THE FOLLOWING ITEMS WERE THE
                                                SUBJECT OF A FORM 12b-25 AND ARE
                                             INCLUDED HEREIN: (A) PART I, ITEM 1
                                             (FINANCIAL STATEMENTS); (B) PART I,
                                                 ITEM 2 (MANAGEMENT'S DISCUSSION
                                                 AND ANALYSIS); (C) EXHIBIT 27.1
                                                      (FINANCIAL DATA SCHEDULE).

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO. 1 TO

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 2000

                                       OR

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________ to _________

                                    333-6440
                            (Commission File Number)

                              Q-SEVEN SYSTEMS, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)


            UTAH                                          87-0567618
(State or Other Jurisdiction of                (IRS Employer Identification No.)
 Incorporation or Organization)

        MITTELSTR. 11-13                                 011-49-2173-392 20
     40789 MONHEIM, GERMANY                         (Issuer's Telephone number)
(Address of Principal Executive Offices)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 [ ]


                                        1


<PAGE>



     The number of shares outstanding of the issuer's commons stock,  $0.001 par
value, as of May 19, 2000 was 12,500,000.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]





                                        2


<PAGE>



                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements.



                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 2000 and December 31, 1999



<TABLE>
<CAPTION>
                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets

                                     ASSETS

                                                                    March 31,           December 31,
                                                                      2000                  1999
                                                               -----------------     -----------------
                                                                   (Unaudited)
<S>                                                           <C>                   <C>
CURRENT ASSETS

   Cash and cash equivalent                                    $         314,243     $          57,534
   Accounts receivable                                                   420,393               388,112
   Interest receivable - related party                                     5,219                -
   Due from related party                                                 24,564                -
                                                               -----------------     -----------------
     Total Current Assets                                                764,419               445,646
                                                               -----------------     -----------------
FIXED ASSETS, NET                                                            565                   622
                                                               -----------------     -----------------
     TOTAL ASSETS                                              $         764,984     $         446,268
                                                               =================     =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                                            $         197,536     $         200,571
   Accrued expenses                                                      255,732               167,073
   Income taxes payable                                                   35,674                35,674
   Investor deposit                                                      250,000                -
                                                               -----------------     -----------------
     Total Current Liabilities                                           738,942               403,318
                                                               -----------------     -----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

   Preferred stock, 50,000,000 shares authorized
    of $0.001 par value, no shares issued or outstanding                  -                     -
   Common stock, 100,000,000 shares authorized of
    $0.001 par value, 12,500,000 shares issued and
    outstanding                                                           12,500                12,500
   Additional paid-in capital (deficit)                                   (8,343)               (8,343)
   Retained earnings                                                      21,885                38,793
                                                               -----------------     -----------------
     Total Stockholders' Equity                                           26,042                42,950
                                                               -----------------     -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $         764,984     $         446,268
                                                               =================     =================
</TABLE>




<PAGE>



                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    For the
                                                              Three Months Ended
                                                                   March 31,
                                                   ---------------------------------------
                                                          2000                   1999
                                                   -----------------     -----------------
<S>                                              <C>                    <C>
NET SALES                                          $         455,810     $         210,669

COST OF SALES                                                213,813               112,414
                                                   -----------------     -----------------
GROSS PROFIT                                                 241,997                98,255
                                                   -----------------     -----------------
OPERATING EXPENSES

   Selling, general and administrative                       259,892               107,944
   Depreciation and amortization                                  57                -
                                                   -----------------     -----------------
     Total Operating Expenses                                (17,952)               (9,689)
                                                   -----------------     -----------------
NET LOSS FROM OPERATIONS                                     (17,952)               (9,689)

OTHER INCOME                                                   1,044                -
                                                   -----------------     -----------------
NET LOSS BEFORE INCOME TAXES                                 (16,908)               (9,689)

