SECURITIES AND 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 March 31, 2000


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

                         Commission file number 1-13587


                         QUERYOBJECT SYSTEMS CORPORATION
             (Exact name of registrant as specified in its charter)

               Delaware                               94-3087939
      (State or other jurisdiction of      (IRS Employer Identification Number)
      incorporation or organization)


                        One Expressway Plaza - Suite 208
                         Roslyn Heights, New York 11577
                    (Address of principal executive offices)

                                 (516) 228-8500
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/     No / /

         As of May 1, 2000  there  were  9,840,252  shares  of the  Registrant's
common stock outstanding.

Transitional Small Business Disclosure Format.  Yes / /     No /X/
<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION

                                   FORM 10-QSB

                                      INDEX




PART I.    FINANCIAL INFORMATION                                            PAGE

Item 1.    Financial Statements

           Condensed Consolidated Balance Sheet
           As of March 31, 2000 (unaudited)...................................3

           Condensed Consolidated Statement of Operations
           For the three months ended March 31, 2000 and 1999 (unaudited).....4

           Condensed Consolidated Statement of Cash Flows
           For the three months ended March 31, 2000 and 1999 (unaudited).....5

           Notes to the Condensed Consolidated Financial Statements...........6

Item 2.    Management's Discussion and Analysis or Plan of Operation..........7

PART II.   OTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds.........................18

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

SIGNATURES ..................................................................19


                                       2
<PAGE>

Part I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

                         QUERYOBJECT SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                      March 31,
                                                                                        2000
ASSETS
Current assets
<S>                                                                                  <C>
           Cash and cash equivalents                                                 $4,097,828
           Accounts receivable, net of allowance for doubtful
                    accounts of $109,000                                              1,001,253
           Prepaid expenses and other current assets                                    165,334
                                                                                     ----------

                    Total current assets                                              5,264,415

Property and equipment, net                                                             843,704
Deposits and other assets                                                               187,258
                                                                                     ----------

                    Total assets                                                     $6,295,377
                                                                                     ----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
           Accounts payable                                                          $  316,906
           Accrued expenses                                                             361,352
           Deferred revenue                                                             224,248
           Deferred rent                                                                 28,921
           Capital lease obligations due within one year                                123,326
                                                                                     ----------

                    Total current liabilities                                         1,054,753

Capital lease obligations                                                                 1,833
Deferred rent                                                                           260,934
                                                                                     ----------

                    Total liabilities                                                 1,317,520
                                                                                     ----------

Stockholders' equity
           Preferred stock, $.001 par value: 4,000,000 shares authorized;
                    0, 5,000 and 2,425 shares of Series A, B and C, respectively,
                    issued and outstanding                                                    7
           Common stock, $0.003 par value:  60,000,000 shares
                    authorized; 9,727,939 shares issued and outstanding                  29,184
           Additional paid-in capital                                                48,281,605
           Accumulated deficit                                                      (43,332,939)
                                                                                    -----------

                    Total stockholders' equity                                        4,977,857
                                                                                    -----------

                    Total liabilities and stockholders' equity                      $ 6,295,377
                                                                                    -----------
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3

<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                   March 31,
                                                             2000           1999
Revenues
<S>                                                     <C>            <C>
          Software licenses                             $   273,800    $   50,000
          Maintenance and services                           54,591        26,189
                                                        -----------    ----------

                    Total revenues                          328,391        76,189

Cost of revenues
          Software licenses                                  10,952         2,050
          Maintenance and services                           20,426        18,988
                                                         ----------   -----------
                    Total cost of revenues                   31,378        21,038
                                                         ----------   -----------

Gross profit                                                297,013        55,151
                                                         ----------   -----------

Operating expenses
          Sales and marketing                             1,409,759       888,684
          Research and development                          526,889       532,031
          General and administrative                        410,887       347,124
                                                         ----------   -----------
                    Total operating expenses              2,347,535     1,767,839
                                                         ----------   -----------

Loss from operations                                     (2,050,522)   (1,712,688)

Interest income                                              65,385         9,249
Interest expense                                             (5,889)      (14,098)
Other expense                                                (3,866)         --
                                                         ----------   -----------

Net loss                                                $(1,994,892)  $(1,717,537)
                                                         ----------   -----------

Basic and diluted net loss per common share             $      (.24)  $      (.94)
                                                         ----------   -----------

Weighted average shares used in per share
          computation (Note 2)                            8,313,372     1,828,115
                                                         ----------   -----------
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4

<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                          March 31,
                                                                    2000            1999
Cash flows from operating activities
<S>                                                             <C>            <C>
      Net loss                                                  $(1,994,892)   $(1,717,537)
      Adjustments to reconcile net loss to net cash used in
          operating activities
              Depreciation and amortization                         111,493        109,578
              Options issued for consulting services                142,735        137,330
              Changes in operating assets and liabilities
                    Accounts receivable, net                        230,295         29,487
                    Prepaid expenses and other current assets       (17,100)       (70,592)
                    Deposits and other assets                       (30,211)         5,822
                    Accounts payable and accrued expenses          (233,641)      (271,566)
                    Deferred rent                                    (2,438)        (3,003)
                    Deferred revenue                                 54,493        (26,189)
                                                                -----------    ------------

