SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                                       OR

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

             For the transition period from _________ to ___________

                                    333-6440
                            (Commission File Number)

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

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

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

         Securities registered under Section 12(b) of the Exchange Act:

                                          Name of Each Exchange
       Title of Each Class                 on Which Registered

                   N/A                             N/A

        Securities registered under Section 12(g) of the Exchange Act:

                                 Title of Class

                    COMMON STOCK, $0.001 PAR VALUE PER SHARE

     Check whether the issuer: (i) has 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 [ ] No [X]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in this  form,  and no  disclosure  will be
contained, to the best of issuer's knowledge, in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

     The issuer's unaudited revenues for the fiscal year ended December 31, 1999
were approximately $1,200,000.

     The  aggregate   market  value  of  the  issuer's   common  stock  held  by
non-affiliates of the issuer as of March 30, 2000,  computed by reference to the
close price as at March 30, 2000 of $1.53125  of the  issuer's  common  stock as
quoted  on the OTC  Bulletin  Board  service  on such  date,  was  approximately
$7,043,750.

     The number of shares  outstanding of the issuer's  common stock as of March
30, 2000 was 12,500,000.

     Transitional Small Business Disclosure Format: Yes [ ] No [X]



                                     PART I

Item 1.   Description of Business.

     BUSINESS DEVELOPMENT

     Q-Seven  Systems,  Inc.  (formerly known as Downstream  Incorporated - DSI,
"our company" or "we") was  incorporated  in November 1996 under the laws of the
State of Utah to engage in the business of financial  consulting.  In July 1997,
we completed a public  offering of our common  stock,  in which we issued to the
public  1,034,000  shares.  On May 24, 1999, our company and the shareholders of
Q-Seven Systems, Inc., a Nevada corporation ("Q-Seven Nevada"),  entered into an
Agreement and Plan of Share Exchange pursuant to which our company acquired from
Messrs.  Kriependorf,  Kamp and Cordt,  who are now our officers,  directors and
principal  shareholders,  100% of the issued and  outstanding  shares of Q-Seven
Nevada for 7,900,000  newly issued shares of our common stock.  On June 10, 1999
we changed our name from Downstream Incorporated - DSI to Q-Seven Systems, Inc.

     Q-Seven Nevada,  which is now a wholly owned subsidiary of our company, has
been granted by Q-Seven  Systems GmbH (see Item 12 - Certain  Relationships  and
Related  Transactions)  the exclusive right to sell licenses  relating to the so
called Q-Seven User Management  Software which is described in detail below (see
Item 1 - Business of Issuer).  At the end of 1999 Q-Seven  Nevada also owned all
issued and  outstanding  shares of common  stock of X-Real  Intertainment,  Inc.
Ltd., a corporation  organized under the laws of the Bahamas  ("X-Real"),  which
owns and operates six adult entertainment  websites.  See also Item 12 - Certain
Relationships and Related Transactions.  X-Real has since received an investment
of DM 1,000,000 (equals  approximately  $500,000) from Infobridge  International
Ltd., a company  organized under the laws of the Bahamas,  in exchange for which
it  will  issue  a  certain   number  of  shares  of  its  stock  to  Infobridge
International Ltd. Our management expects that the number of shares to be issued
to Infobridge  International Ltd. will be equal to the number of shares that are
currently issued and outstanding. As a result, Q-Seven Nevada will soon own only
50% of X-Real's stock.

     On October 29, 1999, we filed with the Securities  and Exchange  Commission
(the  "Commission") a registration  statement on Form 8-A to register our common
stock under Section 12(g) of the Securities Exchange Act of 1934.

     BUSINESS OF ISSUER

Q-Seven Systems, Inc.

     We sell licenses  relating to a modulized  software suite, the Q-Seven User
Management  Software (the "User Management  Software" or "our  software"),  that
allows  Internet  content  providers to  efficiently  build,  operate and manage
Internet  environments,  especially  entertainment  environments.  Our  software
consists of different  modules  which can be combined and  customized to provide
Internet  solutions  for our  customers'  specific  needs.  The User  Management
Software  has been  developed  and is owned by Q-Seven  Systems  GmbH,  a German
corporation,  which has  granted  us the  exclusive  right to  license  the User
Management  Software to our customers.  Q-Seven Systems GmbH is not a subsidiary
of our  company  but is owned  by  Messrs.  Kriependorf,  Kamp  and  Cordt,  our
officers,   directors  and  principal  shareholders.   See  Item  12  -  Certain
Relationships and Related Transactions. The licenses that we sell with regard to
our  software  allow  our  customers  to use the  User  Management  Software  in
accordance with their respective  license  agreements with us. Our customers pay
us a fee for  the  grant  of such  licenses  and  the use of our  software.  Our
customers  usually  make a  downpayment  on the license fee at the time we grant
them a license to our  software;  the remainder of the license fee is paid to us
in equal installments over a period of one to two years.

