SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


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

                  For the quarterly period ended March 31, 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)


                         60 Charles Lindbergh Boulevard
                            Uniondale, New York 11553
                    (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 April 30, 1999 there were  6,492,985  shares of the  Registrant's
common stock outstanding.



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

                                   FORM 10-QSB

                                      INDEX
PART I.   FINANCIAL INFORMATION

PAGE

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheet
          As of March 31, 1999 (unaudited)................................. 3

          Condensed Consolidated Statement of Operations
          For the three months ended March 31, 1999 and 1998 (unaudited)... 4

          Condensed Consolidated Statement of Cash Flows
          For the three months ended March 31, 1999 and 1998 (unaudited)... 5

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

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

PART II.  OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds........................19

Item 6.   Exhibits and Reports on Form 8-K.................................19

SIGNATURES.................................................................20




                                       2
<PAGE>
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

                         QUERYOBJECT SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

                                                                      March 31,
                                                                       1999
ASSETS
Current assets
     Cash and cash equivalents ...............................     $    428,870
     Accounts receivable, net of allowance for doubtful
           accounts of $46,000 ...............................          247,040


     Prepaid expenses and other current assets ...............          173,343
                                                                   ------------

           TOTAL CURRENT ASSETS ..............................          849,253

Property and equipment, net ..................................          865,247
Deposits and other assets ....................................           75,209
                                                                   ------------
                TOTAL ASSETS .................................     $  1,789,709
                                                                   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Accounts payable ........................................     $    361,505
     Accrued expenses ........................................          653,704
     Deferred revenue ........................................           58,602
     Deferred rent ...........................................           15,370
     Capital lease obligations due within one year ...........          180,077

           TOTAL CURRENT LIABILITIES .........................        1,269,258

Capital lease obligations ....................................          125,075
Deferred rent ................................................          251,455
                                                                   ------------
           TOTAL LIABILITIES .................................        1,645,788
                                                                   ============

Stockholders' equity
     Preferred stock, $.001 par value:
           2,000,000 shares authorized;
           1,681,625 and 96,750 shares of
           Series A and B, respectively,
           issued and outstanding ............................            1,778
     Common stock, $0.001 par value:
           30,000,000 shares
           authorized; 6,068,485 shares
           issued and outstanding ............................            6,068
     Additional paid-in capital ..............................       37,266,068
     Accumulated deficit .....................................      (37,129,993)
                                                                   ------------
           TOTAL STOCKHOLDERS' EQUITY ........................          143,921
                                                                   ------------
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........     $  1,789,709
                                                                   ============

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>
                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                THREE MONTHS ENDED
                                                                                     MARCH 31,
                                                                              1999            1998
Revenues
<S>                                                                      <C>            <C>        
     Software licenses ....................                              $    50,000    $    75,000
     Maintenance ..........................                                   26,189         36,861
                                                                         -----------    -----------
              TOTAL REVENUES ..............                                   76,189        111,861
Cost of revenues
     Software licenses ....................                                    2,050            750
     Maintenance ..........................                                   18,988         24,756
                                                                         -----------    -----------

              TOTAL COST OF REVENUES ......                                   21,038         25,506
                                                                         -----------    -----------

Gross Profit ..............................                                   55,151         86,355
                                                                         -----------    -----------

Operating expenses
     Sales and marketing .................                                   888,684      1,327,218
     Research and development ............                                   532,031        566,417
     General and administrative ..........                                   347,124        450,001
                                                                         -----------    -----------

              TOTAL OPERATING EXPENSES....                                 1,767,839      2,343,636
                                                                         -----------    -----------

LOSS FROM OPERATIONS .....................                                (1,712,688)    (2,257,281)

Interest income ...........................                                    9,249         63,341
Interest expense ..........................                                  (14,098)       (41,412)
  Other expense............................                                       --           (231)
                                                                         -----------    -----------

NET LOSS ..................................                              $(1,717,537)   $(2,235,583)
                                                                         -----------    -----------

Basic and diluted net loss per common share                              $      (.31)   $      (.44)
                                                                         -----------    -----------