              Net cash used in operating activities              (1,739,266)    (1,806,670)
                                                                 -----------   ------------

Cash flows from investing activities
     Acquisitions of property and equipment                        (108,897)       (14,589)
                                                                -----------    ------------

        Net cash used in investing activities                      (108,897)       (14,589)
                                                                -----------    ------------

Cash flows from financing activities
     Proceeds from exercise of common stock warrants              1,456,250           --
     Proceeds from exercise of common stock options                  46,919        341,250
     Collection of stock subscriptions receivable, net                 --        1,397,004
     Repayment of loan payable to stockholders                         --         (300,000)
     Payments of capital lease obligations                          (46,032)       (42,143)
                                                                -----------    ------------

        Net cash provided by financing activities                 1,457,137      1,396,111
                                                                -----------    ------------

Net decrease in cash and cash equivalents                          (391,026)      (425,148)

Cash and cash equivalents at beginning of year                    4,488,854        854,018
                                                                -----------    ------------

Cash and cash equivalents at end of period                      $ 4,097,828    $   428,870
                                                                ===========    ============
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       Basis of Presentation

         The unaudited  condensed  consolidated  financial  statements  included
herein reflect all adjustments, consisting only of normal recurring adjustments,
which in the opinion of  management  are necessary to fairly state the Company's
financial  position,  results  of  operations  and cash  flows  for the  periods
presented.  These financial  statements  should be read in conjunction  with the
Company's audited financial  statements  included in the Company's Annual Report
on Form 10-KSB for the year ended  December 31, 1999,  and have been prepared on
the basis that the Company will continue as a going concern,  which contemplates
the  realization  of assets and the  satisfaction  of  liabilities in the normal
course of  business.  The results of  operations  for the period ended March 31,
2000 are not  necessarily  indicative  of the  results  to be  expected  for any
subsequent  quarter,  or for the entire fiscal year ending December 31, 2000, or
for any future period.

         The condensed consolidated financial statements include the accounts of
QueryObject  Systems  Corporation  and  its  subsidiaries,   internetQueryObject
Corporation  ("IQO") and QueryObject Systems  Corporation,  Ltd. All significant
intercompany transactions have been eliminated in consolidation.

         On  January  27,   2000,   the   Company's   stockholders   approved  a
one-for-three  reverse  stock  split  of  all  common  stock  outstanding.   The
one-for-three  reverse stock split also affects options and warrants outstanding
as well as the  conversion  ratio of  Convertible  Preferred  Stock into  common
stock.  All share and per share amounts  affecting net loss per share,  weighted
average number of common and common equivalent shares outstanding,  common stock
and all other stock  transactions  presented in these financial  statements have
been restated to reflect the one-for-three reverse stock split.

         Certain  prior period  amounts have been  reclassified  to conform with
their 2000 presentation.

2.       Basic and Diluted Net Loss Per Share

         Basic net loss per share is computed  by  dividing  the net loss by the
sum of the weighted  average number of shares of common stock  outstanding.  The
weighted  average  number of shares of common  stock  outstanding  includes  the
number of common shares  issuable upon the conversion of  Convertible  Preferred
Stock,  as of the date of conversion,  and the number of common shares  issuable
upon the exercise of options and warrants, as of the date of exercise.

         Diluted  earnings  per share is based on the  potential  dilution  that
would  occur  on  exercise  or  conversion  of  securities  into  common  stock.
Outstanding  options and warrants to purchase  shares of common stock that could
potentially  dilute basic  earnings per share in the future were not included in
the computation of diluted net loss per share because to do so would have had an
antidilutive effect for the periods presented.  In addition, the Series A, B and
C Convertible  Preferred Stock issued during 1999 and 1998 has been excluded due
to the antidilutive effect. As a result, the basic and diluted per share amounts
are identical for all periods presented.

                                       6
<PAGE>

3.       Use of Estimates

         The  preparation  of  the  financial   statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

4.       Liquidity and Business Risks

         The Company has incurred operating losses since inception, has incurred
negative cash flows from operating  activities and had an accumulated deficit of
$43,332,939  and  $41,338,047  as of March  31,  2000  and  December  31,  1999,
respectively.  The  Company  has had a limited  operating  history as a software
product company and has not made significant  sales of its products,  therefore,
revenues are  difficult to predict.  The Company  anticipates  that its cash and
cash  equivalent  balance at March 31, 2000 may be  insufficient  to satisfy its
cash flow  requirements for more than 12 months.  In this event, the Company may
seek to sell additional  equity or convertible debt securities,  however,  there
can be no assurances that the Company would be successful in raising  additional
funds. The sale of additional equity or convertible debt securities would result
in additional dilution to the Company's stockholders.