     Q-Seven Systems GmbH delivers the User Management Software to our customers
and installs and  configures it on our  customers'  servers.  These services are
included in the license fee that our customers pay to us.  Q-Seven  Systems GmbH
is providing these services to our customers at no charge to us.

     The User Management System is a modulized  software suite which can be used
to  distribute  or sell  products and  services  and collect  payments for those
products and services through the Internet,  and which offers users a system for
the backend administration of various types of e-commerce sites on the Internet.
The software  currently  consists of the following  software modules that can be
combined  and  customized  by  Internet  content  providers  into  any  kind  of
commercial online  entertainment or service system,  including online gaming and
adult  entertainment,  to service  and  handle  user  administration  and online
transactions:

     o Q-7 User Account Management Server;

     o Q-7 Billing Module; and

     o Q-7 Casino Module.

     Our software is designed to allow Internet service  providers to administer
their  sites and  manage  the users of their  sites;  it also  provides a secure
online payment  system.  The User Management  Software  provides  frequent,  and
management  believes,  accurate  feedback  to  the  administrator  of a  website
regarding the customers of such websites and their activities.  Our software can
quickly be integrated into existing  Internet  environments  and allows Internet
service providers to keep up with the rapid pace of technological  change in the
Internet.  The User  Management  Software is designed for the use with  standard
webbrowsers by  non-computer  professionals;  our  management  believes that our
software is so easy to use that even non-computer professionals can administer a
system that utilizes our software.

     The user account  management server is the central module of every Internet
environment  that uses our  software.  It manages not only the  accounts of each
user who uses our customers'  websites but also each user's account balances and
other  information.  Each user can transfer money to his/her  individual account
and can then spend this money on our customer's websites.

     The billing  module is the  interface  between the user account  management
server and any online payment  software that our customers might use.  Currently
it supports only the different payment  mechanisms,  e.g., credit and debit card
payments,  that  EuroDebit  Systems,  Inc.  offers.  See  also  Item 12  Certain
Relationships and Related Transactions.

     The casino  module  allows  online  casino  operators  to create and manage
online  casinos  and offers a variety of online  games.  Numerous  jurisdictions
impose license requirements or other restrictions on, or even ban, the operation
of online  casinos in their  territory.  Our  company  does not  operate  online
casinos,  but only  provides the software  that enables our customers to operate
online casinos in accordance  with  applicable  law. The casino module  software
that we license to our  customers as well as the other parts of our software are
installed and operated on our clients' servers and not on any servers or systems
that belong to us or Q-Seven Systems GmbH. Consequently, our management believes
that our company is not directly affected by laws and regulations prohibiting or
restricting Internet gaming and the operation of online casinos.  However, there
is a high degree of uncertainty regarding the scope and the potential addressees
of Internet gaming regulations,  and regulators could take the position that our
business  falls within the scope of such  regulation  and  initiate  enforcement
actions against us. In addition,  Internet gaming regulation could change in the
future and the laws  could be  tightened,  which  could  affect  our  ability to
license  our casino  module  software.  If criminal  or civil  proceedings  were
initiated  against  us or  the  licensees  of  our  casino  module  software  in
jurisdictions that prohibit or restrict Internet gaming,  such proceedings could
involve substantial  litigation  expenses,  penalties,  fines,  diversion of the
attention of our key executives, injunctions or other prohibitions being invoked
against us or the licensees of our casino  module  software.  Such  proceedings,
their results and the uncertainty  surrounding the regulation of Internet gaming
in general  could  have a material  adverse  effect on our  business,  revenues,
operating results and financial condition. Our management believes that the sale
of licenses to our software,  including the casino module, is in accordance with
currently applicable U.S. Federal and State laws.

     Our  management  believes that our main  competitors  in the area of online
gaming  software  are  Starnet  Communications  International  Inc.,  a Delaware
corporation  ("Starnet"),  Boss  Media AB, a  Swedish  company  ("Boss  Media"),
Microgaming, a South African company ("Microgaming"),  and Cryptologic,  Inc., a
Canadian company ("Cryptologic").

     Starnet's  products are the most common online gaming software  products at
the moment.  They offer the largest  number of different  games.  Our management
believes that Starnet's products differ from our products in the following ways:
Starnet only licenses  co-hosted casinos on their own servers in Antigua,  which
requires  the licensee to obtain an Antigua  gaming  license.  In addition,  our
management  believes that Starnet's  licensees must share up to 40% of their net
gaming revenues with Starnet.  In contrast,  our software runs on our customers'
own servers and our  customers  only pay us a fixed license fee, but do not have
to pay us a percentage of their gaming  revenues.  Our management  believes that
this could make our software more attractive to potential customers.

     Boss Media was one of the first  companies to offer online gaming  software
that featured  multi-player  games.  Our  management  believes that Boss Media's
gaming software also can be used only on Boss Media's own servers in Antigua. In
addition,  our management  believes that Boss Media's  customers are required to
pay a high setup fee and a royalty fee based on a certain  percentage of the net
gaming revenues generated by Boss Media's customers.

