<PAGE>

                    U.S. Securities and Exchange Commission
                            Washington, D.C. 20549

                                  FORM 10-QSB

(Mark One)
[X]  Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended September 30, 1999
[ ]  Transition report pursuant section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the transition period from ____________ to _______________

                           INTERACTIVE OBJECTS, INC.
       (Exact name of small business issuer as specified in its charter)

                        Commission file number:  0-25373

           WASHINGTON                                 87-0434226
  (State or other jurisdiction             (IRS Employer Identification No.)
of incorporation or organization)

                        12600 SE 38th Street, Suite 150
                              Bellevue, WA  98006
                   (Address of principal executive offices)

                                (425) 653-5505
                          (Issuer's telephone number)

                          217 Pine Street, Suite 800
                              Seattle, WA  98101
                (Former address of principal executive offices)
                              ___________________

Check whether the issuer  (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and  (2) has been
subject to such filing requirements for the past 90 days.  Yes [X]  No  [ ]

Securities registered under Section 12(b) of the Exchange Act:  None
Securities registered under Section 12(g) of the Exchange Act:  Common Stock,
$.01 par value

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                       DURING THE PRECEDING FIVE YEARS:
Not applicable

                   APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:  As of November 11, 1999, the
Registrant had 14,616,952 shares of Common Stock outstanding.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (check one): Yes [ ]  No [X]

                                       1
<PAGE>

                           INTERACTIVE OBJECTS, INC.
                                  FORM 10-QSB
                   FOR THE QUARTER ENDED SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
Index                                                                Page Number

PART I  FINANCIAL INFORMATION
<S>      <C>                                                         <C>
Item 1.  Consolidated Balance Sheets at September 30, 1999 and
          December 31, 1998                                                    4

         Consolidated Statements of Operations for the three months
          and nine months ended September 30, 1999 and 1998                    5

         Consolidated Statements of Cash Flows for the nine months
          ended September 30, 1999 and 1998                                    6

         Notes to Unaudited Consolidated Financial Statements                  7

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                             8

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                                    13

Item 2.  Changes in Securities                                                13

Item 3.  Defaults Upon Senior Securities                                      13

Item 4.  Submission of Matters to a Vote of Security Holders                  13

Item 5.  Other Information                                                    13

Item 6.  Exhibits and Reports on Form 8-K                                     13

SIGNATURE                                                                     14
</TABLE>

                                       2
<PAGE>

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets at September 30, 1999 and December 31, 1998

Consolidated Statements of Operations for the three months and nine months ended
September 30, 1999 and 1998

Consolidated Statements of Cash Flows for the nine months ended September 30,
1999 and 1998

Notes to Unaudited Consolidated Financial Statements

                                       3
<PAGE>

                           INTERACTIVE OBJECTS, INC.
                          CONSOLIDATED BALANCE SHEETS
                    September 30, 1999 and December 31, 1998

<TABLE>
<CAPTION>
                                                                  September 30, 1999 (1)   December 31, 1998 (2)
           ASSETS
<S>                                                              <C>                         <C>
Current Assets
    Cash                                                           $      1,977,434          $    3,346,535
    Certificate of deposit                                                  109,543                 106,145
    Accounts receivable                                                     232,698                  14,000
    Prepaid expenses                                                        109,862                 154,308
                                                                   ----------------         ---------------

           Total current assets                                           2,429,537               3,620,988

Furniture and Equipment, at cost,
    less accumulated depreciation of $172,136 and $56,495                   393,016                 340,334

Other Assets
    Deposits                                                                  6,935                   6,934
                                                                   ----------------         ---------------

                                                                   $      2,829,488         $     3,968,256
                                                                   ================         ===============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
    Accounts payable                                               $        213,803         $       104,834
    Accrued expenses                                                        145,360                 374,610
    Unearned revenue                                                          5,184
    Current portion long-term debt                                           20,500                  97,017
                                                                   ----------------         ---------------

           Total current liabilities                                        384,847                 576,461

Long-term debt, less current portion                                         61,608                  17,757

