U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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


                For the quarterly period ended November 30, 1998


/   /       TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

            For the transition period from __________ to _______________

            Commission file number:             1-13360



                     CORNERSTONE INTERNET SOLUTIONS COMPANY
        (Exact name of small business issuer as specified in its charter)


            DELAWARE                                             22-3272662
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)


                             584 Broadway Suite 509
                    (Address of Principal Executive Offices)

                                 (212) 343-3920
                (Issuer's Telephone Number, Including Area Code)


            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  /  /

            State  the  number  of shares  outstanding  of each of the  issuer's
classes of common equity, as of the latest practicable date:

                                                            Number Outstanding
      Title of Class                                     as of November 30, 1998
      --------------                                     -----------------------
Common Stock, $.01 Par Value                                  11,574,895

Transitional Small Business Disclosure Format: Yes / /      No /X/


                                       1
<PAGE>
                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                            Page
Item 1     Financial Statements

           Consolidated Balance Sheets at November 30, 1998 
           and May 31, 1998                                                   3

           Consolidated Statements of  Operations for the 
           three month and six-month periods ended November 30, 1998
           and November 30, 1997.                                           4,5

           Consolidated Statements of Cash Flows for the for 
           the six-month periods ended November 30, 1998 and 
           November 30, 1997.                                                 6

           Notes to Financial Statements                                      7

Item 2.    Management's Discussion and Analysis of Financial 
           Condition and Results of Operations                                9


,
PART II - OTHER INFORMATION
                                                                            Page

Item 1.    Legal Proceedings                                                 12

Item 2.    Change in Securities                                              12

Item 3.    Defaults upon Senior Securities                                   12

Item 4.    Submissions of Matters to a Vote by Security Holders              12

Item 5.    Other Information                                                 12

Item 6.    Exhibits and Reports on Form 8-K                                  12


SIGNATURES                                                                   13


                                       2

<PAGE>
             Cornerstone Internet Solutions Company and Subsidiaries
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                   November 30                    May 31
                                                                                      1998                         1998
ASSETS                                                                             (unaudited)
                                                                                --------------------------------------------------
<S>                                                                             <C>                                <C>          
Current Assets
      Cash and cash equivalents                                                      1,751,800                   $       392,200
      Investments                                                                      365,800                           167,400
      Accounts receivable, net                                                         769,800                           343,700
      Other Receivables                                                                 60,800                           100,000
      Prepaid expenses and other                                                       112,200                           269,300
                                                                                --------------------------------------------------
         Total current assets                                                        3,060,400                         1,272,600
Affiliation rights, net                                                                205,400                           219,200
Property and equipment, net                                                            378,500                           485,900
Other                                                                                  106,300                            69,200
                                                                                ----------------                 -----------------
                                                                                  $  3,750,600                   $     2,046,900
                                                                                ----------------                 -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
      Accounts payable                                                            $    509,500                   $       538,100
      Accrued restructuring expenses                                                    31,000                            95,400
      Accrued payroll and related expenses                                             345,100                           202,800
      Other accrued expenses                                                           365,300                           410,300
      Deferred revenue                                                                   3,300                             9,300
      Current maturities of long-term debt                                             106,900                            99,500
                                                                                ----------------                 -----------------
         Total current liabilities                                                   1,361,100                         1,355,400
     Long-term debt                                                                     50,300                           106,400
                                                                                ----------------                 -----------------
         Total liabilities                                                           1,411,400                         1,461,800
Stockholders' Equity
    Preferred Stock $.01 par value, 2,000,000 shares
    authorized;
            Class A  0 and 340 shares issued and outstanding at
November 30,1998 and May 31, 1998.                                                          -                                  -

            Class B  2,000 shares issued and outstanding at
November  30,1998, and May 31, 1998                                                         20                                20

            Class C 540 and 6,260 shares issued and outstanding at
November 30, 1998, and May 31, 1998.                                                        10                               100

            Class D 7320 and 0 shares issued and outstanding at
November 30, 1998, and May 31, 1998 with a liquidating
preference of $1,375 per share.                                                            100                                 -

Common Stock $.01 par value, 50,000,000 shares authorized;
11,574,895 and 9,441,117 issued and outstanding at November 30,
1998, and May 31, 1998 respectively.                                                   115,700                            94,400
    Additional paid-in capital                                                      33,777,270                        30,222,480
    Unrealized Gain on marketable equity securities                                    365,800                           167,400
    Accumulated deficit                                                            (31,919,700)                      (29,899,300)
                                                                                --------------                     -------------
          Total stockholders' equity                                                 2,339,200                           585,100
                                                                                --------------                     -------------

                                                                                $    3,750,600                     $   2,046,900
                                                                                --------------                     -------------
</TABLE>

