SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


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

         For the quarterly period ended September 30, 1999


/ /      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)


                         60 Charles Lindbergh Boulevard
                            Uniondale, New York 11553
                (Former address of Registrant since last report)

         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 / / No  /X/

         As of October 31, 1999 there were 7,785,297  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 September 30, 1999 (unaudited)................................3

          Condensed Consolidated Statement of Operations
          For the three months and nine months ended September 30, 1999
          and 1998 (unaudited)................................................4

          Condensed Consolidated Statement of Cash Flows
          For the nine months ended September 30, 1999 and 1998 (unaudited)...5

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

Item 2.   Management's Discussion and Analysis or Plan of Operation...........9

PART II.  OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds..........................21

Item 6.   Exhibits and Reports on Form 8-K...................................21

SIGNATURES...................................................................22



                                       2

<PAGE>
Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

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

                                                                       September 30,
                                                                            1999
ASSETS
Current assets
<S>                                                                      <C>
    Cash and cash equivalents.........................................   $ 1,789,870
    Accounts receivable, net of allowance for doubtful
       accounts of $104,000...........................................         2,432
    Prepaid expenses and other current assets.........................       269,972
                                                                         -----------
        Total current assets..........................................     2,952,274

Property and equipment, net...........................................       824,305
Deposits and other assets                                                    104,488
                                                                         -----------
        Total assets..................................................   $ 3,881,067
                                                                         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable   ...............................................   $   362,072
    Accrued expenses                                                         776,976
    Deferred revenue                                                         141,006
    Deferred rent                                                              9,362
    Capital lease obligations due within one year.....................       157,642
                                                                         -----------

        Total current liabilities.....................................     1,447,058

Deferred rent                                                                245,095
Capital lease obligations                                                    59,409
                                                                         -----------
        Total liabilities.............................................     1,751,562
                                                                         ===========

Stockholders' equity
    Preferred stock, $.001 par value, 4,000,000 shares authorized;
        1,633,125, 93,000 and 4,500 shares of Series A, B and C,
        respectively, issued and outstanding .........................         1,731

    Common stock, $0.001 par value: 60,000,000 shares
       authorized; 7,093,647 shares issued and outstanding............         7,094
    Additional paid-in capital........................................    41,976,196
    Accumulated deficit...............................................   (39,855,516)
                                                                         -----------
        Total stockholders' equity....................................     2,129,505

        Total liabilities and stockholders' equity....................   $ 3,881,067
                                                                         ===========
</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                Nine Months Ended
                                                           September 30,                     September 30,
                                                      1999               1998           1999               1998
Revenues
<S>                                              <C>               <C>               <C>              <C>
   Software licenses                             $    525,200      $    177,500      $ 1,078,400      $    312,500
   Services and maintenance....................        29,365            25,064           82,459            86,090
                                                 ------------      ------------      -----------      ------------
             Total revenues....................       554,565           202,564        1,160,859           398,590

Cost of revenues
   Software licenses                                   20,004             3,750           42,182             5,250
   Services and maintenance....................        18,949            16,229           56,807            62,140
                                                 ------------      ------------      -----------      ------------
             Total cost of revenues............        38,953            19,979           98,989            67,390
                                                 ------------      ------------      -----------      ------------
Gross profit                                          515,612           182,585        1,061,870           331,200
                                                 ------------      ------------      -----------      ------------
Operating expenses
   Sales and marketing                                877,889           975,097        2,727,863         3,443,543
   Research and development....................       507,827           596,842        1,747,454         1,778,098
   General and administrative..................       326,368           366,890        1,018,884         1,217,620
                                                 ------------      ------------      -----------      ------------
             Total operating expenses..........     1,712,084         1,938,829        5,494,201         6,439,261
                                                 ------------      ------------      -----------      ------------
Loss from operations                               (1,196,472)       (1,756,244)      (4,432,331)       (6,108,061)

Interest income                                        14,165            11,819           25,477           113,184
Interest expense                                       (7,896)          (31,695)         (34,918)         (109,031)
Other expense                                              --                --           (1,288)             (206)
                                                 ------------      ------------      -----------      ------------
Net loss.......................................  $ (1,190,203)      $(1,776,120)     $(4,443,060)     $ (6,104,114)
                                                 ============      ============      ===========      ============
Basic and diluted net loss per common share....  $       (.17)      $      (.35)     $      (.70)     $      (1.19)
                                                 ------------      ------------      -----------      ------------
Weighted average shares used in per share
   computation (Note 2)........................     7,008,391         5,121,422        6,325,624         5,119,538
                                                 ============      ============      ===========      ============
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>
XX
                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                                      1999             1998

