SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                AMENDMENT NO. 1
                                       TO
                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

              [ ] 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 0-7619

                          POWERSOFT TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its charter)

           Delaware                                               93-063633 
(State or other jurisdiction of                               (I.R.S. Employer
  corporation or organization)                               Identification No.)

650 West Georgia Street, Suite 1088, Vancouver, British Columbia Canada V6B 4N8
(Address of principal executive offices)                              (Zip Code)
 

Registrant's telephone number, including area code (604) 685-8318

Heng Fai China Industries, Inc.
(Former name, former address and former fiscal year, if changed since last
report.)

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___ No _X_

15,559,542 shares of common stock, $.01 par value, were issued and outstanding
as of June 30, 1998.

<PAGE>

                          POWERSOFT TECHNOLOGIES, INC.

                                    FORM 10-Q

                                     FOR THE
                           QUARTER ENDED JUNE 30, 1998

                                      INDEX

PART I. FINANCIAL INFORMATION                                               PAGE

Item 1. Financial Statements...........................................        1

        Condensed Consolidated Balance Sheets as at
        June 30, 1998 and December 31, 1997............................        2

        Condensed Consolidated Statements of Operations for the
        six months and three months ended June 30, 1998 and 1997.......        3

        Condensed Consolidated Statements of Cash Flows for the
        six months ended June 30, 1998 and 1997........................        4

        Condensed Consolidated Statement of Shareholders' Equity for 
        the six months and three months ended June 30, 1998 and 1997...        5

        Notes to the Condensed Consolidated Financial Statements.......        6

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

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings..............................................       14
Item 2. Changes in Securities..........................................       14
Item 3. Defaults Upon Senior Securities................................       14
Item 4. Submission of Matters to a Vote of Security Holders............       14
Item 5. Other Information..............................................       14
Item 6. Exhibits and Reports on Form 8-K...............................       14

Signature Page.........................................................       15


                                       I

<PAGE>

                         PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

      The following financial statements of Heng Fai China Industries, Inc. (the
      "Company") are provided herewith:

      (a)   Condensed Consolidated Balance Sheets as at June 30, 1998 and
            December 31, 1997;

      (b)   Condensed Consolidated Statements of Operations for the six months
            and three months ended June 30, 1998 and 1997;

      (c)   Condensed Consolidated Statements of Cash Flows for the six months
            ended June 30, 1998 and 1997;

      (d)   Condensed Consolidated Statement of Stockholders' Equity for the six
            months ended June 30, 1998 and 1997; and

      (e)   Notes to the Condensed Consolidated Financial Statements.


                                       1


<PAGE>

                         Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
                     Condensed Consolidated Balance Sheets
                                  (Unaudited)
                             (United States Dollars)

                                     ASSETS

                                                       June 30,     December 31,
                                                         1998          1997
                                                     -----------    ------------
Current assets:
    Cash and cash equivalents                        $    51,911    $    36,173
    Available-for-sale securities (Note 3)             1,034,421      1,507,345
    Accounts receivable, trade, less
      allowance for doubtful
      accounts of $nil                                    27,276          7,521
    Prepaid and other current assets                      23,248         32,153
    Amounts receivable from related parties               38,035         18,950
                                                     -----------    -----------
       Total current assets                            1,174,891      1,602,142
Property, plant and equipment, net                       764,622        785,920
                                                     -----------    -----------
                                                     $ 1,939,513    $ 2,388,062
                                                     ===========    ===========

                 LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

Current liabilities:
    Current portion of mortgage
       loans payable                                 $   134,903    $   115,251
    Accounts payable and accrued expenses                112,631        148,948
    Margin loan payable (Note 3)                       3,191,641      3,058,295
    Interest payable                                      29,504         43,319
    Security deposits payable                             11,458         11,190
    Amounts payable to related parties                 1,229,814        904,756
                                                     -----------    -----------
       Total current liabilities                       4,779,951      4,281,759
                                                     -----------    -----------

Long-term liabilities:
    Mortgage loans payable (Note 4)                      808,253        837,966
                                                     -----------    -----------
       Total long-term liabilities                       808,253        837,966
                                                     -----------    -----------