See notes to consolidated financial statements

                                       3
<PAGE>
             Cornerstone Internet Solutions Company and Subsidiaries
                      Consolidated Statements of Operations
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                 Three months ended November 30
                                                                               1998                          1997
                                                                        --------------------------------------------

<S>                                                                     <C>                           <C>          
Internet services revenues                                               $1,004,600                      $376,000
Software licensing and royalty revenue                                            -                        98,000
                                                                        -----------------------------------------
       Total revenues                                                     1,004,600                       474,000


Cost of Internet services revenues                                        1,146,300                       803,400
Cost of licensing and royalty revenue                                             -                        22,200
Marketing and selling expenses                                              144,400                       953,500
General and administrative expenses                                         513,300                       492,400
Restructuring expenses                                                            -                       427,700
                                                                        -----------------------------------------
       Total costs and expenses                                           1,804,000                     2,699,200
                                                                        =========================================


Operating loss                                                             (799,400)                   (2,225,200)
                                                                        -----------------------------------------

Other income (expense):
      Interest expense                                                       (4,700)                       (3,400)
      Other income/expense                                                   (6,400)                            -
      Interest income                                                             -                        25,400
                                                                        -----------------------------------------
Net Loss                                                                   (810,500)                 $ (2,203,200)
                                                                        ==========================================

Preferred stock dividends and preferences                                  (511,100)                   (2,608,700)
                                                                        ------------------------------------------
Net loss  to common shareholders                                        $(1,321,600)                 $ (4,811,900)
                                                                        ===========================================

            Basic and diluted loss per share                            $      (.11)                 $       (.61)
                                                                        ============================================

            Weighted average shares of common stock                      11,574,895                     7,828,751
                                                                        ============================================
</TABLE>


See notes to consolidated financial statements

                                       5
<PAGE>
             Cornerstone Internet Solutions Company and Subsidiaries
                      Consolidated Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                  Six months ended November 30
                                                                                         1998                          1997
                                                                         -----------------------------------------------------

<S>                                                                                <C>                              <C>      
Internet services revenues                                                         $1,533,500                      $518,300
Software licensing and royalty revenue                                                 38,000                       132,400
                                                                         --------------------------------------------------
       Total revenues                                                               1,571,500                       650,700
                                                                         --------------------------------------------------

Cost of Internet services revenues                                                  2,238,000                     1,302,400
Cost of licensing and royalty revenue                                                       -                        22,200
Marketing and selling expenses                                                        258,500                     1,752,500
General and administrative expenses                                                 1,078,900                     1,058,800
Restructuring expenses                                                                      -                       427,700
                                                                         --------------------------------------------------
       Total costs and expenses                                                     3,575,400                     4,563,600
                                                                         --------------------------------------------------

Operating loss                                                                     (2,003,900)                   (3,912,900)
                                                                         --------------------------------------------------

Other income (expense):
      Interest expense                                                                 (8,800)                      (3,400)
      Other income/expense                                                             (7,700)                           -
      Interest income                                                                       -                       78,900
                                                                         -------------------------------------------------
Net Loss                                                                          $(2,020,400)                  $(3,837,400)
                                                                         ==================================================

Preferred stock dividends and preferences                                          (1,180,500)                   (4,560,800)
                                                                         --------------------------------------------------
Net loss to common shareholders                                                    (3,200,900)                  $(8,398,200)
                                                                         ===================================================


            Basic and diluted loss per share                                      $     (0.28)                  $     (1.08)
                                                                         ===================================================

            Weighted average shares of common stock                                11,282,152                     7,754,096
                                                                         ==================================================
</TABLE>


See notes to consolidated financial statements

                                       5
<PAGE>
             Cornerstone Internet Solutions Company and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                              Six Months Ended November 30
                                                                                             1998                       1997
                                                                                 ------------------------------------------------

<S>                                                                                      <C>                       <C>         
Cash flows from Operating Activities
Net Loss                                                                                 $(2,020,400)              $(3,837,400)
Adjustments to reconcile net loss to net cash used in operating activities
     Depreciation and amortization                                                           144,400                   109,400
     Stock option consulting expense                                                          12,800
Changes in assets and liabilities
     Accounts receivable                                                                    (426,100)                   (7,800)
     Other receivables                                                                        39,200                    80,100
     Prepaid expenses and other                                                              157,100                  (131,400)
     Other assets                                                                            (37,100)                  (57,800)
     Accounts payable                                                                        (28,600)                  128,000
     Accrued expenses                                                                        111,200                   230,400
     Deferred revenue                                                                         (6,000)                  (69,500)
                                                                                 ------------------------------------------------
           Net cash used in operating activities                                          (2,053,500)               (3,556,000)

Cash flows from investing activities
      Purchases of property and equipment                                                    (23,200)                 (428,700)
                                                                                 ------------------------------------------------
           Net cash (used in) investing activities                                           (23,200)                 (428,700)