Cash flows from operating activities
<S>                                                                             <C>             <C>
     Net loss                                                                   $ (4,443,060)   $  (6,104,114)
     Adjustments to reconcile net loss to net cash used in operating ...........
        activities
          Depreciation and amortization.........................................     319,808          310,021
          Loss on disposition of computer equipment.............................       1,288              206
          Options issued for consulting services................................     380,565          114,102
          Changes in assets and liabilities
             Accounts receivable, net...........................................    (615,905)         240,172
             Prepaid expenses and other current assets..........................    (232,221)             599
             Deferred offering costs                                                      --          (41,340)
             Deposits and other assets..........................................     (23,457)           2,094
             Accounts payable and accrued expenses..............................    (147,727)         (20,865)
             Deferred rent......................................................     (15,371)             672
             Deferred revenue...................................................      56,215           22,151
                                                                                ------------      -----------
             Net cash used in operating activities..............................  (4,719,865)      (5,476,302)
                                                                                ------------      -----------
Cash flows from investing activities
        Loan receivable from stockholder.........................................         --          (65,000)
        Acquisitions of property and equipment...................................   (184,158)         (96,278)
        Repayment of stockholder loan............................................     65,000               --
        Purchase of restricted certificate of deposit............................         --          (22,554)
                                                                                ------------      -----------
             Net cash used in investing activities..............................    (119,158)        (183,832)
                                                                                ------------      -----------
Cash flows from financing activities
        Proceeds from exercise of  common stock warrants and options.............    719,331           10,384
        Proceeds from interim and bridge financing notes payable to    .........
                 shareholders, net..............................................          --          410,000
        Proceeds from issuance of preferred stock, net..........................   4,089,791               --
        Collection of stock subscriptions receivable, net.......................   1,396,000               --
        Repayment of notes payable to stockholders..............................    (700,000)        (433,586)
        Release of restricted certificate of deposit............................          --          403,586
        Payments of capital lease obligations...................................    (130,247)        (163,282)
        Proceeds from notes payable to stockholders.............................     400,000               --
        Repayment of loan receivable from stockholder...........................          --           12,300
        Proceeds from sale-leaseback transaction................................          --           29,202
                                                                                ------------      -----------
             Net cash provided by financing activities                             5,774,875          268,604
                                                                                ------------      -----------
Net increase (decrease) in cash and cash equivalents............................     935,852       (5,391,530)

Cash and cash equivalents at beginning of year..................................     854,018        5,437,350
                                                                                ------------      -----------
Cash and cash equivalents at end of period......................................$  1,789,870      $    45,820
                                                                                ============      ===========
</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, 1998,  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 September 30,
1999 are not  necessarily  indicative  of the  results  to be  expected  for any
subsequent  quarter,  or for the entire fiscal year ending December 31, 1999, or
for any future period.

         In March 1999, the Company formed  internetQueryObject  Corporation,  a
wholly owned subsidiary. The condensed consolidated financial statements include
the accounts of the Company and its subsidiaries.  All significant  intercompany
accounts and transactions have been eliminated.

2.       NET LOSS PER SHARE

         Basic  net loss per  share is  computed  by  dividing  net loss for the
period by the sum of the  weighted  average  number  of  shares of common  stock
outstanding.  Options  and  warrants to acquire  common  stock and the Series A,
Series B and Series C Convertible  Preferred Stock have not been included in the
computation of net loss per share because to do so would have been  antidilutive
for the periods presented.

3.       SUPPLEMENTAL CASH FLOW INFORMATION

                                                         Nine Months Ended
                                                           September 30,
                                                         1999        1998


Interest paid during the period......................$   45,059     $ 85,014
Common stock options issued for consulting services..   380,565      114,102

4.       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.

                                       6
<PAGE>
5.       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
$39,855,516  and  $35,412,456  as of  September  30, 1999 and December 31, 1998,
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  balances may be insufficient to satisfy its operating cash flow
requirements in the foreseeable future.  Given the Company's continued operating
losses, the Company may need additional financing to continue operations. If the
Company's  cash and cash  equivalent  balances are  insufficient  to satisfy its
operating cash flow requirements, the Company may seek to sell additional equity
securities.  In this case,  there can be no  assurance  that the Company will be
successful in raising additional funds. See "Risk Factors That May Affect Future
Results"  included  elsewhere  herein.  The sale of additional equity securities
would result in additional dilution to the Company's stockholders.