Stockholders' Equity
    Common stock                                                            146,169                 155,669
    Additional paid-in capital                                            8,537,409               9,002,909
    Retained deficit                                                     (6,300,545)             (5,784,540)
                                                                   ----------------         ---------------

                                                                          2,383,033               3,374,038
                                                                   ----------------         ---------------

                                                                   $      2,829,488         $     3,968,256
                                                                   ================         ===============
</TABLE>

(1) Unaudited
(2) Audited

                                       4
<PAGE>

                           INTERACTIVE OBJECTS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
     For the Three Months and Nine Months Ended September 30, 1999 and 1998


<TABLE>
<CAPTION>
                                                  Three Months Ended                                 Nine Months Ended

                                    September 30, 1999 (1)   September 30, 1998 (1)   September 30, 1999 (1)  September 30, 1998 (1)

<S>                                 <C>                      <C>                      <C>                     <C>
Revenues
    Service revenue                  $       883,175          $      899,860            $     2,669,101          $    2,716,453

Expenses
    Labor and benefits                       583,789               1,198,679                  2,268,530               3,145,567
    Selling, general and
     administrative                          246,218               1,465,641                    983,944               2,695,377
                                     ---------------          --------------            ---------------           -------------

                                             830,007               2,664,320                  3,252,474               5,840,944
                                     ---------------          --------------            ---------------           -------------

           Income (loss) from
            operations                        53,168              (1,764,460)                  (583,373)             (3,124,491)

    Interest income                           21,463                  61,446                     67,368                  83,513
                                    ----------------          --------------            ---------------           -------------

           Net income (loss)         $        74,631          $   (1,703,014)           $      (516,005)          $  (3,040,978)
                                    ================          ==============            ===============           =============

Basic earnings (loss) per
 share of common stock               $          0.01          $        (0.12)           $         (0.03)          $       (0.22)
                                    ================          ==============            ===============           =============

Diluted earnings (loss) per
 share of common stock               $          0.01          $        (0.12)           $         (0.03)          $       (0.22)
                                    ================          ==============            ===============           =============

Weighted average number of common
    shares outstanding - basic       $    14,616,952         $    14,611,101            $    14,881,421           $  13,741,266
                                    ================         ===============            ===============           =============

Weighted average number of common
    shares outstanding - diluted     $    15,210,102         $    14,611,101            $    14,881,421           $  13,741,266
                                    ================         ===============            ===============           =============
</TABLE>

(1) Unaudited

                                       5
<PAGE>

                           INTERACTIVE OBJECTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
             For the Nine Months Ended September 30, 1999 and 1998

<TABLE>
<CAPTION>
                                                             Sept. 30, 1999 (1)      Sept. 30, 1998 (1)
<S>                                                          <C>                      <C>
Cash Flows From Operating Activities
        Net (loss)                                            $   (516,005)          $  (3,040,978)
        Adjustment to reconcile net (loss) to net cash
           flows from operating activities
        Depreciation                                                74,683                  39,762
        Issuance of stock and stock purchase warrants
           In exchange for services                                                      1,084,840
        Changes in Operating Assets and Liabilities
           Accounts receivable                                    (218,698)               (166,853)
           Prepaid expenses and other                               41,047                (148,483)
           Accounts payable                                        108,969                 205,419
           Accrued expenses                                       (229,250)                 75,042
           Unearned revenue                                          5,184
                                                             -------------            ------------

           Cash Flows from Operating Activities                   (734,070)             (1,951,251)

Cash Flows From Investing Activities
        Purchase of equipment                                     (127,365)               (196,272)
        Capitalized software costs                                                         (35,000)
                                                             -------------            ------------

           Cash Flow from Investing Activities                    (127,365)               (231,272)

Cash Flows From Financing Activities
        Issuance of stock                                                                6,136,040
        Redemption of stock                                       (475,000)
        Distributions                                                                      (46,028)
        Payments on notes payable                                  (32,666)                (40,649)
                                                             -------------            ------------

           Cash Flows from Financing Activities                   (507,666)              6,049,363
                                                             -------------            ------------

           Net increase (decrease) in cash                      (1,369,101)              3,866,840