     Microgaming  was also  among the first  companies  that  offered  an online
casino software solution.  Our management believes that Microgaming's  customers
are required to pay a certain setup fee and are then charged a royalty fee based
on a certain  percentage of the net gaming revenues  generated by  Microgaming's
customers.  Microgaming  is one of the  companies  with the  highest  number  of
licensees in the online casino software market.

     Cryptologic  offers a software solution for online casinos.  Our management
believes that  Cryptologic  charges its customers a high setup fee and a royalty
fee of up to 50% of the net gaming revenues generated by the customer.

     At this time, we have only licensed our software to five  customers,  i.e.,
Global Net Gamble Ltd., Bahamas,  Futura Internet Services Ltd., Bahamas,  World
Network Ltd., Bahamas,  Setec Astronomy Ltd., Bahamas,  and Advanced Media Group
S.A.,  Dominican  Republic.

     New modules for our software are  currently  being  developed and tested by
Q-Seven Systems GmbH. Our management  believes that some of the new modules will
be completed and available for licensing to our customers in the near future. We
have not spent any amounts on research or the  development of our software.  All
research and  development  activities with respect to our software are conducted
by Q-Seven  Systems GmbH,  which also bears all costs and expenses in connection
with  such  research  and  development   activities.   See  Item  12  -  Certain
Relationships and Related Transactions. Q-Seven Systems GmbH spent approximately
DM 1,500,000 (equals approximately  $750,000) since its inception in 1999 on the
research and development of our software.

     Currently,  neither we nor Q-Seven  Systems  GmbH owns any patents or other
intellectual  property  rights  regarding  the  User  Management  Software.  Our
Management believes that Q-Seven Systems GmbH will apply for the registration of
such intellectual property rights in the near future. Our name "Q-Seven Systems"
and the Q-7 logo  are  currently  not  protected  in the  United  States  by any
trademarks.  Q-Seven  Systems GmbH has filed a trademark  application in Germany
concerning the name "Q-Seven Systems" and the Q-7 logo. We own the rights to the
Internet domain names  "q-sevensystems.com"  and  "q-sevensystems.net."  Q-Seven
Systems GmbH owns the rights to the Internet domain name "q-sevensystems.de."

     At this time, neither we nor Q-Seven Nevada has any employees;  however, we
entered  into a  Consulting  Agreement,  dated May 27,  1999,  with Mr. Barry A.
Ellsworth,  our former  president,  treasurer and director,  who currently  owns
approximately 8% of our common stock.  Pursuant to the Consulting  Agreement Mr.
Ellsworth  was to provide  certain  consulting  services  to our  company  for a
monthly  fee of $2,500.  See also Item 12 - Certain  Relationships  and  Related
Transactions.

X-Real Intertainment, Inc. Ltd.

     Our indirect subsidiary, X-Real Intertainment, Inc. Ltd., owns and operates
six adult entertainment  websites,  which are exclusively directed to viewers in
Germany. Four of these websites operate on a subscription basis.

     The  competition  in the area of adult  entertainment  websites is steadily
increasing. X- Real's sites were some of the first to enter this market, and our
management  believes that some of X-Real's  websites have achieved a significant
market brand recognition in Germany.  Although the number of competitors in this
area is increasing, our management believes that X-Real will be able to maintain
and perhaps extend its market position in Germany.

     German  regulators  impose  strict  regulations  on the  content  of  adult
entertainment  websites that are published on the Internet. An organization with
the name  Jugendschutz.net has been formed in Germany which tries to ensure that
minors  will not be able to gain  access to adult  content of  webpages.  X-Real
cooperates with  Jugendschutz.net as well as the German regulators to maintain a
process for its  wegpages  that ensures that only adults are able to gain access
to the restricted  areas of those  webpages.  Our  management  believes that the
content of  X-Real's  websites  complies  with  German law and that the areas of
X-Real's  webpages  which are accessible for every viewer comply with German law
and are suitable for every viewer.

     X-Real's  websites are  exclusively  directed to viewers in Germany and our
management  believes  that the  restricted  areas of these  websites can only be
accessed  by  German  citizens  since  every  viewer  who  wishes  to visit  the
restricted   areas  of  X-Real's   websites  needs  to  enter  certain  personal
information from his/her official German ID card. The process (the "Verification
Process")  that X-Real uses to ensure that only German adults can gain access to
the  restricted  areas of its  websites  has been  developed  and is provided to
X-Real by Cyberotic Media A.G., which manages the operation of X-Real's websites
for a fee. See also Item 12 - Certain  Relationships  and Related  Transactions.
The  Verification  Process  has  been  developed  with  the  help of the  German
authorities that issue the official German ID cards.  The  Verification  Process
requires every person who would like to gain access to the  restricted  areas of
X-Real's  websites to first  register  with X-Real as a member and pay a certain
membership fee to X-Real. One step in the registration process requires that the
potential new member enter his/her ID card number from his/her  official  German
ID card. This 26 digit alphanumeric  number is based on a certain logical format
and includes  various coded  information,  including the holder's date of birth.
The ID card number also contains certain verification digits that are based on a
certain  mathematical  algorithm.  The Verification  Process allows Cyberotic to
decode the date of birth from the ID number and check, based on the verification
digits,  the  plausibility of the ID card number that was provided.  A potential
new member who enters an ID card number that is not plausible will automatically
be rejected by X-Real as a new member.