Commitments and contingencies

Shareholders' (deficit) equity:
    Preferred stock, $5 par value, 25,000,000
      shares authorized, unissued
    Common stock, $.01 par value, 30,000,000
      shares authorized; issued and
      outstanding 1998 and 1997: 15,559,542
      shares                                             155,596        155,595
    Contributed surplus                                5,385,296      5,385,296
    Unrealized loss on available-
      for-sale securities (Note 3)                    (2,752,438)    (2,307,267)
    Cumulative exchange adjustments                      (28,894)         1,516
    Accumulated deficit                               (6,408,251)    (5,904,303)
                                                     -----------    -----------
                                                      (3,648,691)    (2,669,163)
     Common stock issued for consulting
       services to be received                                          (62,500)
                                                     -----------    -----------
       Total shareholders'(deficit) equity            (3,648,691)    (2,731,663)
                                                     -----------    -----------
       Total liabilities and shareholders'
         (deficit) equity                            $ 1,939,513    $ 2,388,062
                                                     ===========    ===========

   See accompanying notes to the Condensed Consolidated Financial Statements.


                                       2
<PAGE>

                         Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
                 Condensed Consolidated Statement of Operations
                                  (Unaudited)
                             (United States Dollars)

<TABLE>
<CAPTION>
                                      Six Months Ended June 30,      Three Months Ended June 30,
                                    ----------------------------    ----------------------------
                                        1998            1997            1998            1997
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>         
Revenues:
    Rental income                   $    172,751    $    171,676    $     85,196    $     86,937
    Investment income                      2,879         109,212             269          31,131
    Other Income                               0           4,052               0           2,225
                                    ------------    ------------    ------------    ------------
       Total revenues                    175,630         284,940          85,465         120,293
                                    ------------    ------------    ------------    ------------
Expenses:
    Depreciation                          21,294          17,410          11,085           9,214
    Legal and professional fees            4,317          43,479           3,149          33,932
    Consulting fees                       62,500         176,000               0          88,000
    Consulting fees paid to a
      related company                    250,000         250,000         125,000         125,000
    Interest expense                     214,505         123,268         125,624          92,918
    Foreign exchange (gain)
      loss                                     0          37,594               0          45,544
    Land lease                            38,173          40,161          18,965          20,081
    Rental real estate
      management fees                     12,146          18,827           6,942          14,738
    Salaries                                   0           4,527               0               0
    Other operating and
      administrative expenses             76,642         345,975          31,339         192,450
                                    ------------    ------------    ------------    ------------
       Total expenses                    679,577       1,057,241         322,104         621,877
                                    ------------    ------------    ------------    ------------
Net loss from continuing
  operations                            (503,947)       (772,301)       (236,639)       (501,584)
                                    ------------    ------------    ------------    ------------
Discontinued operations
  Cangzhou cement                                         70,583                          38,024
  Wuhan container                                        218,245                         132,234
                                                    ------------                    ------------
  Net income (loss) from 
    discontinued operations                              288,828                         170,258            
                                                    ------------                    ------------ 
                                                                                                 
Net loss before minority                  
  interest                              (503,947)     (1,061,129)       (236,639)       (671,842)
                                   
Minority interest from             
  discontinued operations                                 74,464                          41,332   
                                    ------------   -------------    ------------    ------------
Net loss                            $   (503,947)   $   (986,665)   $   (236,639)   $   (630,510)                   
                                    ============    ============    ============    ============

Earnings (loss) per share (basic):                                                                 
  From continuing operations        $     (0.032)   $     (0.057)   $     (0.015)   $     (0.036)    
  Effect of discontinued              
    operations                             0.000          (0.079)              0          (0.048)    
                                    ------------    ------------    ------------    ------------     
   Net loss per share               $     (0.032)   $     (0.136)   $     (0.015)   $     (0.084)    
                                    ============    ============    ============    ============     
Weighted average number                                                                           
  of shares of common stock                                                                        
  outstanding                         15,559,542      13,486,814      15,559,542      13,853,481
                                    ============    ============    ============    ============
</TABLE>                                                                        

   See accompanying notes to the Condensed Consolidated Financial Statements.