5.       Subsequent Event

         In April  2000,  IQO sold 70 Units (the  "Units") of Series A Preferred
Stock  totaling  gross  proceeds of $7,000,000 in a private  placement (the "IQO
Private  Placement").  The  purchase  price  per Unit was  $100,000.  Each  Unit
consists  of 125,000  shares of  newly-created  Series A  Preferred  Stock and a
Common  Stock  Purchase  Warrant  exercisable  until  April 17, 2001 to purchase
125,000  shares of IQO's Common  Stock at an exercise  price of $1.00 per share.
IQO received net proceeds of $6,572,935 and issued  8,750,000 shares of Series A
Preferred Stock.  Each share of Series A Preferred Stock is convertible into one
share of IQO Common Stock.

         IQO granted the placement agent in the IQO Private  Placement an option
to  purchase  an  aggregate  of  492,500  shares  of its  Common  Stock and paid
commissions  and  non-accountable  expense  allowances  equal to  $394,000.  The
securities  offered and sold in the Private  Placement were not registered under
the  Securities  Act of 1933, as amended,  and may not be offered or sold in the
United  States by the  holders  thereof  absent  registration  or an  applicable
exemption from registration requirements.



                                       7

<PAGE>

Item 2.   Management's Discussion and Analysis or Plan of Operation

         The discussion in this report on Form 10-QSB  contains  forward-looking
statements that involve risks and  uncertainties.  The Company's  actual results
may differ materially from those discussed  herein.  Factors that could cause or
contribute to such differences  include, but are not limited to, those discussed
in "Risk  Factors"  in this  Part I, Item 2 as well as those  discussed  in this
section and elsewhere in this Report,  and the risks discussed in "Risk Factors"
in Part I, Item 1 - Business,  included in the  Company's  Annual Report on Form
10-KSB for the year ended December 31, 1999.

         The discussion  and analysis  below should be read in conjunction  with
the  Condensed  Consolidated  Financial  Statements of the Company and the Notes
thereto, included elsewhere herein.

Overview

         The  Company  commenced  operations  in February  1989,  and until 1997
substantially  all of its revenues  have been derived  from  providing  contract
services to customers using its proprietary business intelligence technology. In
the third quarter of 1996, the Company shifted its focus to commercializing  its
proprietary  business  intelligence  technology and most of its activities since
then have been  devoted  to  research  and  development,  recruiting  personnel,
raising   capital  and   developing   a  sales  and   marketing   strategy   and
infrastructure. In November 1997, the Company began implementation of full-scale
marketing  activity for QueryObject  System. The Company has a limited operating
history as a software  product  company and has made only  limited  sales of its
QueryObject System.

         During  the three  months  ended  March 31,  2000,  the  Company  began
staffing and incurred initial marketing expenses with respect to its subsidiary,
IQO.  IQO  will  resell  the  Company's   database,   data  streaming  and  data
distribution technology to Internet based businesses.

         To date, the Company has incurred  substantial  losses from operations,
and at March 31, 2000, had an accumulated  deficit of  $43,332,939.  The Company
expects to incur  substantial  operating  expenses  in the future to support its
product development  efforts (including those of IQO),  establish and expand its
domestic  and  international   sales  and  marketing   capabilities,   including
recruiting  additional  indirect  channel  partners,  and support and expand its
technical and management personnel and organization.

         Revenues  from  the  sales  of the  Company's  products  are  generally
recognized upon the execution of a software licensing  agreement and shipment of
the product,  provided that no  significant  vendor  obligations  remain and the
resulting  receivable is deemed collectible by management.  In instances where a
significant vendor obligation exists, revenue recognition is deferred until such
obligation  has been  satisfied.  Allowances  for estimated  future  returns are
provided for upon shipment.


                                       8
<PAGE>
Results of Operations

         The following table sets forth certain items in the Company's condensed
consolidated  statements of operations for the three months ended March 31, 2000
and 1999 ($ in thousands):

                                               Three Months Ended
                                                    March 31,
                                                2000        1999
                                              --------   ---------
Revenues
           Software licenses                  $   274    $    50
           Maintenance and services                54         26
                                              -------    -------

                   Total revenues                 328         76
                                              -------    -------

Cost of revenues
           Software licenses                       11          2
           Maintenance and services                20         19
                                              -------    -------

                   Total cost of revenues          31         21
                                              -------    -------

Gross profit                                      297         55
                                              -------    -------

Operating expenses
           Sales and marketing                  1,410        889
           Research and development               527        532
           General and administrative             411        347
                                              -------    -------

                   Total operating expenses     2,348      1,768
                                              -------    -------

Loss from operations                           (2,051)    (1,713)
  Interest income                                  65          9
  Interest expense                                 (6)       (14)
  Other expense                                    (3)      --
                                              -------    -------

Net loss                                      $(1,995)   $(1,718)
                                              -------    -------

Revenues

         The  Company's  license  revenues  have been  generated  from  sales of
QueryObject System.  Maintenance revenues consist of ongoing support and product
updates  that are  recognized  ratably over the term of the  contract,  which is
typically   12   months.    Service   revenues   consist   primarily   of   paid
proof-of-concepts performed for customers on a project or contract basis and are
recognized over the term of the respective agreements.

