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 June 30, 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 August 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 June 30, 2000 (unaudited)...................................3

           Condensed Consolidated Statements of Operations
           For the three months and six months ended June 30, 2000
           and 1999 (unaudited)..............................................4

           Condensed Consolidated Statements of Cash Flows
           For the six months ended June 30, 2000 and 1999 (unaudited).......5

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

Item 2.    Management"s Discussion and Analysis or Plan of Operation.........8

PART II.   OTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds........................17

Item 4.    Submission of Matters to a Vote of Security Holders..............17

Item 5.    Other Information................................................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

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                     June 30,
                                                                      2000
ASSETS
Current assets
<S>                                                                 <C>
    Cash and cash equivalents                                       $  8,516,562
    Accounts receivable, net of allowance for doubtful
       accounts of $259,960                                              911,587


    Prepaid expenses and other current assets                            137,134

             Total current assets                                      9,565,283

Property and equipment, net                                              927,602
Deposits and other assets                                                215,444

             Total assets                                           $ 10,708,329
                                                                    ------------

LIABILITIES AND STOCKHOLDERS" EQUITY
Current liabilities
    Accounts payable                                                $    182,695
    Accrued expenses                                                     465,732
    Deferred revenue                                                     150,929
    Deferred rent                                                         32,310
    Capital lease obligations                                              7,528

             Total current liabilities                                   839,194

Deferred rent                                                            254,928

             Total liabilities                                         1,094,122

Minority interest (Note 5)                                             6,534,993

Stockholders' equity
    Preferred stock, $.001 par value: 4,000,000 shares authorized;
       none issued and outstanding                                           --
       Common stock, $0.003 par value:  60,000,000 shares
       authorized; 9,840,252 shares issued and outstanding                29,521
    Additional paid-in capital                                        48,454,534
    Accumulated deficit                                              (45,404,841)

             Total stockholders' equity                                3,079,214

             Total liabilities and stockholders' equity             $ 10,708,329
                                                                    ------------
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                Three Months Ended           Six Months Ended
                                                                     June 30,                    June 30,
                                                               2000           1999          2000            1999
Revenues
<S>                                                      <C>            <C>            <C>            <C>
          Software licenses ..........................   $   582,850    $   503,200    $   856,650    $   553,200
          Maintenance and services ...................       110,720         26,905        165,311         53,094
                                                         -----------    -----------    -----------    -----------
                              Total revenues .........       693,570        530,105      1,021,961        606,294

Cost of revenues
          Software licenses ..........................        23,820         20,128         34,772         22,178
          Maintenance and services ...................        19,358         18,870         39,784         37,858
                                                         -----------    -----------    -----------    -----------
                              Total cost of revenues .        43,178         38,998         74,556         60,036
                                                         -----------    -----------    -----------    -----------
Gross profit .........................................       650,392        491,107        947,405        546,258
                                                         -----------    -----------    -----------    -----------
Operating expenses
          Sales and marketing ........................     1,615,798        961,289      3,025,557      1,849,974
          Research and development ...................       695,495        707,596      1,222,384      1,239,627
          General and administrative .................       526,098        345,392        936,985        692,516
                                                         -----------    -----------    -----------    -----------
                              Total operating expenses     2,837,391      2,014,277      5,184,926      3,782,117
                                                         -----------    -----------    -----------    -----------
Loss from operations .................................    (2,186,999)    (1,523,170)    (4,237,521)    (3,235,859)

Interest income ......................................       119,105          2,063        184,490         11,312
Interest expense .....................................        (4,208)       (12,923)       (10,097)       (27,022)
Other income (expense) ...............................           200         (1,288)        (3,666)        (1,288)
                                                         -----------    -----------    -----------    -----------
Net loss .............................................   $(2,071,902)   $(1,535,318)   $(4,066,794)    (3,252,857)
                                                         -----------    -----------    -----------    -----------

Basic and diluted net loss per common share ..........   $      (.21)   $      (.71)   $      (.45)   $     (1.63)
                                                         -----------    -----------    -----------    -----------

Weighted average shares used in per share
          computation (Note 2) .......................     9,811,407      2,155,793      9,062,390      1,992,860
                                                         -----------    -----------    -----------    -----------
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>

                                                                              Six Months Ended
                                                                                 June 30,
                                                                      2000                   1999
                                                                      ----                   ----