INCOME TAXES                                                  -                     -
                                                   -----------------     -----------------
NET LOSS                                           $         (16,908)    $          (9,689)
                                                   =================     =================
BASIC LOSS PER SHARE                               $           (0.00)    $           (0.00)
                                                   =================     =================
WEIGHTED AVERAGE NUMBER OF SHARES                         12,500,000            12,500,000
                                                   =================     =================
</TABLE>



<PAGE>



                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY
                 Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                  Additional
                                                    Common Stock                   Paid-In
                                         ----------------------------------        Capital            Retained
                                               Shares            Amount           (Deficit)           Earnings
                                         -----------------  ----------------  -----------------  -----------------

<S>                                     <C>                 <C>              <C>                <C>
Balance, December 31, 1998                       7,900,000  $          7,900  $          53,525  $          72,010

Recapitalization                                 4,600,000             4,600            (75,265)            -

Capital contribution                                -                 -                  13,397             -

Net loss for the year ended
 December 31, 1999                                  -                 -                  -                 (33,217)
                                         -----------------  ----------------  -----------------  -----------------
Balance, December 31, 1999                      12,500,000            12,500             (8,343)            38,793

Net loss for the three months
 ended March 31, 2000
 (unaudited)                                        -                 -                  -                 (16,908)
                                         -----------------  ----------------  -----------------  -----------------
Balance, March 31, 2000
 (unaudited)                                    12,500,000  $         12,500  $          (8,343) $          21,885
                                         =================  ================  =================  =================
</TABLE>



<PAGE>



                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                           For the
                                                                                      Three Months Ended
                                                                                           March 31,
                                                                            ---------------------------------------
                                                                                   2000                 1999
                                                                            ------------------  -------------------
<S>                                                                       <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                                 $          (16,908) $           (9,689)
   Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Depreciation                                                                           57              -
     Increase in interest receivable                                                    (5,219)             -
     Increase in due from related parties                                              (24,564)             -
     Increase in accounts receivable                                                   (32,281)            (30,364)
     Increase (decrease) in accounts payable                                            (3,035)             53,628
     Increase in accrued expenses                                                       88,659              -
                                                                            ------------------  ------------------
       Cash Provided by Operating Activities                                             6,709              13,575
                                                                            ------------------  ------------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES                                             -                   -
                                                                            ------------------  ------------------
CASH FLOWS FROM FINANCING ACTIVITIES

   Investor deposit                                                                    250,000              -
   Capital contribution                                                                 -                   13,397
                                                                            ------------------  ------------------
       Cash Provided by Financing Activities                                           250,000              13,397
                                                                            ------------------  ------------------
NET INCREASE IN CASH                                                                   256,709              26,972

CASH AT BEGINNING OF PERIOD                                                             57,534                   4
                                                                            ------------------  ------------------
CASH AT END OF PERIOD                                                       $          314,243  $           26,976
                                                                            ==================  ==================

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for:

   Interest                                                                 $           -       $           -
   Income taxes                                                             $           -       $           -
</TABLE>



<PAGE>


                      Q-SEVEN SYSTEMS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                                 March 31, 2000


NOTE 1 -      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

              The  accompanying  consolidated  financial  statements  have  been
              prepared  by  the  Company   without  audit.  In  the  opinion  of
              management,  all adjustments  (which include only normal recurring
              adjustments)  necessary to present fairly the financial  position,
              results of  operations  and cash flows at March 31,  2000 and 1999
              and for all periods presented have been made.

              Certain information and footnote  disclosures normally included in
              consolidated  financial  statements  prepared in  accordance  with
              generally  accepted  accounting  principles have been condensed or
              omitted.  It  is  suggested  that  these  condensed   consolidated
              financial  statements  be read in  conjunction  with the financial
              statements  and notes thereto  included in the Company's  December
              31, 1999 audited consolidated financial statements. The results of
              operations  for  periods  ended  March  31,  2000 and 1999 are not
              necessarily  indicative  of the  operating  results  for the  full
              years.



<PAGE>



Item 2.   Management's Discussion and Analysis.

