sec document

10KSB/A 1 form10ksba03864_12312000.htm AMENDED ANNUAL REPORT sec document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB/A

(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2000

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ____

Commission file number 1-13587

QUERYOBJECT SYSTEMS CORPORATION
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

Delaware 94-3087939
--------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization

One Expressway Plaza, Suite 208, Roslyn Heights, New York 11577
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (516) 228-8500
--------------

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $.003 per share

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
-- --

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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form10-KSB. o

State the issuer's revenues for its most recent fiscal year: The
issuer's revenues for the fiscal year ended December 31, 2000 were $1,715,841.

The aggregate market value of the voting stock held by
non-affiliates of the Registrant computed by reference to the price at which the
stock was sold on March 23, 2001 was approximately $4,368,000. Solely for the
purposes of this calculation, shares held by directors and officers of the
Registrant have been excluded. Such exclusion should not be deemed a
determination or an admission by the Registrant that such individuals are, in
fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: At April 23, 2001,
there were outstanding 21,972,768 shares of the Registrant's Common Stock, $.003
par value.

Transitional Small Business Disclosure Format (check one):

Yes / / No /X/

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PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
----------------------------------------------------------

MANAGEMENT

The Company's current directors and executive officers are set forth
below. Biographical information concerning them follows. Information is
presented as of April __, 2001.

NAME AGE POSITION

Robert A. Thompson 52 Director, Chief Executive Officer and Chairman of the Board

Joseph M. Valley, Jr. 53 President and Chief Operating Officer

Daniel M. Pess 47 Director, Chief Financial Officer, Executive Vice President and Secretary

Rino Bergonzi 56 Director

Alan W. Kaufman 62 Director

Amy L. Newmark 43 Director

Andre Szykier 55 Director

ROBERT A. THOMPSON has been a director of the Company since May
1999. Mr. Thompson joined the Company in September 1997 as Vice President of
Marketing and became Senior Vice President of Marketing in April 1998. Mr.
Thompson served as President from December 1998 until October 2000. In December
1998, Mr. Thompson became Chief Executive Officer, and in May 1999, Mr. Thompson
became Chairman of the Board. From January 1989 to August 1997, Mr. Thompson was
employed by Cognos Corporation, a provider of client/server tools for data
access, data analysis and application development, most recently as Director of
Marketing Programs. Mr. Thompson holds a B.A.A. in Radio and Television Arts
from Ryerson Politechnical Institute.

JOSEPH M. VALLEY, JR. has been President and Chief Operating Officer
of the Company since October 2000. From November 1998 to October 2000 he served
as Chief Executive Officer and President of MIS AG, USA, a German based software
company. From 1994 to September 1998, Mr. Valley was employed by Momentum
Software Corp., where he served as Chief Executive Officer and President from
January 1996 to September 1998. Prior thereto, Mr. Valley held a variety of
positions at Computer Associates International Inc., from 1986 to 1994,
including Vice President of Global Accounts and he was a Vice President at
Command Computer Corp. from 1984 to 1986. Mr. Valley holds a B.A. in economics
from St. Joseph's University and was a Ph.D candidate at Temple University.

DANIEL M. PESS has been a director of the Company since May 1999.
Mr. Pess joined the Company in July 1994 as Vice President of Finance and
Administration and was promoted to Senior Vice President of Finance and
Administration in October 1997. In December 1998, Mr. Pess became Executive Vice
President and he served as Chief Operating Officer from December 1998 to October
2000. Since December 1996, Mr. Pess has also served as Chief Financial Officer
of the Company and since August 1997, Mr. Pess has served as Secretary of the
Company. From 1991 to July 1994, Mr. Pess was Corporate Controller of Uniforce
Services, Inc., a supplemental staffing company. From 1986 to 1991, Mr. Pess was
employed as Chief Financial Officer and Controller of The Dartmouth Plan, Inc.,
a financial

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institution involved in mortgage and leasing origination, sales and service. Mr.
Pess is a Certified Public Accountant and holds a B.S. in Accounting from C.W.
Post College of Long Island University.