Cash, beginning of period                                        3,346,535                 214,967
                                                             -------------            ------------

Cash, end of period                                          $   1,977,434            $  4,081,807
                                                             =============            ============
</TABLE>

(1) Unaudited

                                       6
<PAGE>

                           INTERACTIVE OBJECTS, INC.
              Notes to Unaudited Consolidated Financial Statements


Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and therefore do not include
all disclosures necessary for a fair presentation of financial position, results
of operations, and cash flows in conformity with generally accepted accounting
principles.  The unaudited consolidated financial statements include the
accounts of Interactive Objects, Inc. ("Interactive Objects") and its wholly-
owned subsidiary Avatar Interactive, Inc. ("Avatar").  Effective March 31, 1999,
Interactive Objects acquired all of the equity interests of Avatar in exchange
for 858,025 shares of Interactive Objects common stock.  These consolidated
financial statements have been prepared under the pooling of interests method of
accounting and reflect the combined financial position and operating results of
Interactive Objects and Avatar as of and for the three month and nine month
periods ended September 30, 1999 and 1998.  The operating results for interim
periods are unaudited and are not necessarily an indication of the results to be
expected for the full fiscal year.  In the opinion of management, the results of
operations as reported for the interim period reflect all adjustments which are
necessary for a fair presentation of operating results.

Note 2. Per Share Information

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128") which
is effective for interim and annual financial statements for periods ending
after December 15, 1997.  Under FAS 128, basic and diluted earnings per share
are to be presented.  Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding in the period.  Diluted earnings per share takes into consideration
common shares outstanding (computed under basic earnings per share) and
potentially dilutive common shares.  Employee stock options outstanding have
been reflected as exercised for the purposes of computing diluted earnings per
share at September 30, 1999, and this computation resulted in 593,150 additional
shares of common stock outstanding.  Employee stock options outstanding at
September 30, 1998, have not been reflected as exercised since the exercise of
such options would be antidilutive.  Also, stock purchase warrants outstanding
(at September 30, 1999 or 1998) have not been reflected as exercised for the
purposes of computing diluted earnings or loss per share since the exercise of
such warrants would be antidilutive.

                                       7
<PAGE>

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

                           INTERACTIVE OBJECTS, INC.
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATION


Statement of Forward-Looking Information

     Statements contained herein that are not based on historical fact,
including without limitation statements containing the words "believes," "may,"
"will," "estimate," "continue," "anticipates," "intends," "expects" and words of
similar import, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, events or developments to be materially different
from any future results, events or developments expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, both nationally and in the regions in
which the Company operates; technology changes; competition; changes in business
strategy or development plans; the ability to attract and retain qualified
personnel; liability and other claims asserted against the Company; and other
factors referenced in the Company's filings with the Securities and Exchange
Commission. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future results, events or developments.

Overview

     Former Microsoft employees founded Interactive Objects in 1995 to develop
object software for commercial Internet and intranet applications.  Today, the
Company continues to evolve and expand its offerings by leveraging revenue
generating intellectual property and technical talent.  Through its consulting
subsidiary, Avatar Interactive, the Company offers a full range of development
services including custom software solutions, Internet development, software
training, and testing.  The Company's Information Appliances division continues
to develop and mature its research and development efforts for embedded systems.

     The Company was incorporated in the State of Washington in October 1995 and
operated under the name Neoteric Media, Inc., d/b/a Interactive Objects, until
August 1997. In August 1997, pursuant to the terms of an acquisition agreement
with Asia Pacific Chemical Engineering Corp., a publicly-held Utah corporation
with nominal assets and liabilities ("APEC"), Neoteric Media entered into a
business combination with APEC. In the Neoteric Acquisition, the shareholders of
Neoteric Media exchanged their stock for a majority of the then-outstanding
common stock of APEC and Neoteric Media became a wholly-owned subsidiary of APEC
(which changed its name to Interactive Objects). For accounting purposes, the
Neoteric Acquisition was accounted for as a reverse purchase, with Interactive
Objects as the continuing

                                       8
<PAGE>

entity. The Company's audited financial statements include, since August 1997,
the results of APEC operations, which were insignificant.