     Numerous  jurisdictions  prohibit  and  restrict  the  operation  of  adult
entertainment  websites.  As users of the Internet are located around the globe,
there is uncertainty  regarding  which  government has  jurisdiction to regulate
various  aspects of the Internet  industry.  Regulators  could take the position
that X-Real's  websites  fall within the scope of  regulations  regarding  adult
entertainment  websites imposed by their  jurisdiction and initiate  enforcement
actions against X-Real. In addition,  the regulations in Germany regarding adult
entertainment  websites  could change in the future and laws could be tightened,
which could affect X-Real's  ability to offer its services to the German market.
If criminal or civil  proceedings were initiated against X-Real in jurisdictions
that prohibit or restrict the operation of adult  entertainment  websites,  such
proceedings could involve substantial  litigation  expenses,  penalties,  fines,
diversion  of  the  attention  of  our  key  executives,  injunctions  or  other
prohibitions  being  invoked  against us. Such  changes,  proceedings  and their
results,  and the  uncertainty  surrounding  the  regulation of the operation of
Internet adult  entertainment  websites in general could have a material adverse
affect on X-Real's and our business,  revenues,  operating results and financial
condition.  Our  management  believes  that  the  operation  of  X-Real's  adult
entertainment  websites is in accordance with currently  applicable U.S. Federal
and State laws.

     Neither we nor X-Real own any  intellectual  property rights  regarding the
name "X-Real." X-Real owns the domain names of the six websites that it owns and
operates.

     X-Real, since its inception,  has not conducted any research or development
activities regarding its business and, consequently,  has not spend any funds on
such activities.

     X-Real does not have any  employees.  It utilizes the services of Cyberotic
Media A.G.,  from which it leases the content of its webpages.  Cyberotic  Media
A.G. also manages the operation of X-Real's websites,  provides the Verification
Process  that limits the access to  X-Real's  websites,  updates  the  websites,
collects, through EuroDebit Systems GmbH, the payments of X-Real's customers and
provides  maintenance  services with respect to X-Real's servers.  X-Real pays a
fee to Cyberotic Media A.G. for such services. In 1999 X-Real paid approximately
$295,000  to  Cyberotic  Media  A.G.  for such  services.  Cyberotic  Media A.G.
provides these services and X-Real pays a fee for these services solely based on
oral  agreements  between  Cyberotic  Media A.G. and X-Real.  See also Item 12 -
Certain Relationships and Related Transactions.

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

Item 2.   Description of Property.

     We do not own any real property.  Since August 1999, our world headquarters
has been located in a recently  completed  office building in Monheim,  Germany,
and consists of  approximately  430 square meters of office space. We share this
space   with   Q-Seven   Systems   GmbH,   which   rents  it  from   Mediacenter
Betriebsgesellschaft  mbH. The office space is provided to us by Q-Seven GmbH at
no charge. See also Item 12 - Certain Relationships and Related Transactions. We
do  currently  not  intend  to rent our own  office  space.  The lack of any own
facilities  for our  operations  may work to our  detriment  in the future.  Our
wholly owned subsidiary Q-Seven Systems, Inc., a Nevada corporation,  as well as
our indirect subsidiary X-Real  Intertainment,  Inc. Ltd. share our office space
in Monheim, Germany.

Item 3.   Legal Proceedings.

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

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

     There  were no  matters  submitted  to a vote of the  holders of our common
stock through the solicitation of proxies or otherwise during the fourth quarter
of the fiscal year covered by this report.


                                     PART II

Item 5.   Market For Common Equity and Related Stockholder Matters.

     MARKET INFORMATION

     Prior to June 15, 1999, our common stock was traded on the Over-The-Counter
Bulletin Board under the trading symbol DWNS.  Since that date, our common stock
has traded under the trading symbol QSSY. Our common stock is also traded on the
over-the-counter market of the Frankfurt Stock Exchange under the trading symbol
QSV. From August 1999 through  January 2000, our common stock was also traded on
the over-the-counter market of the Berlin Stock Exchange.

     The following table sets forth high and low bid prices of the shares of our
common stock for the periods  indicated.  Such quotations  reflect  inter-dealer
prices,  without retail  mark-up,  mark-down or commission and may not represent
actual  transactions.  The  quotations  set forth  below  were  provided  by the
Over-The-Counter Bulletin Board.