Cash flows from financing activities
       Proceeds from private placements                                                    3,457,800                         -
       Proceeds from exercise of stock options                                                27,200                   214,500
       Proceeds from sale and leaseback of equipment                                               -                   168,800
       Principal payments under long-term debt                                               (48,700)                        -
                                                                                 ------------------------------------------------
            Net cash provided by financing activities                                      3,436,300                   383,300
                                                                                 ------------------------------------------------
            Net increase (decrease) in cash and cash equivalents                           1,359,600                (3,601,400)

Cash and cash equivalents
      Beginning of period                                                                    392,200                 4,952,900
                                                                                 ------------------------------------------------
      End of period                                                                       $1,751,800                $1,351,500
                                                                                 ================================================
</TABLE>

See notes to consolidated financial statements

                                       6
<PAGE>
                     CORNERSTONE INTERNET SOLUTIONS COMPANY
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

         General

         The accompanying,  unaudited financial statements have been prepared in
         accordance  with the  instructions to Form 10-QSB and in the opinion of
         management contain all adjustments (consisting of only normal recurring
         entries)   necessary  to  present  fairly  the  financial  position  of
         Cornerstone Internet Solutions Company (the "Company"),  as of November
         30, 1998 and the results of its  operations  and its cash flows for the
         three and six month  periods  ended  November 30, 1998 and November 30,
         1997. Certain information and footnote disclosures normally included in
         financial  statements  prepared in accordance  with generally  accepted
         accounting   principles  have  been  omitted.   The  interim  financial
         statements  should be read in conjunction with the Company's  financial
         statements  and related notes in the May 31, 1998 Annual Report on Form
         10-KSB.  The results for the three and six month periods ended November
         30, 1998 are not  necessarily  indicative of the results to be obtained
         for the full year.

2.       Business

         On July 2, 1998,  the  Company's  shareholders  ratified a proposal  to
         change  the  Company's  name  from  Enteractive,  Inc.  to  Cornerstone
         Internet  Solutions  Company.  Headquartered in New York, New York, the
         Company  is  a  provider  of  business   solutions  based  on  Internet
         technologies.  The Company's  address is 584  Broadway,  Suite 509, New
         York, NY 10012 and its Internet address is www.crstone.com

         In August  1997,  the Company sold its  domestic  distribution  rights,
         inventory  and  certain   accounts   receivable  from  its  interactive
         multimedia publishing business to a third party.

         On August 14, 1998,  the Company  entered into a new agreement with the
         same party and  terminated the August 15, 1997  agreement,  except with
         respect  to the  sale of  inventory  and  accounts  receivable  and the
         assignment of the distribution  contracts (the "1998 contract").  Under
         the terms of the 1998 contract,  the Company sold all its rights to its
         multimedia titles and has assigned all third party rights in the titles
         to the  acquirer  for  $100,000,  payable  at varying  monthly  amounts
         through January 1, 1999. The November 30, 1998 and May 31, 1998 balance
         sheet caption  "Other  receivables"  reflects the amounts due under the
         contract.

         On December 4, 1996 the Company  through,  a  wholly-owned  subsidiary,
         signed multiple  market  affiliate  agreements  with USWeb  Corporation
         ("USWeb") and paid  $625,000 for the right to operate  USWeb  affiliate
         offices in New York City,  and certain  other  markets in the Northeast
         portion of the United  States,  for a ten-year  period.  The operation,
         which has been  conducting  business as USWeb  Cornerstone,  provides a
         full range of Internet and Intranet-based business solutions, including
         Web site design,  hosting and management,  design and implementation of
         database and e-commerce solutions, educational programs and Web-related
         strategic consulting and marketing.

         The  Company  is  obligated  to pay  USWeb  monthly  fees  equal in the
         aggregate to 7% of adjusted gross  revenues,  as defined,  but not less
         than certain  contractual minimum fees. During fiscal 1998, the Company
         reduced operating expenses by concentrating its development  activities
         in New  York  City  and its  marketing  activities  in the  surrounding
         tri-state area. As a result,  in the second quarter of fiscal 1998, the
         Company incurred  restructuring  expenses of $427,700 for the estimated
         losses from subleasing the closed offices and related  severance costs.
         In addition,  in the fourth quarter of fiscal 1998,  the Company,  with
         the approval of USWeb  surrendered  its  affiliation  rights in certain
         geographic  regions and  recorded a write off of $315,000  representing
         the unamortized portion of the related Affiliation Rights.

         The accompanying  financial  statements have been prepared assuming the
         Company will  continue as a going  concern.  The  Company's  continuing
         losses from operations  could impact the Company's  ability to meet its
         obligations as they become due. As part of its business plan to enhance
         liquidity,  the Company has reduced  its  operating  expenses,  secured
         approximately  $1,970,000  in November  1998 from the sale of preferred
         stock in a private placement, and $1,487,900 in July 1998 from the sale
         of  common  stock  in a  private  placement  and is in the  process  of
         attempting  to  increase  its  revenues  and  secure a line of  credit.
         However,  the Company has no agreements,  commitments or understandings
         with respect to a line of credit and there can be no assurance that the
         Company will be able to increase its revenues.