Weighted average shares used in per share
     computation (Note 2) .................                                5,484,345      5,116,626
                                                                         -----------    -----------
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>
                         QUERYOBJECT SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                 THREE MONTHS ENDED
                                                                                                     MARCH 31,
                                                                                          1999                        1998

Cash flows from operating activities
<S>                                                                                  <C>                         <C>          
     Net loss     ..........................................................         $ (1,717,537)               $ (2,235,583)
     Adjustments to reconcile net loss to net cash used in
      operating activities
       Depreciation and amortization.......................................                36,583                     106,580
       Gain on sale of computer equipment..................................                    --                         231
       Options issued for consulting services..............................               137,330                          --
       Changes in operating assets and liabilities
          Accounts receivable, net........................................                 29,487                     251,594
          Prepaid expenses and other current assets.......................                 (5,592)                    (32,538)
          Deposits and other assets.......................................                  5,822                       3,906
          Accounts payable and accrued expenses...........................               (262,567)                   (215,439)
          Deferred rent...................................................                 (3,003)                        224
          Deferred revenue................................................                (26,189)                     43,597
                                                                                     ------------                ------------

      NET CASH USED IN OPERATING ACTIVITIES.................................           (1,805,666)                 (2,077,428)
                                                                                     ------------                ------------

Cash flows from investing activities
     Loan receivable from stockholder.......................................                   --                     (65,000)
     Acquisitions of property and equipment.................................              (14,589)                    (45,964)
     Purchase of restricted certificate of deposit..........................                   --                      (9,221)
                                                                                     ------------                ------------

      NET CASH USED IN INVESTING ACTIVITIES.................................              (14,589)                   (120,185)
                                                                                     ------------                ------------

Cash flows from financing activities
     Proceeds from issuance of  common stock................................              341,250                       9,185
     Collection of stock subscriptions receivable, net......................            1,396,000                          --
     Repayment of loan payable to stockholders..............................                   --                     (30,000)
     Repayment of notes payable.............................................             (300,000)                         --
     Payments of capital lease obligations..................................              (42,143)                    (61,920)
                                                                                     ------------                ------------

      NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               1,395,107                     (82,735)
                                                                                     ------------                ------------

Net decrease in cash and cash equivalents...................................             (425,148)                 (2,280,348)


Cash and cash equivalents at beginning of year..............................              854,018                   5,437,350
                                                                                     ------------                ------------

Cash and cash equivalents at end of period..................................         $    428,870                $  3,157,002
                                                                                     ============                ============
</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.  The results of operations
for the  period  ended  March 31,  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.

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 and B
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

                                                        THREE MONTHS ENDED
                                                             MARCH 31,
                                                       1999             1998


Interest paid during the period...............      $ 24,240        $  31,696

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.

5.          LIQUIDITY AND BUSINESS RISKS

            The Company has  incurred  operating  losses  since  inception,  has
incurred  negative cash flows from operating  activities,  has negative  working
capital and had an  accumulated  deficit of  $37,129,993  and  $35,412,456 as of
March 31,  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 at March 31,
1999 will be insufficient to satisfy its operating cash flow requirements in the
foreseeable future. Accordingly, the Company will seek to sell additional equity
or convertible  debt  securities,  however,  there can be no assurances that the
Company will be successful in raising  additional  funds. See "Risk Factors

                                       6
<PAGE>
That May Affect Future Results - Negative Working  Capital;  Need for Additional
Funding".  The sale of additional  equity or convertible  debt  securities  will
result in additional dilution to the Company's stockholders.

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 March 31, 1999, had an accumulated  deficit of  $37,129,993.
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.

                                       7
<PAGE>
RESULTS OF OPERATIONS

            The  following  table  sets  forth  certain  items in the  Company's
consolidated  statements of operations for the three months ended March 31, 1999
and 1998 ($ in thousands):

<TABLE>
<CAPTION>

                                                                   THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              1999                     1998
                                                              ----                     ----
REVENUES
<S>                                                        <C>                   <C>       
     Software licenses..................................   $    50               $       75
     Maintenance........................................        26                       37
                                                           -------               ----------
           TOTAL REVENUES...............................        76                      112
                                                           -------               ----------

Cost of revenues
     Software licenses..................................         2                        1
     Maintenance........................................        19                       25
                                                           -------               ----------