          OVERVIEW

     Q-Seven  Systems,  Inc., a Utah corporation  (collectively  with our direct
subsidiary, Q- Seven Systems, Inc., a Nevada corporation ("Q-Seven Nevada"), and
our indirect subsidiary, X-Real Intertainment, Inc. Ltd., a Bahamian corporation
("X-Real"),  "our company" or "we"),  currently engages in two lines of Internet
related  business:  (i) the sale of  licenses  to the  Q-Seven  User  Management
Software and (ii) the operation, through X-Real, of Internet adult entertainment
websites.

Q-Seven User Management Software

     We sell licenses to a modulized software suite, the Q-Seven User Management
Software  (the  "User  Management  Software"  or "our  software"),  that  allows
Internet  content  providers to efficiently  build,  operate and manage Internet
environments,  especially entertainment  environments.  Our software consists of
different  modules  which can be combined  and  customized  to provide  Internet
solutions for our customers'  specific needs.  The User Management  Software has
been developed and is owned by Q-Seven Systems GmbH, a German corporation, which
has granted us the exclusive  right to license the User  Management  Software to
our  customers.  Q-Seven  Systems GmbH is not a subsidiary of our company but is
owned by  Messrs.  Kriependorf,  Kamp and Cordt,  our  officers,  directors  and
principal  shareholders.  The licenses  that we sell with regard to our software
allow our customers to use the User Management Software in accordance with their
respective  license agreements with us. Our customers pay us a fee for the grant
of such  licenses  and the use of our  software.  Our  customers  usually make a
downpayment  on the  license  fee at the time we  grant  them a  license  to our
software;  the remainder of the license fee is paid to us in equal  installments
over a period  of one to two  years.  Q-Seven  Systems  GmbH  delivers  the User
Management  Software to our  customers  and  installs and  configures  it on our
customers'  servers.  These  services  are  included in the license fee that our
customers pay to us.  Q-Seven  Systems GmbH is providing  these  services to our
customers at no charge to us, other than the portion of our fee that we must pay
to them for our own license.

Internet Adult Entertainment

     Our indirect subsidiary,  X-Real, owns and operates six adult entertainment
websites,  which are exclusively  directed to viewers in Germany.  Four of these
websites  operate  solely  on a  subscription  basis  and  subscribers  of these
websites pay X-Real a monthly  membership fee. The other two websites operate on
both a subscription and non-subscription  basis. Certain areas of those websites
are accessible to subscribing  members only;  other areas are accessible also to
non-members  who pay a fee to X-Real  based on the  amount  of time  they  spend
viewing the site.

     X-Real has  received a commitment  from  Infobridge  International  Ltd., a
company  organized  under the laws of the Bahamas  ("Infobridge"),  to invest in
X-Real  DM  1,000,000  (the  "Infobdridge  Investment"),   which  amount  equals
approximately  $456,000 on the basis of the Federal Reserve Bank of New York May
17, 2000 noon buying  rate of $1 = Euro  0.8921 and the fixed  exchange  rate of
Euro 1 = DM 1.95583.  X-Real has agreed to issue a certain  number of its shares
to  Infobridge  in exchange  for the  Infobridge  Investment.  At this time,  no
written agreement regarding the Infobridge  Investment exists between X-Real and
Infobridge.  In March 2000,  X-Real received the first tranche of the Infobridge
Investment  in an  amount  of DM  500,000,  which  amount  equals  approximately
$228,000 on the basis of the Federal  Reserve Bank of New York May 17, 2000 noon
buying  rate of $1 = Euro  0.8921  and the  fixed  exchange  rate of Euro 1 = DM
1.95583. The remainder of the Infobridge Investment is to be paid to X-Real upon
our management's request. Our management expects that the number of shares to be
issued to Infobridge  will be  approximately  equal to the number of shares that
are currently issued and outstanding; Q-Seven Nevada intends to retain an equity
interest in X-Real  slightly  exceeding  50% in order to allow us to continue to
consolidate X-Real's results in our financial statements.  As a result,  Q-Seven
Nevada will soon in all  likelihood  own only slightly more than 50% of X-Real's
stock.