6.       SERIES C CONVERTIBLE PREFERRED STOCK

         During  June,  July and August  1999,  the  Company  sold 45 Units (the
"Units") of Series C Preferred  Stock totaling gross proceeds of $4,500,000 in a
private  placement  (the "Series C Private  Placement").  The purchase price per
Unit was $100,000.  Each Unit consists of 100 shares of  newly-created  Series C
Preferred  Stock and a Common Stock  Purchase  Warrant (the "Series C Warrants")
exercisable  until December 28, 2001 to purchase  100,000 shares of Common Stock
at an  exercise  price of $.8625 per share.  As  described  below,  the Series C
Warrants  may be called for  redemption.  The Company  received  net proceeds of
$4,089,791 and issued 4,500 shares of Series C Preferred Stock, convertible into
and aggregate of 5,217,399 shares of Common Stock, and granted Series C Warrants
to purchase 4,500,000 shares of Common Stock.

         The Company  granted the placement agent and the selected dealer in the
Series C Private Placement options to purchase an aggregate of 440,001 shares of
Common Stock and received  commissions and  non-accountable  expense  allowances
equal to  $321,650.  The  securities  offered  and sold in the  Series C 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.

         The following is a description of the securities issued in the Series C
Private Placement:

         SERIES C PREFERRED STOCK

         Stated Value. Each share of Series C Preferred Stock has a stated value
(the "Stated Value") equal to $1,000.

         Ranking. The Series C Preferred Stock will rank junior to the Company's
Series A  Convertible  Preferred  Stock $.001 par value (the "Series A Preferred
Stock") and Series B Convertible Preferred Stock, $.001 par value (the "Series B
Preferred Stock") with respect to rights on liquidation,  dissolution or winding
up of the  Company.  The Series C Preferred  Stock


                                       7
<PAGE>

will rank senior to all other classes and series of capital stock of the Company
then existing or  thereinafter  authorized,  issued or  outstanding,  including,
without limitation, the Common Stock (collectively the "Junior Securities").

         Liquidation Preference.  Upon a liquidation of the Company (including a
sale by the  Company  of all or  substantially  all of its assets or a merger or
consolidation  of the Company with another  Company where the Company is not the
surviving  entity),  the assets of the Company available for distribution to the
stockholders  of the Company (after payment or provision for  liabilities of the
Company),  whether from capital, surplus or earnings, will be distributed in the
following order of priority: (i) first, to the holders of the Series A Preferred
Stock  and the  Series B  Preferred  Stock to the  extent  of their  liquidation
preference,  presently $2.00 per share and $10.00 per share, respectively:  (ii)
second, to the holders of the Series C Preferred Stock,  prior and in preference
to any  distribution to the holders of any Junior  Securities an amount equal to
the Stated Value for each share of Series C Preferred Stock then outstanding and
(iii)  third,  to the  holders  of issued  and  outstanding  Junior  Securities,
including shares of Common Stock.

         Dividends.  The  holders  of the Series C  Preferred  Stock will not be
entitled to receive any stated amount of dividends, whether in cash or otherwise
unless  dividends are paid on any other securities of the Company that are equal
to or junior to the Series C Preferred Stock.

         Conversion. The holders of the Series C Preferred Stock have the right,
subject to adjustment to protect against  dilution,  at the holder's option,  at
any time,  to convert  each share of Series C Preferred  Stock into one thousand
one hundred and fifty nine (1,159) shares of Common Stock.

         Voting.  The  holders of the Series C Preferred  Stock are  entitled to
vote on all matters submitted for a vote to the stockholders of the Company. The
holder of a share of Series C Preferred Stock is entitled to cast that number of
votes as  equals  the  number  of votes  entitled  to be cast by a holder of the
shares of Common Stock into which it is convertible as of the record date of the
proposed stockholder action. The holders of the Series C Preferred Stock vote as
a separate class on all matters upon which the Delaware General  Corporation Law
specifically  requires the holders of such preferred stock to vote as a separate
class.