RINO BERGONZI has been a director of the Company since August 1997.
Since November 1993, Mr. Bergonzi has served as Vice President and Division
Executive of Corporate Information Technology Services at AT&T, a worldwide
provider of voice, data and video telecommunications services to large and small
businesses, consumers and government entities. Mr. Bergonzi has 32 years of
experience in the information services field that includes working for such
companies as Western Union, United Parcel Service Information Services and EDS
Corp. Mr. Bergonzi is a director of Cornerstone Internet Solutions Company, a
company that provides internet services.

ALAN W. KAUFMAN has been a director of the Company since August
1997, and was Chairman of the Board from May 1998 to May 1999, and was President
and Chief Executive Officer of the Company from October 1997 to December 1998.
Prior thereto, Mr. Kaufman was an independent consultant from December 1996 to
October 1997. From April 1986 to December 1996, Mr. Kaufman held various
positions with Cheyenne Software, Inc., a provider of storage management,
security and communications software products, including Vice President of
Marketing and Vice President of Sales and Marketing, and served most recently as
Executive Vice President of Sales. Mr. Kaufman is a director of Global
Telecommunication Solutions, Inc., a prepaid phone card company, a director of
NetIQ Corporation, a software company, and was the founding President of the New
York Software Industry Association. Mr. Kaufman holds a BSEE from Tufts
University.

AMY L. NEWMARK has been a director of the Company since May 1998.
She has been an independent investor since October 1997. Ms. Newmark was
Executive Vice President-Strategic Planning of Winstar Communications, Inc., a
competitive local exchange carrier, from April 1995 until September 1997. From
April 1993 to March 1995, Ms. Newmark was a General Partner of Information Age
Partners, LP, a hedge fund, and from 1990 to 1993, Ms. Newmark was President of
Newmark Research, Inc., an investment research and consulting firm. Ms. Newmark
is a director of ParkerVision, a company that has developed and is
commercializing wireless direct conversion radio technology and has designed and
is marketing automated video camera control and production systems, a director
of U.S. Wireless Data, a company involved in wireless electronic transaction
technology, and a director of Verso Technologies, a full service provider of
applications and outsourced information technology. Ms. Newmark is a Chartered
Financial Analyst and graduated magna cum laude from Harvard College.

ANDRE SZYKIER, co-founder of the Company, has been a director of the
company since 1989 and a consultant to the technology industry since December
1998. Mr. Szykier previously served as the Company's Chief Technology Officer
and Executive Vice President from the inception of the Company in February 1989
to December 1998. Prior to co-founding the Company, Mr. Szykier was Director of
Business Research at Pacific Telesis Group, founder and Chief Executive Officer
of Elan Vital Research Ltd., a software engineering and consulting firm, and was
a mathematician at Bell Labs, where he obtained a patent on signal compression
and worked on interplanetary missions. Mr. Szykier is a director of Global
Network Privacy and 3Dfit.com, both privately held companies. Mr. Szykier holds
an M.S. in Applied Statistics from the University of California-Berkeley and a
B.S. in Economics from St. Mary's University.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with
the Securities and Exchange Commission (the "Commission"). Such officers,
directors and 10% stockholders are also required by Commission rules to furnish
the Company with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons, the Company
believes that, except as provided in the next paragraph, during the fiscal year

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ended December 31, 2000, there was compliance with all Section 16(a) filing
requirements applicable to its officers, directors and 10% stockholders.

Robert Thompson and Daniel Pess each were granted options by the
Company to purchase shares of its common stock, $.003 par value (the "Common
Stock"), in February and March 2000 which were not reported on either a Form 4
or Form 5. Messrs. Thompson and Pess are currently in the process of filing a
Form 5 to report these grants.

ITEM 10. EXECUTIVE COMPENSATION
----------------------

The following table sets forth information concerning the
compensation for the fiscal years ended December 31, 2000, 1999 and 1998 paid
and awarded to and earned by the Company's Chief Executive Officer and the
Company's President and Chief Operating Officer and each executive officer whose
salary and bonus exceeded $100,000 with respect to the fiscal year ended
December 31, 2000 (collectively the "Named Executive Officers").