                                       7

<PAGE>
3.       Affiliation Rights

         Fees for  affiliation  rights  were paid to USWeb for the right to join
         the  USWeb  network  and  operate  as an  affiliate.  The fee is  being
         amortized   over  the  10-year  life  of  the  agreement   with  USWeb.
         Affiliation  rights  at  November  30,  1998  were  net of  accumulated
         amortization of $104,600 and the $315,000 write off described above.

4.       Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions   that  affect  the  reported  amount  of  assets  and
         liabilities and disclosures of contingent assets and liabilities at the
         date of the financial  statements  and the reported  amount of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

5.       Convertible Preferred Stock Class D

         On  November  10,  1998 the Company  raised  $2,000,000  (approximately
         $1,970,000,  net of related  expenses)  through a private  placement of
         1,600 shares of Class D Convertible  Preferred Stock (Class D Preferred
         Stock) at a purchase price of $1,250 per share.  The holders of Class D
         Preferred  Stock  have the  right,  at any time  commencing  after  the
         earlier of (I) June 30, 2000 or (II) if the closing price of the Common
         Stock shall have been at least $1.50 per share  (subject to  adjustment
         in the event of a subdivision  or  combination  of the shares of Common
         Stock) on 15 trading days during any 20-consecutive trading day period,
         to convert each share of Class D Preferred Stock into such whole number
         of shares of Common  Stock equal to the  aggregate  stated value of the
         Class D Preferred  Stock to be converted  divided by $1.00,  subject to
         adjustment.  Each share of Class D  Preferred  Stock has a  liquidating
         preference  (subject  to the  liquidation  preference  of the  Class  C
         Preferred  Stock)  equal to the product of 1.1 and the stated  value of
         $1,250.  The Class D Preferred Stock is entitled to vote on all matters
         submitted to the holder of the Company's  Common Stock,  at 1,250 votes
         per share, pays no dividends and is not redeemable.

6.       Convertible  Preferred  Stock  Class A and C On  December  12, 1996 the
         Company  completed a private  placement of 84 units, each consisting of
         80 shares of Class A  Convertible  Preferred  Stock (Class A Preferred)
         and 50,000 common stock purchase  warrants to purchase in the aggregate
         4,200,000  shares of  Common  Stock at an  exercise  price of $4.00 per
         share and expiring  December 13,  2001(the  "Warrants").  Proceeds were
         approximately  $7,869,100,  net of related  expenses of  $531,000.  The
         Class A Preferred Stock has a stated value of $1,250 per share.

         On  November  19, 1997 the Company  offered to exchange  the  4,200,000
         Warrants for common stock (the "Exchange Offer"),  whereby for each 2.8
         warrants  exchanged,  the Company issued one share of its Common Stock.
         In connection with the Exchange Offer the Company  received the written
         consent of the participating  preferred shareholders to amend the terms
         of the  Class A  Preferred  Stock to delay  the date  when the  Class A
         Preferred  Stock can first be  converted  into Common Stock from May 1,
         1998 to July 1, 1999 and  modify  certain  redemption  features  of the
         Preferred  Stock.  Holders of 6,260 shares of Preferred Stock agreed to
         the terms of the Exchange Offer.  As a result,  on February 6, 1998 the
         Company  issued  1,397,323  shares of Common  Stock in exchange for the
         cancellation of 3,912,500 Warrants.  The fair value of the Common Stock
         issued   approximated   the  fair  value  of  the  canceled   Warrants.
         Subsequently  the  Company  redesignated  the  6,260  shares of Class A
         Preferred held by the  shareholders  who approved the Exchange Offer as
         Class C Convertible Preferred Stock (Class C Preferred). Such preferred
         shareholders  will  receive a  dividend  at 12% per year of the  stated
         value of the  Preferred  Stock for the period  from April 30,  1998 and
         ending the earlier of June 30, 1999 or a  redemption  date,  if any. In
         accordance  with the terms of the exchange offer discussed  below,  all
         dividends  associated  with  Class C  Preferred  Stock  exchanged  were
         relinquished. Dividends are payable in common stock and for those Class
         C Preferred  shares  outstanding  after the exchange  offer amounted to
         $41,000 for the six months ended November 30, 1998.

