of its financial
resources towards the continued development and marketing of its technology,
products and services to potential customers in the United States and in the
Asian Region through Prime. Capital will also be used for corporate and
administrative expenses and general working capital.

         For the fiscal quarter ended December 31, 2000, the Company had a net
loss of $443,973 or $0.03 per share, as compared to a net loss of $174,124 or
$0.01 per share for the fiscal quarter ended December 31,1999.

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.

          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.


                                       2


<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:

None.


(b)     On October 31, 2000, the Company filed an amendment to current report
        on Form 8-k/A relating to the financial statements of Anchor
        Reinforcements, which was acquired on August 31, 2000








                                   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, there unto
duly authorized.

Date: February 21, 2001

                                               Composite Solutions, Inc.



                                               By: /s/ Gilbert Hegemier
                                                   ---------------------------
                                                    Chairman of The Board, and
                                                    Chief Financial Officer


                                       3