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS

Robert A. Thompson, Chief Executive 2000 $245,000(2) $-------- 63,333
Officer and Chairman of the Board 1999 200,000(3) 50,000 133,333
1998 145,000 45,000 116,667

Joseph M. Valley, Jr. President and Chief
Operating Officer (4) 2000 41,667 -------- 100,000
1999 -------- -------- ---------
1998 -------- -------- ---------

Daniel M. Pess, Executive Vice President 2000 227,654(5) -------- 65,417
and Chief Financial Officer 1999 190,000(6) 40,000 133,333
1998 139,583 30,000 111,667

(1) Certain of the officers of the Company routinely receive other benefits
from the Company, the amounts of which are customary in the industry.
The Company has concluded, after reasonable inquiry, that the aggregate
amounts of such benefits during each of 1998, 1999 and 2000 did not
exceed the lesser of $50,000 or 10% of the compensation set forth above
as to any named individual.

(2) Includes $100,000 paid by the Company's subsidiary, internetQueryObject
Corporation ("IQO") and $20,000 of paid vacation from prior years.

(3) Includes $33,333 paid by IQO.

(4) Mr. Valley's employment with the Company commenced in October 2000.

(5) Includes $95,000 paid by IQO and $22,654 of paid vacation from prior
years.

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(6) Includes $16,625 paid by IQO.

The following table sets forth certain information regarding stock
options granted to the Named Executive Officers during the fiscal year ended
December 31, 2000. The Company has never granted any stock appreciation rights.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS

% OF TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE OR BASE PRICE
NAME GRANTED(#) FISCAL YEAR (Per Share) EXPIRATION DATE

Robert Thompson 33,333 3.5 $6.88 2/02/07
30,000 3.1 8.04 3/22/07
Joseph M. Valley, Jr. 100,000 10.4 2.50 10/22/07
Daniel M. Pess 35,417 3.7 6.88 2/02/07
30,000 3.1 8.04 3/22/07

The following table sets forth certain information regarding the
exercise of options by the Named Executive Officers and the number and value of
unexercised stock options held by the Named Executive Officers as of December
31, 2000.

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STOCK OPTION EXERCISE AND
AGGREGATED FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
SHARES AT OPTIONS AT
ACQUIRED DECEMBER 31, 2000 DECEMBER 31, 2000 (1)
ON VALUE EXERCISABLE/ EXERCISABLE/UNEXERCISABLE
NAME EXERCISE REALIZED (2) UNEXERCISABLE

Robert Thompson ------ $ ------ 189,498/140,502 $0/$0

Joseph M. Valley, Jr. ------ ------ 0/100,000 0/0

Daniel M. Pess 2,083 14,435(2) 189,431/140,569 0/0

(1) Based on the per share closing price of the Common Stock of $1.00 on
the American Stock Exchange on December 31, 2000.

(2) Based on the difference between the option exercise price and the
per share closing price of a share of Common Stock on January 12, 2000, the date
of exercise, as reported on the OTC Bulletin Board.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of
Robert Thompson, its Chairman and Chief Executive Officer, Joseph M. Valley, its
President and Chief Operating Officer, and Daniel M. Pess, its Executive Vice
President and Chief Financial Officer. The employment agreements of Messrs.
Thompson and Pess provide for a term, through December 31, 2001, each with
annual base cash compensation of $225,000. Mr. Valley's employment agreement
provides for an initial term through October 23, 2001, with annual base
compensation of $200,000. Each of Messrs. Thompson, Valley and Pess are also
eligible to receive bonuses if the Company meets certain fiscal year targets
agreed upon in advance by the Board of Directors. Each is entitled to receive
his full salary for 12 months upon termination, unless his employment is
terminated for cause, disability or death. Each have agreed not to compete with
the Company for a period of one year after termination. All such employment
agreements are for full-time employment and are automatically renewable for
additional periods unless either party terminates such employment agreement at
least 60 days prior to the expiration of the initial term or any subsequent
renewal term.

