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, 2000


/ /       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.)


                    500 Lanidex Plaza, Parsippany, New Jersey
                    (Address of Principal Executive Offices)

                                 (973) 503-5600
                (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 January 10, 2001
    --------------------                               ----------------------
    Common Stock, $.01 Par Value                            25,108,326
    Transitional Small Business
        Disclosure Format:    Yes / /   No /X/

<PAGE>

                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

                                                                            Page
Item 1   Condensed Consolidated Financial Statements

         Condensed Consolidated Balance Sheets as of November 30, 2000
         and May 31, 2000                                                    3

         Condensed Consolidated Statements of Operations for the
         three months ended November 30, 2000 and November 30, 1999          4


         Condensed Consolidated Statements of Operations for the
         six months ended November 30, 2000 and November 30, 1999
                                                                             5
         Condensed Consolidated Statements of Cash Flows for the six months
         ended November 30, 2000 and November 30, 1999                       6


         Notes to Condensed Consolidated Financial Statements                7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                10


,
PART II - OTHER INFORMATION

                                                                           Page
Item 1.  Legal Proceedings                                                  12

Item 2.  Change in Securities and Use of Proceeds                           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
Condensed Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
                                                                       November 30,      May 31,
                                                                           2000           2000
                                                                     ---------------  ------------
                                                                                       (restated)
<S>                                                                  <C>             <C
ASSETS
Current assets:
      Cash and cash equivalents                                      $     21,793    $     94,712
       Investments, at fair value                                            --            75,568
       Advances to B2Bgalaxy.com                                             --         1,446,422
       Prepaid expenses and other current assets                            9,369          26,878
                                                                     ------------    ------------
         Total current assets                                              31,162       1,643,580

Net assets of discontinued operations                                        --           455,130
Investment in B2Bgalaxy.com                                             2,245,246       5,225,043
Other non-current assets                                                  310,557         153,218
                                                                     ------------    ------------
                                                                     $  2,586,965    $  7,476,971
                                                                     ------------    ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                               $     56,657    $     54,763
      Accrued payroll and related expenses                                 43,026         142,824
      Other accrued expenses                                               37,926          37,926
      Deferred revenue                                                    143,724            --
                                                                     ------------    ------------
         Total current liabilities                                        281,333         235,513

Net liabilities of discontinued operations                                132,249            --


Stockholders' equity:
    Preferred stock, $.01 par value,
            2,000,000 shares authorized;
           Class C, 20 shares issued and outstanding
           as of November 30, 2000 and May 31, 2000                          --              --
    Common stock, $.01 par value, 50,000,000 shares
           authorized and 25,108,326 shares issued and outstanding
           as of November 30, 2000 and May 31, 2000                       251,083         251,083
    Additional paid-in capital                                         49,534,442      49,534,442
    Accumulated other comprehensive income                                   --            75,568
    Accumulated deficit                                               (47,612,142)    (42,619,635)
                                                                     ------------    ------------
          Total stockholders' equity                                    2,173,383       7,241,458
                                                                     ------------    ------------
                                                                     $  2,586,965    $  7,476,971
                                                                     ------------    ------------

</TABLE>

See notes to condensed consolidated financial statements

                                       3
<PAGE>
Cornerstone Internet Solutions Company
Condensed Consolidated Statements of Operations
(unaudited)

<TABLE>
<CAPTION>
                                                                                         Three months ended
                                                                                       November 30,   November 30,
                                                                                          2000            1999
                                                                                     ----------------------------
<S>                                                                                  <C>             <C>

Subscription revenue                                                                 $       --      $     13,395
                                                                                     ----------------------------
       Total revenues                                                                        --            13,395


Cost of subscription revenue                                                                 --           217,614
Marketing, sales, and support                                                                --            26,446
General and administrative expenses                                                        60,983         601,775
Research and development                                                                     --            28,865
                                                                                     ----------------------------
       Total costs and expenses                                                            60,983         874,700

Operating loss                                                                            (60,983)       (861,305)

Other income:
      Interest income                                                                        --             6,920
      Gain on sale of investments                                                            --           728,750
      Other expense, net                                                                     --            (8,243)
      Share of loss in B2Bgalaxy.com                                                   (1,160,797)           --
                                                                                     ----------------------------

