SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

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


                      For Fiscal Year Ended:March 31, 1998
                       Commission File Number:33-38511-FW

                         CHEQUEMATE INTERNATIONAL, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

                           Utah             76-0279816
                           ---------------------------
                  (State or other jurisdiction (I.R.S. Employer of incorporation
              or organization )Identification No.)


            57 West 200 South, Suite 350; Salt Lake City, Utah 84101
            --------------------------------------------------------
                    (Address of principal executive offices)
                         


                                 (801) 322-1111
                                 --------------
                           (Issuer's Telephone Number)


Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirement for the past 90 days. YES X   No
                                                            ---
         State issuer's revenues for
         Its most recent fiscal year:                $1,091,794

         As of July 7, 1998, the aggregate market value of the voting stock held
by  non-affiliates  Computed  by  reference  to the price at which the stock was
sold, or the average bid and asked prices of such stock,  as of a specified date
within the past 60 days:          $13,783,460


         State the number of shares  outstanding of each of the issuer's  common
equity, as of the latest practicable date: 16,059,441 (July 7, 1998)

Transitional Small Business Format:   YES               NO   X
                                                            ---


                                       1
<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                     PART I
                                     ------

Item 1.  Description of Business...............................................3

Item 2.  Description of Property...............................................6

Item 3.  Legal Proceedings.....................................................6

Item 4.  Submission of Matters to a Vote of Security Holders...................6


                                     PART 2
                                     ------

Item 5.  Market for Common Equity.......................................... ...6

Item 6.  Management's Discussion and Analysis................................. 7

Item 7.  Financial Statements..................................................8

Item 8.  Changes in and Disagreements With Accountants on
         Accounting and Financial Disclosure..................................26


                                     PART 3
                                     ------

Item 9.  Directors and Executive Officers.....................................26

Item 10. Executive Compensation...............................................28

Item 11. Security Ownership of Certain Beneficial Owners and Managemen.29

Item 12. Certain Relationships and Related Transactions.......................29

Item 13. Exhibits and Reports.................................................30


                                       2
<PAGE>


                                     Part I
                                     ------

Item 1.  Description of Business

History of the Company

         The  Company was  incorporated  under the laws of the State of Texas on
April 21,  1989  under the name  Ainsley  Corporation.  The  Company  issued its
initial shares of common stock on April 25, 1989  (inception)  and was organized
primarily  for the purpose of raising  capital to take  advantage  of  potential
business  opportunities.  The name of the Company was later changed to Automated
Compliance & Training,  Inc. (AC&T),  with Utah the state of  incorporation.  On
September  3, 1996,  AC&T merged  with its wholly  owned  subsidiary  Chequemate
International,  Inc.  (the  "Company"  or  "CMI")  and  assumed  the name of the
subsidiary.

         On November  15,  1994,  the Company  acquired  all of the  outstanding
capital stock of CMI, a marketing  company of family and small business  finance
products.  In addition,  the Company purchased  Families in Focus,  Inc., a Utah
corporation.  Chequemate International,  Inc. was incorporated under the laws of
the State of Utah in March 1992. CMI, and its  subsidiaries,  provide  financial
record keeping and money management services to individuals and small business.

         On June 15, 1992, CMI entered into an agreement with its majority owned
(51%)  subsidiary  Data Control Inc.  (DCI)  whereby DCI is to perform  computer
processing required by CMI for its financial record keeping and money management
services.

         On September 3, 1996 AC&T merged with its wholly owned  subsidiary  CMI
and officially changed its name to Chequemate International, Inc. CMI maintained
it's subsidiaries of FIF and DCI as previously outlined.

         On April  17,  1997 CMI  formed a new  wholly  owned  subsidiary  named
Chequemate Third  Dimension,  Inc. The name has since been changed to Chequemate
Electronics,  Inc. (CE). CE was formed to manufacture and market breakthrough 3D
imaging  technology  which was be acquired from Advanced  Technology  Group, LLC
(ATG).  On June 23, 1997 an  agreement  was  finalized  by which CE obtained the
exclusive worldwide license to the 3D technology developed by ATG.


Principal Products and Services

3D

         The  Company is very  excited  about its  position  in the future of 3D
technology.   The  vision  is  to  integrate   the  three  areas  of  electronic
entertainment from production to distribution to exhibition. We see ourselves as
the  "channel"  or conduit  that will enable all three areas to become  actively
involved in producing 3D material,  distributing  what is produced and providing
the mechanism for it to be displayed in every television or computer owning home
in the world.

