<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                         For the Quarterly Period Ended

                               SEPTEMBER 30, 1998


                         Commission File Number: 0-24005


                           INTERNATIONAL BARTER CORP.
             (Exact name of registrant as specified in its charter)


         Nevada,                                              91-1739746
------------------------                                ------------------------
(Place of Incorporation)                                (IRS Employer ID Number)



            21400 International Blvd. #207, Seattle, Washington 98198
            ---------------------------------------------------------
              (Address of registrant's principal executive office)

                                 (206) 870-9290
                                 --------------
                         (Registrant's telephone number)




Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 of 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 [ ]


 Number of Shares of Common Stock, $0.001 Par Value Outstanding at November 11,
                                 1998 4,975,200



                                       1
<PAGE>   2


                           INTERNATIONAL BARTER CORP.
                              FOR THE QUARTER ENDED
                               SEPTEMBER 30, 1998
                              INDEX TO FORM 10-QSB

<TABLE>
<CAPTION>
                                                                              PAGE
                                                                              ----
<S>                                                                           <C>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements:

         Consolidated Balance Sheets:
         - September 30, 1998 and March 31, 1998................................3

         Consolidated Statements of Operations:
         - For the Three Months and Six Months
           Ended September 30, 1998 and 1997....................................4

         Consolidated Statements of Cash Flow:
         - For the Six Months Ended
           September 30, 1998 and 1997..........................................5

 Notes to Consolidated Financial Statements ....................................6

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

PART II - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds...............................16

</TABLE>


                                       2
<PAGE>   3



                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                      SEPTEMBER 30, 1998 AND MARCH 31, 1998

<TABLE>
<CAPTION>
                                                                                         SEPTEMBER 30,         MARCH 31,
                                                                                            1998                  1998
                                                                                         -----------           -----------
<S>                                                                                      <C>                   <C>        
                                     ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                             $ 1,716,690           $   382,564
   Accounts receivable, net of allowance for
     doubtful accounts of $3,102 and $1,956 for
     September 30, 1998 and March 31, 1998, respectively                                      52,498                63,259
   Notes receivable - current                                                                  2,406                 2,406
   Other current assets                                                                        1,163                   571
                                                                                         -----------           -----------
       Total Current Assets                                                                1,772,757               448,800
                                                                                         -----------           -----------
PROPERTY AND EQUIPMENT, at cost, net of
   accumulated depreciation                                                                   49,914                42,259
                                                                                         -----------           -----------
OTHER ASSETS
   Notes receivable - noncurrent                                                              26,898                32,791
   Prepaid advertising                                                                       147,900                    --
   Other assets                                                                                8,700                 1,200
                                                                                         -----------           -----------
       Total Other Assets                                                                    183,498                33,991
                                                                                         -----------           -----------
                                                                                         $ 2,006,169           $   525,050
                                                                                         ===========           ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                                      $    35,058           $     9,274
   Trade Dollars issued in excess of earned                                                   98,765                 5,439
   Current portion of long-term debt                                                          11,387                13,074
   Other current liabilities                                                                  12,464                 7,683
                                                                                         -----------           -----------
       Total Current Liabilities                                                             157,674                35,470
                                                                                         -----------           -----------
LONG-TERM DEBT                                                                                11,845                19,097
                                                                                         -----------           -----------
STOCKHOLDERS' EQUITY
   Common stock, $.001 par value; authorized 25,000,000 shares; issued and
     outstanding 4,883,200 shares and 3,832,900 shares as of September 30, 1998
     and March 31, 1998, respectively                                                          4,883                 3,833
   Additional paid-in capital                                                              1,084,018               540,618
   Subscribed shares, 800,000 shares and 195,000 shares (giving effect to stock
     split) as of September 30, 1998 and March 31, 1998, respectively                      1,000,000                37,500

   Accumulated deficit                                                                      (252,251)             (111,468)
                                                                                         -----------           -----------

       Total Stockholders'  Equity                                                         1,836,650               470,483
                                                                                         -----------           -----------
                                                                                         $ 2,006,169           $   525,050
                                                                                         ===========           ===========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                       3
<PAGE>   4