         On April 27,  1998,  the  Company  notified  the holders of the Class A
         Preferred  that the Company  would redeem the  remaining  460 shares of
         outstanding  Class A Preferred  Stock as of May 28, 1998 at a price per
         share  equal to 1.1  multiplied  by the  stated  value of each share of
         Class A  Preferred.  Holders of 340 shares of Class A  Preferred  Stock
         exercised their right to convert such Class A Preferred Stock to Common
         Stock, which resulted in the issuance of 348,361 shares of common stock
         in June  1998.  120  shares  of Class A  Preferred  were  redeemed  for
         $165,000 in May 1998.

         In October 1998 the Company offered to exchange one share of its "Class
         D Preferred Stock" for one share of Class C Preferred Stock. There were
         6,260 shares of Class C Preferred Stock  outstanding at the time of the
         offer.  On November 25, 1998 the Company issued 5,720 shares of Class D
         Preferred  Stock in  exchange  for a like  amount of Class C  Preferred
         Stock pursuant to the exchange offer.

                                       8
<PAGE>
7.       Class B Convertible Preferred Stock
         On February  19, 1998,  the Company  consummated  a $2,000,000  private
         placement  resulting  in the  issuance  of 2,000  shares of Class B par
         value $.01 Convertible  Preferred Stock (Class B Preferred Stock).  Net
         proceeds to the Company were  $1,990,800.  The Class B Preferred Stock,
         with a stated  value of $1,000 per share,  was  entitled to vote on all
         matters  submitted to holders of the Company's  common stock,  at 1,000
         votes per share, paid no dividends and was not redeemable.

         On  December  7,  1998  the  Company  issued  1,600  shares  of Class D
         Preferred Stock in exchange for all the  outstanding  Class B Preferred
         Stock.  The  exchange  was the  result of the  Company's  offer,  which
         provided  that one share of its  Class B  Convertible  Preferred  Stock
         could be  exchanged  for .8  shares  of Class D  Convertible  Preferred
         Stock.

         Based on the market price of the Company's  Common Stock on the date of
         issuance  the  Class  B  Preferred  Stock  had  a  non-cash  beneficial
         conversion feature of $2,250,000.  The beneficial conversion feature is
         recognized solely in the calculation of loss per common share over a 14
         month  period,  beginning  with the  issuance  of the Class B Preferred
         Stock  to March  1999  (the  first  date  that  conversion  could  have
         occurred).  As a result, the net loss to common  shareholders  includes
         preferred stock  preferences of $511,100 and $946,000 for the three and
         six months ended November 30, 1998.

8.       Private Placement of Common Stock
         On July  24,  1998 the  Company  consummated  a  private  placement  of
         1,768,750  unregistered  shares of Common Stock,  for $1 per share. The
         net proceeds of the offering were approximately $1,487,900.

Item 2   Management's Discussion and Analysis of Financial Condition and Results
         of Operations
         The  discussion  and analysis  should be read in  conjunction  with the
         Consolidated  Financial  Statements of Cornerstone  Internet  Solutions
         Company  and  Subsidiaries  and  Notes  to the  Consolidated  Financial
         Statements included elsewhere in this Form 10-QSB.

Results of Operations - Six Months Ended November 30, 1998 and 1997
Revenues
Internet  services  revenues  Internet  services  revenues were  $1,533,500  and
$518,300 in the six months ended November 30, 1998 and 1997,  respectively.  The
increase in revenues is a result of securing new contracts with  customers.  The
Company  anticipates that revenues will be impacted in the future by its ability
to expand its services in existing accounts and grow its client base. There were
two customers  that  individually  comprised more than 10% of revenue and in the
aggregate  amounted to 38% of accounts  receivable and 46% of total revenues for
the six months ended  November 30, 1998.  The loss of either of these  customers
would  have a  material  adverse  effect on the  results  of  operations  of the
Company.

Software  licensing and royalty revenue  Software  licensing and royalty revenue
were $38,000 and  $132,400 in the six months ended 1998 and 1997,  respectively.
The  decrease  reflects the  Company's  decision to  concentrate  on the design,
development and  implementation of business systems using Internet  technologies
and discontinue the publishing of interactive CD-Rom titles.

Expenses
Cost of Internet  Services  Revenues  Cost of Internet  Services  Revenues  were
$2,238,000 and  $1,302,400,  in the six months ended November 30, 1998 and 1997,
respectively.  Cost  of  Internet  Services  Revenues  in the six  months  ended
November  30,  1998  exceeded  Internet  services  revenues  as a result  of the
Company's  need to supplement  staff with  consultants  who had specific  skills
necessary to fulfill customer  projects and the Company's  decision to build its
development capability to secure customer contracts. The Company expects that as
it  secures  additional  contracts,  the cost of  revenues  as a  percentage  of
revenues will decrease.

Cost of licensing and royalty revenue Cost of licensing and royalty revenue were
$0 and $22,200 in the six months ended November 30, 1998 and 1997, respectively.
The reduction results from the Company's  decision to discontinue the publishing
of interactive CD-Rom titles.