           TOTAL COST OF REVENUES.......................        21                       26
                                                           -------               ----------
GROSS PROFIT............................................        55                       86
                                                           -------               ----------

Operating expenses
     Sales and marketing................................       889                    1,327
     Research and development...........................       532                      566
     General and administrative.........................       347                      450
                                                           -------               ----------
           TOTAL OPERATING EXPENSES.....................     1,768                    2,343
                                                           -------               ----------

LOSS FROM OPERATIONS....................................    (1,713)                  (2,257)
     Interest income....................................         9                       63
     Interest expense...................................       (14)                     (42)
                                                           -------               ----------
NET LOSS................................................   $(1,718)              $   (2,236)
                                                           =======               ==========
</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  decreased by $36,000,  or 32%, from $112,000 for the
three months ended March 31, 1998 ("1998") to $76,000 for the three months ended
March 31, 1999 ("1999").  License  revenues for 1999 and 1998 were the result of
one license sale in each quarter.  Maintenance  revenue decreased by $11,000, or
30%, from $37,000 in 1998 to $26,000 in 1999,  primarily due to  non-renewal  of
certain maintenance agreements.

COST OF REVENUES

            Cost of software license revenues  consists  primarily of royalties,
product packaging,  documentation and production costs. Cost of software license
revenues  increased as a percentage  of software  license  revenues from 1.0% in
1998 to 4.1% in 1999,  primarily  due to 


                                       8
<PAGE>
royalties due to a third party for 1999 shipments.  Cost of maintenance revenues
consist  primarily  of customer  support  costs.  Cost of  maintenance  revenues
increased as a percentage  of  maintenance  revenues  from 67% in 1998 to 72% in
1999, primarily due to the lower revenue base.

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
$438,000,  or 33%, from $1,327,000 in 1998 to $889,000 in 1999, primarily due to
reduced sales,  personnel related costs, marketing expenses and recruiting fees.
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 $34,000,  or 6%, from $566,000 in 1998 to
$532,000 in 1999,  primarily due to a decrease in consultant costs and personnel
related expense. The Company believes that a significant level of investment for
product  research  and  development  is  required  to  remain  competitive  and,
accordingly, the Company anticipates that it will continue to devote substantial
resources to product research and development and that these costs will increase
in absolute  dollars.  To date,  all  research and  development  costs have been
expensed as incurred.

            GENERAL  AND  ADMINISTRATIVE.  General and  administrative  expenses
consist  primarily of personnel  costs for finance,  MIS,  human  resources  and
general management, as well as insurance and professional expenses.  General and
administrative  expenses decreased by $103,000, or 23%, from $450,000 in 1998 to
$347,000 in 1999,  primarily due to a decrease in personnel  related costs.  The
Company believes that its general and  administrative  expenses will increase in
absolute  dollars as it incurs  additional  costs including  investor  relations
programs.

INTEREST INCOME AND INTEREST EXPENSE

            Interest income  represents  income earned on the Company's cash and
cash equivalents.  Interest income decreased by $54,000, or 86%, from $63,000 in
1998 to  $9,000  in  1999,  primarily  due to a lower  level  of cash  and  cash
equivalents on deposit during 1999.

            Interest expense generally represents charges relating to the H.C.C.
Financial Services Loan Agreement (the "Loan Agreement") and interest expense on
capital  equipment leases.  Interest expense decreased by $28,000,  or 67%, from
$42,000 in 1998 to $14,000  in 1999.  This  decrease  was  primarily  due to the
repayment of the outstanding balance of the Loan Agreement in October 1998.

                                       9

<PAGE>
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.

LIQUIDITY AND CAPITAL RESOURCES

            On November 25, 1997,  the Company  consummated  its initial  public
offering  ("IPO") whereby it sold 2,500,000  shares of Common Stock and received
approximately  $12,470,000 of cash, net of underwriting  discounts,  commissions
and other offering costs. The Company immediately repaid $5,100,000 plus accrued
interest due on bridge and interim  financings  payable.  Upon completion of the
IPO, all  outstanding  shares of then  outstanding  preferred  stock (a total of
approximately 1,697,000 shares) were converted into shares of Common Stock.