                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND
                THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

<TABLE>
<CAPTION>
                                                  THREE                 THREE                  SIX                   SIX
                                                  MONTHS                MONTHS                MONTHS                MONTHS
                                                  9-30-98               9-30-97               9-30-98               9-30-97
                                                -----------           -----------           -----------           -----------
<S>                                             <C>                   <C>                   <C>                   <C>        
REVENUE                                         $   124,745           $   166,799           $   273,256           $   327,485
COST OF SALES                                        17,002                19,947                34,168                66,836
                                                -----------           -----------           -----------           -----------
       Gross Profit                                 107,743               146,852               239,088               260,649
                                                -----------           -----------           -----------           -----------
OPERATING EXPENSES
   Selling, general and administrative              267,656               128,589               390,972               268,239
   Depreciation                                       3,201                 2,270                 5,859                 4,540
                                                -----------           -----------           -----------           -----------
     Total Operating Expenses                       270,857               130,859               396,831               272,779
                                                -----------           -----------           -----------           -----------
Income (Loss) from Operations                      (163,114)               15,993              (157,743)              (12,130)
                                                -----------           -----------           -----------           -----------
OTHER INCOME (EXPENSE)
   Interest income                                   14,091                 1,779                18,330                 3,555
   Interest expense                                    (525)               (1,230)               (1,961)               (2,527)
                                                -----------           -----------           -----------           -----------
     Total Other Income (Expense)-net                13,566                   549                16,369                 1,028
                                                -----------           -----------           -----------           -----------
Net Income (Loss) Before Income Taxes              (149,548)               16,542              (141,374)              (11,102)
Income Tax Expense (Benefit)                             --                    --                  (591)                   --
                                                -----------           -----------           -----------           -----------

Net Income (Loss)                               $  (149,548)          $    16,542           $  (140,783)          $   (11,102)
                                                ===========           ===========           ===========           ===========
Average Common and Equivalent Shares:
   Basic                                          5,683,200             1,550,000             5,227,367             1,550,000
                                                ===========           ===========           ===========           ===========
   Diluted                                        5,683,200             1,550,000             5,227,367             1,550,000
                                                ===========           ===========           ===========           ===========
Net Income (Loss) Per Common Share:
   Basic                                        $      (.03)          $       .01           $      (.03)          $      (.01)
                                                ===========           ===========           ===========           ===========
   Diluted                                      $      (.03)          $       .01           $      (.03)          $      (.01)
                                                ===========           ===========           ===========           ===========

Giving Effect to Stock Split:
Average Common and Equivalent Shares:
   Basic                                                                3,100,000                                   3,100,000
                                                                      ===========                                 ===========
   Diluted                                                              3,100,000                                   3,100,000
                                                                      ===========                                 ===========
Net Income (Loss) Per Common Share:
   Basic                                                              $       .00                                 $      (.00)
                                                                      ===========                                 ===========
   Diluted                                                            $       .00                                 $      (.00)
                                                                      ===========                                 ===========

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       4
<PAGE>   5



                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                          1998                  1997
                                                                      -----------           -----------
<S>                                                                   <C>                   <C>         

CASH USED IN OPERATING ACTIVITIES:
Net loss                                                              $  (140,783)          $   (11,102)
Adjustments to reconcile net loss to cash
   provided by operating activities:
     Depreciation                                                           5,859                 4,540
     Bad debts                                                              1,146                    --
     Deferred income taxes                                                   (591)                 (351)
     Net trade revenue earned over (under) trade costs                    (42,074)              (31,151)
Changes in operating assets and liabilities:
   Accounts receivable                                                      9,615                (1,802)
   Contracts receivable                                                     5,892                   240
   Prepaids and other assets                                              (20,000)                   --
   Accounts payable and other liabilities                                  30,565                 1,555
                                                                      -----------           -----------
       Net Cash Used by Operating Activities                             (150,371)              (38,071)
                                                                      -----------           -----------

CASH USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment                                     (13,514)              (20,358)
                                                                      -----------           -----------
       Net Cash Used by Investing Activities                              (13,514)              (20,358)
                                                                      -----------           -----------