Marketing and Selling Expenses  Marketing and Selling expenses were $258,500 and
$1,752,500,  in the six months ended  November 30, 1998 and 1997,  respectively.
The 85%  decrease  relates to the  reduction in sales force and closure of sales
offices during the second half of fiscal 1998, a result of the Company's  fiscal
1998 decision to centralize its marketing activities in New York City.

General and  Administrative  Expenses General and  administrative  expenses were
$1,078,900  and  $1,058,800  in the six months ended  November 30, 1998 and 1997
respectively.

Restructuring  expenses The Company incurred  restructuring expenses of $427,700
during the six month period ending  November 30, 1997 for the  estimated  losses
from  subleasing  the closed  sales  offices and related  severance  costs.  The
subsequent expenditures have been consistent with the original accrued amounts.

                                       9
<PAGE>
Other Income and (Expense)  Other income and (expense) was $(16,500) and $75,500
in the six months ended  November 30, 1998 and 1997,  respectively.  The Company
derived less  interest  income in the six months ended  November 30, 1998 due to
the Company's lower cash balances.

Income tax benefit No income tax benefit  was  recorded in the six months  ended
November  30, 1998 and  November  30,  1997.  Using the  standards  set forth in
Financial  Accounting  Standard No. 109,  management cannot currently  determine
whether the Company  will  generate  taxable  income  during the period that the
Company's net operating loss carry forward may be applied  towards the Company's
taxable  income,  if any.  Accordingly,  the Company has established a valuation
allowance against its deferred tax asset.

Quarterly results
The Company expects its quarterly  results to vary  significantly in the future.
The number of customer  contracts  signed and the ability of the solutions to be
readily implemented by the development staff  significantly  influence revenues.
Further  market  acceptance of the  Company's  offerings is dependent on (1) the
growth and utilization of the Internet as a medium for commerce, (2) the success
of USWeb in  establishing  and  positioning  the USWeb brand in the  territories
where the Company operates (3) the degree of market  acceptance of the Company's
offerings and (4) the success of offerings by competitors.  The Company does not
expect seasonal factors to be a significant influence on revenues.

Results of Operations -Quarter Ended November 30, 1998 and 1997
Revenues
Internet  services  revenues  Internet  services  revenues were  $1,004,600  and
$376,000,  in the quarters ended November 30, 1998 and 1997,  respectively.  The
increase in revenues is a result of securing new contracts with  customers.  The
Company  anticipates that revenues will be impacted in the future by its ability
to expand its services in existing  accounts and grow its client base. There was
one customer  that  individually  comprised  more than 10% of revenue and in the
aggregate  amounted to 30% of accounts  receivable and 27% of total revenues for
the three months ended November 30, 1998. The loss of this customer would have a
material adverse effect on the results of operations of the Company.

Expenses
Cost of Internet  Services  Revenues  Cost of Internet  Services  Revenues  were
$1,146,300  and  $1,272,800,  in the quarters  ended November 30, 1998 and 1997,
respectively.  Cost of Internet  Services Revenues in the quarter ended November
30, 1998 exceeded  Internet  services revenues as a result of the Company's need
to  supplement  staff with  consultants  who had  specific  skills  necessary to
fulfill  customer  projects.  The Company expects that as it secures  additional
contracts the cost of revenues as a percentage of revenues will  decrease.  Cost
of  Internet  Services  revenues  was 114% and 339% of related  revenues  in the
quarters ended November 30, 1998 and 1997, respectively.

Marketing and Selling Expenses  Marketing and Selling expenses were $144,400 and
$953,500,  in the quarters ended November 30, 1998 and 1997,  respectively.  The
85%  decrease  relates  to the  reduction  in sales  force and  closure of sales
offices during the second half of fiscal 1998, a result of the Company's  fiscal
1998 decision to centralize its marketing activities in New York City.

General and  Administrative  Expenses General and  administrative  expenses were
$513,300  and  $492,400  in the  quarters  ended  November  30,  1998 and  1997,
respectively.

Restructuring  Expenses The Company incurred  restructuring expenses of $427,700
during the three month period ending November 30, 1997 for the estimated  losses
from  subleasing  the closed  sales  offices and related  severance  costs.  The
subsequent expenditures have been consistent with the original accrued amounts.

Other Income and (Expense) Other income and (expense) was ($11,100) and $ 22,000
in the  quarters  ended  November  30, 1998 and 1997  respectively.  The Company
recorded $25,000 less interest income in the quarter ended November 30, 1998 due
to the Company's  lower cash  balances  than in the quarter  ended  November 30,
1997.

Income tax  benefit No income tax benefit was  recorded  in the  quarters  ended
November  30, 1998 and  November  30,  1997.  Using the  standards  set forth in
Financial  Accounting  Standard No. 109,  management cannot currently  determine
whether the Company  will  generate  taxable  income  during the period that the
Company's net operating loss carry forward may be applied  towards the Company's
taxable  income,  if any.  Accordingly,  the Company has established a valuation
allowance against its deferred tax asset.