     From June 30, 1999 to September 30, 1999, the Company's revenues were
derived from its Information Appliance division and its software consulting
division, Avatar Interactive. To date, the Company has provided consulting
services to predominately Fortune 1000 companies, including SAFECO, Microsoft,
Airborne Express, Paccar, Pinnacle, CourtLink, Eddie Bauer and Port Townsend
Paper. The Company's Information Appliances division focuses on emerging
technology and strategic partnering with hardware, software and platform
providers to deliver to consumers the tools they want to work, play, and
function more efficiently. The development of the Microsoft Mobile Audio Player,
the first digital audio player software for the Microsoft Windows CE operating
system, is a direct product of this division's talent and focus. In addition,
the Company completed an ongoing contract with Microsoft for the continuing
development of streaming technology for the Windows CE operating system. With
support for Windows Media Technologies, the Windows Media Audio (WMA) codec, as
well as MP3, the Information Appliances division is positioned on the cutting
edge of digital audio software technology. The Company anticipates that it will
devote further resources to product development for the Information Appliances
division in the remainder of fiscal 1999. All costs incurred in the research and
development of products and enhancements to existing products have been expensed
as incurred.

     In the first quarter of 1998, the Company released two software component
products and acquired a Novell-based software component product. Subsequent to
such acquisition, the Company decided to focus exclusively on Microsoft-based
software component products. The Company also released a suite of seven
components in October 1998. Until recently, the Company has marketed its
products solely through the Internet. As a result of low product sales, the
Company is focusing more attention in 1999 on the expansion of its Information
Appliances division's development and licensing of its intellectual property,
building strategic relationships, and enhancing its software consulting group,
Avatar Interactive.

     Effective October 1998, the Company announced a corporate restructuring
plan. As part of this plan, the Company reduced its employee base from 23 to 13
employees, most of whom were first-level supervisors and administrative staff.
In addition, the Company promoted Steve Wollach, the Company's Chief Financial
Officer and Director, to serve as the Company's President, replacing Matthew
Schiltz. Mr. Schlitz was a consultant hired by the Company in October 1998 to
serve as the interim Chief Executive Officer in connection with the resignation
of Ryan Smith, the former Chief Executive Officer of the Company. Mr. Schiltz
served as an advisor to the Company and its Board of Directors through June
1999. In connection with the restructuring plan, the Company included a
provision for up to $310,000 for severance and settlement payments in connection
with the resignations of Ryan Smith and John Guarino from their positions as
officers and directors of the Company. In the first quarter of 1999, the Company
settled all disputes with Messrs. Smith and Guarino. Also in connection with the
restructuring plan, the Company repriced all outstanding stock options held by
current Company employees and directors to $1.406 per share, the closing trading
price of the Common Stock on the OTC Bulletin Board on November 4, 1998.

                                       9
<PAGE>

     Effective March 31, 1999, the Company acquired Avatar Interactive, Inc., a
Washington corporation ("Avatar").  The acquisition of Avatar was effected by
means of a forward merger of a newly formed Washington corporation and wholly-
owned subsidiary of the Company with and into Avatar.  Avatar became a wholly-
owned subsidiary of the Company.  The merger was accounted for as a pooling-of-
interests.

Results of Operation--Three Month and Nine Month Periods Ended September 30,
1999

     Revenues.  Revenues for the three-month periods ended September 30, 1998
and 1999 decreased by 1.8% from $899,860 to $883,175, respectively. Revenues for
the nine-month periods ended September 30, 1998 and 1999 decreased by 1.7% from
$2,716,453 to $2,669,101, respectively. During the three-month and nine-month
periods ended September 30, 1999, the Company's revenue was generated by its
Information Appliances division and its consulting service group, Avatar
Interactive. The decrease in gross revenue during the three-month and nine-month
periods is attributable primarily to a decrease in consulting services.