          ACCOUNTING TREATMENT OF Q-SEVEN NEVADA ACQUISITION

     For accounting purposes, our acquisition (the "Q-Seven Nevada Acquisition")
in May  1999 of  Q-Seven  Nevada  is  considered  a  reverse  merger,  i.e.,  an
acquisition  of our  company by  Q-Seven  Nevada  and its  wholly  owned  direct
subsidiary  X-Real. At the time of the Q-Seven Nevada  Acquisition,  our company
was essentially  inactive and had no operations and minimal assets. The exchange
of  7,900,000  shares  of our  common  stock for all  shares of common  stock of
Q-Seven  Nevada had the effect that the former  shareholders  of Q-Seven  Nevada
obtained  control of our  company.  Accordingly,  Q-Seven  Nevada and its wholly
owned direct  subsidiary  X-Real became the  continuing  entities for accounting
purposes  and  the  Q-Seven   Nevada   Acquisition   was   accounted  for  as  a
recapitalization  of Q-Seven Nevada and its wholly owned subsidiary  X-Real with
no  adjustments  to the  basis of  Q-Seven  Nevada's  and  X-Real's  assets  and
liabilities  that were acquired and assumed,  respectively.  For legal purposes,
our company is the surviving entity of the Q-Seven Nevada Acquisition.

     Due to the  accounting  treatment of the Q-Seven  Nevada  Acquisition  as a
reverse merger, all results which relate to the quarter ended March 31, 1999 and
appear in our interim  financial  statements for this period or in the following
Management's  Discussion  and  Analysis  solely  reflect the results of Q- Seven
Nevada and its wholly owned  subsidiary  X-Real.  Any results that relate to the
operations  of  our  company  prior  to  the  Q-Seven  Nevada  Acquisition  were
eliminated.  The reader  should  keep this in mind when  comparing  our  interim
financial  statements  for  the  quarter  ended  March  31,  2000  to  financial
statements  of our  company  relating  to periods  prior to the  Q-Seven  Nevada
Acquisition.

          CONSOLIDATED RESULTS OF OPERATIONS

          Revenues

     The following  table and  discussion  highlights our revenues for the three
months ended March 31, 2000 and March 31, 1999:


<TABLE>
<CAPTION>
                                                   Three Months Ended                Three Months Ended
                                                     March 31, 2000                    March 31, 1999



<S>                                                 <C>               <C>          <C>               <C>
Revenues from the sale of licenses to the User      $100,000          21.89%                $0                0%
Management Software

Revenues from X-Real's adult entertainment          $355,810          77.88%          $210,669              100%
websites

Other revenues                                        $1,044           0.23%                $0                0%


Total revenues                                      $456,854            100%          $210,669              100%
</TABLE>


     Our total  revenues rose from $210,669 for the three months ended March 31,
1999 to $456,854 for the three months ended March 31, 2000. In the first quarter
of 2000,  revenues  from the sale of licenses to our software  were  $100,000 or
21.89% of our total revenues for the three months ended March 31, 2000,  whereas
revenues from X-Real's adult  entertainment  websites were $355,810 or 77.88% of
our total  revenues.  Our  management  expects that during the second quarter of
2000 the  amount  and the  importance  of  revenues  generated  from the sale of
licenses to our software  will increase  further.  In addition,  our  management
expects that the revenues generated through X-Real are likely to decrease in the
second  quarter of the 2000 fiscal year due to the fact after the  completion of
the Infobridge  Investment we will in all likelihood own only slightly more than
50% of X-Real's stock and, consequently,  will participate in only approximately
50% of X-Real's revenues.

Sale of Licenses to the User Management Software

     In the three months ended March 31, 2000,  we generated  $100,000  from the
sale of  licenses  and the  collection  of  installments  on  previous  sales of
licenses to our software. We sold the first license to our software in September
1999 and,  accordingly  did not generate any revenues  from this business in the
three months ended March 31, 1999. In the first quarter of 2000, we continued to
concentrate on selling licenses to the newly developed casino module of the User
Management  Software,  while Q-Seven  Systems GmbH  concentrated on research and
development  with regard to the User  Management  Software.  In January 2000, we
attended the International  Casino Exhibition ICE 2000 in London.  Contacts made
by our management during this tradeshow led to discussions and negotiations with
potential new customers of our software.