CASH PROVIDED BY FINANCING
   ACTIVITIES:
   Proceeds from sale of common stock                                   1,506,950                    --
   Repayment of notes payable                                              (8,939)              (13,167)
                                                                      -----------           -----------
     Net Cash Provided by Financing Activities                          1,498,011               (13,167)
                                                                      -----------           -----------
   Net Increase (Decrease) in Cash                                      1,334,126               (71,596)
   Cash at Beginning of Period                                            382,564               162,327
                                                                      -----------           -----------
   Cash at End of Period                                              $ 1,716,690           $    90,731
                                                                      ===========           ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid for interest                                             $     1,961           $     2,452
   Cash paid for income taxes                                                  --                    --

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Prepaid advertising and scrip acquired for IBC Trade Dollars          $   135,400           $        --

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.



                                       5
<PAGE>   6


                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 - BASIS OF PRESENTATION

The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.

The results of operations for the three-month and six-month periods ended
September 30, 1998 and 1997 are not necessarily indicative of the results to be
expected for the full year. The Notes to Consolidated Financial Statements
included in the Company's March 31, 1998 registration statement on Form 10-SB
should be read in conjunction with these consolidated financial statements.

2 - TRADE DOLLARS

At September 30, 1998, the Company had expended 98,765 IBC Trade Dollars in
excess of the amount of Trade Dollars earned by the Company. At March 31, 1998,
the Company had expended 5,439 IBC Trade Dollars in excess of the amount of
Trade Dollars earned by the Company. This situation is commonly referred to in
the commercial barter industry as a "negative trade balance". Trade Dollars
expended in excess of earned by the Company is provided for in the IBC Trading
Rules that govern the Exchange. Such provisions allow the Company to expend
Trade Dollars in excess of earned within certain guideline amounts. The Company
would be ultimately obligated to provide goods and services for sale to Exchange
members to offset any amounts of Trade Dollars expended in excess of earned.

3 - CAPITAL STOCK

In July of 1998, the Company received cash for common stock and warrants through
a private placement whereby, 800,000 units were sold at $1.25 per unit. Each
unit consists of one share of common stock and one warrant exercisable at $1.50
per share. The warrants expire June 20, 2000. As of September 30, 1998, the
shares were unissued and thereby classified as subscribed stock. During the
quarter ended September 30, 1998, 195,000 shares of previously unissued
(subscribed) shares were issued. Additionally, warrants were exercised for
649,200 common shares for which the Company received proceeds of $356,300.

On July 9, 1998, the Board of Directors passed a resolution for a 2-for-1 stock
split (split) of the Company's common stock to be distributed to shareholders of
record after the close of market on July 24, 1998. As a result of the split,
$2,020 was reclassified from the "additional paid-in capital" account to the
"common stock" account.

4 - INCOME (LOSS) PER SHARE

During the current fiscal year, the Company adopted FASB Statement No. 128,
Earnings Per Share. Statement 128 requires presentation of basic earnings per
share and diluted earnings per share. Basic earnings per share excludes
potential dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Diluted earnings per share is
computed similarly to fully diluted earnings per share under previous generally
accepted accounting principles in the United States. All prior year earnings per
share data are restated to conform with Statement 128 for consistent
presentation of all years.



                                       6
<PAGE>   7



                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4 - INCOME (LOSS) PER SHARE (CONTINUED)

As explained above, on July 9, 1998, the Board of Directors passed a resolution
for a 2-for-1 stock split of the Company's common stock to be distributed to
shareholders of record after the close of market on July 24, 1998. In order to
properly reflect earnings per share on a prospective basis, the Company has
provided earnings per share disclosures assuming the stock split had occurred
retroactively, along with the earnings per share disclosures based upon actual
shares outstanding as of September 30, 1997 and for the three and six months
ended September 30, 1997.