         Total  revenues  increased by $252,000,  or 332%,  from $76,000 for the
three  months  ended March 31, 1999  ("1999") to $328,000  for the three  months
ended March 31, 2000 ("2000").  License revenues increased by $224,000, or 448%,
from $50,000 in 1999 to $274,000 in 2000.  During 2000,  license  revenues  were
derived from the sale of three licenses, while during 1999 license revenues were
derived from the sale of one license.  Maintenance and service revenue increased
by $28,000,  or 108% from  $26,000 in 1999 to $54,000 in 2000.  Maintenance  and
service  revenues  are  expected to increase  as the  Company  sells  additional
licenses.

                                       9

<PAGE>

Cost of Revenues

         Cost  of  software  license  revenues  consists  primarily  of  royalty
payments to third  parties,  product  packaging,  documentation  and  production
costs.  Cost of software  license  revenues as a percentage of software  license
revenues  was 4.1% in 1999 and 4.0% in 2000.  Cost of  maintenance  and services
revenues consist primarily of customer support costs and direct costs associated
with  proof-of-concept  services.  Cost of  maintenance  and  services  revenues
decreased as a percentage of maintenance and services  revenues from 72% in 1999
to  37%  in  2000,  primarily  due to  higher  revenues  that  did  not  require
significant additional personnel costs related to customer support.

Operating Expenses

         Sales and Marketing.  Sales and marketing expenses consist primarily of
personnel costs,  including sales  commissions and incentives,  of all personnel
involved  in the sales and  marketing  process,  as well as  related  recruiting
costs,  public relations,  advertising  related costs,  collateral  material and
trade shows. Sales and marketing  expenses  increased by $521,000,  or 59%, from
$889,000 in 1999 to $1,410,000 in 2000, primarily due to personnel related costs
and marketing costs of IQO and a general  increase in marketing  expenses of the
Company.  The  Company  believes  that its sales  and  marketing  expenses  will
increase in absolute dollars as the Company continues to increase  promotion and
other marketing expenses.

         Research and  Development.  Research and development  expenses  consist
primarily of salaries and other personnel  related  expenses,  recruiting  costs
associated  with  the  hiring  of  additional  software  engineers  and  quality
assurance personnel, consultant costs and depreciation of development equipment.
Research and development  expenses  decreased by $5,000, or 1%, from $532,000 in
1999 to  $527,000 in 2000,  primarily  due to a decrease  in  personnel  related
costs, offset in part by higher depreciation  expense. The Company believes that
a  significant  level of  investment  for product  research and  development  is
required to remain competitive and, accordingly, the Company anticipates that it
will  continue  to  devote   substantial   resources  to  product  research  and
development  (including  those of IQO) and that  these  costs will  increase  in
absolute dollars. To date, all research and development costs have been expensed
as incurred.

         General and Administrative. General and administrative expenses consist
primarily  of personnel  costs for finance,  MIS,  human  resources  and general
management,  as  well  as  insurance  and  professional  expenses.  General  and
administrative  expenses increased by $64,000,  or 18%, from $347,000 in 1999 to
$411,000 in 2000, primarily due to higher legal and professional expenses,  that
was offset in part by a  reduction  in  personnel  related  costs.  The  Company
believes that its general and administrative  expenses will increase in absolute
dollars.

Interest Income and Interest Expense

         Interest income represents income earned on the Company's cash and cash
equivalents.  Interest income increased by $56,000, or 622%, from $9,000 in 1999
to $65,000 in 2000, primarily due to a higher level of cash and cash equivalents
on deposit during 2000.

                                       10

<PAGE>

         Interest expense  generally  represents  interest on capital  equipment
leases.  Interest expense  decreased by $8,000,  or 57%, from $14,000 in 1999 to
$6,000 in 2000. This decrease was primarily due to a lower  outstanding  balance
on capital lease obligations.

Provision for Income Taxes

         The Company  accounts for income taxes in accordance  with Statement of
Financial  Accounting  Standards  No. 109,  "Accounting  for Income  Taxes." The
Company incurred net operating losses in 1999 and 1998 and consequently  paid no
federal or state  income  taxes.  At  December  31,  1999,  the  Company had net
operating  losses and  research and  experimental  tax credit  carryforwards  of
$37,705,000  and  $259,000,  respectively,  available to offset  future  federal
taxable income and tax. These net operating loss carryforwards expire at various
dates through 2019.  Although the  determination  of whether an ownership change
has occurred is subject to factual and legal uncertainties, the Company believes
that an ownership change occurred upon the completion of previous financings and
such "ownership  change" will materially limit the Company's  ability to utilize
its NOL carryforward.  Moreover,  while such loss carryforwards are available to
offset  future  taxable  income of the  Company,  the Company does not expect to
generate sufficient taxable income so as to utilize all or a substantial portion
of such loss carryforwards prior to their expiration.