            The IPO  prospectus  indicated  that the Company  believed  that the
proceeds of the IPO together with then existing  resources and cash  anticipated
to be generated  from  operations  would be  sufficient to satisfy the Company's
cash  requirements  for at least 14  months  after  the  completion  of the IPO.
However,  as of September 30, 1998  (approximately 10 months after the IPO), the
Company had negative  working  capital of $1,744,000.  The variance  between the
Company's  expectations at the time of the IPO and the Company's analysis of its
cash position was  primarily  due to lower than expected  sales of the Company's
products.  The Board of Directors  of the Company  considered  various  means of
procuring  additional  financing and determined  that a private  offering of the
Company's securities would be in the best interests of the Company.

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


                                       11

<PAGE>

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).  The
Company has also received  $534,050 from the exercise of warrants granted in the
Series A Private Placement and Series B Private Placement, of which $341,250 was
received in the three months ended March 31, 1999.

            In connection with the Series A and Series B Private Placements, the
placement agent was granted an option to purchase additional Series A and Series
B Units  equal to 10% of the  Series A and  Series B Units  sold and  received a
commission  and  non-accountable  expense  allowance  equal  to  5.6%  and  9.3%
respectively, of the gross proceeds received by the Company.

            As of March 31,  1999,  the  Company  had  $429,000 in cash and cash
equivalents  and a  working  capital  deficit  of  $420,000.  Net  cash  used in
operating   activities   was   $1,806,000  and  $2,077,000  in  1999  and  1998,
respectively.  For 1999,  net cash used in operating  activities  was  primarily
attributable to a net loss of $1,718,000,  less  depreciation,  amortization and
consulting  expenses of $174,000 and a decrease in accounts  payable and accrued
expenses  of  $263,000.  For 1998,  net cash used in  operating  activities  was
primarily  attributable  to a net  loss of  $2,236,000,  less  depreciation  and
amortization  of  $107,000.  Net  cash  provided  by  financing  activities  was
$1,395,000  in  1999,   primarily  as  a  result  of  the  collection  of  stock
subscription receivables and the exercise of common stock purchase warrants.

            The  Company  does  not  currently  have a  line  of  credit  with a
commercial  bank. As of December 31, 1998, 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
outstanding borrowings  under capital  leases  which are payable  through  2001.
Pursuant to employment  agreements with executive  officers of the Company,  the
Company is  obligated  to pay  $262,000  and $0 in salaries  for the years ended
December 31, 1999 and 2000, respectively.

            As of March 31, 1999,  the Company had a deficit in working  capital
of $420,000.  During 1999, the Company  received  $1,396,000 in working  capital
from the proceeds of the 1998 Private  Placement  and $534,050 from the exercise
of  warrants  granted  in the 1998  Private  Placement,  of which  $192,800  was
received subsequent to March 31, 1999. The Company has incurred operating losses
since inception,  has incurred negative cash flows from operating activities and
had an accumulated  deficit of $37,129,993 as of March 31, 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 current cash and cash equivalent position will
be  insufficient  to satisfy its liquidity  requirements,  and as a result,  the
Company is seeking to sell additional equity securities.  See "Risk Factors That
May  Affect  Future  Results - Negative  Working  Capital;  Need for  Additional
Funding".  The sale of additional  equity  securities  will result in additional
dilution to the Company's stockholders.

                                       11
<PAGE>
YEAR 2000 COMPLIANCE

            We have  commenced an  assessment  of the  readiness of our internal
business  information  systems  for  handling  the Year  2000 and the Year  2000
compliance  of our  products.  We believe that we will need to modify or replace
portions  of our  internal  business  information  systems  to ensure  Year 2000
compliance  and 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 are taking 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 not yet
received written  compliance  information from these third parties and we cannot
currently determine when 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.

            While we have not incurred any material  expenditures  in connection
with  identifying or evaluating  Year 2000  compliance  issues,  there can be no
assurance that our Year 2000 compliance costs will continue at this level.  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.


                                       12
<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.

            NEGATIVE WORKING CAPITAL;  NEED FOR ADDITIONAL FUNDING: At March 31,
1999,  we had  negative  working  capital  of  $420,005.  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.