Following, is a reconciliation of the numerators of the basic and diluted income
(loss) per share for the three months ended September 30, 1998 and 1997 and the
six months ended September 30, 1998 and 1997:

<TABLE>
<CAPTION>
                                                           THREE           THREE         SIX             SIX
                                                           MONTHS         MONTHS       MONTHS           MONTHS
                                                          9-30-98         9-30-97      9-30-98          9-30-97
                                                          --------        --------     --------        ---------
<S>                                                      <C>             <C>          <C>              <C>
Net income (loss) available to
common shareholders                                      $(149,548)        $16,542    $(140,783)        $(11,102)
                                                          ========        ========     ========        =========

Weighted average shares                                  5,683,200       1,550,000    5,227,367        1,550,000
Effect of dilutive securities
  Warrants and options                                           -               -               -               -
                                                          --------        --------     --------        ---------
                                                         5,683,200       1,550,000    5,227,367        1,550,000
                                                          ========        ========     ========        =========
Basic income (loss) per share (based on
   weighted average shares)                                 $(.03)            $.01       $(.03)           $(.01)
                                                          ========        ========     ========        =========
Diluted income (loss) per share                             $(.03)            $.01       $(.03)           $(.01)
                                                          ========        ========     ========        =========

Giving Effect to Stock Split:
Weighted average shares                                                  1,550,000                     1,550,000
Effect of dilutive securities
  Warrants and options                                                           -                             -
                                                                         ---------                     ---------
                                                                         1,550,000                     1,550,000
                                                                         =========                     =========
Basic income (loss) per share (based on
   weighted average shares and giving 
     effect to stock split)                                              $     .00                     $    (.00)
                                                                         =========                     =========
Diluted income (loss) per share (giving 
     effect to stock split)                                              $     .00                     $    (.00)
                                                                         =========                     =========
</TABLE>

5 -  REVENUE

The following table summarizes the cash and trade (consisting of IBC Trade
Dollars) components of revenue for the three months ended September 30, 1998 and
1997 and the six months ended September 30, 1998 and 1997:

<TABLE>
<CAPTION>
                THREE             THREE              SIX              SIX
                MONTHS            MONTHS            MONTHS            MONTHS
               9-30-98           9-30-97           9-30-98           9-30-97
               --------          --------          --------          --------
<S>            <C>               <C>               <C>               <C>     
Trade          $ 62,149          $ 79,208          $134,546          $148,597
Cash             62,596            87,591           138,710           178,888
               --------          --------          --------          --------
               $124,745          $166,799          $273,256          $327,485
               ========          ========          ========          ========

</TABLE>


                                       7
<PAGE>   8


                    INTERNATIONAL BARTER CORP. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6 - STOCK OPTION PLAN

The Company adopted a Stock Option Plan (Plan) effective June 1, 1998 whereby,
stock options for up to 20% of the shares of common stock outstanding may be
granted at the fair market price at the date of grant to Directors, Officers,
Employees and Consultants. Pursuant to the Plan, effective June 1, 1998, the
Company granted 148,500 stock options to eleven individuals and entities;
exercisable at $1.625 per share for up to 5 years.

Additional shares were granted to one employee based upon the following
schedule:

<TABLE>
<CAPTION>
                                          LIMIT ON PERCENTAGE OF SHARES
                                             OUTSTANDING BASED UPON
               OPTION          NUMBER         6,050,000 SHARES OF
               PRICE         OF OPTIONS    COMMON STOCK OUTSTANDING
               -----         ----------    ------------------------
<S>                          <C>           <C>  
               $ 4.00           10,000            0.17%
               $ 6.00           20,000            0.33%
               $ 8.00           40,000            0.66%
               $10.00           80,000            1.32%
               $12.00          160,000            2.64%
               $14.00          320,000            5.29%
</TABLE>


7 - SUBSEQUENT EVENTS

A brokerage account was opened and funded for the sole purpose of repurchasing
up to 250,000 shares of the Company's common stock in the open market. In
October of 1998, 10,900 shares were repurchased for $13,011.



                                       8
<PAGE>   9


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.

RESULTS OF OPERATIONS:

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1997:

OVERALL OPERATING RESULTS

Revenues are generally derived from transaction fees charged (cash and trade)
based upon a percentage of the dollar amount of client trades. Total revenue
decreased 25% to $124,745 in the second quarter of fiscal 1998 from $166,799 in
the second quarter of fiscal 1997. The Company had a net loss from operations of
$163,114 in the second quarter of fiscal 1998 and a net income from operations
of $15,993 in the second quarter of 1997.