Liquidity and Capital Resources

         Since January 1, 1998, the Company has consummated  several  financings
to fund operations as follows:

         (a) During June,  July and August 1999,  the Company sold 45 Units (the
"Units")  totaling  gross  proceeds of  $4,500,000 in a private  placement  (the
"Series C Private  Placement").  Each Unit  consisted  of 100 shares of Series C
Convertible  Preferred  Stock  ("Series C Preferred  Stock") and a Common  Stock
Purchase Warrant (the "Series C Warrants")  exercisable  until December 28, 2001
to purchase  33,333  shares of Common Stock at an exercise  price of $2.5875 per
share.  As  described  below,  all Series C Warrants  have been  exercised.  The
Company  received  proceeds of $4,089,791,  after  deduction of commissions  and
expenses  payable to the placement agent. As of March 31, 2000, there were 2,425
shares  of  Series  C  Preferred  Stock  issued  and  outstanding,  all of which
converted to Common Stock during April 2000.

         The Company  granted the placement agent and the selected dealer in the
Series C Private Placement options to purchase an aggregate of 146,667 shares of
Common Stock.

         (b)  During May and June  1999,  the  Company  borrowed  $400,000  from
stockholders  of the  Company  and issued  promissory  notes  (the  "1999  Notes
Payable").  The 1999 Notes  Payable bore  interest at 12% per annum and upon the
initial  closing of the Series C Private  Placement on June 28,  1999,  the 1999
Notes Payable were repaid.

         (c) In October and November 1998,  the Company had the initial  closing
of two private  placements  -- the Series A Private  Placement  and the Series B
Private Placement.  The Series A Private Placement  consisted of 1,750,000 Units
(the  "Series A Units")  with a gross  sales price of  $3,500,000.  The Series B
Private  Placement  consisted  of 10 Units (the  "Series B Units")  with a gross
sales price of $1,000,000. Each Series A Unit consisted of one share of Series A
Convertible


                                       11

<PAGE>

Preferred Stock ("Series A Preferred  Stock")  convertible  into 1.333 shares of
Common  Stock and a warrant to purchase  .83 of a share of Common Stock at a per
share exercise price of $1.50.  Each Series B Unit consisted of 10,000 shares of
Series B Convertible  Preferred Stock ("Series B Preferred  Stock")  convertible
into 6.666  shares of Common  Stock and  warrants to purchase  41,666  shares of
Common Stock at a per share exercise  price of $1.50.  As described  below,  all
Series A and Series B Warrants have been exercised.  The Company consummated the
final closing on each of the Series A Private Placement and the Series B Private
Placement in February  1999 and received an  aggregate of  $3,995,000  from such
private  placements  (after deduction of commissions and expenses payable to the
placement  agent).  As of March  31,  2000,  there  were no  shares  of Series A
Preferred  Stock issued and  outstanding and there were 5,000 shares of Series B
Preferred Stock issued and  outstanding,  all of which converted to Common Stock
during April 2000.

         In connection  with the Series A and Series B Private  Placements,  the
placement agent was granted an option to purchase additional Series A and Series
B Units equal to 10% of the Series A and Series B Units sold.

         (d) In September and October 1998, the Company  borrowed  $490,000 from
stockholders  of the Company and issued  unsecured  promissory  notes (the "1998
Notes").  During 1998,  $20,000 of 1998 Notes was converted  into Series A Units
and $170,000 of 1998 Notes was repaid.  The balance of $300,000  outstanding  at
December 31, 1998 was repaid in full in January 1999.

         During the year ended  December 31,  1999,  the exercise of Series A, B
and C Warrants resulted in the issuance of 2,767,573 shares of Common Stock with
proceeds to the Company of  $5,213,908.  In January  2000,  the  exercise of the
remaining Series A, B and C Warrants  resulted in the issuance of 591,697 shares
of Common Stock with proceeds to the Company of $1,456,250.

         For the three months  ended March 31, 2000 and the year ended  December
31, 1999, the holders of Series A, B and C Preferred Stock  converted  preferred
stock into  4,135,941  and 475,061  shares of Common  Stock,  respectively.  All
remaining preferred stock outstanding as of March 31, 2000 converted into Common
Stock in April 2000.

         As of March 31,  2000,  the  Company  had  $4,097,828  in cash and cash
equivalents and working capital of $4,209,662. Subsequent to March 31, 2000, IQO
consummated  the  Private  Placement  (see  Note 5 of  Notes  to  the  Condensed
Consolidated  Financial  Statements included elsewhere herein).  The Company has
incurred operating losses since inception, has incurred negative cash flows from
operating  activities  and had an  accumulated  deficit as of March 31, 2000 and
December 31, 1999 of $43,332,939 and $41,338,047, respectively.