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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------

The following table sets forth information concerning ownership of
the Company's Common Stock as of April 23, 2001 by each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
Common Stock, each director, each executive officer and by all directors and
executive officers of the Company as a group. Unless otherwise indicated, the
address for each such person is in care of the Company, One Expressway Plaza,
Suite 208, Roslyn Heights, New York 11577.

NUMBER OF SHARES
DIRECTORS, EXECUTIVE OFFICERS OF COMMON STOCK
AND 5% STOCKHOLDERS BENEFICIALLY OWNED(1) PERCENTAGE
----------------------------- --------------------- ----------

Barry Rubenstein .......................................... 15,840,792(2) 51.5%
68 Wheatley Road
Brookville, New York 11545

Irwin Lieber .............................................. 9,278,474(3) 35.5%
767 Fifth Avenue, 45th Floor
New York, New York 10153

Barry Fingerhut ........................................... 9,209,724(4) 34.3%
767 Fifth Avenue, 45th Floor
New York, New York 10153

Seth Lieber ............................................... 8,027,328(5) 30.8%
767 Fifth Avenue, 45th Floor
New York, New York 10153

Jonathan Lieber ........................................... 8,027,328(6) 30.8%
767 Fifth Avenue, 45th Floor
New York, New York 10153

Wheatley Foreign Partners, L.P. ........................... 8,026,663(7) 30.8%
c/o Fiduciary Trust
One Capital Place
Snedden Road
P.O. Box 1062
Grand Cayman
British West Indies

Wheatley Partners, L.P. ................................... 8,026,663(7) 30.8%
60 Cutter Mill Road
Great Neck, New York 11021

Seneca Ventures ........................................... 1,886,673(8) 8.1%
68 Wheatley Road
Brookville, New York 11545

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NUMBER OF SHARES
DIRECTORS, EXECUTIVE OFFICERS OF COMMON STOCK
AND 5% STOCKHOLDERS BENEFICIALLY OWNED(1) PERCENTAGE
----------------------------- --------------------- ----------

Woodland Venture Fund ..................................... 1,927,162(9) 8.3%
68 Wheatley Road
Brookville, New York 11545

Woodland Partners ......................................... 1,236,960(10) 5.4%
68 Wheatley Road
Brookville, New York 11545

Marilyn Rubenstein ........................................ 6,197,898(11) 24.1%
68 Wheatley Road
Brookville, New York 11545

Woodland Services Corp. ................................... 3,813,835(12) 15.8%
68 Wheatley Road
Brookville, New York 11545

Dalewood Associates ....................................... 1,296,296(13) 5.9%
One State Street Plaza
24th Floor
New York, New York 10004

Brookwood Partners, L.P. .................................. 1,147,102(14) 5.1%
Brookville, New York 11545

Claudia Rouhana ........................................... 1,666,667(15) 7.2%
5 Prospect Lane
Sands Point, New York 11050

K.B. (CI)Nominees Ltd. .................................... 1,296,296(16) 5.9%
P.O. Box 76
Wests Centre
37 Helier, Jersey
Channel Islands JE4 8PQ

Joseph M. Valley, Jr ...................................... 20,000 (17)

Robert Thompson ........................................... 261,503(18) 1.1%

Daniel M. Pess ............................................ 262,844(19) 1.2%

Rino Bergonzi ............................................. 15,562(18) (17)

Alan W. Kaufman ........................................... 196,971(20) (17)

Amy L. Newmark ............................................ 183,757(21) (17)

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NUMBER OF SHARES
DIRECTORS, EXECUTIVE OFFICERS OF COMMON STOCK
AND 5% STOCKHOLDERS BENEFICIALLY OWNED(1) PERCENTAGE
----------------------------- --------------------- ----------

Andre Szykier ............................................. 113,479(22) (17)

All directors and executive officers as a group (7 persons) 1,054,116(23) 4.6%

(1) A person is deemed to be the beneficial owner of voting securities that
can be acquired by such person within 60 days after April 23, 2001 upon
the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants or convertible securities that are held by such person
(but not those held by any other person) and that are currently
exercisable (i.e., that are exercisable within 60 days after the Record
Date) have been exercised. Unless otherwise noted, the Company believes
that all persons named in the table have sole voting and investment
power with respect to all shares beneficially owned by them.