Cash flows from operating activities
<S>                                                               <C>                 <C>
     Net loss                                                     $  (4,066,794)      $  (3,252,857)
     Adjustments to reconcile net loss to net cash used in
         operating activities
             Depreciation and amortization................              223,894             219,849
             Loss on disposal of equipment................                9,033               1,288
             Options issued for consulting services.......              289,625             257,652
             Changes in operating assets and liabilities
                Accounts receivable, net..................              319,961            (548,844)
                Prepaid expenses and other current assets.               11,100            (215,973)
                Deposits and other assets.................              (58,397)             12,415
                Accounts payable and accrued expenses.....             (263,470)            437,144
                Deferred rent.............................               (5,055)             (8,127)
                Deferred revenue..........................              (18,826)             59,269
                                                                   ------------         -----------

         Net cash used in operating activities............           (3,558,929)         (3,038,184)
                                                                   ------------         -----------

Cash flows from investing activities
     Acquisitions of property and equipment...............             (314,228)            (78,564)
     Repayment of stockholder note receivable.............                   --              65,000
                                                                   ------------         -----------

         Net cash used in investing activities............             (314,228)            (13,564)
                                                                   ------------         -----------

Cash flows from financing activities
     Proceeds from exercise of common stock warrants......            1,456,250             635,256
     Proceeds from exercise of common stock options.......               73,285                  --
     Proceeds from issuance of preferred stock, net.......                   --             834,517
     Proceeds from issuance of IQO preferred stock, net...            6,534,993                  --
     Collection of stock subscriptions receivable, net....                   --           1,397,004
     Repayment of loans payable to stockholders...........                   --            (700,000)
     Proceeds from loan payable to stockholders...........                   --             400,000
     Payments of capital lease obligations................             (163,663)            (85,544)
                                                                   ------------         -----------

         Net cash provided by financing activities........            7,900,865           2,481,233
                                                                   ------------         -----------

Net increase (decrease) in cash and cash equivalents......            4,027,708            (570,515)


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


Cash and cash equivalents at end of period................         $  8,516,562         $   283,503
                                                                   ------------         -----------
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>

                         QUERYOBJECT SYSTEMS CORPORATION
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         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 June 30, 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  issued upon the  conversion  of  Convertible  Preferred
Stock, as of the date of conversion, and the number of common shares issued 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  Convertible
Preferred  Stock  issued  during  1999 and 1998 has been  excluded  prior to its
conversion to common shares,  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 has an accumulated deficit of
$45,404,841  and  $41,338,047  as of  June  30,  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 June 30, 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 assurance 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.       IQO Preferred Stock

         In April  2000,  IQO sold 70  Units,  at a  purchase  price per Unit of
$100,000  (the  "Units"),  each Unit  consisted  of  125,000  shares of Series A
Preferred Stock and a Common Stock Purchase  Warrant to purchase  125,000 shares
of IQO"s Common Stock (the "IQO Private  Placement").  IQO received net proceeds
of $6,534,993.  Each share of Series A Preferred  Stock is  convertible,  at the
option of the holder,  into one share of IQO Common Stock  (8,750,000  shares in
total).  The Series A Preferred  Stock ranks senior to all other  classes of IQO
capital stock and has a liquidation preference equal to its purchase price, $.80
per share.  The Series A Preferred  Stock is not  entitled to receive  dividends
unless  dividends  are  declared on a junior  security  with the approval of the
Series A holders. The Common Stock Purchase Warrants are exercisable until April
17, 2001 at an exercise price of $1.00 per share.

         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 IQO 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.

         As of June 30, 2000, the Company owns all the outstanding  common stock
of IQO.  Assuming the conversion of all of the Series A Preferred Stock into IQO
Common Stock,  the Company would own 53.3% of the  outstanding IQO Common Stock.
The Company has  reported  the  proceeds  from the IQO Private  Placement,  less
professional  expenses  and fees  associated  with  the  offering,  as  Minority
interest in the accompanying Condensed Consolidated Balance Sheet.


                                       7
<PAGE>

6.       Recent Accounting Pronouncement

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC"s views in applying generally
accepted accounting  principles to revenue recognition in financial  statements.
In June  2000,  the SEC  issued  SAB No.  101B to defer  the  effective  date of
implementation  of SAB No. 101 until the  fourth  quarter  of fiscal  2000.  The
Company is in the process of evaluating the impact of SAB 101.

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, but has a limited
operating  history as a software product company and has made only limited sales
of its QueryObject System.

         During the six months ended June 30, 2000,  the Company began  staffing
and incurred  initial  marketing  and product  related  expenses and general and
administrative 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 June 30, 2000, had an  accumulated  deficit of  $45,404,841.  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.