         Net cash used in operating  activities was $1,739,000 and $1,807,000 in
2000 and 1999, respectively. For 2000, net cash used in operating activities was
primarily  attributable  to a net loss of $1,995,000  and a decrease in accounts
payable and accrued expenses of $234,000,  less  depreciation,  amortization and
consulting  option  expenses of $254,000.  For 1999,  net cash used in operating
activities was primarily attributable to a net loss of $1,718,000 and a decrease
in accounts  payable  and  accrued  expenses  of  $272,000,  less  depreciation,
amortization  and consulting  option expenses of $247,000.  Net cash provided by
financing   activities   was   $1,457,000  and  $1,396,000  in  2000  and  1999,
respectively,  primarily  as a result of  proceeds  from


                                       12

<PAGE>

the exercise of common stock purchase warrants during 2000 and the collection of
stock  subscription  receivables during 1999. The Company believes that its cash
and cash  equivalent  balance  may be  insufficient  to  satisfy  its cash  flow
requirements  for more than 12 months  since the Company is unable to predict if
it will have  sufficient  revenues to enable it to continue  operations  without
additional financing.

         The Company does not currently  have a line of credit with a commercial
bank. As of December 31, 1999, the Company's principal  commitments consisted of
obligations  under  operating and capital leases and employment  agreements.  At
that date,  the Company had  approximately  $171,000 in  outstanding  borrowings
under capital  leases,  which are payable  through 2001.  Pursuant to employment
agreements  with  executive  officers of the Company,  as of March 31, 2000, the
Company's  remaining  obligation is to pay $323,000 and $430,000 in salaries for
the years ended December 31, 2000 and 2001, respectively.

Year 2000 Compliance

         We have not  suffered  any  significant  Year  2000  problems  with our
internal  systems or with our  third-party  vendors  and  licensors  of material
software and  services.  We  completed  our  assessment  and system tests of all
current  versions of hardware and software  products and technology  information
systems that we use and believe that they are Year 2000 compliant.  However,  we
continue  to  monitor  our Year  2000  implications.  We have not  incurred  any
material costs in identifying or evaluating Year 2000 compliance issues.

Risk Factors That May Affect Future Results

         The Company operates in a rapidly changing  environment that involves a
number of risks, some of which are beyond the Company's  control.  The following
discussion highlights the most material of the risks.

We May Need Further Financing to Continue Our Operations.

         We have had a limited  operating history as a software product company,
have not made  significant  sales of our products and our revenues are difficult
to predict. Our total revenues for the three months ended March 31, 2000 and for
the year ended  December 31, 1999 were  $328,391 and  $1,774,109,  respectively.
Given our  continued  operating  losses,  we may need  additional  financing  to
continue operations. We anticipate that our cash and cash equivalent balance may
be insufficient to satisfy our cash flow  requirements  for more than 12 months,
since we are unable to predict if we will have sufficient  revenues to enable us
to continue our operations without additional financing. We have no commitments,
agreements  or  understandings  regarding  additional  financings  and we may be
unable to obtain additional financing on satisfactory terms or at all.

We Have Had a History of Operating  Losses and Project Future Losses;  Therefore
We Have Doubt About Our Ability To Continue as a Going Concern.

         At March 31, 2000, our  accumulated  deficit was  $43,332,939.  For the
three months  ended March 31, 2000 and for the fiscal  years ended  December 31,
1999 and 1998, we incurred net losses of $1,994,892,  $5,925,591 and $7,294,032,
respectively.  We have  incurred a net loss


                                       13

<PAGE>

in each  year of our  existence,  and have  financed  our  operations  primarily
through sales of equity and debt securities. Our expense levels are high and our
revenues are difficult to predict.  The independent  accountants'  report on our
financial  statements  for the year ended  December  31,  1999  states  that our
recurring   losses  from  operations  and  negative  cash  flow  from  operating
activities raise doubt about our ability to continue as a going concern.

         We expect to incur net losses for the foreseeable  future. We may never
achieve or sustain  significant  revenues or  profitability  on a  quarterly  or
annual  basis in the future.  Our future  operating  results will depend on many
factors, including:

         o      product demand

         o      product and price competition in our industry

         o      our success in expanding our direct sales force and establishing
                indirect channel partners

         o      our ability to develop and market products and control costs

         o      the  percentage  of our revenues  that is derived from  indirect
                channel partners

Our Revenues Depend On Sales of QueryObject  System and We Are Uncertain Whether
There Will be Broad Market Acceptance of this Product.

         Substantially  all of our  revenues  for  the  foreseeable  future  are
expected to be derived from sales of QueryObject System. Between January 1, 1995
and March 31, 2000,  we had software  product  revenue from only 35  QueryObject
System  installations,  including those sold pursuant to reseller agreements for
the resellers' own use. Our future  financial  performance  will depend upon the
successful  introduction and customer  acceptance of QueryObject  System and the
development of new and enhanced  versions of the product.  If we fail to achieve
broad market acceptance of QueryObject  System, it would have a material adverse
effect on our business, operating results and financial condition.

We Are  Seeking to Develop  Additional  Strategic  Relationships  With  Indirect
Channel  Partners to Increase Sales,  But We May be Unable to Attract  Effective
Partners and We Will Have Lower Gross Margins For Sales Through Indirect Channel
Partners.