         Up to now a limited  quantity of quality 3D material has been  produced
due to the fact that  distribution was difficult and no cost effective system to
display the material had been developed.  CMI is solving these problems. CMI has
developed a low cost manner by which people can view real-time 3D from the

                                       3
<PAGE>



comfort of their own home.  With CMI  lowering  the cost to exhibit 3D  content,
distributors can now make it available to their customers by whatever means they
use;  whether  it  be  cable,   satellite,   internet  or  some  other  kind  of
distribution.  Those  distributors will be pushing producers to provide more and
more  3D  material  to  fill  their  growing  distribution  capability.  CMI  is
strategically positioned to revolutionize the home entertainment industry.

         The system has been marketed under two names, Realeyes 3D and C-3D. The
system is used to show 3D images on any  television.  The  system is  capable of
displaying  pre-processed  stereoscopic  imagery, or converting  two-dimensional
media into  three-dimensional  images in real time. The product  accepts NTSC or
PAL compatible signals from network broadcasts,  video game consoles,  satellite
transmissions,  cable decoders, VCR's, or any video component. After receiving a
composite RCA or S-VHS video input from a signal  source,  the system  digitally
processes the images and displays them in real-time on any standard  television.
With the system any  television  can  transform  flat 2D images to  stunning  3D
images.

Finance

         The Company  continues to base its  financial  programs on The Four T's
tracking,  targeting, trimming and training. Through its Fastrak(TM) System, the
Company  provides a method to quickly  and easily  track  spending  and  income,
generating  monthly  reports that  pinpoint  exactly where each penny was spent.
Targets,  or goals,  are then set based on spending  information,  providing the
means and  motivation to trim  unnecessary  expenditures.  Finally,  the company
offers  educational and training  opportunities that build positive spending and
money-management habits.

         The Chequemate Financial Manager (CFM) program takes the Fastrak System
a step further by offering a debt  restructuring  and an  accelerated  repayment
program. When combined with Fastrak, CFM represents a means too not only get out
of debt, but to stay out of debt permanently.

Distribution Methods

3D

         Distribution  of the 3D  imaging  system  during  the  fiscal  year was
through  numerous  different  channels.  Although some  conventional  retail and
wholesale outlets were used, the majority of sales were due to the Company's own
marketing  efforts.  These included ads in national  publications  such as "Home
Theater  Magazine"  and  "Sports  Illustrated"  along  with  local  ads in  area
newspapers.  Opportunity  was also  taken to use the news  media as a source  to
inform the public about the new  technology.  This included an interview  during
the new business segment on CNN business news.  Local  television  stations have
also  visited  our  offices  and run  segments  during  their  news  broadcasts.
Newspapers from across the nation have also run articles about the 3D system.

         Along  with  these  established   distribution  methods,  CMI  is  also
currently  negotiating with one of the largest hotel/motel in room entertainment
providers  to have the 3D imaging  system as part of the  entertainment  options
they  provide  for  guests.  Besides  being a valuable  source of revenue to the
company it would  also  supply an  excellent  chance to learn more about how the
public responds to the product and what content they most enjoy viewing in 3D.

         A contract has also recently been signed to sell the 3D system  through
several TV shopping networks. The first broadcast is scheduled for July 25. This
provides  an outlet to the mass  market  without  the high  expense of  national
advertising.  Original  purchase  orders have been placed,  and  projections for
follow up orders are now underway.

                                       4
<PAGE>

Finance

         The established network of CMI independent  representatives continue to
be the major source of distribution for the various financial products. However,
with the  increased  emphasis on the CFM Program  (debt  consolidation  and bill
paying  service)  more   opportunities  to  work  with  mortgage  companies  are
appearing.  Mortgage  companies see the financial products as natural fit to the
value-added services they are now trying to provide to their customers.

         Due to the interest  shown by some of the mortgage  companies and CMI's
desire  to focus  completely  on the 3D  products,  potential  buyers  are being
courted for the financial division of the company.

Status of Publicly Announced Products or Service

         The 3D imaging system  released early this year under the name Realeyes
3D and /or C-3D went  through  many  modifications  as it was  transformed  from
prototype to final product.  Further  enhancements are currently being worked on
by the R&D engineers which will hopefully be instigated in the coming months.