                                       3

<PAGE>

                         Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
                 Condensed Consolidated Statement of Cash Flows
                                  (Unaudited)
                             (United States Dollars)

                                                       Six Months Ended June 30,
                                                     ---------------------------
                                                         1998           1997
                                                     ------------   ------------
Cash flows from operating activities
  Net loss                                           $  (503,947)   $  (986,665)
  Adjustments to reconcile net loss
    to net cash used in operating activities:
    Minority interest                                          0        (74,464)
    Depreciation and amortization                         21,294        130,465
    Consulting fee paid in common stock                   62,500        176,000
  Changes in working capital components:
    Accounts receivable                                  (19,755)    (3,022,841)
    Inventories                                                0      2,237,312
    Prepaid and other current assets                       8,905     (1,175,875)
    Amounts receivable from related parties              (19,085)    (1,829,235)
    Value added  taxes recoverable                                      427,369
    Prepaid rental                                                       14,458
    Accounts payable and accrued expenses                (36,317)       896,115
    Bills payable                                                      (481,927)
    Accrued interest                                     (13,815)         5,024
    Security deposits payable                                268           (816)
    Amounts due to related parties                       395,058       (516,386)
    Exchange difference                                   (2,653)             0
                                                     -----------    -----------
    Net cash used in operating activities               (107,547)    (4,201,466)
                                                     -----------    -----------
Cash flows from investing activities:
  Purchase of available-for-sale securities                          (4,367,238)
  Proceeds from sale of available-for-sale                         
    securities                                                        2,445,150
  Purchases of property, plant and                                 
    equipment                                                           (50,842)
                                                                    -----------
    Net cash used in investing activities                            (1,972,930)
                                                                    -----------
Cash flow from financing activities:                                 
  Common stock issued for cash                                        1,620,000
  Increase in short-term borrowings                                   3,056,533
  Increase in margin loan payable                        133,346      1,498,293
  Mortgage loan repaid                                   (10,061)        (9,902)
                                                     -----------    -----------
    Net cash provided by (used in) financing
      activities                                         123,285      6,164,944
                                                     -----------    -----------
Net increase (decrease) in cash and
  cash equivalents                                        15,738         (9,452)
  Cash and cash equivalents, beginning of
    the period                                            36,173        170,259
                                                     -----------    -----------
  Cash and cash equivalents, end of the period       $    51,911    $   160,807
                                                     ===========    ===========
Analysis of the balance of cash and
  cash equivalents
    Bank balances and cash                           $    51,911    $   160,807
                                                     ===========    ===========

   See accompanying notes to the Condensed Consolidated Financial Statements.


                                       4

<PAGE>

                         Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
            Condensed Consolidated Statement of Shareholders' Equity
                                  (Unaudited)
                             (United States Dollars)

<TABLE>
<CAPTION>
                                     Six Months Ended June 30,        Three Months Ended June 30,
                                    --------------------------        ---------------------------
                                        1998          1997                1998          1997
                                    -----------    -----------        -----------    -----------
<S>                                 <C>             <C>                   <C>             <C>         
Balance, beginning                  $(2,731,663)   $     3,370        $(3,167,046)   $   643,104
                                    -----------    -----------        -----------    -----------
                                                                     
Comprehensive income (loss):                                         
                                                                     
  Net loss                             (503,947)      (986,665)          (236,639)      (630,510)
                                                                     
  Reversal of expense for                                            
    common stock issued                                              
    for services                         62,500        176,000                  0         88,000
                                                                     
  Change in cummulative                                              
    exchange adjustment                 (30,410)             0            (26,120)             0
                                                                     
  Change in net unrealized loss        (445,171)     1,985,497           (218,886)     2,097,608
                                    -----------    -----------        -----------    -----------
                                                                     
    Comprehensive income (loss)        (917,028)     1,174,832           (481,645)     1,555,098
                                    -----------    -----------        -----------    -----------
                                                                     
Proceeds from private placement                      1,620,000                           600,000       
                                    -----------    -----------        -----------    -----------
                                                                     
Balance, June 30, 1998              $(3,648,691)   $ 2,798,202        $(3,648,691)   $ 2,798,202
                                    ===========    ===========        ===========    ===========
</TABLE>

   See accompanying notes to the Condensed Consolidated Financial Statements.