 The Company's gross margin decreased to a gross profit of $107,743 in the
second quarter of 1998 from $146,852 in the second quarter of fiscal 1997.The
gross margin in the second quarter of fiscal 1998 was approximately the same as
the gross margin in the second quarter of fiscal 1997. The Company sells
inventory on consignment from its showroom. In the second quarter of fiscal
1997, the Company focused on selling all of its showroom inventories and did not
rebuild them in fiscal 1998. There was therefore, a decrease in revenue from
sales of showroom inventory from fiscal 1997 to 1998.

The Company reported a net loss of $149,548, or $(0.03) per share in the second
quarter of fiscal 1998 and a net income of $16,542, or $0.01 per share ($0.00
per share assuming stock-split) in the second quarter of fiscal 1997.

REVENUE

Total Revenue. Total revenue decreased 25% to $124,745 in the second quarter of
fiscal 1998 from $166,799 in the second quarter of fiscal 1997. Following, is a
summary of the components of revenue for the second quarters of fiscal 1998 and
1997:

<TABLE>
<CAPTION>
                                                1998                      1997
                                              --------                  --------
<S>                                           <C>                       <C>     
Trade                                         $ 62,149                  $ 79,208
Cash                                            62,596                    87,591
                                              --------                  --------
                                              $124,745                  $166,799
                                              ========                  ========
</TABLE>

Trade Exchange Revenue. In the second quarter of fiscal 1998, the Company's
revenue from its core retail trade exchange business was $124,745, down from the
revenue in the second quarter of fiscal 1997. The Company focused on selling all
of its showroom inventories in the second quarter of 1997 and did not rebuild
its inventories in the second quarter of 1998. Total revenues decreased in the
second quarter of fiscal 1998 from the second quarter of fiscal 1997 due to a
planned decrease in showroom inventories.



                                       9
<PAGE>   10


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

COSTS, EXPENSES AND GROSS MARGINS

Costs of Trade Exchange Revenue. Costs of trade exchange revenue decreased to
$17,002 in the second quarter of fiscal 1998 from $19,947 in the second quarter
of fiscal 1997. The gross margin from trade exchange operations was $107,743 in
the second quarter of fiscal 1998 as compared to $146,852 in the second quarter
of fiscal 1997. Costs of trade exchange revenue were 14% of trade exchange
revenue in the second quarter of fiscal 1998 and 12% in the second quarter of
fiscal 1997.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including depreciation) increased from $130,859 in the
second quarter of fiscal 1997 as compared to $270,857 in the second quarter of
fiscal 1998. The increase was primarily attributable to the following factors:

(a)  Significant resources were devoted in the second quarter to the development
     of the "Ubarter" internet site. The Company plans to invest much of its
     available resources into the future development of Ubarter in order to
     attract a significant share of the related internet commerce market.

(b)  Salaries increased due to the addition of several key personnel. Two
     full-time employees were hired to work primarily on the future development
     of Ubarter. A chief financial officer was hired to fill a new position in
     the Company and two new brokers and an Executive Assistant were also hired.

 (c) Additional costs in the second quarter of 1998 which were not incurred in
     the second quarter of 1997, included such items as legal and other
     professional fees for assistance with filings, regulatory matters and
     strategic development, and increased telephone costs.

One of the advantages available to barter businesses is the ability to pay a
significant portion of its operating costs such as graphic design, advertising
and printing using Trade Dollars. The accumulated deficit at September 30, 1998
was $98,765, compared to $5,439 at March 31, 1998.

SIX MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE SIX MONTHS ENDED SEPTEMBER
30, 1997:

OVERALL OPERATING RESULTS

Revenue decreased 17% to $273,256 in the first two quarters of fiscal 1998 from
$327,485 in the first two quarters of fiscal 1997. The Company had a net loss
from operations of $157,743 in the first two quarters of fiscal 1998 and a net
loss from operations of $12,130 in the first two quarters of 1997. The Company's
gross margin decreased to a gross profit of $239,088 in the first two quarters
of 1998 from $260,649 in the first two quarters of fiscal 1997.