                                       8
<PAGE>

        Results of Operations

         The following table sets forth certain items in the Company's condensed
consolidated  statements of operations for the three and six month periods ended
June 30, 2000 and 1999 ($ in thousands):
<TABLE>
<CAPTION>

                                                               Three Months Ended               Six Months Ended
                                                                    June 30,                       June 30,
                                                                2000          1999          2000                1999
Revenues
<S>                                                           <C>            <C>             <C>             <C>
     Software licenses....................................    $      583     $    503        $    857        $      553
     Maintenance and services.............................           111           27             165                53
                                                              ----------     --------        --------        ----------
        Total revenues....................................           694          530           1,022               606
                                                              ----------     --------        --------        ----------
Cost of revenues
     Software licenses....................................            24           20              35                22
     Maintenance and services.............................            20           19              40                38
                                                              ----------     --------        --------        ----------
        Total cost of revenues............................            44           39              75                60
                                                              ----------     --------        --------        ----------
Gross profit.................................................        650          491             947               546
                                                              ----------     --------        --------        ----------
Operating expenses
     Sales and marketing..................................         1,616          961           3,026             1,850
     Research and development.............................           695          708           1,222             1,240
     General and administrative...........................           526          345             937               692
                                                              ----------     --------        --------        ----------
        Total operating expenses..........................         2,837        2,014           5,185             3,782
                                                              ----------     --------        --------        ----------
Loss from operations.........................................     (2,187)      (1,523)         (4,238)           (3,236)

  Interest income............................................        119            2             184                11
  Interest expense...........................................         (4)         (13)            (10)              (27)
  Other expense..............................................         --           (1)             (3)               (1)
                                                              ----------     --------        --------        ----------
Net loss..................................................... $   (2,072)    $ (1,535)       $ (4,067)       $   (3,253)
                                                              ==========     ========        ========        ==========
</TABLE>


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 $164,000,  or 31%,  from  $530,000 in the
second  quarter of 1999 to $694,000 in the second quarter of 2000. For the first
six months,  total revenues increased by $416,000,  or 69% from $606,000 in 1999
to $1,022,000  in 2000.  The increase for the first six months was primarily due
to an increase in license  revenues as compared to 1999 and the increase for the
second  quarter  was due to  increased  license  revenue and  increased  service
revenue.  The  Company  recorded  license  revenue  from the  sale of eight  (8)
licenses  in the  second

                                       9


<PAGE>

quarter  of 2000 as  compared  to the sale of five (5)  licenses  in the  second
quarter  of 1999.  The  Company  recorded  license  revenue  from the sale of 11
licenses  for the first six months of 2000 as compared to the sale of 5 licenses
for the first six months of 1999.  Maintenance and service revenue  increased by
$83,000,  or 307%, from $27,000 in the second quarter of 1999 to $110,000 in the
second quarter of 2000. This increase was primarily the result of an increase in
proof-of-concept  services.  For the first six months,  maintenance  and service
revenue increased by $112,000, or 211% from $53,000 in 1999 to $165,000 in 2000.
Maintenance  and service  revenues are expected to increase as the Company sells
additional licenses.

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% for both the  second  quarter  of 2000 and for the  first six
months of 2000 as compared  to 4.0% for both the second  quarter of 1999 and for
the first six months of 1999. These increases  resulted primarily from increased
production costs for the licenses sold.

         Costs  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  as  a  percentage  of
maintenance revenues were 18% and 24%, respectively, for the three and six-month
periods  ended June 30, 2000.  Cost of  maintenance  revenues as a percentage of
maintenance revenues were 70% and 72%, respectively, for the three and six-month
periods ended June 30, 1999.  These decreases in the 2000 periods were 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 $655,000,  or 68%, from
$961,000 in the second  quarter of 1999 to $1,618,000  in the second  quarter of
2000.  For the first six  months,  sales and  marketing  expenses  increased  by
$1,176,000,  or 64%,  from  $1,850,000  in 1999 to  $3,026,000  in  2000.  These
increases in the 2000 periods were primarily due to personnel  related costs and
marketing  and sales costs of IQO  ($374,000  and $733,000 for the three and six
month periods ended in 2000,  respectively)  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 $13,000, or 2%, from $708,000 in
the second  quarter of 1999 to $695,000 in the second  quarter of 2000.  For the
first six months, research and development expenses decreased by $18,000, or 1%,
from  $1,240,000  in 1999 to  $1,222,000  in 2000.  These  decreases in the 2000
periods were primarily