     On May 24, 2000, we entered into a preliminary  agreement (the "Preliminary
Agreement") with Omni Software Systems, Inc., a company organized under the laws
of  Antigua.  The  Preliminary  Agreement  has been  filed as an exhibit to this
amendment of our quarterly report and is incorporated herein by reference.  Omni
Software Systems,  Inc. is affiliated with I-Gaming  Solutions,  Inc., a company
organized  under the laws of Dominica  ("I-Gaming"),  which has  operated in the
online gaming industry for over two years. I-Gaming provides consulting services
to  operators  of online  casinos and helps them to obtain  gaming  licenses and
market their  services.  In the Preliminary  Agreement,  we have agreed to grant
Omni Software Systems, Inc. a non-exclusive license to sell to its customers the
User  Management  System of our  software in  combination  with a gaming  module
developed by Omni Software Systems,  Inc. Omni Software Systems, Inc. has agreed
to pay us a fixed  license fee for each sale of the User  Management  Systems of
our  software to one of its  customers.  In addition to this fixed  license fee,
Omni Software Systems, Inc. has agreed to pay us on a monthly basis a continuing
license  fee,  the  amount of which is  determined  by the  amount  of  revenues
generated by Omni  Software  Systems,  Inc.'s  customers  from the use of gaming
software which includes the User Management  System of our software.  While Omni
Software  Systems,  Inc.  will  market  and sell  licenses  to our  software  in
connection with Internet gaming applications, we will concentrate on the sale of
licenses to our software for the use in other fields.

     On May 10,  2000,  the House  Banking  Committee  Chairman  James A.  Leach
(R-Iowa) and the  committee's  ranking  Democrat,  Rep. John J. LaFalce  (N.Y.),
introduced  legislation (H.R. 4419) that would prohibit the use of credit cards,
checks, or electronic fund transfers in internet gambling. The bill, intended to
complement the Internet Gambling  Prohibition Act (H.R.  3125),  which the House
Judiciary  Committee  approved in April,  would extend a current ban on gambling
over  telephone  lines to the Internet.  If these bills were  enacted,  it could
affect our  customers'  interest in our gaming module  software and could have a
material  adverse  effect  on our  business,  revenues,  operating  results  and
financial condition.

X-Real's Adult Entertainment Websites

     X-Real  generates  revenues  by  charging a fee to viewers of its six adult
entertainment  websites.  Our revenues  generated  through X-Real increased from
$210,669  for the three  months  ended March 31, 1999 to $355,810  for the three
months ended March 31, 2000.  This  increase was primarily  attributable  to the
addition,  in spring 1999, of two new websites to X-Real's  adult  entertainment
business and  increased  subscriptions  for X-Real's  websites as a result of an
affiliate  program  with  webmasters  which  advertise  X-Real's  websites for a
percentage of the revenues generated by X-Real as a result of such advertising.

     Upon the completion of the Infobridge  Investment,  our management  expects
that the funds  received  by X-Real will be used to improve  the  marketing  for
X-Real's  services and  products.  Online,  offline and  television  advertising
campaigns  for  X-Real's  services  and  products are expected to be launched in
Germany.  Our management expects that funds from the Infobridge  Investment will
also be used to improve X-Real's services, to implement new forms of payment and
to launch new  innovative  products,  e.g.,  anonymous high speed access through
special phone numbers.  The new investor,  Infobridge,  has marketing experience
and  contacts  to the  television  and  audiotext  industry  in Germany  and our
management  expects that this  experience  will  contribute  to the  anticipated
advertising campaign in Germany.