         As part of our sales and  marketing  efforts we are  seeking to develop
additional  strategic  relationships  with indirect  channel  partners,  such as
original  equipment  manufacturers  and value-added  resellers,  to increase the
number of our customers.  We currently are investing,  and intend to continue to
invest,  significant resources to develop indirect channel partners. Our results
of operations  will be adversely  affected if we are unable to attract  indirect
channel partners to market our products  effectively and provide timely and cost
effective customer support and service. If we successfully sell products through
these sales channels,  the lower unit prices we expect to receive for such sales
will result in our gross margins being lower than if we had sold those  products
through our direct sales force.

                                       14

<PAGE>

We Are  Dependent  on a Few  Significant  Customers  and the  Loss  of a  Single
Customer Could Adversely Effect Our Business.

         For the three months ended March 31, 2000, two customers  accounted for
75%, and for the fiscal year ended December 31, 1999,  four customers  accounted
for 72%, of our total  revenues.  We are unsure if we will  realize  significant
future  revenues  from  any of  these  customers.  We also  expect  that for the
foreseeable  future a  relatively  small  number of  customers  and value  added
resellers will account for a significant percentage of our revenues. The loss of
any such customer would have a material adverse effect on our operating  results
and financial condition.

We Are Dependent On a Few Key Personnel and We Need to Attract and Retain Highly
Qualified Technical, Sales, Marketing, Development and Management Personnel.

         Our future  performance  depends in significant part upon the continued
service of key technical, sales and senior management personnel. The loss of the
services of one or more of our key employees,  in particular,  Robert  Thompson,
our  President  and  Chief  Executive  Officer,  or Daniel  M.  Pess,  our Chief
Operating and Financial  Officer,  could have a material  adverse  effect on our
business,   operating  results  and  financial  condition.  We  have  employment
agreements with Mr. Thompson and Mr. Pess that expire in December 2001.

         Our future success also depends on our  continuing  ability to attract,
train and retain highly qualified technical,  sales, marketing,  development and
managerial  personnel.  Competition for such personnel is intense, and we may be
unable to retain key technical,  sales,  development and managerial employees or
attract,   assimilate  or  retain  other  highly  qualified  technical,   sales,
development  and  managerial  personnel in the future.  If we are unable to hire
such personnel on a timely basis, our business,  operating results and financial
condition could be materially adversely affected.

We  Lack  Proprietary  Technology  Protection  of  Our  Products  And  May  Risk
Infringement Upon Technology Developed by Others.

         We rely primarily on a combination  of trade  secrets,  confidentiality
agreements and contractual provisions to protect our proprietary technology.  We
license  rather  than sell our  software  and  require  licensees  to enter into
license agreements that impose certain  restrictions on their ability to utilize
the software.  In addition,  we seek to avoid  disclosure of our trade  secrets,
including  but not  limited  to  requiring  those  persons  with  access  to our
proprietary  information to execute  confidentiality  agreements and restricting
access to our source code. These steps afford only limited protection.  While we
have applied for a patent for our Internet streaming  technology,  we are unable
to predict  whether we will receive such patent and we have no other  patents or
patent  applications  pending.  Despite our  efforts to protect our  proprietary
rights,  unauthorized  parties  may attempt to copy  aspects of our  products or
obtain and use information that we regard as proprietary.  Policing unauthorized
use of our products may be difficult and costly,  and software piracy may become
a persistent  problem.  In addition,  the laws of some foreign  countries do not
protect  our  proprietary  rights  to as great an  extent  as do the laws of the
United  States.  We are unable to predict  whether our means of  protecting  our
proprietary  rights will be adequate or whether  competitors will  independently
develop the same technology.

                                       15

<PAGE>

         From time to time, third parties may assert patent, copyright and other
intellectual  property claims against us. If we are unable to license  protected
technology  that  may be used in our  products,  we  could  be  prohibited  from
manufacturing and marketing such products. We also could incur substantial costs
to redesign our products,  to defend any legal action taken against us or to pay
damages to any infringed  party.  Litigation,  which could result in substantial
cost to and  diversion of our  resources,  may be necessary to enforce our other
intellectual property rights or to defend us against claimed infringement of the
rights of others.

We Intend to Expand Our  International  Sales,  But There Are Substantial  Risks
Involved,  Including Effectively  Establishing Additional Foreign Operations and
Foreign Regulatory Concerns.

         Our  international  sales for the three months ended March 31, 2000 and
for the fiscal year ended December 31, 1999, were  approximately  13% and 49% of
our  total  revenue,   respectively.  We  intend  to  expand  our  international
operations and to enter  additional  international  markets,  which will require
significant  management  attention and financial  resources and could  adversely
affect  our  business,  operating  results  or  financial  condition.  To expand
international   sales  successfully,   we  must  establish   additional  foreign
operations,  hire  additional  personnel  and recruit  additional  international
resellers and  distributors.  If we are unable to do so in a timely manner,  our
growth,  if any,  in  international  sales will be  limited,  and our  business,
operating  results  and  financial  condition  could  be  materially   adversely
affected.  We anticipate  that  expanded  international  sales,  if any, will be
denominated  in U.S.  dollars.  An  increase  in the  value of the  U.S.  dollar
relative to foreign  currencies  could make our  products  more  expensive  and,
therefore,  potentially  less  competitive  in those markets.  Additional  risks
inherent in our future international business activities generally include:

         o      unexpected changes in regulatory requirements

         o      tariffs and other trade barriers

         o      costs of localizing products for foreign countries

         o      longer accounts receivable payment cycles

The Market Price of Our Common Stock Is Volatile.