     Labor and Benefits Expenses.  Labor and benefits includes all internal
labor costs including salaries, taxes and benefits and other direct costs
related to project performance, such as project specific independent contractor
fees, labor costs, supplies and specific project related expenditures. The
Company's labor and benefits expenses for the three-month periods ended
September 30, 1998 and 1999 decreased by 51.3% from $1,198,679 to $583,789,
respectively. During the nine-month periods ended September 30, 1998 and 1999,
the labor and benefits expenses decreased by 27.9% from $3,145,567 to
$2,268,530, respectively. The decrease in labor and benefits expenses from the
third quarter and first nine months of 1999 compared to the same periods in 1998
was directly attributable to the decrease in consulting services and contract
labor for those services.

     At September 30, 1999, the Company had twelve employees in software
consulting services and product development, three employees in sales and
marketing, and four employees in general and administrative. In addition, the
Company hires independent contractors to service project demand for the
Company's consulting services on a project by project basis, and expects to
continue to staff projects with both Company employees and independent
contractors. The Company expects that it will hire additional staff if and as
needed to meet demand from current clients and prospective clients whose
projects are anticipated to commence within ninety days after hiring.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses for the three-month periods ended September 30, 1998 and
1999 decreased by 83.2% from $1,465,641 to $246,218, respectively.  During the
nine-month periods ended September 30, 1998 and 1999, the selling, general and
administrative expenses decreased by 63.5% from $2,695,377 to $983,944,
respectively.  In each period, these expenses consisted primarily of employee
recruiting, travel, professional fees, occupancy costs, telephone and related
Internet connectivity fees, computer network costs, office expenses and
supplies, marketing, advertising and new business development costs. Overall,
selling, general and administrative expenses as a percentage of gross revenue
were 27.9% for the three-month period ended September 30, 1999 as compared to
162.9% for the same period in 1998. Selling, general and administrative expenses
as a percentage of gross revenue were 36.9% for the nine-month period ended
September 30,

                                       10
<PAGE>

1999 as compared to 99.2% for the same period in 1998. Selling, general and
administrative expenses decreased due to decreased staffing, investment in
infrastructure and associated expenses. The Company believes that its selling,
general and administrative expenses will increase in dollar amount for the
remainder of fiscal 1999 as a result of an anticipated expansion of the
Company's administrative staff required to support its growing operations and as
a result of an increase in expenses associated with being an Exchange Act
reporting company.

     Interest Income.  Interest income for the three-month periods ended
September 30, 1998 and 1999 decreased by 65.1% from $61,446 to $21,463,
respectively. This decrease was primarily due to lower available cash balances
due to the use of funds for working capital purposes. Interest income for the
nine-month periods ended September 30, 1998 and 1999 decreased by 19.3% from
$83,513 to $67,368, respectively. This decrease was primarily due to lower
available balances from the proceeds from the Company's financing in May 1998.

     Net Loss/Income.  The Company recognized net income for the three-month
period ended September 30, 1999 of $74,631 compared to a net loss of $1,703,014
for the same period in 1998. The Company recognized a net loss of $516,005 for
the nine-month period ended September 30, 1999 compared to a net loss of
$3,040,978 for the same period in 1998. Net income as a percentage of gross
revenue was 8.5% for the three-month period ended September 30, 1999 as compared
to a net loss as a percentage of revenue of 189.3% for the same period in 1998.
Net loss as a percentage of gross revenue was 19.3% for the nine-month period
ended September 30, 1999 as compared with a net loss as a percentage of gross
revenue of 111.9% for the same period in 1998. The change for both comparable
periods is due primarily to decreased labor and benefits costs and general and
administrative costs.

Liquidity and Capital Resources

     At September 30, 1999, the Company had working capital of $2,044,690
compared with working capital of $3,044,527 at December 31, 1998. At September
30, 1999, the Company had cash and cash equivalents of $2,429,537.