         WARRANTS

         Each Series C Warrant  entitles  the  registered  holder to purchase at
anytime until  December 28, 2001,  100,000  shares of Common  Stock,  subject to
adjustment to protect against  dilution,  at a per share exercise price equal to
$.8625.  The Series C Warrants may be called for  redemption by the Company at a
redemption  price of $.01 per Series C Warrant upon not less than 30 days' prior
written notice if the closing price of the Common Stock shall have been at least
$1.20  per  share  (subject  to  adjustment  in the  event of a  subdivision  or
combination  of the  shares  of Common  Stock) on 20  trading  days  during  any
30-consecutive  day trading  period ending not more than three days prior to the
date such notice is given.

                                       8
<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, 1998.

         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.

         To date, the Company has incurred  substantial  losses from operations,
and at September  30,  1999,  had an  accumulated  deficit of  $39,855,516.  The
Company expects to incur substantial operating expenses in the future to support
its  product  development  efforts,   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 delayed until such
obligation  has been  satisfied.  Allowances  for estimated  future  returns are
provided for upon shipment.

                                       9
<PAGE>
RESULTS OF OPERATIONS

         The  following   table  sets  forth  certain  items  in  the  Company's
consolidated statements of operations for the three and nine month periods ended
September 30, 1999 and 1998 ($ in thousands):
<TABLE>
<CAPTION>

                                                        Three Months Ended             Nine Months Ended
                                                           September 30,                  September 30,
                                                       1999           1998            1999            1998
Revenues
<S>                                                <C>             <C>             <C>            <C>
    Software licenses........................      $    525        $    178        $  1,078       $    313
    Maintenance..............................            30              25              83             86
                                                   --------        --------        --------       --------
       Total revenues........................           555             203           1,161            399
                                                   --------        --------        --------       --------
Cost of revenues
    Software licenses........................            20               4              42              5
    Maintenance..............................            19              16              57             62
                                                   --------        --------        --------       --------
       Total cost of revenues................            39              20              99             67
                                                   --------        --------        --------       --------
Gross profit.................................           516             183           1,062            332
                                                   --------        --------        --------       --------
Operating expenses
    Sales and marketing......................           878             975           2,728          3,444
    Research and development.................           508             597           1,747          1,778
    General and administrative...............           326             367           1,019          1,218
                                                   --------        --------        --------       --------
       Total operating expenses..............         1,712           1,939           5,494          6,440
                                                   --------        --------        --------       --------
Loss from operations.........................        (1,196)         (1,756)         (4,432)        (6,108)

  Interest income............................            14              12              25            113
  Interest expense...........................            (8)            (32)            (35)          (109)
  Other expense..............................            --              --              (1)            --
                                                   --------        --------        --------       --------
  Net loss...................................      $ (1,190)       $ (1,776)       $ (4,443)      $ (6,104)
                                                   ========        ========        ========       ========
</TABLE>

REVENUES

         The  Company's  license  revenues  have been  generated  from  sales of
QueryObject System. Maintenance revenues consist of ongoing support and products
updates  and are  recognized  ratably  over the term of the  contract,  which is
typically twelve months.

         Total  revenues  increased by $352,000,  or 173%,  from $203,000 in the
third  quarter of 1998 to $555,000 in the third  quarter of 1999.  For the first
nine months, total revenues increased by $762,000, or 191% from $399,000 in 1998
to  $1,161,000 in 1999.  These  increases  were  primarily due to an increase in
license  revenues in the 1999 periods as compared to 1998. The Company  recorded
license  revenue from the sale of five (5) licenses in the third quarter of 1999
as compared to the sale of three (3) licenses in the third quarter of 1998.  The
Company recorded license revenue from the sale of 11 licenses for the first nine
months of 1999 as compared to the sale of five (5)  licenses  for the first nine
months of 1998. Maintenance revenue increased by $5,000, or 20%, from


                                       10
<PAGE>

$25,000 in the third  quarter  of 1998 to $30,000 in the third  quarter of 1999.
For the first nine months,  maintenance  revenue decreased by $3,000, or 3% from
$86,000 in 1998 to $83,000 in 1999.  Maintenance revenue is expected to increase
as the Company continues to sell additional licenses.

COST OF REVENUES

         Cost of software  license  revenues  consists  primarily of  royalties,
product packaging,  documentation and production costs. Cost of software license
revenues as a  percentage  of software  license  revenues  was 3.8% in the third
quarter  of 1999 as  compared  to 2.2% for the third  quarter  of 1998.  Cost of
software  license revenues as a percentage of software license revenues was 3.9%
for the first nine  months of 1999 as compared to 1.6% for the first nine months
of 1998. These increases resulted from royalty payments made to third parties in
the 1999 periods.