The gross margin in the first two quarters of fiscal 1998 was slightly higher
than the gross margin in the first two quarters of fiscal 1997. The Company
sells inventory on consignment from its showroom. In the first two quarters of
fiscal 1997, the Company focused on selling all of its showroom inventories and
did not rebuild them in fiscal 1998. There was therefore, a decrease in revenue
from sales of showroom inventory from fiscal 1997 to 1998. Since the gross
profit on sales of showroom inventory is much lower than from other types of
revenues, the gross margin was higher in the first two quarters of 1998 than it
was in the first two quarters of 1997.

The Company reported a net loss of $140,783, or $(0.03) per share in the first
two quarters of fiscal 1998 and a net loss of $11,102, or $(0.01) per share
($0.00 per share assuming stock-split) in the first two quarters of fiscal 1997.



                                       10
<PAGE>   11


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

REVENUE

Total Revenue. Total revenue decreased 17% to $273,256 in the first two quarters
of fiscal 1998 from $327,485 in the first two quarters of fiscal 1997.
Following, is a summary of the components of revenue for the first two quarters
of fiscal 1998 and 1997:

<TABLE>
<CAPTION>
                                                1998                      1997
                                              --------                  --------
<S>                                           <C>                       <C>     
Trade                                         $134,546                  $148,597
Cash                                           138,710                   178,888
                                              --------                  --------
                                              $273,256                  $327,485
                                              ========                  ========
</TABLE>

Trade Exchange Revenue. In the first two quarters of fiscal 1998, the Company's
revenue from its core retail trade exchange business was $273,256, down from the
revenue in the first two quarters of fiscal 1997. The Company focused on selling
all of its showroom inventories in the first two quarters of 1997 and did not
rebuild its inventories in the first two quarters of 1998. Total revenues
decreased in the first two quarters of fiscal 1998 from the first two quarters
of fiscal 1997 due to a planned decrease in revenues from the sale of showroom
inventories.

COSTS, EXPENSES AND GROSS MARGINS

Costs of Trade Exchange Revenue. Costs of trade exchange revenue decreased to
$34,168 in the first two quarters of fiscal 1998 from $66,836 in the first two
quarters of fiscal 1997. The gross margin from trade exchange operations was
$239,088 in the first two quarters of fiscal 1998 as compared to $260,649 in the
first two quarters of fiscal 1997. Costs of trade exchange revenue were 13% of
trade exchange revenue in the first two quarters of fiscal 1998 and 20% in the
first two quarters of fiscal 1997. The reduced 1998 gross margin is attributable
to the sale of inventory on consignment from the Company's showroom, as
discussed above. Since the gross profit on sales of showroom inventory is much
lower than from other types of revenues, the gross margin was higher in the
first two quarters of 1998 than it was in the first two quarters of 1997.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including depreciation) increased from $272,779 in the
first two quarters of fiscal 1997 as compared to $396,831 in the first two
quarters of fiscal 1998. The increase was primarily attributable to the
following factors:

(a)  Significant resources were devoted in the second quarter to the development
     of the "Ubarter" internet site. The Company plans to invest much of its
     available resources into the future development of Ubarter in order to
     attract a significant share of the related internet commerce market.

(b)  Salaries increased due to the addition of several key personnel. A
     full-time employee was hired to work primarily on the future development of
     Ubarter. A chief financial officer was hired to fill a new position in the
     Company and two new brokers and an Executive Assistant were also hired.

 (c) Additional costs in the first two quarters of 1998, which were not incurred
     in the first two quarters of 1997, included such items as legal and other
     professional fees for assistance with filings, regulatory matters and
     strategic development, and increased telephone costs.

One of the advantages available to barter businesses is the ability to pay a
significant portion of its operating costs such as graphic design, advertising
and printing using Trade Dollars. The accumulated deficit at September 30, 1998
was $98,765, compared to $5,439 at March 31, 1998.