         The plan to start  broadcasting a 24 hour a day 3D channel are still in
place,  however the actual  start date is  uncertain.  Hopes are that the target
date of this fall can still be meet,  but due to the  scale of the  project  and
numerous other factors management cannot be sure.


Competition

3D

         The Company has yet to find a product that  competes  directly with the
major features of its C-3D system. These features include the real-time 2D to 3D
conversion, eye dominance, depth adjustment, and cost. Many large companies have
spent time and money in trying to develop  similar 3D  technology  without being
able  to  establish  a  product  that  has  been  successfully  marketed  to the
individual consumer.

         CMI is obviously a small  player in the world of consumer  electronics.
Management  believes that if these larger companies decide to further pursue the
3D business,  they will do so as a strategic move to sell their other  hardware.
CMI  has  already  had  discussions  with  some  electronic  manufactures  about
licensing the product and other possible partnerships. It could very well become
important for CMI to use its patent pending  technology to  strategically  align
itself as more companies become involved in the 3D industry.

Finance

         CMI's  financial  products are unique,  however the financial  arena is
highly competitive.  Literally thousands of companies are willing to tell people
how to invest their money,  how to spend their money, and how they can help them
refinance the debt they've gotten into. CMI's financial  products truly have the
purpose of helping people get control of their financial  lives.  This is why it
has become such an attractive  product to other companies and should help in the
divesting by CMI of that division.


Patents and Trademarks

         The  Company  has several  patents  and  trademarks  which it uses with
respect to the conduct of the business.  The most important one is the patent on
the licensed 3D  technology.  Originally  filed in May of 1997 as a  provisional
patent it now has patent  pending  status.  Other  patents  still being used are
those in the financial division,  which include the three-digit code used in the
Fastrak  System and design  elements of its CFM Program.  Patents and Trademarks
still exist  which were used by AC&T  Direct,  a wholly  owned  subsidiary,  but
operations have been closed in that division due to lack of consumer interest.

                                       5
<PAGE>

Employees

As of June  30,  1998,  the  Company  and  its  subsidiaries  had 13  full  time
employees.


ITEM 2.  Description of Property

         The company  occupies  leased office space at 57 West 200 South,  Suite
350, 301 & 302,  Salt Lake City,  Utah.  The company  offices  comprise of 7,921
square feet and are leased at a monthly base rental of $11,435. The Company also
occupies  space for its  fulfillment  division at 545 West 500 South,  Suite 140
Bountiful,  Utah.  The office  space is 3,879  square  feet,  and is leased at a
monthly base rental of $2,223.


ITEM 3.  Legal Proceedings

         March 11, 1997 a citation  and  petition  for suit on damages was filed
against  Chequemate  Tele-Services  Inc., in the District Court of Dallas County
Texas. The plaintiff is Peak Credit Card  Processing,  L.C. d/b/a Peak Financial
Services.  Relief is being sought by  plaintiff  for  unspecified  damages to be
determined  at some later date. A response to the citation was filed in a timely
basis in the court of  jurisdiction  denying any and all allegation  made in the
citation.  A court  hearing was set for May 4, 1998;  the plaintiff did not show
up. A motion was moved to throw out the action, but the court wanted to give the
plaintiff time to file a motion for  continuance.  No motion for continuance has
been filed,  and it is the belief of the registrant  that the plaintiff does not
have the means or the will to continue  this action.  No action has been evident
since the original citation was filed.

         December 18, 1997 a citation  and  petition for suit was filed  against
Chequemate  Tele-Services,  Inc.,  Blaine  Harris,  and  Fred  Boedeker,  in the
District  Courts of Dallas County Texas.  The plaintiff is Central  Meadow Park,
L.P.  Plaintiff  seeks  damages  both  direct  and  consequential  for breach of
contract on leased  premises as detailed  in the  citation.  No specific  dollar
damages are mentioned.

         June 22, 1998 a suit was filed against Chequemate  International,  Inc.
in the District Court for the Northern  District of Illinois  Eastern  Division.
The plaintiff, BH Productions,  Inc. d/b/a Ignite Advertising is seeking payment
remaining  under a contract for  advertising  entered into in October 1997.  The
payment of  $382,595.40  still owing is  reflected  in the  Company's  financial
statements in the current liabilities section under accounts payable.