                                       5
<PAGE>

                          Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
        Notes to Condensed Consolidated Financial StatementsJune 30, 1998

                                   (Unaudited)

1.  BASIS OF PRESENTATION

The  condensed  consolidated  financial  statements  include the accounts of the
Company and its wholly owned subsidiaries.  The condensed consolidated financial
statements  included  herein have been prepared by the Company,  without  audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company  believes that the  disclosures are adequate to make the information
presented not misleading.  The condensed  consolidated  financial statements and
the notes thereto should be read in conjunction with the consolidated  financial
statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended  December 31, 1997. In the opinion of the  management of the Company,  the
accompanying  condensed  consolidated financial statements contain all necessary
adjustments to present fairly the financial position,  the results of operations
and cash flows for the periods reported.  All adjustments are a normal recurring
nature.

The results of  operations  for the six month  periods  and three month  periods
ended June 30, 1998 and June 30, 1997,  are not  necessarily  indicative  of the
results to be expected for the full year.

The  condensed  statements  of  operations  for  the  six-month  period  and the
three-month period ended June 30, 1997, have been reclassified to conform to the
1998 presentation.

2. CONTINUING OPERATIONS

These  condensed  consolidated  financial  statements  have been prepared on the
going  concern  basis of  accounting  which assumes the Company will realize its
assets and  discharge  its  liabilities  in the normal  course of business.  The
Company is currently operating at a loss and has minimal in net tangible assets.
Should the Company be unable to  continue as a going  concern it may be required
to  realize  its assets and  settle  its  liabilities  at amounts  substantially
different from the current carrying values.

The  Company's  ability to continue as a going concern is dependent on continued
financial support from its principal shareholder,  Fai H. Chan, who has signed a
letter of financial support to the Company.


                                       6
<PAGE>

                          Powersoft Technologies, Inc.
                    formerly Heng Fai China Industries, Inc.
        Notes to Condensed Consolidated Financial StatementsJune 30, 1998

                                   (Unaudited)

3. AVAILABLE-FOR-SALE SECURITIES

The cost and approximate market value of investment securities were as follows:

                                                    June 30,        December 31,
                                                        1998               1997
                                                 -----------        -----------
Corporate equity securities (a):
    Cost                                         $ 3,786,859        $ 3,814,612
    Less gross unrealized losses                  (2,752,438)        (2,307,267)
                                                 -----------        -----------
    Estimated fair value                         $ 1,034,421        $ 1,507,345
                                                 ===========        ===========
    Carrying value  (c)                          $ 1,034,421        $ 1,507,345
                                                 ===========        ===========
Margin loan payable (b)                          $ 3,191,641        $ 3,058,295
                                                 ===========        ===========

      (a) Included in the above  securities  are  48,535,276  shares at June 30,
      1998, and December 31, 1997,  representing  3.9 percent of the outstanding
      common stock of Heng Fung Holdings  Company  Limited ("Heng Fung").  These
      securities  were  acquired  in  1997  at a cost  of  $3,786,859  and had a
      carrying  value of $1,034,421 at June 30, 1998, and $1,507,345 at December
      31, 1997.  Fai H. Chan and Robert Trapp,  directors of Heng Fung, are also
      officers, directors and/or shareholders of the Company.

      The  investment  securities  held by the  Company  are not  subject to any
      contractual  or  statutory  resale  restrictions  and any portion of these
      securities can be reasonably expected to qualify for sale within one year.

      (b) All  investments  are  pledged to secure  the  Company's  margin  loan
      payable.  The loan is payable on demand  and bears  interest  at Hong Kong
      best lending rate (10.5% at June 30, 1998) plus 3.5% per annum.

      (c) At  October  31,  1998,  the  market  value  of the  available-or-sale
      securities  held by the  Company at the  balance  sheet date  amounted  to
      approximately $450,000.