Loss from continuing operations before minority interest                               (1,221,780)       (133,878)

Minority interest in subsidiary, net                                                         --          (221,929)
                                                                                     ----------------------------

Loss from continuing operations                                                        (1,221,780)       (355,807)

Loss from operations of discontinued operations                                              --          (492,253)
                                                                                     ----------------------------

Net loss                                                                             $ (1,221,780)   $   (848,060)
                                                                                     ============================

Loss per share information:
Basic and diluted loss per share from continuing operations                          $       (.05)   $       (.03)
Basic and diluted loss per share from discontinued operations                                --              (.03)
                                                                                     ----------------------------
Basic and diluted net loss per share attributable to common stockholders             $       (.05)   $       (.06)
                                                                                     ============================
Weighted average shares of common stock used to compute loss per share information
                                                                                       25,108,326      13,883,431
</TABLE>

                                       4

See notes to condensed consolidated financial statements.

<PAGE>
Cornerstone Internet Solutions Company
Condensed Consolidated Statements of Operations
(unaudited)

<TABLE>
<CAPTION>
                                                                                           Six months ended
                                                                                       November 30,  November 30,
                                                                                          2000           1999
                                                                                     ----------------------------
<S>                                                                                    <C>               <C>
Subscription revenues                                                                $       --      $     13,395
                                                                                     ----------------------------
       Total revenues                                                                        --            13,395


Cost of subscription revenue                                                                 --           217,614
Marketing, sales, and support                                                                --           131,905
General and administrative expenses                                                       175,990         914,525
Research and development                                                                     --            43,113
                                                                                     ----------------------------
       Total costs and expenses                                                           175,990       1,307,157

Operating loss                                                                           (175,990)     (1,293,762)

Other income:
      Interest income                                                                        --            23,975
      Gain on sale of investments                                                            --           728,750
      Other expense, net                                                                     --            (2,187)
      Share of loss in B2Bgalaxy.com                                                   (2,979,797)           --
                                                                                     ----------------------------

Loss from continuing operations before minority interest                               (3,155,787)       (543,224)

Minority interest in subsidiary, net                                                         --          (443,858)

                                                                                     ----------------------------

Loss from continuing operations                                                        (3,155,787)       (987,082)

Discontinued operations:
   Loss from operations of discontinued operations                                       (915,567)       (896,009)
   Loss on disposal of discontinued operations                                           (921,153)           --
                                                                                     ----------------------------
       Total loss from discontinued operations                                         (1,836,720)       (896,009)
Net loss                                                                               (4,992,507)     (1,883,091)

Preferred stock dividends and preferences                                                    --            (6,750)

                                                                                     ----------------------------
Net loss attributable to common stockholders                                         $ (4,992,507)   $ (1,889,841)
                                                                                     ============================

Loss per share information:
Basic and diluted loss per share from continuing operations                          $      (0.13)   $      (0.07)
Basic and diluted loss per share from discontinued operations                               (0.07)          (0.07)
                                                                                     ----------------------------
Basic and diluted net loss per share attributable to common stockholders             $      (0.20)   $       (.14)
                                                                                     ============================

Weighted average shares of common stock used to compute loss per share information     25,108,326      13,775,754

</TABLE>

See notes to condensed consolidated financial statements.

                                       5
<PAGE>

 CORNERSTONE INTERNET SOLUTIONS COMPANY
 Condensed Statement of Cash Flows
 (unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                   Six Months Ended

                                                                              November 30,   November 30,
                                                                                  2000           1999
                                                                              --------------------------
<S>                                                                           <C>            <C>
Cash flows from operating activities:
Net loss                                                                      $(4,992,507)   $(1,883,091)
Loss from discontinued operations                                               1,836,720        896,009
                                                                              --------------------------
Loss from continuing operations                                                (3,155,787)      (987,082)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                   --           92,749
     Share of loss in B2Bgalaxy.com                                             2,979,797           --
     Minority interest in net loss of subsidiary, net                                --          443,858
     Net gain on sale of investment                                                  --         (728,750)
Changes in assets and liabilities:
     Accounts receivable                                                             --         (122,988)
     Advances to B2Bgalaxy.com                                                  1,446,422           --
     Prepaid expenses and other current assets                                     17,509          2,416
     Other assets                                                                (157,339)       (42,138)
     Accounts payable                                                               1,894        102,138
     Accrued expenses                                                             (99,798)        43,428
     Deferred revenue                                                             143,724           --
                                                                              --------------------------
           Net cash provided by (used in) continuing operations                 1,176,422     (1,196,369)
           Net cash used in discontinued operations                            (1,249,341)    (1,484,994)
                                                                              --------------------------