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

         No matters were submitted to a vote of security  holders for the fourth
quarter of fiscal year 1997.



                                     PART II
                                     -------


ITEM 5.  Market for Common Equity and Related Stockholder Matters.

         The stock of the Company is traded on the OTC Bulletin Board (OTCBB) of
the NASD Stock market, Inc. The OTCBB symbol for the Company is CQMT. As of July
7, 1997 there are approximately 781 shareholders of record of the Company. As of
July 7, 1997, the Company had issued and  outstanding  shares of 16,059,441.  An
estimated  740,000 of paid subscription  shares were also due to be issued.  The

                                       6
<PAGE>

stock of the company as of July 9,1998, was quoted at $1.22 bid and $1.25 ask.

         The NASD Stock Market,  Inc.  provided the fiscal year 1998  quotations
for the Company's stock. The referenced  quotations reflect  inter-dealer prices
without dealer  mark-up,  markdown or commissions  and may not represent  actual
transactions.



Fiscal  Year                        High Bid Price            Low Bid Price

--------------------------------------------------------------------------------
1997 - 1st  Quarter  (4/96-6/96)         7.25                    6.625
1997 - 2nd  Quarter  (7/96-9/96          7.00                     6.25
1997 - 3rd  Quarter  (10/96-12/96)       7.00                     5.75
1997 - 4th Quarter   (1/97-3/97)         6.25                     3.50
1998 - 1st Quarter   (4/97-6/97)       6.6875                     3.50
1998 - 2nd Quarter   (7/97-9/97)       6.0625                    3.625
1998 - 3rd Quarter   (10/97-12/97)     3.6875                     2.25
1998 - 4th Quarter   (1/98-3/98)        2.625                     1.20
--------------------------------------------------------------------------------

The Company has paid no  dividends  on common  stock  during its two most recent
fiscal years, and has no present intention to pay dividends in fiscal year 1998.


ITEM 6.   Management's Discussion and Analysis

General

         For more detailed  financial  information,  please refer to the Audited
Financial Statements for the periods of March 31, 1998 and 1997. A copy of these
Financial Statements is attached to this Report.

         Fiscal year 1998 has been an exciting and adventurous  year for CMI and
its  subsidiaries.  The Company has  successfully  confronted  the challenges of
entering the electronics manufacturing industry while maintaining some divisions
and selling of another.  The Company's intent as it moves forward is to focus on
the 3D product due to its huge potential.

         With a years experience in manufacturing and selling the 3D product the
Company has been able to gain  extensive  knowledge  about the  industry and the
energy and focus it requires to be successful. Feedback from consumers has shown
us areas  where we can improve the product and also great hope for the future as
their excitement for the product became evident.  Work is currently taking place
that will directly address improvements consumers would like to see.

         The Company has also  realized the need to bring  management  with more
experience   and   expertise   in  the  fields  of  consumer   electronics   and
entertainment.  One of these key figures is Joseph  Napoli.  Mr. Napoli has vast
experience in the cable and satellite industry and has worked for companies such
as HBO, Time Warner and most  recently the Sega Channel.  Mr. Napoli will be key
in  establishing  the 24 hour a day 3D  cable  station  and has  already  helped
tremendously in the negotiations to have the 3D system installed in thousands of
hotel/motel rooms.

Liquidity and Capital Resources

         The audited  financial  statements  reflect the consolidated  financial

                                       7
<PAGE>

position of the Company and its subsidiary  entities.  As of March 31, 1998, the
Company had current assets of $2,940,782 with current liabilities of $2,002,947.
This represents working capital of $937,835.  At March 31, 1997, the Company had
current  assets  of  $398,409  with  current   liabilities  of  $703,670.   This
represented negative working capital of $305,261.

         The change in working  capital  results in a ratio of current assets to
current  liabilities,  as of March 31, 1998, of 1.47 as compared to .57 on March
31, 1997.  The major  contributor  to current  assets is inventory  ($2,684,378)
which is primarily made up of C-3D units.

         At March 31,  1997,  long term  liabilities  were  $14,764  compared to
$145,639 at March 31, 1997, a reduction of $130,875. Long-term debt continued to
decrease because the Company uses equity to fund operations instead of acquiring
more debt.