                                       11
<PAGE>   12



           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1998, the Company's working capital was $1,615,083, based on
current assets of $1,772,757 and current liabilities of $157,674. The Company's
working capital ratio at March 31, 1998, was $413,330, based on current assets
of $448,800 and current liabilities of $35,470. The improvement in working
capital resulted primarily from the following factor:

(a)  An increase in the Company's cash to $1,716,690 at September 30, 1998, from
     $382,564 at March 31, 1998. This was primarily attributable to proceeds
     from a private placement of its common stock from which the Company
     received net proceeds of $1,000,000 and the exercise of warrants for which
     the Company received net proceeds of $356,300.

Total stockholders' equity increased to $1,836,650 at September 30, 1998, from
$470,483 at March 31, 1998. This increase was primarily attributable to the
following factor:

(a) Cash of $1,498,011 provided by the financing activities of the Company.

During the first two quarters of 1998, the Company reported net cash used in
operations of $150,371 in the statement of cash flows, as compared to cash used
in operations of $38,071 in the first two quarters of 1997. The decrease in cash
used in operations was primarily attributable to increased salaries and
development costs in the first two quarters of 1998 over the first two quarters
of 1997.



                                       12
<PAGE>   13


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

DEVELOPMENT ACTIVITIES

 UBARTER. "Ubarter.com" (Ubarter) is an internet website for electronic barter
trading that was launched by the Company on July 20, 1998. The software, was at
that time, largely in the development stage and had design flaws that made
transacting trades somewhat cumbersome for the user. As a result, registration
was moderate and the project got off to a slow start. On September 9, 1998, an
updated version was released with major improvements and gave the website a new
"look and feel". The Company intends to invest much of its available resources
into the future development of Ubarter in order to attract a significant share
of the related internet commerce market.

The Company expects to experience negative cash flow and operating losses from
its investment of working capital during the development period, after which
positive cash flow and profitability is expected. Two full time personnel have
been hired by the Company to work almost exclusively on the future development
of Ubarter. The market focus of Ubarter is to draw customers who presently
engage in traditional barter transactions and to attract new customers who may
be unfamiliar with the barter concept but routinely engage in electronic
commerce. The ultimate goal of Ubarter is to provide a central, worldwide
clearinghouse for electronic barter transactions. However, there can be no
assurance that adequate funds from operations or investors will be available to
successfully complete the project as planned.

TRADE EXCHANGE ACQUISITIONS. The Company also intends to devote significant
financial and human resources to a strategic plan of acquiring existing
profitable barter trade exchanges in the United States and in other selected
countries throughout the world. Such acquisitions could result in negative cash
flows and operating losses initially but are expected to provide positive cash
flows and increase the overall profitability of the Company. However, there can
be no assurance that adequate funds will be available to successfully acquire
additional barter trade exchanges as planned.

DISCUSSION OF THE YEAR 2000 ISSUE

Background. Many computer programs have been written using two digits rather
than four to identify the year. Any computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities. This situation is commonly referred as "Y2K".

Scope and Impact of Y2K on the Company.

The Company utilizes both proprietary software and software provided by outside
vendors which may be impacted by the Y2K problem. The operation of the IBC
Retail Trade Exchange is dependent upon the proper functioning of its computer
software. Management has assessed the potential impact of the Y2K issue on the
Company and does not believe that the Company's business, operations or
financial condition will be materially impacted by the Y2K issue as it relates
to the Company's proprietary software. Furthermore, it is expected that
potential impact of third parties' failure would not have a material impact on
the Company's business, operations or financial condition.



                                       13
<PAGE>   14


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Remediation plans. The Company's software vendor has begun reprogramming of its
proprietary software which is approximately 40% completed. The remaining portion
is mainly related to a small segment of data fields. The Company anticipates
that the project will be completed sometime in the first quarter of 1999. The
cost of such reprogramming is not material and is not expected to have a
material effect on the Company's results of operations when incurred. With
respect to software supplied by third parties, the Company has determined that
such software is already Y2K compliant or will be compliant well before the year
2000 or, alternatively, that any such software will be replaced at a cost which
is not material to the Company's results of operations.

Uncertainties and Contingencies. The Company presently believes that with
modifications to existing software and conversions to new software, the Y2K
issue can be mitigated. However, even if such modifications or conversions are
not made, or are not completed timely, the Company would be able to continue
operations manually. This would result in more cumbersome and less efficient
operations but is not expected to have a material effect on the Company's
business, operations or financial condition.