            We sold  securities  in private  placements  in October and November
1998 so  that we  could  continue  operations.  In the  private  placements,  we
received  conditional  commitments to purchase $4,500,000 of units consisting of
convertible  preferred  stock and warrants to purchase  common  stock,  of which
payment for all of the units had been made as of February  1999. We received net
proceeds of  approximately  $3,995,000  from such private  placements  (of which
$1,396,000 was received  subsequent to December 31, 1998).  During 1999, we also
received  proceeds of  $521,750  from the  exercise of warrants  granted in such
private placements.  However, given our continued operating losses, we will need
additional  financing to continue  operations.  Our current projections indicate
that our current  cash and cash  equivalent  position  will be  insufficient  to
satisfy our liquidity requirements. Except as provided in the next paragraph, we
have  no  commitments,   agreements  or  understandings   regarding   additional
financings and we may be unable to obtain additional financing.

            We are in discussions  with a placement agent relating to a proposed
private  placement  (the "Series C Private  Placement") of a minimum of 10 and a
maximum of 30 units (the "Units") at a purchase price of $100,000 per unit. Each
Unit would consist of 100 shares of newly-created Series C Convertible Preferred
Stock,  $.001 par value (the  "Series C Preferred  Stock"),  and a Common  Stock
Purchase  Warrant (the "Warrant") to purchase 100,000 shares of Common Stock. If
all 30 Units were to be sold, we could in our discretion determine to sell up to
an additional 15 Units on the same terms and  conditions as those prepared to be
offered. It is currently anticipated that each share of Series C Preferred Stock
would be  convertible  into such number of shares of Common Stock as is equal to
the quotient  obtained by dividing $1,000 by the fair market value of the Common
Stock,  i.e.,  the average  closing  price of the Common Stock in the  principal
securities  market  in  which  it is then  traded  for  the  five  trading  days
immediately  preceding the date of the initial closing of the offer.  Assuming a
fair market value of $.75 per share,  a share of Series C Preferred  Stock would
initially be convertible  into 1,333 shares of Common Stock.  The Warrants would
have a term of 2 1/2 years and would be  exercisable  at a per share price equal
to the fair market value of the Common Stock.  We are unable to predict  whether
the Series C Private  Placement will be consummated and based on discussion with
the  placement  agent and market  conditions,  the terms of the Series C Private
Placement may change.

            ACCUMULATED  DEFICIT;  HISTORICAL  AND  PROJECTED  FUTURE  OPERATING
LOSSES; GOING CONCERN QUALIFICATION IN INDEPENDENT ACCOUNTANTS' REPORT: At March
31, 1999, our accumulated  deficit was  $37,129,993.  For the three months ended
March 31, 1999 and the fiscal  years  ended  December  31,  1998,  and 1997,  we
incurred net losses of $1,717,537, $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


                                       13

<PAGE>

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:

            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

            LIMITED OPERATING HISTORY;  LACK OF 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 three  months  ended  March 31,  1999  were  $928,505  and
$76,189,  respectively.  Prior to 1997, our revenues were derived primarily from
contract data analysis services, which we no longer provide.

            DEPENDENCE UPON QUERYOJECT  SYSTEM;  UNCERTAIN MARKET  ACCEPTANCE OF
QUERYOBJECT SYSTEM: Substantially all of our revenues for the foreseeable future
are expected to be derived from sales of QUERYOBJECT SYSTEM.  Between January 1,
1995  and  March  31,  1999,  we had  software  product  revenue  from  only  16
QUERYOBJECT  SYSTEM  installations,  including  those sold  pursuant to reseller
agreements for the resellers' own use. We only recently  commenced an integrated
marketing effort for our products.  Our future financial performance will depend
upon the successful  introduction and  customeracceptance  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.

            NASDAQ DELISTING; POTENTIALLY LIMITED TRADING MARKET: Effective with
the close of business on May 6, 1999,  our Common  Stock was  delisted  from the
Nasdaq  SmallCap  Market  ("Nasdaq")  because of our  inability  to comply  with
certain  maintenance   standards  required  for  continued  listing  on  Nasdaq,
including  the  net  tangible  asset  requirement.  We  fell  out of  compliance
primarily as a result of continued losses during 1998.