4. MORTGAGE LOAN PAYABLE:

The mortgage  loan which  matured and became  payable  June 15,  1998,  has been
extended for an additional five year period.


                                       7
<PAGE>

                          Powersoft Technologies, Inc.

                    formerly Heng Fai China Industries, inc.

                                  June 30, 1998

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

The  following  discussion  should  be read in  conjunction  with the  Condensed
Consolidated  Financial Statements of the Company and the related notes thereto,
and  other  financial   information   that  is  included   elsewhere  herein  or
incorporated by reference.

Introduction

The Company was originally incorporated in 1958 and until June 1994 had been
engaged in business other than those it presently operates.

The Company owns an apartment building in North Vancouver, British Columbia, and
until June 1995 the Company's  operations were comprised of that single segment.
In 1995 and 1996, the Company,  through various  subsidiaries,  acquired certain
interests  in the People's  republic of China  ("PRC"),  including  (i) Min You,
which has an option to lease a  production  line in Cangzhou  Factory for cement
manufacturing; (ii) a 70% interest in Wuhan, a PRC container manufacturer; (iii)
an interest in the duck contract  pursuant to which the Company  operated a duck
farm in PRC; and (iv) an option to form Heng Li in order to develop a commercial
building in Zhangjiagang PRC.

During  the  fourth  quarter  of  1997,  the  Company  determined  that it would
discontinue substantially all of its operations in PRC. The divestiture included
(i) the transfer of 81% of the Company's  interest in Min You; (ii) effecting an
agreement  to reverse the  acquisition  of a 70%  interest  in Wuhan;  (iii) the
termination of the duck contract; and (iv) the termination of the option to form
Heng Li and cancel the respective joint venture agreement.

Presently the Company  retains a 19% interest in Min You, with a full  provision
for the permanent  dimunition in value, its sole PRC operation,  and 100% of the
outstanding stock of Vancouver Hong Kong.


                                       8
<PAGE>

Results of Continuing Operations

The  six-month  ended June 30, 1998 as compared to the six months ended June 30,
1997

There were no significant  changes in the revenues and expenses  attributable to
the operation of Vancouver Hong Kong's real estate between the six-months  ended
June 30, 1998 and six-months ended June 30, 1997.

Investment  income  decreased  from  $109,212 in through June 30, 1997 to $2,883
through June 30, 1998. The Company has not engaged in investment activity during
the quarter ended March 31, 1998. This is because of the uncertainty  related to
the  international  securities  markets.  Investment  income in 1998 consists of
interest income.

Consulting  expense decreased from an aggregate of $426,000 for the sixth months
ended June 30, 1997 to $312,500 for the sixth  months ended June 30, 1998.  This
is due to the Company's  reduced use of consulting  services.  Interest  expense
increased from $123,268 for the  six-months  ended June 30, 1997 to $214,505 for
the same period in 1998.  This is due to the increase in margin  loans  payable.
The  outstanding  balance of margin loans  payable  amounted to  $3,191,147  and
$1,987,486 at June 30, 1998,  and June 30, 1997,  respectively.  Other  expenses
decreased  from  $345,975  in 1997 to $76,642 in 1998.  The  decrease  is due to
reduced professional fees and financial,  travel and miscellaneous expenses. The
Company  experienced no foreign  exchange loss for the six months ended June 30,
1998,  as compared to a foreign  exchange  loss of $37,594 six months ended June
30, 1997.

Results of Continuing Operations

The six months  ended June 30, 1997 as compared to the six months ended June 30,
1996

There were no significant  changes in the revenues and expenses  attributable to
the  operation  of Vancouver  Hong Kong's real estate  between the first half of
fiscal 1997 and the first half of fiscal 1996.

Investment income increased to $109,212 for the six-months ended June 30, 1997
as compared to $26,276 for 1996.

The  consulting  arrangements  that caused an expense of  $1,290,395  in the six
months ended June 30, 1996 did not recur in 1997.  Consulting fees declined from
$1,290,395  to $426,000 in 1997.  Other  operating and  administrative  expenses
increased in the six months ended June 30, 1997 to $345,975 from $105,409 in the
same period of 1996.  The increase is due  primarily  to increased  professional
fees.