         At March 31,  1998,  the  Stockholders'  equity was  $3,791,755  versus
$437,451 at March 31,  1997.  This  represents  an  improvement  of  $3,354,304.
Stockholders' equity increased significantly due to the value placed upon the 3D
product  rights  acquired  from  Advanced  Technology  Group,  LLC in an  equity
transaction.

         The sale of stock to offshore  entities  continues  to be an  important
source of capital  funding for the Company.  As previously  reported in Form 8K,
the Company has sold additional shares to offshore entities to raise capital for
the continued operations of the Company.  Furthermore,  other sources of capital
funding are being pursued to help meet the cash needs of the Company.

Results of Operations

         For the fiscal  year 1998,  total  gross  revenue  of the  Company  was
$1,091,794  compared to $776,963  for the previous  fiscal year;  an increase of
$314,831.  Total  expenses  for fiscal  year 1998  increased  to  $5,208,070  as
compared to $1,974,738  for the previous year. The Company also had to recognize
a large Other Expense in the  re-valuation of the 3-D technology.  The result of
the  incresaed  expenses and the large other expense was an increase in net loss
from $1,502,573 in fiscal year 1997 to $8,024,045 in fiscal year 1998.

         The  loss for the  twelve-month  period  ended  March  31,  1998 can be
attributed to increases in both selling and general and administrative  expenses
which were  associated  with the launch of the new C-3D product,  along with the
large adjustment which was made to product rights. Action has been taken to trim
expenses until revenue can grow in a more proportional manner.


ITEM 7.  Financial Statements




                          CHEQUEMATE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)

                        Consolidated Financial Statements

                             March 31, 1998 and 1997


                                       8
<PAGE>

                                 C O N T E N T S


Independent Auditors' Report .................................................10

Consolidated Balance Sheets ................................................. 11

Consolidated Statements of Operations ....................................... 13

Consolidated Statements of Stockholders' Equity ............................. 14

Consolidated Statements of Cash Flows ....................................... 16

Notes to Consolidated Financial Statements .................................. 18

                                       9
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Stockholders
Chequemate Technologies, Inc. and Subsidiaries
(Formerly Chequemate International, Inc.)
Salt Lake City, Utah


We have  audited the  accompanying  consolidated  balance  sheets of  Chequemate
Technologies, Inc. and Subsidiaries (formerly Chequemate International, Inc.) as
of  March  31,  1998  and  1997  and  the  related  consolidated  statements  of
operations,  stockholders'  equity, and cash flows for the years ended March 31,
1998,  1997  and  1996.  These   consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Chequemate   Technologies,    Inc.   and   Subsidiaries   (formerly   Chequemate
International,  Inc.) as of March 31, 1998 and 1997 and the consolidated results
of their  operations  and their cash flows for the years ended  March 31,  1998,
1997 and 1996 in conformity with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 12 to
the consolidated financial statements, the Company has suffered recurring losses
which raises substantial doubt about its ability to continue as a going concern.
Management's  plans in regard to this matter are also  described in Note 12. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.



Jones, Jensen & Company
Salt Lake City, Utah
June 23, 1998


                                       10
<PAGE>



                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                           Consolidated Balance Sheets


                                     ASSETS
                                     ------

                                                                March 31,
                                                                ---------
                                                            1998          1997
                                                         ----------   ----------
CURRENT ASSETS

  Cash                                                   $  220,840   $  165,536
  Accounts receivable - net of allowances of $115,000
   and $7,520 in 1998 and 1997, respectively                 24,305       38,852
  Inventory (Note 2)                                      2,684,378      185,518
  Prepaid expenses                                           11,259        8,503
                                                         ----------   ----------

     Total Current Assets                                 2,940,782      398,409
                                                         ----------   ----------

PROPERTY AND EQUIPMENT (Note 3)                             200,335      454,174
                                                         ----------   ----------

OTHER ASSETS

  Organization costs and product rights (Note 1)          2,657,296      415,610
  Note receivable                                              --          7,514
  Refundable deposits                                         8,053        8,053
  Investments                                                 3,000        3,000
                                                         ----------   ----------

     Total Other Assets                                   2,668,349      434,177
                                                         ----------   ----------

     TOTAL ASSETS                                        $5,809,466   $1,286,760
                                                         ==========   ==========

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

                                       11
<PAGE>
<TABLE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                     Consolidated Balance Sheets (Continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
<CAPTION>