     During the first nine months of 1999, total cash used in operating
activities was $734,070, which was principally due to the Company's net loss for
the period partially offset by depreciation and accounts payable. During the
first nine months of 1998, total cash used in operating activities was
$1,951,251, which was primarily due to the Company's net loss for the period
partially offset by the issuance of stock and stock purchase warrants in
exchange for services. During the first nine months of 1999, investing
activities used net cash of $127,365 for purchases of equipment. During the
first nine months of 1998, investing activities used net cash of $231,272 for
purchases of equipment and capitalization of software costs. During the first
nine months of 1999, total cash used in financing activities was $507,666 which
represents redemption of stock and payments on notes payable. During the first
nine months of 1998, financing activities provided cash of $6,049,363 primarily
from the issuance of common stock offset by distributions and payments on notes
payable.

  Based on the Company's current proposed plans and assumptions relating to
product releases and sales, the Company anticipates that it will not require
additional capital financing

                                       11
<PAGE>

through the second quarter of 2000. If the Company's plans change or its
assumptions prove to be inaccurate, the Company may be required to seek
additional equity and/or debt financing sooner than currently anticipated. The
Company has no current arrangements related to additional financing. There can
be no assurance that any additional financing will be available to the Company
when needed, on commercially reasonable terms, or at all.

Certain Accounting Pronouncements

     Statement of Financial Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities" established accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
133 has no impact on the Company's financial statements because the Company does
not currently engage in any derivatives or hedging activities.

     Statement of Financial Standards No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise" does not apply to the Company.

Year 2000 Compliance

     Many companies are currently expending significant resources in order to
address the "Year 2000" issue.  Expenditures to address the Year 2000 issue
often involve the modification of legacy and other existing software systems
rather than the development of new systems.  Because of the size of such
expenditures, companies may defer or cancel other new software development
projects for which such companies might otherwise have purchased products from
the Company or engaged the Company for consulting. Any reductions in revenues to
the Company resulting from other companies' focus on the Year 2000 issue could
have a materially adverse effect on the Company's business, results of
operations, and financial condition.

     The Company has commenced a review of its internal information technology
("IT") and non-IT systems.  The objective of the review is to address necessary
code changes, testing and implementation with the objective of taking corrective
action based on the results of such review. The Company could be materially and
adversely affected by costs or complications relating to code changes, testing
and implementation for its own systems or similar issues faced by its
distributors, suppliers, customers, vendors and the financial service
organizations with which the Company interacts.  At this time, the Company does
not expect the costs related to achieving Year 2000 compliance will be material.

     The Year 2000 issue could affect the products that the Company sells.  The
Company has reviewed its current products and believes that its products are
Year 2000 compliant and that the Year 2000 issue will not materially impact the
Company.  However, to the extent that the Company's products prove to be non-
compliant or in the event of any dispute with any customer regarding whether the
Company's products are compliant, the Company's business, results of operations
and financial condition could be materially and adversely affected.

                                       12
<PAGE>

     The forward looking statements referenced above are subject to a number of
risks and uncertainties, including the abilities of customers, vendors and other
third parties to solve timely their Year 2000 issues, the accuracy of Year 2000
testing methods, and that remediation of Year 2000 issues will be correctly
implemented. The Company does not have a contingency plan to address unexpected
Year 2000 issues.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings

     The Company has been served with a complaint filed by Jay Paulson in King
County Superior Court in the State of Washington on November 18, 1998 (case no.
98-2-27751-1SEA) for declaratory and injunctive relief and unspecified damages
in connection with a requested transfer of restricted securities held by Mr.
Paulson.   On November 9, 1999, Mr. Paulson filed a motion for voluntary
dismissal of this lawsuit.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits.

<TABLE>
<CAPTION>
Exhibit No.                           Description
-----------  -------------------------------------------------------------------
<S>          <C>
10.2         Lease between Interactive Objects, Inc. and Sterling Realty
             Organization Co., effective November 1, 1999.

27.1         Financial Data Schedule.
</TABLE>

(b)  Reports on Form 8-K.

     None.

                                       13
<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.

                                       INTERACTIVE OBJECTS, INC.


Dated:  November 11, 1999              By: /s/ Steven G. Wollach
                                          -----------------------------------
                                           Steven G. Wollach
                                           President, Chief Executive Officer,
                                           Chief Financial Officer and Treasurer
                                           (Principal Executive, Financial
                                           and Accounting Officer)

                                       14