Interest expense amounted to $123,268 and $67,037 for the six months ended June
30, 1997 and 1996, respectfully.

The Company's net loss from continuing operations for the six-month period ended
June 30,  1997 was  $772,301,  a change of  $588,325  compared  to a net loss of
$1,360,626  for the  corresponding  period in 1996. The decrease in the net loss
was the net result of (I) an increase in investment income;  (ii) a reduction in
expenses for overhead and consultants; (iii) increases in professional fees that
are included in other operating and administrative expenses; (iv) an increase in
interest expense.


                                       9
<PAGE>

The  Company's  net loss from  continuing  operations  was  $503,947 for the six
months  ended June 30,  1998,  as compared to a net loss of $772,301 for the six
months  ended June 30, 1997.  This trend is also  reflected in the net loss from
continuing  operations  for the three months  ended June 30, 1998,  amounting to
$236,639,  compared to a net loss of $501,584  for the three month  period ended
June 30, 1997. The reasons for this trend are the reductions in other  operating
and administrative expenses and consulting fees, and the offsetting decreases in
investment income and increase in interest expense.

Results of Discontinued Operations

Inflation

The general inflation rate in China was approximately 15%, 8% and 3%per annum in
1995, 1996 and 1997, respectively. In recent years, the PRC Government has taken
steps to control inflation by means of credit restrictions, increase in interest
rates and open  market  operations,  which in turn,  lead to a  slowdown  of the
Chinese economy.  The austerity measures  implemented by the PRC Government have
continued  to affect the  operations  of Min You and Wuhan  Container.  Although
there was a sign of easing in such austerity measures,  both turnover and profit
margin of Min You and Wuhan Container were still severely affected.

The six months  ended June 30, 1998 as compared to the six months ended June 30,
1997

There has been no activity in the discontinued operations in 1998.

The six months  ended June 30, 1997 as compared to the six months ended June 30,
1996

The cement  operation of Min You Cement Company Limited  commenced in the second
half of 1995.  Cement sales decreased from $174,795 in 1996 to $143,268 in 1997.
At the same time the cost of cement  sales  increased  from  $154,338 in 1996 to
$160,885 in 1997.

Wuhan container  experienced sales of $2,934,871 and cost of sales of $2,589,495
for  the  six  months  ended  June  30,  1998.  There  was no  activity  for the
corresponding period in 1997.

Both  operations  operated at less than full capacity  because of the impacts of
the austerity measures noted above.

Liquidity and Capital Resources

The net cash used in  operating  activities  cash flows for the six month period
ended June 30, 1998 amounted to $107,547. This is primarily due to the operating
losses  experienced.  The Company met its working capital  requirements from the
proceeds of margin  loans,  described  below and the  collection of amounts from
related parties.

During the six months ended June 30, 1998,  the Company did not make  additional
cash investments in securities or facilities.

The net cash provided by financing  activities  amounted to $123,285 for the six
months ended June 30,  1998.  This is due  primarily to the  increases in margin
loans.


                                       10
<PAGE>

The net cash used in  operating  activities  for the six  months  ended June 30,
1997,  amounted to  $4,201,466.  This was primarily due to the operating  losses
experienced, increases in receivables from the container segment and the payment
of amounts  that were  payable to related  parties.  The Company met its working
capital  requirements  from the proceeds of bank  borrowings and the issuance of
common shares.

The net cash used in investing  activities  amounted to  $1,972,930  for the six
months ended June 30, 1998.  This is primarily due to the use of cash to pay for
the purchase of investments.

The net cash provided by financing activities amounted to $6,164,944 for the six
months  ended  June  30,  1997.  This  is due to the  increases  in  short  term
borrowings and margin loans and the issuance of common shares.

As discussed in Note 2 of the Notes to the  Consolidated  Financial  Statements,
the Company's  recurring  losses from operations and minimal net tangible assets
raise  substantial  doubts as to its  ability to  continue  as a going  concern.
However, the principal shareholder has committed to continue providing financial
support.