Liquidity and Capital Resources
Since June 1, 1997,  the  Company's  principal  sources of capital  have been as
follows:

      (i)    On February 19, 1998, the Company  consummated a $2,000,000 private
             placement  resulting  in the  issuance  of 2,000  shares of Class B
             Preferred Stock . Net proceeds to the Company were $ 1,990,800.

      (ii)   On July 24, 1998,  the Company  consummated a private  placement of
             1,768,750  unregistered shares of Common Stock for $1.00 per share.
             The net proceeds of the offering were approximately $1,487,900.
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<PAGE>
      (iii)  On November 10, 1998, the Company  consummated a private  placement
             of 1,600 shares of newly created Class D Preferred Stock for $1,250
             per  share.   Net  proceeds  to  the  Company  were   approximately
             $1,970,000.

On April 27,  1998,  the Company  notified  the holders of the Class A Preferred
Stock that the Company  would  redeem the  remaining  460 shares of  outstanding
Class A  Preferred  Stock as of May 28,  1998 at a price per share  equal to 1.1
multiplied  by the stated value of each share of Class A  Preferred.  Holders of
340 shares of Class A Preferred  Stock  exercised  their  right to convert  such
Class A Preferred  Stock to Common  Stock,  which  resulted  in the  issuance of
348,361  shares of Common Stock in June 1998. One hundred twenty shares of Class
A Preferred Stock were redeemed for $165,000 in May 1998.

The Company had cash and cash equivalents of $1,751,800 and $392,200 at November
30, 1998 and May 31, 1998,  respectively.  The increase of  $1,359,600  reflects
primarily  the  private  placements  described  above which  yielded  $3,457,800
partially  offset  by the  funding  of  operating  activities  ($2,053,500)  and
payments of long term debt of $48,700.  Capital  expenditures  were  $23,200 and
$428,700  in the six  months  ended  November  30,  1998 and 1997.  The  Company
anticipates that capital  expenditures  will increase as revenues  increase as a
result of equipping staff or contractors to service customers.

The  Company's  continuing  losses from  operations  could impact the  Company's
ability to meet its  obligations as they become due. The  Independent  Auditor's
report for the fiscal year ended May 31, 1998 includes an explanatory  paragraph
regarding the Company's  ability to continue as a going concern.  As part of its
business  plan to enhance  liquidity,  the Company  has  reduced  its  operating
expenses,  secured in July 1998 and November 1998  approximately  $1,487,900 and
$1,970,000,  respectively  from the sale of common stock and preferred  stock in
two seperate  private  placements and is continuing  its activities  designed to
increase its  revenues.  However,  these funds may not be sufficient to meet the
Company's  longer-term cash  requirements for operations.  Based on management's
assessment of the demand for Internet based professional  services,  the Company
may significantly alter the level of expenses. Management believes that based on
funds on hand at  November  30, 1998 and  anticipated  revenues  operations  can
continue until at least thru the end of the current fiscal year.

NASDAQ Listing Standards;  Possible NASDAQ Delisting. In August 1997, the Nasdaq
Stock  Market  ("Nasdaq")  enacted new  standards  for the listing of its member
companies on Nasdaq.  These  standards,  which took effect on February 23, 1998,
require listed companies to maintain certain financial and corporate  governance
criterion for continued  listing on Nasdaq,  including net tangible assets of at
least  $2,000,000  and a per  share  price of at least  $1.00 per  share.  As of
November 30, 1998 the Company had $2,339,200 in net tangible assets.  Nasdaq had
advised the Company that based on the tangible net worth  reported at August 31,
1998 of  $933,700  the  Company no longer  met the  requirements  for  continued
listing.  The Company had a hearing  with Nasdaq on January 7, 1999 to determine
whether the Company  Common Stock  should be delisted.  Nasdaq has not reached a
detemination  as of the  date of this  filing.  The  determination  could  be to
continue  listing.  However,  Nasdaq may determine that the Company's plans will
not warrant continued listing;  in such event, Nasdaq will issue a Formal Notice
of  Deficiency  and the Common  Stock will be delisted.  If the Common  Stock is
delisted from Nasdaq,  trading, if any, in the Common Stock, would then continue
to be conducted in the  over-the-counter  market on the OTC Bulletin  Board,  an
NASD-sponsored  inter-dealer  quotation system, or in what are commonly referred
to as "pink  sheets." As a result,  an investor  may find it more  difficult  to
dispose  of or to  obtain  accurate  quotations  as to the  market  value of the
Company's  Common Stock and the trading price of the Company's  Common Stock may
be adversely affected.