           Net cash used in operating activities                                  (72,919)    (2,681,363)
Cash flows from investing activities:
     Purchases of property and equipment                                             --         (591,780)
     Proceeds from sale of investments                                               --          728,750
                                                                              --------------------------
            Net cash provided by investing activities                                --          136,970
                                                                              --------------------------

Cash flows from financing activities:                                                --             --
     Proceeds from exercise of stock options                                         --        1,935,513
     Principal payments of long-term debt                                            --          (52,976)
                                                                              --------------------------
            Net cash provided by financing activities                                --        1,882,537
                                                                              --------------------------
            Net decrease in cash and cash equivalents                             (72,919)      (661,856)
Cash and cash equivalents:
      Beginning of period                                                          94,712      2,939,596
                                                                              --------------------------
      End of period                                                           $    21,793    $ 2,277,740
                                                                              ==========================
</TABLE>

See notes to condensed consolidated financial statements.

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

            General

1.          The  accompanying   unaudited   condensed   consolidated   financial
            statements have been prepared in accordance with the instructions to
            Form  10-QSB,   and  in  the  opinion  of  management   contain  all
            adjustments  necessary to present  fairly the financial  position of
            Cornerstone   Internet  Solutions  Company  (the  "Company")  as  of
            November  30,  2000 and the results of its  operations  and its cash
            flows for the three and six months ended November 30, 2000 and 1999,
            respectively.  Certain  information  and note  disclosures  normally
            included  in  financial   statements  prepared  in  accordance  with
            generally  accepted  accounting  principles  have been omitted.  The
            condensed  consolidated  financial  statements  should  be  read  in
            conjunction with the Company's consolidated financial statements and
            related notes in the Company's  Annual Report on Form 10-KSB for the
            fiscal year ended May 31, 2000. The results for the six months ended
            November 30, 2000 are not  necessarily  indicative of the results to
            be obtained for the full year.

2.          Business and Liquidity

            The  Company is a  provider  of  comprehensive  business-to-business
            e-commerce  services and  solutions.  The  Company's  address is 500
            Lanidex  Plaza,  Third Floor,  Parsippany,  New Jersey 07054 and its
            Internet address is www.crstone.com.

            The Company owns financial  interests in two companies,  Enteractive
            Network  Solutions Inc.  (Enteractive)  and  B2Bgalaxy.com  ("B2B").
            Enteractive  is  a  wholly-owned  subsidiary  of  the  Company,  and
            formerly an  independent  affiliate of marchFIRST  Corporation,  the
            successor  of  USWEB  Corporation   ("USWeb").   Enteractive  ceased
            operations  on  November  1, 2000 and ended  its  relationship  with
            MarchFIRST.  This is further described in Note 6 below. B2B is 37.8%
            owned  by the  Company  and is  accounted  for as an  equity  method
            investment  (See Note 4). B2B was  established  in February  1999 to
            leverage the Company's  expertise in business  consulting,  Internet
            technology  and  e-commerce  in the  creation  of  industry-specific
            business-to-business e-commerce portals. The portals link buyers and
            sellers  with  a  focus  on  improving  profitability.  B2B  targets
            industries  where  small to  medium  size  businesses  and  local or
            regional  distribution  are dominant and where cost of goods sold is
            significant.  The goal of each industry portal is the enhancement of
            the  earnings  of its  members  through  cost  savings on  essential
            supplies.  In May  1999,  B2B  launched  FOODgalaxy.com,  the  first
            portal,  which was  designed to lower the cost of food and  supplies
            for restaurants and other food service  providers  through increased
            price  competition.  In  March  2000,  B2B  agreed  to  license  its
            e-commerce solution to PetAssure,  Inc. to create VETgalaxy.com,  an
            online marketplace targeting the veterinary service industry.  Under
            this agreement,  B2B functions as an operational and support partner
            for the new company. In July 2000,  Telefonica B2B and B2Bgalaxy.com
            agreed to  create  an  e-commerce  marketplace  for the  foodservice
            industry in Latin  America,  Spain and Portugal.  This joint venture
            initially offers a solution for the food service industry in Spanish
            and Portuguese  speaking markets,  and could  potentially  extend to
            other industries with similar purchasing needs and behaviors.