                                       10

<PAGE>

due to a  decrease  in  personnel  related  costs,  offset  in  part  by  higher
depreciation  and other equipment costs. 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 and  accounting,  human  resources and
general management, as well as insurance and professional expenses.  General and
administrative  expenses  increased by $181,000,  or 52%,  from  $345,000 in the
second  quarter of 1999 to $526,000 in the second quarter of 2000. For the first
six months,  general and administrative  expenses increased by $245,000, or 35%,
from $692,000 in 1999 to $937,000 in 2000.  These  increases in the 2000 periods
were primarily due to higher legal and professional expenses,  costs relating to
IQO and  higher bad debt  expense,  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 $117,000  from $2,000 in the second
quarter of 1999 to  $119,000  in the second  quarter of 2000.  For the first six
months,  interest income  increased by $173,000 from $11,000 in 1999 to $184,000
in 2000.  These  increases in the 2000 periods  were  primarily  due to a higher
level of cash and cash  equivalents  on deposit  during  2000 as a result of the
closing of the IQO Private Placement.

         Interest expense  generally  represents  interest on capital  equipment
leases. Interest expense decreased by $9,000, or 69%, from $13,000 in the second
quarter  of 1999 to  $4,000 in the  second  quarter  of 2000.  For the first six
months,  interest expense decreased by $17,000,  or 63%, from $27,000 in 1999 to
$10,000 in 2000.  These  decreases in the 2000 periods were  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.


                                       11
<PAGE>

Liquidity and Capital Resources

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

              (a) In  April  2000,  IQO  sold 70 Units  consisting  of  Series A
Preferred Stock and Common Stock Purchase  Warrants and received net proceeds of
$6,534,993 in a private placement. See Note 5 of Notes to Condensed Consolidated
Financial Statements included herein for further discussion.

              (b) During June,  July and August 1999,  the Company  received net
proceeds of $4,089,791  from a private  placement of  securities  that have been
converted or exercised into an aggregate of 3,239,169 shares of Common Stock.

         The Company granted the placement agent and the selected dealer in this
private  placement  options to purchase an aggregate of 146,667 shares of Common
Stock.

              (c) Between  October 1998 and February 1999, the Company  received
net proceeds of $3,995,000  from two private  placements of securities that have
been  subsequently  converted or exercised into an aggregate of 4,834,103 shares
of Common Stock.

         In connection  with these private  placements,  the placement agent was
granted  an  option  to  purchase  additional  securities  equal  to  10% of the
securities sold.

         During the year ended  December  31,  1999,  the  exercise  of Warrants
granted  in the  private  placements  noted  in (b) and (c)  above  resulted  in
proceeds to the Company of  $5,213,908.  In January  2000,  the  exercise of the
remaining outstanding Warrants from such private placements resulted in proceeds
to the Company of $1,456,250.

         As of June  30,  2000,  the  Company  had  $8,516,562  in cash and cash
equivalents  and  working  capital  of  $8,726,089.  The  Company  has  incurred
operating  losses  since  inception,  has  incurred  negative  cash  flows  from
operating  activities  and had an  accumulated  deficit as of June 30,  2000 and
December 31, 1999 of $45,404,841 and $41,338,047, respectively.

         Net cash used in operating activities was $3,559,000 and $3,038,000 for
the six-month  period ended in 2000 and 1999,  respectively.  For 2000, net cash
used  in  operating  activities  was  primarily  attributable  to a net  loss of
$4,067,000 and a decrease in accounts  payable and accrued expenses of $263,000,
less depreciation,  amortization and consulting option expenses of $514,000. For
1999, net cash used in operating activities was primarily  attributable to a net
loss  of  $3,253,000  less  depreciation,  amortization  and  consulting  option
expenses of $478,000.  Net cash provided by financing  activities was $7,901,000
and  $2,481,000 for the six-month  period ended in 2000 and 1999,  respectively,
primarily as a result of proceeds  from the IQO Private  Placement  and from the
exercise  of  Warrants  during  2000 and the  collection  of stock  subscription
receivables,  exercise of Warrants and the sale of convertible securities 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.


                                       12
<PAGE>

         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 June 30, 2000,  the
Company"s  remaining  obligation is to pay $215,000 and $430,000 in salaries for
the years ended December 31, 2000 and 2001, respectively.