                                         Bid Prices
                                  High                 Low

     Quarter Ended                          1998

     March 31, 1998                ---*                ---*
     June 30, 1998                 ---*                ---*
     September 30, 1998        $0.375**          $0.15625**
     December 31, 1998        $0.4375**              $0.125



                                            1999
     March 31, 1999              $1.375               $0.25
     June 30, 1999            $2.625***             $0.5***
                               $5.25***             $1.5***
     September 30, 1999        $5.78125            $1.78125
     December 31, 1999           $2.875              $1.125

     --------
     * High and low bid prices are not  available  for our common  stock for the
     first and second quarter of 1998 according to the OTC Bulletin  Board.  The
     prices that were  reported  in our 1998  Annual  Report on Form 10-KSB were
     provided by certain market makers and the National Quotation Bureau.

     ** These  prices  differ  from the prices  that were  provided  in our 1998
     Annual  Report on Form 10-KSB.  The prices used in last years'  report were
     based on  information  that was provided by certain  market  makers and the
     National Quotation Bureau.  This years' information was provided by the OTC
     Bulletin Board.  Our management  believes that the information set forth in
     the table above is the accurate information.

     *** The OTC Bulletin Board provided us with two sets of bid prices for this
     period due to the fact that our  trading  symbol was  changed in the second
     quarter of 1999. The first set of bid prices  reflects the low and high bid
     prices of our common  stock for the time during the second  quarter of 1999
     when it was  traded  under the  symbol  DWNS;  the second set of bid prices
     reflects  the low and high bid  prices  of our  common  stock  for the time
     during the second quarter of 1999 when it was traded under the symbol QSSY.


     HOLDERS

     As of April 5, 2000,  there were  approximately 28 holders of record of our
common stock. Some of these holders were institutions that probably were holding
our stock on behalf of various beneficial owners.

     DIVIDENDS

     We have never paid cash dividends on our common stock and do not anticipate
paying dividends in the foreseeable future.

Item 6.   Management's Discussion and Analysis or Plan of Operation.

     [TO BE COMPLETED  BY AMENDMENT  UPON  COMPLETION  OF OUR AUDITED  FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.]

Item 7.   Financial Statements.

     [TO BE COMPLETED  BY AMENDMENT  UPON  COMPLETION  OF OUR AUDITED  FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.]

Item 8.   Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosure.

     There were no changes in, or  disagreements  with accountants on accounting
and financial disclosure for our two most recent fiscal years.


                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act.

          DIRECTORS AND EXECUTIVE OFFICERS

     As of March 30, 2000, the following directors and executive officers of our
company  hold the  offices  indicated  until  their  successors  are  chosen and
qualified after the next annual meeting of shareholders:


Name                        Age  Title(s)

Philipp S. Kriependorf      26   President, Chief Executive Officer and
                                 Director since  May 1999
Philip Kamp                 26   Vice President, Treasurer and Director since
                                 May 1999
Olaf D. Cordt               28   Secretary and Director since May 1999

     The  following is certain  additional  information  concerning  each of the
executive officers and directors of our company.

PHILIPP SEBASTIAN  KRIEPENDORF serves as President,  Chief Executive Officer and
Director  of our  company.  He also  serves as a  Managing  Director  of Q-Seven
Systems  GmbH and as Director of  EuroDebit  Systems,  Inc.,  a company that has
developed an electronic  on-line  debit-entry  payment and clearing system.  Mr.
Kriependorf   also   serves  as  a   management   consultant   for   Mediacenter
Betriebsgesellschaft  mbH and has  prior  experience  as a project  manager  for
T.N.P./Q-5 Internet Marketing GmbH. Mr. Kriependorf is the chairman of Cyberotic
Media A.G.'s  supervisory  board. Mr.  Kriependorf has studied  economics at the
University of Cologne in Germany.  See also Item 12 - Certain  Relationships and
Related Transactions.

PHILIP KAMP serves as Vice President,  Treasurer and Director of our company. He
also  serves as Chief  Financial  Officer  of  EuroDebit  Systems,  Inc.  and as
Managing Director of EuroDebit Systems GmbH, a 90% owned subsidiary of EuroDebit
Systems,  Inc., of which X-Real, our indirect Bahamian subsidiary,  is currently
the  main  customer.  Mr.  Kamp  also  serves  as a  management  consultant  for
Mediacenter  Betriebsgesellschaft  mbH. Mr. Kamp has previously  worked for D.M.
Griffith,  Inc.  Consulting.  In 1997,  Mr.  Kamp  founded  T.N.P./Q-5  Internet
Marketing GmbH and, in 1999, Cyberotic Media AG. Mr. Kamp has a bachelors degree
in economics,  specializing in international business  administration,  from the
University  of  Utrecht  in  the  Netherlands.   See  also  Item  12  -  Certain
Relationships and Related Transactions.

     OLAF DOMINIK CORDT serves as Secretary and Director of our company. He also
serves as a consultant  for Q-Seven  Systems GmbH and as a Director of EuroDebit
Systems, Inc. He also works as a consultant for Mediacenter Betriebsgesellschaft
mbH. Mr. Cordt has  Internet-related  experience  through his work at T.N.P./Q-5
Internet  Marketing  GmbH, of which he is currently the Managing  Director.  Mr.
Cordt has studied  computer  sciences at the  University of Dortmund in Germany.
See also Item 12 - Certain Relationships and Related Transactions.