            The accompanying  condensed  consolidated  financial statements have
            been  prepared  assuming  that the Company will  continue as a going
            concern.  The Company's continuing losses could impact the Company's
            ability to meet its  obligations as they become due. The accumulated
            deficit as of November 30, 2000 was $47,612,142 and the net loss for
            the six months ended November 30, 2000 was  $4,992,507.  The Company
            is  considering  various  business  alternatives,  which may include
            merger, acquisition,  joint ventures or liquidation. It is uncertain
            which, if any, alternative the Company will pursue.

            The  Company  was  advised by the Nasdaq  SmallCap  Market  that the
            Company's  Common  Stock  would be  delisted on January 3, 2001 from
            trading on the Nasdaq SmallCap Market due to a failure to maintain a
            minimum bid price of $1.00 over 30  consecutive  trading  days.  The
            Company  appealed this  determination  by the Nasdaq SmallCap Market
            and a hearing has been  scheduled  for Friday,  February 9, 2001. If
            the Company's appeal is unsuccessful, management of the Company will
            attempt to take the  necessary  steps to allow its  Common  Stock to
            trade on the OTC Bulletin Board System.  The Company's  Common Stock
            will also continue to trade on the Boston Stock  Exchange.  However,
            the Company's  Common Stock could be considered a penny stock and be
            subject to various regulations which could have an adverse effect on
            the  trading  market for and market  price of the  Company's  Common
            Stock.

            The Company did not file Form 10-QSB for the quarterly  period ended
            November  30,  2000 in a timely  manner.  On January 25, 2001 NASDAQ
            advised  the  Company  that as a result of the  filing  delinquency,
            effective Monday January 29, 2001 the Company's  trading symbol will
            be changed  from CNRS to CNRSE.  In  addition,  NASDAQ  advised  the
            Company has failed to

                                       7
<PAGE>

            maintain  a minimum  of two active  market  makers  over the last 10
            consecutive  trading days as required by the Nasdaq  SmallCap Market
            These issues will be  considered  at the  Company's  oral hearing on
            February 9, 2001.

3.          B2Bgalaxy.com Transactions

            In fiscal  1999,  B2B received  from a third party  $37,064 of fixed
            assets in exchange for 20.6% of its common shares outstanding, which
            resulted in an increase in the Company's paid-in-capital of $27,369.
            In addition, on April 30, 1999, B2B sold 2,400 shares of convertible
            preferred stock ("Preferred  Stock") for net proceeds of $2,122,957.
            The stated value of a share of the  Preferred  Stock is $1,000.  The
            Preferred Stock does not provide for dividends and has voting rights
            equal to the  number  of shares of  common  stock  into  which it is
            convertible. Under the terms of the Preferred Stock, if by September
            30, 2000, B2B had  consummated a public offering of equity in excess
            of  $5   million,   each  share  of   Preferred   Stock  would  have
            automatically  converted  into 1,667 shares of B2B's Common Stock or
            converted  based on 75% of the Common Share price in the  financing,
            whichever  would have resulted in a higher number of Common  Shares.
            As B2B did not consummate  such financing by September 30, 2000, the
            holders of the Preferred Stock had the option to either convert each
            Preferred Share into 1,667 Common Shares of B2B or 400 Common Shares
            of the Company. All of the Preferred Stock was converted into shares
            of B2B  resulting in the issuance of 4,000,800  shares of B2B Common
            Stock.

            Based on the market price of the Company's  Common Stock on the date
            of  issuance,  B2B's  Preferred  Stock  had  a  non-cash  beneficial
            conversion  feature of $1,257,600.  Such portion of the proceeds was
            allocated to  additional  paid-in  capital and was  recognized as an
            expense in minority interest through February 29, 2000.  Thereafter,
            the amortization  through September 30, 2000 increased the Company's
            share of loss in B2B.

            On  February  29,  2000,  B2B  consummated  a private  placement  of
            5,357,181  shares of Common  Stock,  resulting  in net  proceeds  of
            $14,975,213.