         Cost of maintenance  revenues consists  primarily of personnel costs in
providing  customer  support.  Cost of  maintenance  revenues as a percentage of
maintenance revenues were 63.3% and 68.7%, respectively,  for the three and nine
month  periods  ended  September  30, 1999.  Cost of  maintenance  revenues as a
percentage of maintenance revenues were 64.0% and 72.1%,  respectively,  for the
three and nine month periods ended  September 30, 1998.  These  decreases in the
1999 periods were primarily due to a reduced requirement for 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,   consulting  expense,   advertising  related  costs,
collateral  material and trade shows.  Sales and marketing expenses decreased by
$97,000,  or 10%,  from $975,000 in the third quarter of 1998 to $878,000 in the
third quarter of 1999. For the first nine months,  sales and marketing  expenses
decreased by $716,000,  or 21%,  from  $3,444,000 in 1998 to $2,728,000 in 1999.
These  decreases  in the  1999  periods  were  primarily  due to  reduced  sales
personnel  related costs as a result of fewer employees and decreased  marketing
expenses.  The  Company  believes  that its sales and  marketing  expenses  will
increase  in  absolute  dollars as the  Company  increases  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  software   engineers  and  quality  assurance
personnel,  consultant costs and depreciation of development equipment. Research
and  development  expenses  decreased by $89,000,  or 15%,  from $597,000 in the
third  quarter of 1998 to $508,000 in the third  quarter of 1999.  For the first
nine months, research and development expenses decreased by $31,000, or 2%, from
$1,778,000 in 1998 to $1,747,000  in 1999.  These  decreases in the 1999 periods
were primarily due to decreased  personnel  related 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 and that these costs will increase in absolute dollars. To date, all
research and development costs have been expensed as incurred.

                                       11
<PAGE>
         General and Administrative. General and administrative expenses consist
primarily  of personnel  costs for finance,  MIS,  human  resources  and general
management, as well as insurance,  consulting and professional expenses. General
and administrative  expenses decreased by $41,000,  or 11%, from $367,000 in the
third  quarter of 1998 to $326,000 in the third  quarter of 1999.  For the first
nine months, general and administrative  expenses decreased by $199,000, or 16%,
from  $1,218,000  in 1998 to  $1,019,000  in 1999.  These  decreases in the 1999
periods were primarily due to a reduction in personnel related costs as a result
of fewer  employees.  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 $2,000,  or 17%, from $12,000 in the
third  quarter of 1998 to $14,000  in the third  quarter of 1999.  For the first
nine months, interest income decreased by $88,000, or 78%, from $113,000 in 1998
to $25,000 in 1999.  This increase and decrease in the  respective  1999 periods
were  primarily  related  to the level of cash and cash  equivalents  on deposit
during such periods.

         Interest expense  generally  represents  interest on capital  equipment
leases,  and for the 1998  periods,  charges  relating  to the H.C.C.  Financial
Services Loan Agreement (the "Loan  Agreement").  Interest expense  decreased by
$24,000,  or 75%,  from  $32,000  in the third  quarter of 1998 to $8,000 in the
third quarter of 1999. For the first nine months,  interest expense decreased by
$74,000,  or 68%, from $109,000 in 1998 to $35,000 in 1999.  These  decreases in
the 1999 periods were  primarily due to payments made to reduce the  outstanding
balance under the Loan Agreement during the 1998 periods.  The remaining balance
under the Loan Agreement was repaid in full during October 1998.

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 1998 and 1997 and consequently  paid no
federal or state  income  taxes.  At  December  31,  1998,  the  Company had net
operating  losses and  research and  experimental  tax credit  carryforwards  of
$29,660,000  and  $207,000,  respectively,  available to offset  future  federal
taxable income and tax. These net operating loss carryforwards expire at various
dates through 2018.  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.