However, there is no guarantee that the software of other companies on which the
Company's software relies will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company and its
operations.

The materiality of the costs of becoming Y2K compliant and the date upon which
the Company plans to complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources,
third party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
from those plans. Specific factors that might cause such differences include,
but are not limited to, the availability and cost of personnel trained in this
area, the ability to locate and correct all relevant computer codes, and similar
uncertainties.


FORWARD LOOKING INFORMATION

Except for disclosures that report the Company's historical results, the
statements set forth in this section contain forward-looking statements. Words
or phrases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project or projected", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the Reform Act).

Actual results could differ materially form those projected in forward-looking
statements. Additional information and factors that could cause actual results
to differ materially from those in the forward-looking statements are set forth
in this Form 10-QSB, and in the section entitled "Risk Factors" in the Company's
Form 10-SB on file with the Securities and Exchange Commission. The Company
desires to take advantage of certain provisions in the Private Securities
Litigation Reform Act of 1995, that provided a safe harbor for forward-looking
statements made by or on behalf of the Company. The Company hereby cautions
stockholders, prospective investors in the Company, and other readers to not
place undue reliance on these forward-looking statements, which can only address
known events as of the date of this report.



                                       14
<PAGE>   15


           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Investors should also be aware of factors that could have a negative impact on
the Company's prospects and the consistency of progress in the areas of revenue
generation, liquidity, and generation of capital resources. These include: 1)
variations in the mix of revenues, 2) possible inability of the Company to
attract investors for its investor securities or otherwise raise adequate funds
from any source, 3) increased governmental regulation of the barter industry,
and 4) a decrease in the cash fees and commissions realized by the Company based
upon a substantial decrease in retail trade exchange transactions.

INFLATION

The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on its
operations in the future.



                                       15
<PAGE>   16


                           PART II - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

During the quarter ended September 30, 1998, warrants were exercised for 649,200
common shares. The issuances of common stock to investors upon exercise of
warrants were deemed to be either exempt from registration under the Securities
Act in reliance on Section 4(2) of the Securities Act as transactions by an
issuer not involving any public offering. The recipients of securities in each
such transaction had pre-existing relationships with the Company, were not
contacted through advertising or general solicitation, and had adequate access,
through their relationships with the Company, to information about the Company.

Pursuant to the Company's 1998 Stock Option Plan, during the quarter ended
September 30, 1998, the Company granted stock options to four employees to
purchase an aggregate total of 30,000 shares at an exercise price of $.937 per
share. The Company also granted stock options to one employee based upon the
following schedule:

<TABLE>
<CAPTION>
                                                         LIMIT ON PERCENTAGE OF SHARES
                                                            OUTSTANDING BASED UPON
                     OPTION         NUMBER                   6,050,000 SHARES OF
                     PRICE          OF OPTIONS             COMMON STOCK OUTSTANDING
                     -----          ----------           ------------------------------
<S>                                 <C>                  <C>  
                     $ 4.00           10,000                       0.17%
                     $ 6.00           20,000                       0.33%
                     $ 8.00           40,000                       0.66%
                     $10.00           80,000                       1.32%
                     $12.00          160,000                       2.64%
                     $14.00          320,000                       5.29%
</TABLE>

The granting of stock options did not require registration under the Securities
Act, or an exemption therefrom, since the grants did not involve a "sale" as the
term is used in Section 2(3) of the Securities Act.

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

27   Financial Data Schedule

No reports on Form 8-K have been filed during the quarter ended September 30,
1998.



                                       16
<PAGE>   17


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.

INTERNATIONAL BARTER CORP.
(Registrant)



Date: November 13, 1998

 /s/ STEVEN WHITE
 ---------------------------------
Steven White, Chairman of the Board of Directors, 
President and Chief Executive Officer 
(principal executive officer and director)

Date: November 13, 1998

/s/ KEVIN R. ANDERSEN
 ---------------------------------
Kevin R. Andersen, Chief Financial Officer (principal
accounting officer)



                                       17