            As a result of the above  transactions,  at November 30,  2000,  the
            Company owned 37.8% of B2B's Common Stock.

4.          Use of Equity Method of Accounting for B2B

            The Company has  reflected B2B as a  consolidated  subsidiary in its
            previously filed financial statements. However, as described in Note
            3, on February 29, 2000, B2B completed a private placement of common
            stock, which reduced the Company's voting interest in B2B below 50%.
            As the  Company no longer had a  controlling  financial  interest in
            B2B, the Company  should have  presented the investment in B2B using
            the equity method of accounting as of and for periods after February
            29, 2000. In the accompanying financial information,  the investment
            in B2B has been reflected using the equity method of accounting from
            February 29, 2000. The accompanying  condensed  consolidated balance
            sheet as of November 30, 2000 reflects the Company's interest in B2B
            using the equity  method of  accounting.  The  consolidated  balance
            sheet as of May 31, 2000 has been adjusted to reflect the investment
            in B2B on an equity basis from  February 29, 2000  forward.  For the
            three months and six months ended November 30, 2000, the Company has
            recognized its proportionate share of B2B's net losses on the equity
            method,  based on its  ownership  in B2B for each  period,  in other
            income.  From June 1 to September 30, 2000, the Company's  ownership
            of B2B was 48.7%.  As described  in Note 3, on  September  30, 2000,
            4,000,800  shares of Common Stock of B2B were issued upon conversion
            of the B2B Preferred Stock.  This transaction  reduced the Company's
            economic  ownership  of B2B from 48.7% to 37.8%.  From  October 1 to
            November 30, 2000, the Company's  ownership was 37.8%. For the three
            months and six months ended November 30, 1999, the operations of B2B
            are presented on a consolidated basis as previously reported.

            The Company plans to amend its financial statements included in Form
            10-KSB  for the year  ended  May 31,  2000 and Form  10-QSB  for the
            quarterly  periods ended  February 29 and August 31, 2000 to reflect
            its  investment in B2B using the equity  method of  accounting  from
            February 29, 2000. The Company does not anticipate there will be any
            changes to the Company's  stockholders'  equity, net loss or related
            per share  amounts  as a result of the  revisions  to the  financial
            statements  to  apply  the  equity  method  of  accounting  for  the
            Company's investment in B2B. The Company's auditors,  KPMG LLP, have
            not  completed  their  audit  of the  adjustments  to the  Company's
            financial statements as of and for the year ended May 31, 2000.


                                       8
8<PAGE>



Summarized  balance sheet data as of May 31, 2000 as originally  reported and as
restated is as follows:

($ in thousands)                    Originally Reported          As Restated
----------------                    -------------------          -----------

Cash and cash equivalents           12,222                          94
Current assets                      13,111                       1,644
Total assets                        15,621                       7,477

Current and total liabilities       2,194                          236
Minority interest                   6,480                        -
Stockholders' equity                6,947                        7,241

Deferred charges of $293,872 were included in stockholders' equity as originally
reported in error which has been corrected in the restated amounts.

Summarized  financial data for B2B as of and for the three months and six months
ended November 30, 2000 is as follows:

                                    Three months ended         Six months ended
($ in thousands)                    November 30, 2000          November 30, 2000
---------------                     -----------------          -----------------
Statement of operations data:
Revenues                                      370                        792
Operating loss                              2,878                      6,196
Net loss                                    2,877                      6,159

Balance sheet data:                 November 30, 2000               May 31, 2000
                                    -----------------               ------------
Cash and cash equivalents                   4,054                     12,127
Total assets                                6,487                     14,037
Shareholders' equity                        5,352                     11,411


5.          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.

6.          Discontinuance of the Internet Business Solutions Segment

            On September 25, 2000,  the Company  announced its plan to close its
            Internet Business Solutions  segment.  In accordance with such plan,
            the Company  immediately reduced the workforce of the unit by 57% on
            September 25, 2000.  The Company closed and disposed of the business
            by November 1, 2000 by selling the remaining  assets of the segment.
            As of November  30, 2000,  the Company had two full time  employees,
            the  Chairman  of the  Board and the Chief  Financial  Officer,  who
            devote  substantially all of their time to the B2B operations.  They
            perform   similar   functions   as   necessary   for  the   Company.
            B2bgalaxy.com  staff  perform   administrative   functions  for  the
            Company.  The costs of these services are borne by the Company.  The
            Company is  considering  various  business  alternatives,  which may
            include merger,  acquisition,  joint ventures or liquidation.  It is
            uncertain which, if any, alternative the Company will pursue.