                                       12

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         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
Preferred  Stock and a warrant to purchase  2.5 shares of Common  Stock at a per
share  exercise  price  equal to $.50.  Each Series B Unit  consisted  of 10,000
shares of Series B Preferred  Stock and  warrants to  purchase an  aggregate  of
125,000  shares of Common Stock at a per share exercise price equal to $.50. The
Series A Units were sold at a purchase price of $2.00 per Unit and each share of
Series A Preferred  Stock is convertible  into four shares of Common Stock.  The
Series B Units were sold at a purchase price of $100,000 per Unit and each share
of Series B Preferred  Stock is convertible  into twenty shares of Common Stock.
The effective  purchase price, on a Common Stock  equivalent  basis was $.50 per
common  share,  which  represented  a discount from the fair market value of the
Company's Common Stock on the various dates of issuance. 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 (1)  $3,181,000
from the Series A Private Placement (after deduction of commissions and expenses
payable  to the  placement  agent) and (ii)  $814,000  from the Series B Private
Placement  (after deduction of commissions and expenses payable to the placement
agent).  Through October 31, 1999, the Company has also received $1,055,156 from
the exercise of warrants granted in the Series A Private  Placement and Series B
Private  Placement.  In  addition,  certain  holders  of  Series A and  Series B
Preferred Stock have converted their  respective  preferred  shares into 562,000
shares of the Company's Common Stock.

         During  May  and  June  1999,  the  Company   borrowed   $400,000  from
stockholders  of the  Company in  exchange  for  promissory  notes  (the  "Notes
Payable").  The Notes Payable bear interest at 12% per annum and were due at the
earlier of June 30, 1999 or the successful  consummation of the Series C Private
Placement.  Upon the initial  closing of the Series C Private  Placement on June
28, 1999, the Notes Payable were repaid.

                                       13

<PAGE>

         During June, July and August 1999, the Company consummated the Series C
Private  Placement,  pursuant  to which the  Company  received  net  proceeds of
$4,089,791. See Note 6. to the Condensed Consolidated Financial Statements for a
further  description of the Series C Private Placement.  The net proceeds of the
Series C Private  Placement is being used for sales and marketing,  research and
development, and general working capital purposes.

         As of September 30, 1999,  the Company had  $1,740,000 in cash and cash
equivalents  and working  capital of  $1,505,000.  During the nine months  ended
September 30, 1999, the Company received  $1,396,000 in working capital from the
proceeds  of the  Series A Private  Placement  and  Series B Private  Placement,
$4,089,791 from the closing of the Series C Private  Placement and $719,331 from
the exercise of warrants granted in the Series A Private  Placement and Series B
Private  Placement.  The Company has incurred  operating losses since inception,
has  incurred  negative  cash  flows  from  operating   activities  and  had  an
accumulated deficit of $39,855,516 as of September 30, 1999. 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  balances,  may be
insufficient to satisfy its operating cash flow  requirements in the foreseeable
future.  Given the Company's  continued  operating losses,  the Company may need
additional financing to continue operations. However, there can be no assurances
that the Company  will be  successful  in raising  additional  funds.  See "Risk
Factors That May Affect Future Results" included  elsewhere herein.  The sale of
additional equity securities will result in additional dilution to the Company's
stockholders.

         Net cash used in operating activities was $4,720,000 and $5,476,000 for
the nine month period ended in 1999 and 1998,  respectively.  For 1999, net cash
used  in  operating  activities  was  primarily  attributable  to a net  loss of
$4,443,000  and an increase in net accounts  receivable of $616,000,  reduced by
depreciation and amortization of $320,000.  For 1998, net cash used in operating
activities  was  primarily  attributable  to a  net  loss  of  $6,104,000,  less
depreciation  and  amortization  of  $310,000  and a  decrease  in net  accounts
receivable of $240,000. Net cash provided by financing activities was $5,775,000
in  1999,  primarily  as a  result  of  the  collection  of  stock  subscription
receivables,  the closing of the Series C Private  Placement and the exercise of
common stock purchase warrants.

         The Company does not currently  have a line of credit with a commercial
bank. As of September 30, 1999, the Company's principal commitments consisted of
obligations  under  operating and capital leases and employment  agreements.  At
that date, the Company had  approximately  $347,000 in liabilities under capital
leases,  which are payable through 2001. Pursuant to employment  agreements with
executive  officers of the  Company as of  September  30,  1999,  the  Company's
remaining  obligation  is to pay $98,000 and  $390,000 in salaries for the years
ended December 31, 1999 and 2000, respectively.

                                       14
<PAGE>

YEAR 2000 COMPLIANCE

         We have  assessed the  readiness of our internal  business  information
systems for handling the Year 2000 and the Year 2000 compliance of our products.
We expect that we will  successfully  address  Year 2000 issues  relating to our
internal business information systems by the end of fiscal 1999.