     SIGNIFICANT EMPLOYEES

     Our company has  currently no  employees.  We utilize at no charge  certain
employees of Q-Seven Systems GmbH, none of which we would consider a significant
employee.

     FAMILY RELATIONSHIPS

     Our  management  is  not  aware  of  any  family  relationships  among  our
directors,  executive  officers or other  persons  nominated  or chosen by us to
become officers or executive officers of our company.

     INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     Our management is not aware of any material legal proceedings involving any
of our directors,  director  nominees,  promoters or control persons,  including
bankruptcy petitions filed by or against any business of which such person was a
general  partner or executive  officer  either at the time of the  bankruptcy or
within two years prior to that time;  criminal  convictions or pending  criminal
proceedings (excluding traffic violations and other minor offenses);  any order,
judgment or decree,  not  subsequently  reversed,  suspended or vacated,  of any
court of competent jurisdiction,  permanently or temporarily enjoining, barring,
suspending  or  otherwise  limiting  the  involvement  in any type of  business,
securities or banking activities;  any order,  judgment or decree of a competent
jurisdiction  (in a civil  action),  the  Commission  or the  Commodity  Futures
Trading Commission to have violated a federal or state securities or commodities
law, which judgment has not been reversed, suspended or vacated.

     SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities  Exchange Act of 1934 requires our officers
and directors,  and persons who own more than ten percent of a registered  class
of our  common  stock,  to file with the  Commission  reports of  ownership  and
changes in  ownership.  Officers,  directors  and  persons who own more than ten
percent of our common  stock are required to furnish us with copies of all forms
they file pursuant to Section 16(a) of the Exchange Act.

     Based  solely on our review of the copies of such forms  received by us, or
written  representations from certain reporting persons, our management believes
that,  during the fiscal year ended December 31, 1999,  all filing  requirements
applicable to our officers,  directors and more than percent  beneficial  owners
were complied with.

Item 10.  Executive Compensation.

     The following  table  summarizes the total  compensation of (A) our current
President, Chief Executive Officer and Director, Mr. Kriependorf, (B) our former
President,  Treasurer and Director (until May 24, 1999), Mr. Ellsworth,  and (C)
our other most highly compensated executive officers  (collectively,  the "Named
Executive Officers"). At this time, none of our executive officers receives from
us a salary or other  compensation for their services.  Mr.  Kriependorf did not
receive any compensation  from us in 1999. He received,  however,  payments from
our affiliate Mediacenter  Betriebsgesellschaft  mbH, which are reflected in the
compensation  table below. See also Item 12 - Certain  Relationships and Related
Transactions.

<TABLE>
<CAPTION>
                                 Annual Compensation                         Long-Term Compensation
                                                                             Awards                    Payouts
                                                                             Restricted Securities
                                                               Other Annual  Stock      Underlying     LTIP     All Other
Name and Principal Position  Year   Salary          Bonus      Compensation  Award(s)   Optional SARs  Payouts  Compensation
<S>                          <C>    <C>             <C>        <C>           <C>        <C>            <C>      <C>

                                    ($)             ($)        ($)           ($)        (#)            ($)      ($)
(a)                          (b)    (c)             (d)        (e)           (f)        (g)            (h)      (i)

Philipp S. Kriependorf       1999   approximately         0             0          0              0         0             0
President, Chief Executive           $50,000***
Officer and Director*

Barry A. Ellsworth           1999          $6,000         0    $5,000****          0              0         0             0
Director, President and      1998         $22,000   $19,300             0          0              0         0             0
Treasurer**                  1997         $12,000    $2,535             0          0              0         0             0
</TABLE>
--------------
*   Since May 24, 1999.
**  Until May 24, 1999.
*** The amount of DM 100,000 (equals approximately  $50,000) was paid in 1999 to
    Mr.  Kriependorf  by  Mediacenter  Betriebsgesellschaft  mbH.  This  amount
    includes the monetary benefits relating to the use of a car provided to Mr.
    Kriependorf.  Approximately  90% of  this  compensation  was  paid  for his
    services as managing  director of Q-Seven  Systems GmbH.  The remaining 10%
    was paid to Mr.  Kriependorf for services that he provided in 1999 to other
    Internet related  companies owned by Messrs.  Kriependorf,  Kamp and Cordt.
    See also Item 12 - Certain  Relationships  and Related  Transactions.
****This amount was paid to Mr.  Ellsworth  pursuant to a Consulting  Agreement
    with us dated May 27, 1999. See Item 12 - Certain Relationships and Related
    Transactions.


     We have not granted to the Named Executive  Officers during the fiscal year
ended  December  31, 1999 any options or SARs or any  long-term  incentive  plan
awards.