                                       11
<PAGE>

Exchange Rate Risk

At present,  the Company's revenues and expenses are denominated in U.S. dollars
and Hong Kong  dollars.  In view of the exchange  rate pegged  between Hong Kong
dollars and U.S. dollars, the Company is not subject to any direct exposure from
the fluctuation of U.S. dollars.  Also, the Company's disposal of its operations
in PRC in 1997 nearly eliminates its exposure to exchange rate risk with the PRC
Renminbi.  The  Renminbi is the  currency of the PRC.  The Company is exposed to
exchange rate risk in its real estate  operations in Canada.  The Company's real
estate activity  transactions,  including long-term debt are payable in Canadian
dollars.  The Canadian dollar has declined in its relation to the U.S. dollar to
$1.42 from approximately $1.36 in 1996.

The Company is not involved in any hedging activities in foreign currencies.

New accounting standards not yet adopted

In February 1998,  the FASB issued SFAS No. 132,  Employers'  Disclosures  about
Pensions  and  Other  Postretirement   Benefits,  which  amends  the  disclosure
requirements  for pensions and other  postretirement  benefits.  Adoption of the
standard  will  not  significantly  change  the  Company's  financial  statement
disclosures.

During April 1998, the AICPA  Accounting  Standards  Executive  Committee issued
Statement of Position  98-5,  "Reporting  on the Costs of Start-up  Activities".
Generally the Statement requires that the costs of start-up  activities shall be
expensed as incurred,  and that upon initial  adoption an  adjustment to reflect
the  cumulative  effect of a change in accounting  principle  shall be recorded.
This statement will be effective for periods  beginning after December 15, 1998,
with earlier application permitted.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards 133, "Accounting for Derivative  Instruments and
Hedging  Activities."  This  statement  establishes   accounting  and  reporting
standards  for  derivative  instruments.  It requires an entity to recognize all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position  and  measure  those  instruments  at fair  value.  This  statement  is
effective  for fiscal  years  beginning  after  June 15,  1999,  although  early
adoption is permitted.

The Company  believes that the effects of adopting  these  standards will not be
material to the Company's financial position or results of operations.


                                       12
<PAGE>

Regional economic developments

Several countries in Asia have recently experienced significant adverse economic
developments including substantial exchange rate fluctuations, inflation, social
unrest,  increased  interest rates,  reduced  economic  growth rates,  corporate
bankruptcies,  declines in the market value of shares listed on stock exchanges,
emergency   loan   agreements   with  the   International   Monetary   Fund  and
government-imposed  austerity  measures.  To date, neither the PRC nor Hong Kong
has experienced these  developments to the same extent as many other major Asian
countries.  However,  there can be no assurance that these economic developments
in other  countries  will not  adversely  affect the  economy of the PRC or Hong
Kong, or that similar adverse economic developments will not occur in the PRC or
Hong  Kong in the  future,  which  could  have a  material  adverse  effect on a
Company's financial condition or results of operations.

The year 2000

The Year 2000 Issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year.  Computer programs
that have  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.  Based on a recent internal  assessment,
the Company does not anticipate that the cost of any needed  modifications  will
have a material effect on results of operations.

There can be no  assurance,  however,  that should the Year 2000 Issue  become a
problem, that such problem will be resolved successfully and in a timely fashion
or that any failure or delay by the Company or any third parties which  interact
with the  Company in  achieving  year 2000  compliance  will not have an adverse
effect on its operations.


                                       13
<PAGE>

                         (c) PART II. OTHER INFORMATION

Item 1. Legal Proceedings

      None

Item 2. Changes in Securities

      None

Item 3. Defaults in Senior Securities

      None

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

      None

Item 5. Other Information

      None

Item 6. Exhibits and Reports on Form 8-K

      None


                                       14
<PAGE>

                                   SIGNATURES

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

                                            POWERSOFT TECHNOLOGIES, INC.

Dated:  January 29, 1999                    By:   /s/Robert H. Trapp
                                                  ---------------------------
                                                  Robert H. Trapp
                                                  Secretary and Treasurer


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