         The market price of our common  stock has in the past been,  and may in
the future continue to be, volatile.  For instance,  between January 1, 1999 and
May 5, 2000,  the closing price of our common stock has ranged between $1.41 and
$10.94.  The  volatility  of the market  price of our common  stock may  further
increase now that our common stock has been  delisted  from the Nasdaq  SmallCap
Market.  A variety of events may cause the market  price of our common  stock to
fluctuate significantly, including:

         o     quarter to quarter variations in operating results

         o     adverse news announcements

         o     the introduction of new products

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<PAGE>

         o     market conditions in the industry

         In  addition,   the  stock  market  in  recent  years  has  experienced
significant price and volume  fluctuations  that have particularly  affected the
market prices of equity  securities of many  companies that service the software
industry and that often have been unrelated to the operating performance of such
companies.  These  market  fluctuations  may  adversely  affect the price of our
common stock.

We Have a Significant  Amount of Authorized But Unissued  Preferred Stock, Which
May Affect the Likelihood of a Change of Control in our Company.

         As of April 28, 2000, our Board of Directors has the authority, without
further action by the stockholders, to issue 3,701,700 shares of preferred stock
on such terms and with such rights,  preferences  and  designations,  including,
without limitation  restricting  dividends on our common stock,  dilution of the
voting power of our common stock and  impairing  the  liquidation  rights of the
holders of our common stock, as the Board may determine  without any vote of the
stockholders.  Issuance  of such  preferred  stock,  depending  upon the rights,
preferences and designations thereof may have the effect of delaying,  deterring
or  preventing  a  change  in  control.  In  addition,  certain  "anti-takeover"
provisions of the Delaware  General  Corporation  Law,  among other things,  may
restrict  the  ability  of our  stockholders  to  authorize  a merger,  business
combination or change of control.

We Can Give No Assurances That Our Forward Looking Statements Will Be Correct.

         Certain forward-looking statements,  including statements regarding our
expected financial position,  business and financing plans are contained in this
prospectus  or are  incorporated  in  documents  annexed  as  exhibits  to  this
prospectus.  These forward-looking  statements reflect our views with respect to
future events and financial performance. The words, "believe," "expect," "plans"
and "anticipate" and similar expressions  identify  forward-looking  statements.
Although we believe  that the  expectations  reflected  in such  forward-looking
statements are reasonable,  we can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from such  expectations are disclosed in this prospectus.  All
subsequent written and oral  forward-looking  statements  attributable to us are
expressly qualified in their entirety by the cautionary  statements.  We caution
readers not to place undue reliance on these forward-looking  statements,  which
speak only as of their dates.  We undertake no obligations to publicly update or
revise any forward-looking  statements,  whether as a result of new information,
future events or otherwise.


                                       17
<PAGE>

Part II.          OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         During the three  months ended March 31,  2000,  the Company  issued an
aggregate of  4,135,941  shares of Common Stock  pursuant to the  conversion  of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.
The Company also issued an aggregate of 68,750  shares of Common stock  pursuant
to the exercise of warrants granted in the Series A Private  Placement,  and the
Series B Private  Placement.  Such  warrants had an exercise  price of $1.50 per
share of Common Stock.  The Company also issued  522,947  shares of Common Stock
pursuant to the exercise of warrants granted in the Series C Private  Placement.
Such warrants had an exercise  price of $2.5875 per share of Common  Stock.  The
issuance  of the  shares of Common  Stock upon the  conversion  of the Series A,
Series B and Series C Preferred  Stock and the exercise of the warrants was made
pursuant to the  exemption  contained in Section 4(2) of the  Securities  Act of
1933,  as  amended.  No  underwriter  was  involved  in  any  of  the  foregoing
conversions of Preferred Stock or exercises of warrants.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              Statement of Computation of Net Loss Per Share (Exhibit 11.1)

              Financial Data Schedule (Exhibit 27.1)

         (b)  Reports of Form 8-K

              No Reports on Form 8-K were filed  during the quarter  ended March
              31, 2000.



                                       18
<PAGE>

                                   SIGNATURES

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



Dated:  May 12, 2000             QUERYOBJECT SYSTEMS CORPORATION



                                 By: /s/ Daniel M. Pess
                                     -------------------------------------------
                                     Executive Vice President, Chief Operating
                                     Officer and Chief Financial Officer
                                     (Principal Financial Officer and Principal
                                     Accounting Officer)



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