(2) Based upon information contained in a report on a Schedule 13D filed
jointly by Barry Rubenstein, Wheatley Foreign Partners, L.P. ("Wheatley
Foreign"), Wheatley Partners, L.P. ("Wheatley"), Seneca Ventures
("Seneca"), Woodland Venture Fund ("Woodland Fund"), Woodland Partners,
Rev-Wood Merchant Partners ("Rev-Wood"), Brookwood Partners, L.P.
("Brookwood") and certain other entities with the Securities and
Exchange Commission ("SEC") and a Form 4 filed by Mr. Rubenstein with
the SEC as well as certain other information. Includes 64,237 shares of
Common Stock issuable upon exercise of options held by Mr. Rubenstein
and 740,741 shares issuable upon exercise of warrants held by Mr.
Rubenstein. Also includes (i) 741,782 shares of Common Stock issuable
upon exercise of warrants held by Woodland Partners, (ii) 1,112,153
shares of Common Stock issuable upon exercise of warrants held by
Woodland Fund, (iii) 1,112,153 shares of Common Stock issuable upon
exercise of warrants held by Seneca, (iv) 3,750,108 shares of Common
Stock issuable upon exercise of warrants held by Wheatley, (v) 326,050
shares of Common Stock issuable upon exercise of warrants held by
Wheatley Foreign, (vi) 200,000 shares of Common Stock issuable upon
exercise of options held by Rev-Wood and (vii) 740,740 shares of Common
Stock issuable upon exercise of warrants held by Brookwood. Mr.
Rubenstein disclaims beneficial ownership of the securities held by
Woodland Partners, Woodland Fund, Seneca, Wheatley, Wheatley Foreign,
Rev-Wood, and Brookwood, except to the extent of his respective equity
interests therein.

(3) Based upon information contained in the Wheatley 13D and a Form 4 filed
by Mr. Lieber and certain other information. Includes 68,750 shares of
Common Stock issuable upon exercise of options held by Mr. Lieber and
740,741 shares of Common Stock issuable upon exercise of warrants held
by Mr. Lieber. Also includes (i) 3,750,108 shares of Common Stock
issuable upon exercise of warrants held by Wheatley, and (ii) 326,050
shares of Common Stock issuable upon exercise of warrants held by
Wheatley Foreign, of which Mr. Lieber disclaims beneficial ownership,
except to the extent of his respective equity interests therein.

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(4) bBased upon information contained in the Wheatley 13D and a Form 4 filed
by Mr. Fingerhut and certain other information. Includes 740,741 shares
of Common Stock issuable upon exercise of warrants held by Mr.
Fingerhut. Also includes (i) 3,750,108 shares of Common Stock issuable
upon exercise of warrants held by Wheatley, and (ii) 326,050 shares of
Common Stock issuable upon exercise of warrants held by Wheatley
Foreign. Mr. Fingerhut disclaims beneficial ownership of the securities
held by Wheatley and Wheatley Foreign, except to the extent of his
respective equity interests therein.

(5) Based upon information contained in the Wheatley 13D and a Form 4 filed
by Mr. Lieber. Includes 695 shares of Common Stock issuable upon
exercise of options held by Mr. Lieber. Also includes (i) 3,750,108
shares of Common Stock issuable upon exercise of warrants held by
Wheatley, and (ii) 326,050 shares of Common Stock issuable upon exercise
of warrants held by Wheatley Foreign, of which Mr. Lieber disclaims
beneficial ownership, except to the extent of his respective equity
interests therein.

(6) Based upon information contained in the Wheatley 13D and a Form 4 filed
by Mr. Lieber. Includes 695 shares of Common Stock issuable upon
exercise of options held by Mr. Lieber. Also includes (i) 3,750,108
shares of Common Stock issuable upon exercise of warrants held by
Wheatley, and (ii) 326,050 shares of Common Stock issuable upon exercise
of warrants held by Wheatley Foreign, of which Mr. Lieber disclaims
beneficial ownership, except to the extent of his respective equity
interests therein.