          COSTS AND EXPENSES

     The following table and discussion highlight our costs and expenses for the
quarters ended March 31, 2000 and March 31, 1999:


<TABLE>
<CAPTION>
                                                  Three Months Ended               Three Months Ended
                                                    March 31, 2000                   March 31, 1999

<S>                                               <C>            <C>             <C>               <C>
Total revenues                                       $456,854                        $210,669

Costs and expenses:
Cost of sales                                        $213,813        45.13%          $112,414         51.01%

Selling, general and administrative                  $259,892        54.86%          $107,944         48.99%
Depreciation and amortization                             $57         0.01%                $0             0%

Total costs and expenses                             $473,762          100%          $220,358           100%
</TABLE>


Cost of Sales

     Cost of sales for the three months ended March 31, 2000 includes  primarily
costs  associated  with the  management,  operation and  maintenance of X-Real's
adult entertainment websites, computer and network equipment costs in connection
with X-Real's  servers and royalties paid to Q-Seven  Systems GmbH for our right
to license the User Management Software.

     Our  cost of sales  during  the  three  months  ended  March  31,  2000 was
$213,813,  as compared to $112,414  for the three  months  ended March 31, 1999.
This increase is primarily  attributable to increased costs  associated with the
operation of X-Real's  websites due to the addition,  in spring 1999, of two new
webpages and the payment of a royalty fee to Q-Seven  Systems GmbH for our right
to license the User Management Software to our customers. Approximately $123,813
or 58% of our total cost of sales are  attributable to the operation of X-Real's
websites, whereas approximately $90,000 or 42% relate to the sale of licenses to
our   software.   During  the  three  months  ended  March  31,  2000,  we  paid
approximately  $123,813 to Cyberotic  Media A.G.  for  managing,  operating  and
maintaining X-Real's websites and $90,000 to Q-Seven Systems GmbH as royalty fee
for our right to license  the User  Management  Software to our  customers.  Our
management  expects  that our cost of sales  relating  to  X-Real's  websites is
likely to decrease in the second  quarter of 2000 due to the fact that after the
completion  of the  Infobridge  Investment  in all  likelihood  we will own only
slightly more than 50% of X-Real's  stock and,  consequently,  will  participate
only in  approximately  50% of the cost of sales relating to X-Real's  websites.
The aggregate  royalty fee that we pay to Q-Seven  Systems GmbH for the right to
license our software will increase in the second quarter of 2000, as compared to
the first quarter,  if we sell more licenses to our software and generate higher
license  fees,  since the fee we pay to Q-Seven  Systems GmbH is a percentage of
the fee we receive from our customers.

General and Administrative

     Selling,  general and  administrative  expenses  for the three months ended
March 31, 2000 consist primarily of legal and accounting  expenses in connection
with the compliance with periodic  reporting  requirements  under the securities
laws and advertising costs for X-Real's websites.

     Our selling,  general and  administrative  expenses during the three months
ended March 31, 2000 were $259,892, as compared to $107,944 for the three months
ended March 31, 1999. This increase is primarily attributable to increased legal
and  accounting  expenses in connection  with the  compliance  with the periodic
reporting requirements under the securities laws and increased advertising costs
for  X-Real's  websites.  Approximately  $173,711  or  67% of  the  general  and
administrative  expenses  during  the three  months  ended  March  31,  2000 are
attributable  to the  operation  of  X-Real's  websites,  whereas  approximately
$86,181 or 33% of such expenses are  attributable to the sale of licenses to our
software.

Depreciation and Amortization

     Depreciation  and  amortization  expenses  increased  from $0 for the three
months ended March 31, 1999 to $57 for the three months ended March 31, 2000.

          LIQUIDITY AND CAPITAL RESOURCES

     We are currently financing our operations  primarily through cash generated
from  operations.  Net cash provided by operating  activities  was $6,709 in the
three  months  ended  March 31,  2000  compared  to net  provided  by  operating
activities of $13,575 in the three months ended March 31, 1999.  The decrease in
net cash provided by operating  activities is primarily due to a decrease in net
income. Net cash provided by financing activities was approximately $250,000 and
$13,397  for the  three  months  ended  March  31,  2000  and  March  31,  1999,
respectively.  The approximately $250,000 resulted from the receipt of the first
tranche of the Infobridge Investment

     We expect to continue  financing our ongoing  operations  primarily through
cash generated from  operations.  Our management  anticipates that cash on hand,
cash  provided  by  operating  activities  and cash  available  from the capital
markets will be sufficient to fund our operations for the next twelve months.