            Fees for  affiliation  rights  were paid to  marchFIRST.com  for the
            right to join the  marchFIRST  network and operate as an  affiliate.
            The fee was being  amortized  over the 10-year life of the agreement
            with marchFIRST, but as a result of the termination of the agreement
            with marchFIRST stemming from the management decision to discontinue
            the Internet Business Solutions segment,  the unamortized balance of
            $159,722 on August 31,  2000,  has been  written down to zero and is
            included in the loss on disposal of discontinued operations.

            Management of the Company estimated costs that it will incur as part
            of the discontinuance and ultimate disposal of the Internet Business
            Solutions  segment.  At August 31,  2000,  the Company  recorded the
            estimated loss of discontinuing  this operation and disposing of the
            related assets. The estimate consisted  primarily of severance costs
            for employees who have been

                                       9
<PAGE>

            terminated,  lease cancellation  payments, and the estimated loss on
            the sale of the segment's remaining assets.  These amounts have been
            included in the loss on disposal of  discontinued  operations in the
            accompanying condensed  consolidated statement of operations.  There
            were no changes in the estimates made for the  discontinuance of the
            Internet  Business   Solutions  segment  during  the  quarter  ended
            November 30, 2000.

7.          Convertible Preferred Stock Class C

            As of November 30,  2000,  there were 20 shares of Class C Preferred
            Stock  outstanding,  which, as of such date, are convertible into an
            aggregate of 20,205  shares of Common  Stock.  Each share of Class C
            Preferred is  convertible  into the whole number of shares of common
            stock equal to the  aggregate  stated value of the Class C Preferred
            Stock to be converted divided by the lesser of (i) $2.00 or (ii) 50%
            of the average  closing  price for the common stock for the last ten
            trading  days in the  fiscal  quarter of the  Company  prior to such
            conversion. The Company has the option to redeem all, or any portion
            of on a pro rata basis,  the Class C  Preferred  at any time upon 30
            days prior written  notice,  at a redemption  price equal to 110% of
            the stated value.

            The conversion rate of the Class C Preferred (when calculated on the
            basis of dividing the stated value by $2.00 only) will be subject to
            adjustments  to  protect  against  dilution  in the  event  of stock
            dividends, stock splits, and certain other events. In July 1999, 500
            shares of Class C Preferred  were  converted  into 505,132 shares of
            common stock.  Dividends amounted to $6,750 for the six months ended
            November 30, 1999. In July 1999,  40,213 shares of common stock were
            issued in full payment of the preferred stock dividends.

8.          Gain on sale of investments
            In the second  quarter of fiscal 2000, the Company  exercised  USWeb
            warrants and sold the underlying USWeb stock, resulting in a gain of
            $728,750.

9.          Comprehensive Loss
            The amounts  related to  investments  reported in net loss and other
            comprehensive  loss for the six months  ended  November 30, 2000 are
            comprised of a holding loss arising during the period, net of taxes,
            of $75,568. The comprehensive loss for the six months ended November
            30, 2000 was ($5,068,075).

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
            Condensed  Consolidated Financial Statements of Cornerstone Internet
            Solutions Company and Notes to the Condensed  Consolidated Financial
            Statements included elsewhere in this Form 10-QSB.

Results of Operations - Six Months Ended November 30, 2000 and 1999
General
-------
On September  25,  2000,  the Company  announced  its plan to close its Internet
Business  Solutions   segment.   In  accordance  with  such  plan,  the  Company
immediately  reduced the workforce of the unit by 57% on September 25, 2000. The
Company  closed and  disposed of the business by November 1, 2000 by selling the
remaining  assets of the segment.  As of November 30, 2000,  the Company had two
full time employees,  the Chairman of the Board and the Chief Financial Officer,
who devote  substantially all of their time to the B2B operations.  They perform
similar  functions as necessary  for the Company.  B2bgalaxy.com  staff  perform
administrative  functions for the Company. The costs of these services are borne
by the Company. The Company is considering various business alternatives,  which
may include merger, acquisition,  joint ventures or liquidation. It is uncertain
which, if any, alternative the Company will pursue.