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 six months ended June 30, 2000 and for
the year ended December 31, 1999 were $1,021,961 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 June 30, 2000, our accumulated deficit was $45,404,841.  For the six
months ended June 30, 2000 and for the fiscal years ended  December 31, 1999 and
1998,  we  incurred  net  losses  of  $4,066,794,   $5,925,591  and  $7,294,032,
respectively.  We have  incurred a net loss 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

                                       13

<PAGE>

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.  Through June 30, 2000,
we had software product revenue from only 43 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.

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

         For the six months ended June 30, 2000,  four  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


                                       14

<PAGE>

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.

         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 six months ended June 30, 2000 and for
the fiscal year ended December 31, 1999, were  approximately  27% and 49% of our
total  revenue,  respectively.  We may expand our  international  operations and
enter  additional   international   markets,  which  would  require  significant
management  attention and financial  resources  and could  adversely  affect our
business,  operating  results or financial  condition.  To expand  international
sales  successfully,  we  may  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 may be limited,  and our business,  operating results and
financial  condition  could be 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,

                                       15


<PAGE>

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
August 4, 2000,  the closing price of our common stock has ranged  between $1.41
and $10.94.  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
             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 August 5, 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
document or are incorporated in documents  annexed as exhibits to this document.
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

                                       16

<PAGE>

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.

Part II.    OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         As described in Note 5 of the Notes to Condensed Consolidated Financial
Statements  included  elsewhere  herein,  IQO  has  closed  on the  IQO  Private
Placement.  The sale of the securities in the IQO Private  Placement was made in
reliance on the  exemption  contained in Section 4(2) of the  Securities  Act of
1933, as amended.  EarlyBird  Capital Inc.  acted as the placement  agent of the
Series  A  Private  Placement.  For more  information  relating  to IQO  Private
Placement  (including the conversion or exercise terms of the securities  issued
in the Private  Placement),  see Note 5 of the Notes to  Condensed  Consolidated
Financial Statements.

         During the three  months  ended June 30,  2000,  the Company  issued an
aggregate  of  102,967  shares  of  Common  Stock  upon  conversion  of Series B
Preferred  Stock and Series C  Preferred  Stock.  The  issuance of the shares of
Common Stock upon the  conversion  of the Series B and Series C Preferred  Stock
was  made  in  reliance  on 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.

Item 4.  Submission of Matters to a Vote of Security Holders

         At the annual meeting of  stockholders  of the Company on May 31, 2000,
the  stockholders  (i) elected  seven members of the Board of Directors to serve
until the next annual  meeting,  (ii)  approved  the  adoption of the 2000 Stock
Option Plan, and (iii) ratified the appointment of PricewaterhouseCoopers LLP as
the Company"s independent public accounts for year ending December 31, 2000.

         (i)    The vote to elected  seven  members of the Board of Directors to
                serve until the next annual meeting was as follows:

                Nominee                    For              Withheld
                -------                    ---              --------

                Robert A. Thompson         6,015,897        18,194
                Daniel M. Pess             6,015,897        18,194
                Rino Bergonzi              6,015,897        18,194
                Alan W. Kaufman            6,015,897        27,518
                Amy L. Newmark             6,015,897        18,194
                Gianluigi Riccio           6,006,573        18,194
                Andre Szykier              6,015,897        18,194


                                       17

<PAGE>

         (ii)   The vote for the  adoption of the 2000 stock  option plan was as
                follows:

                                                          Abstain and
                For                     Against           Broker Non-Votes
                ---                     -------           ----------------

                3,342,604               101,333           11,202

         (iii)  The vote for ratifying the appointment of PricewaterhouseCoopers
                LLP was as follows:
                                                            Abstain and
                For                   Against               Broker Non-Votes
                ---                   -------               ----------------

                10,978,122            7,050                 1,500

Item 5.  Other Information

         Pursuant to recent  amendments to the proxy rules under the  Securities
Exchange Act of 1934, as amended,  the Company"s  stockholders are notified that
the deadline for providing the Company timely notice of any stockholder proposal
to be  submitted  outside of the Rule 14a-8  process  for  consideration  at the
Company"s 2001 Annual  Meeting of  Stockholders  (the "Annual  Meeting") will be
March 19, 2001. As to all such matters which the Company does not have notice on
or prior to March 19, 2001, discretionary  authorization shall be granted to the
designated persons in the Company"s proxy statement for the Annual Meeting.

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 on Form 8-K

         A Report on Form 8-K was filed on April 20,  2000  under Item 5 " Other
         Events.


                                       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:  August 11, 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)


                                       19