     Our current assets  increased by $318,773,  from $445,646 at March 31, 1999
to  $764,419  at March 31,  2000,  while our current  liabilities  increased  by
$300,624,  from  $403,318 to  $703,942,  over the same  period.  The increase in
current  assets was primarily  attributable  to an increase in cash and accounts
receivable generated by our operations.  The increase in current liabilities was
primarily due to an increase in accrued expenses and accounts payable  resulting
from our  operations.  Our fixed  assets at March 31, 2000  consisted  of office
equipment valued at $565.

          YEAR 2000

     Many currently  installed  computer systems and software products are coded
to accept only two digit  entries in the date code field and cannot  distinguish
21st  century  dates from 20th  century  dates.  These date code  fields need to
distinguish  21st century dates from 20th century  dates and, as a result,  many
companies' software and computer systems had to be upgraded or replaced in order
to  comply  with  such  "Year  2000"  requirements.  Neither  we nor  any of our
subsidiaries have experienced any significant Year 2000 disruptions, and neither
we nor our subsidiaries have incurred any material costs in connection with Year
2000 remediation.

          FORWARD LOOKING STATEMENTS

     Our company has made  certain  forward-looking  statements  in this report.
They use such  words as "may,"  "will,"  "expect,"  "believe,"  "plan" and other
similar   terminology.   These  statements  reflect  our  management's   current
expectations  and involve a number of risks and  uncertainties.  Actual  results
could differ materially due to the success of operating initiatives, advertising
and promotional  efforts,  continuing Year 2000 compliance  efforts,  as well as
changes in global and local business and economic conditions;  currency exchange
and  interest  rates;  labor and other  operating  costs;  political or economic
instability  in  local  markets;  competition;  consumer  preferences,  spending
patterns and  demographic  trends;  legislation and government  regulation;  and
accounting policies and practices.

                                     PART II
                                OTHER INFORMATION

Item 1.   Legal Proceedings.

     There are no actions,  suits,  proceedings or  governmental  investigations
pending, or to the knowledge of our management  threatened,  against our company
or any of our subsidiaries.

Item 2.   Changes in Securities and Use of Proceeds.

     Not applicable.

Item 3.   Default Upon Senior Securities.

     Not applicable.

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

     There  were no  matters  submitted  to a vote of the  holders of our common
stock through the  solicitation of proxies of otherwise during the first quarter
of the year 2000.

Item 5.   Other Information.

     The Consulting  Agreement  with our former  officer and director,  Barry A.
Ellsworth,   has  been  terminated  effective  August  5,  1999  pursuant  to  a
Termination  Agreement dated April 17, 2000. A copy of the Termination Agreement
has been filed as Exhibit  10.4 to our  Quarterly  Report on Form 10- QSB and is
incorporated herein by reference.

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

          EXHIBITS

EXHIBIT NO.                                  DESCRIPTION

3.1                 Articles of Incorporation,  as amended:  Incorporated herein
                    by reference to Exhibit 3.1 to the report on Form 10-QSB for
                    the quarter ended June 30, 1999.

3.2                 By-laws,  as amended:  Incorporated  herein by  reference to
                    Exhibit  3.2 to the  report on Form  10-QSB  for the  period
                    ended September 30, 1999.

3.3                 Form of Stock Certificate:  Incorporated herein by reference
                    to Exhibit 3.3 to the  Registration  Statement  on Form 8-A,
                    filed on October 29, 1999.

10.1                License  Agreement  between Q-Seven Systems GmbH and Q-Seven
                    Nevada:  Incorporated herein by reference to Exhibit 10.1 to
                    the  Report on Form  10-QSB for the  quarter  ended June 30,
                    1999.