(7) Based upon information contained in the Wheatley 13D and a Form 4 filed
by each of Wheatley and Wheatley Foreign and certain other information.
Includes (i) 3,750,108 shares of Common Stock issuable upon exercise of
warrants held by Wheatley, and (ii) 326,050 shares of Common Stock
issuable upon exercise of warrants held by Wheatley Foreign. Wheatley
Foreign disclaims beneficial ownership of the securities held by
Wheatley and Wheatley disclaims beneficial ownership of the securities
held by Wheatley Foreign.

(8) Based upon information contained in the Wheatley 13D and certain other
information. Includes 1,112,153 shares of Common Stock issuable upon
exercise of warrants held by Seneca.

(9) Based upon information contained in the Wheatley 13D and certain other
information. Includes 1,112,153 shares of Common Stock issuable upon
exercise of warrants held by Woodland Fund.

(10) Based upon information contained in the Wheatley 13D and certain other
information. Includes 741,782 shares of Common Stock issuable upon
exercise of warrants held by Woodland Partners.

(11) Based upon information contained in the Wheatley 13D and certain other
information. Includes (i) 741,782 shares of Common Stock issuable upon
exercise of warrants held by Woodland Partners, (ii) 1,112,153 shares of
Common Stock issuable upon exercise of warrants held by Seneca, (iii)
1,112,153 shares of Common Stock issuable upon exercise of warrants held
by Woodland Fund and, (iv) 740,740 shares of Common Stock issuable upon
exercise of warrants held by Brookwood. Marilyn Rubenstein disclaims
beneficial ownership of the Securities held by Woodland Partners,
Seneca, Woodland Fund and Brookwood except to the extent of her
respective equity interest therein.

(12) Includes (i) 1,112,153 shares of Common Stock issuable upon exercise of
warrants held by Woodland Fund and (ii) 1,112,153 shares of Common Stock
issuable upon exercise of warrants held by Seneca.

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(13) Does not include shares of Common Stock issuable upon exercise of
warrants.

(14) Includes 740,740 shares of Common Stock issuable upon the exercise of
warrants.

(15) Includes 1,111,111 shares of Common Stock issuable upon exercise of
warrants.

(16) Does not include shares of Common Stock issuable upon exercise of
warrants.

(17) Less than 1%.

(18) Consists of shares of Common Stock issuable upon exercise of options.

(19) Includes 260,261 shares of Common Stock issuable upon exercise of
options.

(20) Includes 88,644 shares of Common Stock issuable upon exercise of
options.

(21) Includes 105,562 shares of Common Stock issuable upon exercise of
options.

(22) Includes 104 shares of Common Stock owned by Remy Szykier, Mr. Syzkier's
daughter, and 44,896 shares of Common Stock issuable upon exercise of
options.

(23) Includes 776,428 shares of Common Stock issuable upon exercise of
options.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------

From time to time, the Company has raised capital through the sale
of equity and debt securities. Many of the investors in such offerings have been
officers, directors and entities associated with directors, and beneficial
owners of 5% or more of the Company's securities. In each transaction, such
persons participated on terms no more favorable than those offered to all other
investors.

PREFERRED STOCK PRIVATE PLACEMENTS AND EXERCISE OF WARRANTS

The following table sets forth the Directors and 5% stockholders (or
entities affiliated with 5% stockholders) who exercised warrants, in December
1999 or January 2000, previously acquired in private placements as well as the
number of shares acquired upon exercise of the warrant and the per share
exercise price of the warrant.