New Accounting Pronouncement
The Company will implement the  provisions of Statement of Financial  Accounting
Standards  No.  133,   "Accounting   for  derivative   Instruments  and  Hedging
Activities"  in fiscal year 2000,  for which the Company is presently  assessing
its impact on the consolidated financial statements, if any.

Year 2000 Compliance
Many currently  installed  computer  systems and software  products are coded to
accept only  two-digit  entries in the date code  field.  These date code fields
will need to accept four digit  entries to  distinguish  21st century dates from
20th century dates. As a result,  in less than two years,  computer  systems and
software used by many companies,  including customers and potential customers of
the  Company,  may  need  to  be  upgraded  to  comply  with  such  "Year  2000"
requirements.  The Company is closely  monitoring the progress the developers of
the  software  the  Company  utilizes  in many  of its  customer  projects  i.e.
Microsoft  Corporation,  as well as the  developers of the software  utilized in
internal  systems are making  towards  ensuring  that the  products  the Company
utilizes are Year 2000 compliant. The Company believes that its internal systems
and third party software  incorporated  into client  solutions will be Year 2000
compliant.  Failure  to  provide  Year 2000  compliant  business  solutions  and
software to its customers could have a material  adverse effect on the Company's
business,  results of operations and financial condition. The Company's costs to
ensure that internal  systems and software  acquired for integration into client
business  solutions are Year 2000  compliant has not been and is not expected to
become significant.  The Company has not implemented any contingency plans if it
fails to become year 2000 compliant.
                                       11

<PAGE>
Further,  the Company  believes  that the  purchasing  patterns of customers and
potential  customers  may be affected by Year 2000  issues as  companies  expend
significant  resources to correct or patch their  current  software  systems for
Year 2000 compliance.  These  expenditures may result in reduced funds available
to purchase products and services such as those offered by the Company.

Forward looking statements
This Form 10-KSB contains certain forward-looking  statements within the meaning
of Section 27A of the  Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the  safe  harbors   created   thereby.   Investors  are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of the Company to develop its products,  the success of
its  USWeb  Cornerstone   subsidiary  as  well  as  general  market  conditions,
competition  and pricing.  Although the Company  believes  that the  assumptions
underlying the forward-looking  statements contained herein are reasonable,  any
of the assumptions could be inaccurate, and therefore, there can be no assurance
that the  forward-looking  statements included in this Form 10-KSB will prove to
be   accurate.   In  light  of   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

Inflation
The past and expected future impact of inflation on the financial  statements is
not significant.

Item 1.     Legal Proceedings

None

Item 2.     Change in Securities

On November 10, 1998 the Company consummated a private placement of 1,600 shares
of Class D Preferred  Stock Stock for $1,250 per share.  The net proceeds of the
offering  were  approximately  $1,970,000.  The sale was  made  pursuant  to the
exemption  contained in Section 4(2) of the  Securities  Act of 1933 as amended.
The  Company  did not engage a placement  agent in  connection  with the private
placement. For a further description of the terms of the Class D Preferred Stock
and the private placement,  please see Note 6 of Notes to Consolidated Financial
Statements.

In  October  1998 the  Company  offered  to  exchange  one  share of its Class D
Convertible  Preferred  Stock (the "Class D  Preferred  Stock") for one share of
Class C  Convertible  Preferred  Stock.  There  were  6,260  shares  of  Class C
Preferred  Stock  outstanding at the time of the offer. On November 25, 1998 the
Company  issued 5,720  shares of Class D Preferred  Stock in exchange for a like
amount of Class C Preferred Stock.

On December 7, 1998 the Company  issued 1,600 shares of Class D Preferred  Stock
in exchange for all the outstanding  Class B Preferred  Stock.  The exchange was
the result of the Company's offer,  which provided that one share of its Class B
Convertible  Preferred  Stock  could  be  exchanged  for .8  shares  of  Class D
Convertible Preferred Stock.

Item 3.     Defaults upon Senior Securities

None

Item 4.     Submissions of Matters to a Vote Security Holders

None

Item 5.     Other Information

            On January 8th, 1999, Ken Gruber, the Chief Financial Officer of the
            Company left to pursue other interests. Until a new CFO is named, Ed
            Schroeder, CEO will be the Company's principal financial officer.

Item 6.     Exhibits and Reports on Form 8-K

            Exhibit 27-       Financial Data Schedule

            Exhibit 4.14-     Certificate  of  Designations,   Preferences,  and
                              other  Rights  and   Qualifications   of  Class  D
                              Preferred Stock.

                                       12
<PAGE>
                                   SIGNATURES

            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.

                                    CORNERSTONE INTERNET SOLUTIONS COMPANY
                                    -----------------
                                    (Registrant)

Date January 8, 1999                /S/ Kenneth Gruber
                                    ------------------------------
                                    Kenneth Gruber
                                    Chief Financial Officer and
                                    Principal Accounting Officer



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