         We believe that our current products are Year 2000 compliant.  However,
it is possible that current or future  customers  will assert claims  against us
with  respect to Year 2000 issues and, in the event such claims are asserted and
adjudicated in favor of these  customers,  our liability  could be material.  We
have taken steps to identify  affected  customers  and assist them in  assessing
risks that may be associated with our products.  We may incur  increasing  costs
regarding  customer service related to these actions over the next few years. As
our customer service programs are currently ongoing,  we are unsure of the scope
of any resulting  Year 2000 issues and potential  liability  resulting from such
issues.  We do not know the potential impact on our business,  operating results
and financial condition with respect to these matters.

         We have had discussions with our significant vendors, service providers
and large  customers  to  evaluate  Year 2000  issues,  if any,  relating to the
interaction of their systems with our internal systems. We have received limited
information  from these third  parties and we do not believe we will receive all
of this information.  Thus, despite the initiation of these discussions, we lack
the  information  necessary  to  estimate  the  potential  impact  of Year  2000
compliance  issues relating to these third parties and their interaction with us
and are unsure of when we will receive such information.

         We have not incurred  any  material  expenditures  in  connection  with
identifying or evaluating Year 2000 compliance issues. Most of our expenses have
related to the  opportunity  cost of time spent by our employees  evaluating our
internal business  information  systems, our products and the interaction of our
internal  business  information  systems  with  the  internal  systems  of third
parties.  Although we are unaware of any  material  operational  issues or costs
associated with preparing our internal business information systems and products
for the Year  2000,  we are  unsure  that we will  avoid  serious  unanticipated
negative  consequences  and/or  material  costs caused by  undetected  errors or
defects in our  technology.  Such  unanticipated  negative  consequences  and/or
material  costs,  if  incurred,  could  have a  material  adverse  effect on our
business, operating results or financial condition.

         Because we are unaware of any material Year 2000 compliance  issues, we
lack a Year  2000-specific  contingency plan. If Year 2000 compliance issues are
discovered, we will evaluate the need for one or more contingency plans relating
to  such  issues.  If  we  are  unable  to  develop  and  implement  appropriate
contingency  plans, as needed,  in a timely manner, we may experience delays in,
or increased costs  associated  with,  implementation  of changes to address any
such  issues,  which  could  have a  material  adverse  effect on our  business,
operating results or financial condition.


                                       15
<PAGE>
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.

         ALTHOUGH WE RECENTLY RECEIVED ADDITIONAL FINANCING, WE MAY NEED FURTHER
FINANCING TO CONTINUE OUR OPERATIONS.

         During  June,  July and  August  1999,  we  received  net  proceeds  of
$4,089,791 from the sale of 45 units of Series C Preferred  Stock. 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.
Given our  continued  operating  losses,  we may need  additional  financing  to
continue operations.  Our current projections indicate that if our forecasts are
achieved,  we may have  enough  cash to  continue  operations  until  May  2000;
however,  we are  unable to  predict  how long we will be able to  continue  our
operations.  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 September 30, 1999, our accumulated deficit was $39,855,516. For the
nine months ended  September  30, 1999 and the fiscal  years ended  December 31,
1998 and 1997, we incurred net losses of $4,443,060, $7,294,032 and $10,563,484,
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, 1998 states that our recurring  losses from  operations,
our deficiencies in working capital and stockholders  equity,  and negative cash
flow from  operating  activities  raise  substantial  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:


                                       16
<PAGE>

         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

         WE HAVE HAD A LIMITED  OPERATING  HISTORY AS A SOFTWARE PRODUCT COMPANY
AND LACK ANY SUBSTANTIAL REVENUE.

         We have a limited  operating  history as a software product company and
have made only limited  sales of our products.  Our total  revenues for the year
ended  December 31, 1998 and for the nine months ended  September  30, 1999 were
$928,505 and $1,160,859,  respectively. Prior to 1997, our revenues were derived
primarily from contract data analysis services, which we no longer provide.

         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 September 30, 1999, we had software product revenue from only 26 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.

         OUR COMMON STOCK WAS DELISTED FROM THE NASDAQ SMALLCAP MARKET AND THERE
MAY BE A LIMITED TRADING MARKET FOR OUR STOCK.

         Effective  with the close of business on May 6, 1999,  our common stock
was delisted from the Nasdaq  SmallCap Market because of our inability to comply
with certain maintenance  standards required for continued listing on the Nasdaq
SmallCap Market,  including the net tangible asset  requirement.  We fell out of
compliance primarily as a result of continued losses during 1998.