     COMPENSATION OF DIRECTORS

     The members of our Board of Directors do neither  receive any  compensation
from us for their service as directors of our company nor are they reimbursed by
us for actual  expenses  incurred  by them in  attending  our board  meetings or
otherwise.

     EMPLOYMENT  CONTRACTS AND TERMINATION OF EMPLOYMENT,  AND CHANGE IN CONTROL
     ARRANGEMENTS

     There are neither any written employment contracts between us and the Named
Executive Officers nor any compensatory plans or arrangements  involving a Named
Executive Officers exceeding $100,000.  Oral employment  contracts exist between
each of  Messrs.  Kriependorf,  Kamp and  Cordt,  our  officers,  directors  and
principal shareholders,  and Mediacenter  Betriebsgesellschaft  mbH, relating to
services  rendered by Messrs.  Kriependorf,  Kamp and Cordt to Internet  related
companies that are owned by them,  including Q-Seven Systems GmbH. None of these
oral employment agreements provide for an annual compensation exceeding, in each
case,  $100,000.   See  also  Item  12  -  Certain   Relationships  and  Related
Transactions.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The table below sets forth  information,  as of April 5, 2000 (except where
otherwise  indicated),  with respect to the  beneficial  ownership of our common
stock by each person known by us to be the  beneficial  owner of more than 5% of
our outstanding common stock, by each of our directors,  by each Named Executive
Officer and by all of our officers and  directors as a group.  Unless  otherwise
noted,  each such  shareholder  has the sole  investment  and voting  power with
respect to the shares owned.

<TABLE>
<CAPTION>

                                                                               Amount and Nature of Beneficial
                                                                               Ownership of Common Stock as
Title of Class   Name And Address of Beneficial Owner   Position               of April 5, 2000                  Percent of Class
--------------   ------------------------------------   --------               ------------------------------    ----------------
<S>              <C>                                    <C>                    <C>                               <C>

Common Stock,    Philipp S. Kriependorf                 President, Chief       2,633,334 shares                  21.07%
$0.001 par       c/o Q-Seven Systems, Inc., Mittelstr   Executive Officer,
value per share  11-13, D-40789 Monheim, Germany        and Director*          Record and Beneficial

Common Stock,    Philip Kamp                            Vice President,        2,633,333 shares                  21.07%
$0.001 par       c/o Q-Seven Systems, Inc., Mittelstr   Treasurer, and
value per share  11-13, D-40789 Monheim, Germany        Director*              Record and Beneficial

Common Stock,    Olaf D. Cordt                          Secretary and          2,633,333 shares                  21.07%
$0.001 par       c/o Q-Seven Systems, Inc., Mittelstr   Director*
value per share  11-13, D-40789 Monheim, Germany                               Record and Beneficial

Common Stock,    Barry A. Ellsworth                     President, Treasurer   1,021,500 shares***               8.17%***
$0.001 par       6120 W. Tropicana Ave. A16-299,        and Director**
value per share  Las Vegas, NV 89103                                           Record and Beneficial

Common Stock,    All directors and executive officers                          7,900,000 shares                  63.2%
$0.001 par       of our company as a group (3 persons).
value per share                                                                Record and Beneficial
</TABLE>
     ----------
     *        Since May 24, 1999.
     **       Until May 24, 1999.
     ***      As of January 27, 2000.


Item 12.  Certain Relationships and Related Transactions.

     Some of the  stockholders,  directors  and officers of our company are also
controlling  shareholders,  directors  and  officers of other  Internet  related
companies. In certain instances,  our company engages in transactions with these
companies.

     Q-Seven  Systems  GmbH,  a German  corporation  founded  in  February  1999
("Q-Seven  GmbH"),  is  owned  by  Messrs.  Kriependorf,  Kamp  and  Cordt,  our
directors,  officers  and  controlling  shareholders.  Mr.  Kriependorf  is  the
managing  director of Q-Seven GmbH and receives a salary for such  services from
Mediacenter  Betriebsgesellschaft  mbH (see below).  We use at no charge Q-Seven
GmbH's offices in Monheim,  Germany, as well as certain of Q-Seven GmbH's office
equipment (e.g., telephone,  facsimile, etc.). We also utilize free of charge to
us the  services of certain of Q-Seven  GmbH's  employees.  There are no written
agreements  between us and  Q-Seven  GmbH  regarding  the use of Q-Seven  GmbH's
offices,  office equipment and employees.  Q-Seven GmbH owns the User Management
Software  that we  license  to our  customers.  We have  entered  into a License
Agreement with Q-Seven GmbH pursuant to which we have been granted the exclusive
and unlimited right to license the User Management Software to our customers. We
have to pay to Q-Seven  GmbH a royalty fee of 90% of the  revenues  generated by
the sale of licenses regarding the User Management Software.