            Now that the Common Stock has been delisted from Nasdaq,  trading in
the Common Stock is  conducted on the OTC Bulletin  Board and may continue to be
conducted on the Boston Stock  Exchange.  The Boston Stock Exchange has notified
us that we may not meet such exchange's  continuing  listing  requirements  with
regard to net  tangible  assets and that it will  delist the Common  Stock if we
have less than $500,000 in net tangible assets. We will be unable


                                       14
<PAGE>

to  maintain  at  least  $500,000  in net  tangible  assets  without  additional
financing.  The Boston  Stock  Exchange has advised us that the Common Stock can
temporarily  continue to be traded on the Boston  Stock  Exchange at least until
May 28, 1999. At such time, we must advise the Boston Stock Exchange whether the
offering  of Series C Preferred  Stock has closed and how much  proceeds we will
receive  from  such  offering.  Based  on such  information  and  our  financial
condition at such time,  the Boston Stock  Exchange may  determine to delist the
Common Stock even if we receive proceeds from the offering of Series C Preferred
Stock.

            If the Common Stock is delisted from the Boston Stock Exchange,  the
Common Stock could be considered a penny stock. SEC 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 SEC would require
broker-dealers  to deliver to a purchaser of Common Stock a disclosure  schedule
explaining  the penny stock  market and the risks  associated  with it.  Various
sales practice  requirements are also imposed on  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 the Common Stock.

            USE OF INDIRECT  CHANNEL  PARTNERS TO INCREASE SALES: 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.

            DEPENDENCE  ON  SIGNIFICANT  CUSTOMERS:  For the three  months ended
March 31, 1999,  one customer  accounted  for 66%, 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.

            DEPENDENCE UPON KEY PERSONNEL;  NEED TO INCREASE  SALES,  MARKETING,
DEVELOPMENT  AND  TECHNICAL   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 an employment  agreement  with Mr.  Thompson that expires in
October  1999,  and an  employment


                                       15

<PAGE>

agreement  with Mr. Pess that  expires in May 1999.  We are unsure if we will be
able to agree with either of Messrs. Thompson or Pess on the terms of extensions
to their employment agreements prior to the expiration of these agreements.

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

            LACK OF PROPRIETARY TECHNOLOGY PROTECTION; RISKS OF INFRINGEMENT: 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 ourselves  against claimed
infringement of the rights of others.

            INTERNATIONAL  OPERATIONS:  Our  international  sales  for the three
months  ended  March  31,  1999 and for the  fiscal  year  ended  in 1998,  were
approximately  66% 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:


                                       16

<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

            POSSIBLE  VOLATILITY OF SECURITIES  PRICES:  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 May 10, 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 Nasdaq.  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.

            ISSUANCE OF PREFERRED STOCK;  ANTI-TAKEOVER PROVISIONS: Our Board of
Directors has the  authority,  without  further action by the  stockholders,  to
issue  41,025  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 our
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.

            FORWARD   LOOKING   STATEMENTS   AND   ASSOCIATED   RISKS:   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


                                       17

<PAGE>

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.  Readers  are  cautioned  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.


                                       18
<PAGE>

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 A Private Placement and the Series B Private  Placement.  The sale of the
securities in the Series A Private  Placement and the Series B Private Placement
was made pursuant to the exemption  contained in Section 4(2) of the  Securities
Act of  1933,  as  amended.  Southeast  Research  Partners,  Inc.  acted  as the
placement  agent of the  Series A  Private  Placement  and the  Series B Private
Placement.  For more information  relating to the Series A Private Placement and
the Series B Private  Placement  (including  the conversion or exercise terms of
the  securities  issued in the  Private  Placements),  please see  "Management"s
Discussion and Analysis of Plan of Operation - Liquidity and Capital Resources."

            During the three months ended March 31, 1999,  the Company issued an
aggregate of 263,000 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 672,500 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 Income Per Share (Exhibit 11.1)

              Financial Data Schedule (Exhibit 27.1)

         (b)  Reports of Form 8-K

              No Reports on Form 8-K were filed  during the quarter  ended March
              31, 1999.



                                       19
<PAGE>
                                   SIGNATURES

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



Dated: May 13, 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)



                                       20