         Now that our common stock has been  delisted  from the Nasdaq  SmallCap
Market,  trading in our common stock is conducted on the OTC Bulletin  Board and
the Boston Stock Exchange.  The Boston Stock Exchange has notified us that while
we currently meet its continuing listing requirements, the exchange will monitor
whether  continued  operating  losses will jeopardize our ability to comply with
its requirement that we have at least $500,000 in net tangible assets.

         If our common  stock is delisted  from the Boston Stock  Exchange,  our
common  stock  could  be  considered  a penny  stock.  Securities  and  Exchange
Commission  regulations  generally define a penny stock to be an equity security
that is not listed on Nasdaq or a national  securities  exchange  and that has a
market price of less than $5.00 per share,  subject to certain  exceptions.  The
regulations   of  the   Securities   and  Exchange   Commission   would  require
broker-dealers  to  deliver to a  purchaser  of our  common  stock a  disclosure
schedule  explaining  the penny stock market and the risks  associated  with it.
Various sales practice  requirements are also imposed on


                                       17

<PAGE>

broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions).  In addition,  broker-dealers
must provide the customer  with current bid and offer  quotations  for the penny
stock,  the  compensation  of  the  broker-dealer  and  its  salesperson  in the
transaction  and monthly  account  statements  showing the market  value of each
penny stock held in the customer's  account.  If our common stock is traded only
on the OTC Bulletin Board and becomes subject to the  regulations  applicable to
penny stocks, investors may find it more difficult to obtain timely and accurate
quotes and execute trades in our common stock.

         WE ARE SEEKING TO DEVELOP 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
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 AFFECT OUR BUSINESS.

         For the nine months ended September 30, 1999, four customers  accounted
for 86%,  and for the fiscal  year  ended  December  31,  1998,  four  customers
accounted  for 80%,  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,

                                       18
<PAGE>

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.  We have
no 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 nine months ended  September 30, 1999
and for the fiscal  year ended in 1998,  were  approximately  61% and 17% 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
our  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:

                                       19

<PAGE>

         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, 1998 and
October 15, 1999,  the closing price of our common stock has ranged between $.47
and $5.50.  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
         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 October  15,  1999,  our Board of  Directors  has the  authority,
without  further  action  by the  stockholders,  to issue  2,275,625  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



                                       20
<PAGE>

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  under  "Management's  Discussion  and Analysis or Plan of
Operation  -Liquidity  and  Capital  Resources,"  the  Company has closed on the
Series C Private  Placement.  The sale of the securities in the Series C Private
Placement was made  pursuant to the  exemption  contained in Section 4(2) of the
Securities  Act of 1933,  as amended.  Seaboard  Securities,  Inc.  acted as the
placement agent of the Series C Private Placement. For more information relating
to the Series C Private Placement (including the conversion or exercise terms of
the securities issued in the Private Placement),  please see "Note 6. - Notes to
the Condensed Consolidated Financial Statement."

         During the three months ended September 30, 1999, the Company issued an
aggregate of 119,500 shares of Common Stock pursuant to the conversion of Series
A Preferred  Stock and Series B  Preferred  Stock.  The  Company  also issued an
aggregate  of  168,150,  shares of Common  Stock  pursuant  to the  exercise  of
warrants  granted  in the  Series A Private  Placement  and the Series B Private
Placement. The warrants had an exercise price of $.50 per share of Common Stock.
The issuance of the shares of Common Stock upon the  conversion  of the Series A
Preferred  Stock  and the  Series B  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.

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)
              Employment Agreement, dated January 1, 1999, by and between Robert
              Thompson  and  QueryObject  Systems  Corporation   (Exhibit  99.1)
              Employment Agreement, dated January 1, 1999, by and between Daniel
              Pess and QueryObject Systems Corporation (Exhibit 99.2)
              Agreement  of  Sublease,  dated as of  October  6,  1999,  between
              QueryObject Systems Corporation and Progressive Casualty Insurance
              Company (Exhibit 99.3)
              Agreement  of Lease,  dated as of August  13,  1999,  between  LKM
              Expressway  Plaza  Limited  Partnership  and  QueryObject  Systems
              Corporation - Expressway Plaza One, Suite 208 (Exhibit 99.4)

         (b)  Reports of Form 8-K

              No  Reports  on Form 8-K  were  filed  during  the  quarter  ended
              September 30, 1999.

                                       21

<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: November 12, 1999        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)