     EuroDebit  Systems,  Inc,  a Nevada  corporation  which  has  developed  an
electronic on-line  debit-entry  payment and clearing system  ("EuroDebit"),  is
approximately 42% owned by Messrs.  Kriependorf,  Kamp and Cordt, our directors,
officers  and  controlling  shareholders.   EuroDebit  Systems  GmbH,  a  German
corporation ("EuroDebit GmbH"), is a 90% owned subsidiary of EuroDebit.  X-Real,
our indirect  Bahamian  subsidiary,  is currently,  through Cyberotic Media A.G.
(see below), the main customer of EuroDebit GmbH.

     Mediacenter Betriebsgesellschaft mbH, a German corporation ("Mediacenter"),
is owned by Messrs.  Kriependorf,  Kamp and Cordt,  our directors,  officers and
controlling shareholders.  Q-Seven GmbH leases from Mediacenter the office space
in Monheim  that we are using and certain of the office  equipment  that Q-Seven
GmbH and we are using.  Mr.  Kriependorf  is an  employee  of  Mediacenter  and,
pursuant to an oral agreement  between  Mediacenter and Q-Seven Systems GmbH and
an oral employment  agreement between Mediacenter and Mr. Kriependorf,  receives
from  Mediacenter  a salary for his  services  as  Managing  Director of Q-Seven
Systems GmbH. See Item 10 - Executive  Compensation,  in Footnote "***". Messrs.
Kamp  and  Cordt  are  also  employees  of  Mediacenter  and,  pursuant  to oral
employment  agreements with  Mediacenter,  each received in 1999 a salary in the
amount of DM 100,000 (equals  approximately  $50,000) from Mediacenter for their
services to Internet related  companies owned by Messrs.  Kriependorf,  Kamp and
Cordt, including Q-Seven GmbH.

     Cyberotic Media A.G., a German corporation,  which is controlled by Messrs.
Kamp and Cordt,  two of our directors,  officers and  controlling  shareholders,
resells EuroDebit GmbH's services to X-Real,  our indirect Bahamian  subsidiary.
Cyberotic Media A.G. also manages the operations of X-Real,  leases to X-Real to
content for its X-Real websites and provides  maintenance  services with respect
to X-Real's  servers.  Cyberotic Media A.G. provides such services to X-Real and
X-Real  pays  a fee  to  Cyberotic  for  such  services  solely  based  on  oral
agreements.

     In other  instances,  as is the case with  respect to  T.N.P./Q-5  Internet
Marketing  GmbH,  whose  managing  director  is  Mr.  Cordt,  our  Director  and
Secretary,  there are no  intercompany  transactions,  but only  commonality  of
ownership and control.  Because  control of these  companies is held by a common
group of people, under certain  circumstances our company could possibly be held
liable for the debt of one of those other  companies,  if that  company  were to
become  insolvent.  If this were to occur,  it could have a significant  adverse
effect on our business and financial condition.

     Mr. Barry A. Ellsworth was the President and Treasurer of our Company until
May 24, 1999 and currently owns approximately 8% of our common stock. We entered
into a Consulting  Agreement with Mr. Ellsworth dated May 27, 1999,  pursuant to
which Mr. Ellsworth was to provide certain consulting services to us in exchange
for a monthly  fee of  $2,500.

Item 13.  Exhibits, List and Reports on Form 8-K.

          EXHIBITS


EXHIBIT NO.  DESCRIPTION

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

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

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

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

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

10.3         Consulting  Agreement dated May 27, 1999 between Q-Seven Systems,
             Inc. and Mr. Barry A. Ellsworth.*

21.1         Subsidiaries.*

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


     REPORTS ON FORM 8-K

     On November  15,  1999,  we filed with the  Commission  an amendment to our
report on Form 8-K of June 8,  1999,  to amend  and  restate  certain  financial
statements that were filed as exhibits to such report.

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused  this  request to be signed on its behalf by the  undersigned,  thereunto
duly authorized.


                                    Q-SEVEN SYSTEMS, INC.


      Date: April 14, 2000   By:    /s/ Ph. Kriependorf
                                    _________________________
                                    Name:  Philipp S. Kriependorf
                                    Title: President, Chief Executive Officer
                                           and Director


      In  accordance  with the  Exchange  Act,  this report has been
signed  below by the  following  persons  on  behalf  of the  registrant  in the
capacities and the dates indicated.


      Date: April 14, 2000          /s/ Ph. Kriependorf
			            _________________________
                                    Philipp S. Kriependorf
                                    President, Chief Executive Officer
                                    Chief Financial Officer, Chief
                                    Accounting Officer and Director


      Date: April 14, 2000          /s/ Philip Kamp
                                    _________________________
                                    Philip Kamp
                                    Director


      Date: April 14, 2000          /s/ Olaf D. Cordt
                                    _______________________
                                    Olaf D. Cordt
                                    Director




<PAGE>


                                INDEX TO EXHIBITS



EXHIBIT NUMBER      DESCRIPTION OF EXHIBIT

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

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

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

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

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

10.3               Consulting  Agreement  dated May 27,  1999  between  Q-Seven
                   Systems, Inc. and Mr. Barry A. Ellsworth.*

21.1               Subsidiaries.*


   -------
   *    Filed herewith.