As a result of  discontinuing  the  Internet  Business  Solutions  segment,  the
Company has no  operations.  It owns 37.8% of the common stock of  B2Bgalaxy.com
and through shareholder agreements votes 47.6% of B2Bgalaxy.com's common stock.

The Company has reflected  B2B as a  consolidated  subsidiary in its  previously
filed  financial  statements.  However,  as described in Note 3, on February 29,
2000,  B2B  completed a private  placement of common  stock,  which  reduced the
Company's  voting  interest  in B2B below  50%.  As the  Company no longer had a
controlling  financial  interest in B2B, the Company  should have  presented the
investment  in B2B using the equity  method of  accounting as of and for periods
after  February  29,  2000.  In  the  accompanying  financial  information,  the
investment in B2B has been reflected  using the equity method of accounting from
February 29, 2000. The accompanying  condensed  consolidated balance sheet as of
November 30, 2000 reflects the Company's interest in B2B using the equity method
of  accounting.  The  consolidated  balance  sheet  as of May 31,  2000 has been
adjusted to reflect the  investment  in B2B on an equity basis from February 29,
2000 forward.  For the three months and six months ended  November 30, 2000, the
Company has recognized its proportionate share of B2B's net losses on the equity
method,  based on its ownership in B2B for each period,  in other

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<PAGE>

income.  From June 1 to September 30, 2000,  the Company's  ownership of B2B was
48.7%. As described in Note 3, on September 30, 2000, 4,000,800 shares of Common
Stock of B2B were  issued  upon  conversion  of the B2B  Preferred  Stock.  This
transaction reduced the Company's economic ownership of B2B from 48.7% to 37.8%.
From October 1 to November 30, 2000, the Company's  ownership was 37.8%. For the
three months and six months ended  November 30, 1999,  the operations of B2B are
presented on a consolidated basis as previously reported.

The Company plans to amend its financial  statements included in Form 10-KSB for
the year ended May 31,  2000 and Form  10-QSB for the  quarterly  periods  ended
February  29 and August  31,  2000 to reflect  its  investment  in B2B using the
equity  method of  accounting  from  February  29,  2000.  The Company  does not
anticipate there will be any changes to the Company's  stockholders' equity, net
loss or related per share  amounts as a result of the revisions to the financial
statements to apply the equity method of accounting for the Company's investment
in B2B. The Company's auditors,  KPMG LLP, have not completed their audit of the
adjustments to the Company's  financial  statements as of and for the year ended
May 31, 2000.

Gain on sale of investments
---------------------------
In the second quarter of fiscal 2000, the Company  exercised  USWeb warrants and
sold the USWeb stock, resulting in a gain of $728,750.

Discontinued operations
-----------------------
The loss from operations of the discontinued Internet Business Solutions segment
for six months ended November 30, 2000 was $915,567.  The losses from operations
of the discontinued  Internet  Business  Solutions segment for the three and six
months ended November 30, 1999 were $492,253 and $896,009, respectively.

The  estimated  loss on disposing  the Internet  Business  Solutions  segment of
$921,153 was recorded at August 31, 2000. There was no change in the estimate in
the three months ended November 30, 2000.

Share of loss in B2Bgalaxy.com
------------------------------
The Company's share of loss in B2Bgalaxy.com  for the three and six months ended
November  30,  2000 was  $1,160,797  and  $2,979,797,  respectively.  During the
quarter ended November 30, 2000, the Company's share of the loss fell from 48.7%
to 37.8% as a result of the conversion of B2B's  preferred  stock into 4,000,800
shares of B2B common stock.

Liquidity and Capital Resources

The Company's ability to raise capital at this point is significantly  dependent
upon the  valuation  of its  investment  in B2B.  The Company  currently  has no
agreements,  commitments,  or understandings with respect to additional funding.
Any funds raised may not be sufficient to meet the  Company's  longer-term  cash
requirements.  In addition,  there can be no assurance  that the Company will be
able to obtain additional  financing.  The Company should be able to continue in
business  as  long as its  investment  in  B2Bgalaxy.com  can be sold or used as
collateral.  Management believes that based on B2B funds on hand at November 30,
2000 and  anticipated  revenues,  operations can continue at least through April
2001.