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Number of shares Per share
acquired upon exercise price
Name of Director or Stockholder exercise of warrant of warrant
------------------------------- ------------------- --------------
Seneca 50,000 $2.5875
Woodland Fund 37,500 $1.50
Woodland Fund 66,667 $2.5875
Woodland Partners 33,334 $2.5875
Amy L. Newmark 41,667 $1.50
Alan Kaufman 41,667 $1.50
Barry Fingerhut 33,334 $2.5875
Brookwood 16,667 $2.5875
Barry Rubenstein 33,333 $2.5875
Barry Rubenstein 41,667 $1.50

In April 2000, IQO consummated the IQO Series A Private Placement.
The IQO Series A Private Placement consisted of 70 Units (the "IQO Series A
Units") with a gross sales price of $7,000,000. Each IQO Series A Unit consisted
of 125,000 shares of IQO Series A Preferred Stock and a warrant to purchase
125,000 shares of Common Stock at a per share exercise price equal to $1.00. The
IQO Series A Units were sold at a purchase price of $100,000 per Unit and each
share of IQO Series A Preferred Stock is convertible into one share of common
stock of IQO. Among the purchasers in the IQO Series A Private Placement were
the following individuals or entities that beneficially own more than 5% of the
outstanding Common Stock: (i) Barry Fingerhut purchased one IQO Series A Unit,
(ii) Irwin Leiber purchased two IQO Series A Units, (iii) Wheatley purchased 12
IQO Series A Units, (iv) Brookwood purchased one and one half IQO Series A
Units, (v) Seneca purchased one and one half IQO Series A Units, (vi) Woodland
Fund purchased two and six tenths IQO Series A Units and (vii) Woodland Partners
purchased three IQO Series A Units. In addition, Amy Newmark, a Director of the
Company, purchased one half of an IQO Series A Unit.

Between February 2001 and April 2001, the Company consummated a
private placement (the "2001 Private Placement") of an aggregate of 11,611,111
units, each unit consisting of one share of Common Stock and two redeemable
Common Stock purchase warrants at a purchase price of $0.27 per unit. The
warrants are exercisable into Common Stock at any time until February 7, 2006 at
an exercise price of $.485 per share. Among the purchasers in the 2001 Private
Placement were the following individuals or entities that beneficially own more
than 5% of the outstanding Common Stock (i) Wheatley and Wheatley Foreign
(purchased an aggregate of 2,037,037 units), (ii) Seneca and Woodland Fund
(which each purchased 455,556 units), (iii) Woodland Partners (which purchased
370,371 units), (iv) Barry Rubenstein, Barry Fingerhut, Irwin Lieber [and Eli
Oxenhorn] (who each purchased 370,370 units), (v) Brookwood (which purchased
370,371 units), (vi) Dalewood Associates, L.P. (which purchased 1,296,297
units), (vii)K.B. (CI) Nominees Ltd. (which purchased 1,296,297 units and (viii)
Claudia Rouhana (who purchased 555,556 units). In addition, EarlyBirdCapital,
Inc., the placement agent in the 2001 Private Placement received an option which
is exercisable for up to 3,483,333 shares of Common Stock.

Barry Rubenstein, a 5% stockholder, may be deemed to be the
beneficial owner of the units and/or IQO Series A Units acquired by Wheatley,
Wheatley Foreign, Seneca Ventures, Woodland Fund, Woodland Partners and
Brookwood. Barry Fingerhut, Irwin Lieber, Seth Lieber and Jonathan Lieber, each
of whom are 5% Stockholders, may be deemed to be the beneficial owner of the
units and/or IQO Series A Units acquired by Wheatley and Wheatley Foreign.
Marilyn Rubenstein, a 5% Stockholder, may be deemed to be a

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beneficial owner of the units and/or IQO Series A Units acquired by Seneca
Ventures, Brookwood, Woodland Partners and Woodland Fund. Woodland Services
Corp. a 5% Stockholder may be deemed to be the beneficial owner of the units
and/or IQO Series A Units acquired by Woodland Fund and Seneca.

INTERIM FINANCING

In December 2000, Wheatley and Wheatley Foreign purchased an
aggregate of $250,000 principal amount of unsecured promissory notes issued by
the Company. Such promissory notes have been converted into units in the 2001
Private Placement

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

QUERYOBJECT SYSTEMS CORPORATION

Dated: April 24, 2001 By: /s/ Daniel M. Pess
-----------------------------------
Daniel Pess
Executive Vice President and Chief Operating Officer