10.2                Agreement  and Plan of Share  Exchange  dated May 24,  1999:
                    Incorporated  herein  by  reference  to  Exhibit  III to the
                    Report on Form 8-K filed on June 9, 1999.

10.3                Consulting  Agreement  dated May 27,  1999  between  Q-Seven
                    Systems,  Inc.  and Mr.  Barry  A.  Ellsworth:  Incorporated
                    herein by  reference  to Exhibit  10.3 to the Report on Form
                    10-KSB for the fiscal year ended December 31, 1999.

10.4                Termination  Agreement  dated April 17, 2000 between Q-Seven
                    Systems,  Inc.  and Mr.  Barry  A.  Ellsworth:  Incorporated
                    herein by  reference  to Exhibit  10.4 to the Report on Form
                    10-QSB for the quarter ended March 31, 2000.

10.5                Agreement dated May 24, 2000 between Q-Seven  Systems,  Inc.
                    and Omni Software Systems, Inc.* **

27.1                Financial Data Schedule.*

--------
*    Filed herewith.

**   Certain  material  from this  agreement  has been omitted and  confidential
     treatment  is being  requested  therefor  pursuant  to Rule 24b-2 under the
     Securities  Exchange Act of 1934, as amended.  All such omitted material is
     being filed separately with the Commission.



          REPORTS ON FORM 8-K

     There  were no  reports  on Form 8-K  filed by us with the  Securities  and
Exchange Commission during the first quarter of the year 2000.



<PAGE>


     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



         Date: May 26, 2000             /s/ Philipp S. Kriependorf
                                        __________________________________
                                        Philipp S. Kriependorf
                                        President, Chief Executive Officer
                                        and Chief Financial Officer



<PAGE>


                                INDEX TO EXHIBITS


EXHIBIT NUMBER                         DESCRIPTION OF EXHIBIT

3.1                 Articles of Incorporation,  as amended:  Incorporated herein
                    by reference to Exhibit 3.1 to the report on Form 10-QSB for
                    the period ended June 30, 1999.

3.2                 By-laws,  as amended:  Incorporated  herein by  reference to
                    Exhibit  3.2 to the  report on Form  10-QSB  for the  period
                    ended September 30, 1999.

3.3                 Form of Stock Certificate:  Incorporated herein by reference
                    to Exhibit 3.3 to the  Registration  Statement  on Form 8-A,
                    filed on October 29, 1999.

10.1                License  Agreement between Q-Seven Systems GmbH and Q- Seven
                    Nevada:  Incorporated herein by reference to Exhibit 10.1 to
                    the  report on Form  10-QSB  for the  period  ended June 30,
                    1999.

10.2                Agreement  and Plan of Share  Exchange  dated May 24,  1999:
                    Incorporated  herein  by  reference  to  Exhibit  III to the
                    Report on Form 8-K filed on June 9, 1999.

10.3                Consulting  Agreement  dated May 27,  1999  between  Q-Seven
                    Systems,  Inc.  and Mr.  Barry  A.  Ellsworth:  Incorporated
                    herein by  reference  to Exhibit  10.3 to the Report on Form
                    10-KSB for the fiscal year ended December 31, 1999.

10.4                Termination  Agreement  dated April 17, 2000 between Q-Seven
                    Systems,  Inc.  and Mr.  Barry  A.  Ellsworth:  Incorporated
                    herein by  reference  to Exhibit  10.4 to the Report on Form
                    10-QSB for the quarter ended March 31, 2000.

10.5                Agreement dated May 24, 2000 between Q-Seven  Systems,  Inc.
                    and Omni Software Systems, Inc.* **

27.1                Financial Data Schedule.*

-------
*    Filed herewith.

**   Certain  material  from this  agreement  has been omitted and  confidential
     treatment is  being requested  therefor  pursuant  to Rule 24b-2  under the
     Securities Exchange Act  of 1934, as amended.  All such omitted material is
     being filed separately with the Commission.