The Company was advised by the Nasdaq SmallCap Market that the Company's  Common
Stock would be delisted on January 3, 2001 from  trading on the Nasdaq  SmallCap
Market  due to a  failure  to  maintain  a minimum  bid  price of $1.00  over 30
consecutive  trading days. The Company appealed this determination by the Nasdaq
SmallCap  Market and a hearing has been scheduled for Friday,  February 9, 2001.
If the Company's appeal is unsuccessful,  management of the Company will attempt
to take  the  necessary  steps  to allow  its  Common  Stock to trade on the OTC
Bulletin Board System. The Company's Common Stock will also continue to trade on
the  Boston  Stock  Exchange.  However,  the  Company's  Common  Stock  could be
considered a penny stock and be subject to various  regulations which could have
an adverse  effect on the trading  market for and market price of the  Company's
Common Stock.

New Accounting Pronouncements
The Company will implement the  provisions of Statement of Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities", as amended by Statements of Financial Accounting Standards Nos. 137
and 138, in fiscal year 2002,  for which the Company is presently  assessing its
impact on the consolidated financial statements, if any.

FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation"  ("FIN No. 44), provides guidance for applying APB Opinion No. 25,
"Accounting for Stock Issued to Employees".  With certain exceptions, FIN No. 44
applies  prospectively  to  new  awards,  exchanges  of  awards  in  a  business
combination,  modifications to outstanding  awards and changes in grantee status
on or after July 1, 2000.  The Company does not believe that the  implementation
of FIN No. 44 will have a significant effect on results of operations.

                                       11
<PAGE>

In December 1999,  the SEC issued Staff  Accounting  Bulletin No. 101,  "Revenue
Recognition in Financial  Statements" ("SAB No. 101"),  which summarizes certain
of the SEC staff's views in applying generally accepted accounting principles to
revenue  recognition in financial  statements.  The Company is required to adopt
the  accounting  provisions  of SAB No. 101 no later than the  Company's  fourth
quarter of fiscal 2001. The Company does not believe that the  implementation of
SAB No. 101 will have a significant effect on results of operations.

Forward looking statements
This Form 10-QSB 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 business,  the success of
its  B2Bgalaxy.com  investment,  as well as the risk  factors  set  forth in the
Company's  Annual  Report on Form 10KSB for the fiscal year ended May 31,  2000.
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-QSB 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 and Use of Proceeds
None

Item 3.     Defaults upon Senior Securities

None

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

None

Item 5.     Other Information
The Company was advised by the Nasdaq SmallCap Market that the Company's  Common
Stock would be delisted on January 3, 2001 from  trading on the Nasdaq  SmallCap
Market  due to a  failure  to  maintain  a minimum  bid  price of $1.00  over 30
consecutive  trading days. The Company appealed this determination by the Nasdaq
SmallCap  Market and a hearing has been scheduled for Friday,  February 9, 2001.
If the Company's appeal is unsuccessful,  management of the Company will attempt
to take  the  necessary  steps  to allow  its  Common  Stock to trade on the OTC
Bulletin Board System. The Company's Common Stock will also continue to trade on
the  Boston  Stock  Exchange.  However,  the  Company's  Common  Stock  could be
considered a penny stock and be subject to various  regulations which could have
an adverse  effect on the trading  market for and market price of the  Company's
Common Stock.

The Company did not file Form 10-QSB for the quarterly period ended November 30,
2000 in a timely fashion. On January 25, 2001 NASDAQ advised the Company that as
a result of the  filing  delinquency,  effective  Monday  January  29,  2001 the
Company's trading symbol will be changed from CNRS to CNRSE. In addition, NASDAQ
advised the Company has failed to maintain a minimum of two active market makers
over the last 10  consecutive  trading  days as required by the Nasdaq  SmallCap
Market These issues will be considered at the Company's oral hearing on February
9, 2001.

Item 6.     Exhibits and Reports on Form 8-K


                                       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)

                                       /S/ Ken Gruber
Date: January 26, 2001                ------------------------------
                                      Ken Gruber
                                      Executive Vice President
                                      And Chief Financial and Accounting Officer

                                       16