                                                                       March 31,
                                                                       ---------
                                                                  1998            1997
                                                             ------------    ------------
CURRENT LIABILITIES

<S>                                                          <C>             <C>
  Accounts payable                                           $  1,584,576    $    174,865
  Related party accounts payable (Note 16)                         42,034          19,413
  Short term debt (Note 15)                                          --           300,000
  Customer deposits                                                54,724            --
  Accrued expenses                                                 43,339         103,552
  Income tax payable (Note 1)                                         500             400
  Accrued interest - related party (Note 5)                        65,903          65,903
  Current portion related party (Note 5)                          156,802            --
  Current portion long-term debt (Note 6)                          50,080          33,533
  Current portion capital lease (Note 7)                            4,989           6,004
                                                             ------------    ------------

     Total Current Liabilities                                  2,002,947         703,670
                                                             ------------    ------------

LONG-TERM LIABILITIES

  Long-term related party notes payable (Note 5)                     --            90,000
  Long-term debt (Note 6)                                          11,976          46,834
  Capital lease obligations (Note 7)                                2,788           8,805
                                                             ------------    ------------

     Total Long-Term Liabilities                                   14,764         145,639
                                                             ------------    ------------

     Total Liabilities                                          2,017,711         849,309
                                                             ------------    ------------

STOCKHOLDERS' EQUITY

  Common stock, $.0001 par value, 500,000,000 shares
   authorized, 14,088,650 and 13,117,84 shares outstanding
   at 1998 and 1997, respectively                                   1,409           1,312
  Minority interest                                                  --           100,000
  Subscribed stock (Note 4)                                     4,022,970         270,000
  Capital in excess of par                                     14,960,783       7,235,501
  Accumulated deficit                                         (15,193,407)     (7,169,362)
                                                             ------------    ------------

     Total Stockholders' Equity                                 3,791,755         437,451
                                                             ------------    ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $  5,809,466    $  1,286,760
                                                             ============    ============
</TABLE>

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


                                       12
<PAGE>
<TABLE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                      Consolidated Statements of Operations
<CAPTION>


                                                     For the Years Ended March 31,
                                                     -----------------------------
                                                 1998             1997            1996
                                             ------------    ------------    ------------


REVENUES

<S>                                          <C>             <C>             <C>
  Sales - products                           $  1,091,794    $    776,963    $    382,137
                                             ------------    ------------    ------------

COST OF SALES

  Product, supplies and materials                 849,919         291,072         167,566
                                             ------------    ------------    ------------

GROSS PROFIT                                      241,875         485,891         214,571
                                             ------------    ------------    ------------

EXPENSES

  Bad debts                                       138,259           6,465           5,627
  Selling expenses                              1,639,806         630,207         539,123
  General and administrative                    3,430,005       1,338,066       1,486,948
                                             ------------    ------------    ------------

     Total Expenses                             5,208,070       1,974,738       2,031,698
                                             ------------    ------------    ------------

OPERATING (LOSS)                               (4,966,195)     (1,488,847)     (1,817,127)

OTHER INCOME (EXPENSE)

  Interest income                                  24,152           7,018            --
  Interest expense                                (18,478)        (20,344)        (61,588)
  Reduction in valuation of product rights     (3,133,333)           --              --
  Gain on sale of equipment                        70,309            --              --
                                             ------------    ------------    ------------

     Total Other Income (Expense)              (3,057,350)        (13,326)        (61,588)
                                             ------------    ------------    ------------

(LOSS) BEFORE INCOME TAXES                     (8,023,545)     (1,502,173)     (1,878,715)

INCOME TAX PROVISION                                  500             400             300
                                             ------------    ------------    ------------

NET INCOME (LOSS)                            $ (8,024,045)   $ (1,502,573)   $  1,879,015
                                             ============    ============    ============

EARNINGS (LOSS) PER SHARE                    $      (0.59)   $      (0.12)   $      (0.15)
                                             ============    ============    ============

AVERAGE NUMBER OF
 SHARES OUTSTANDING                            13,568,845      12,891,947      12,208,526
                                             ============    ============    ============
</TABLE>

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


                                       13
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                 Consolidated Statements of Stockholders' Equity
                For the Years Ended March 31, 1998, 1997 and 1996


                                            Total                       Capital
                                            Shares         Common      in Excess
                                            Issued         Stock        of Par
                                          -----------   -----------   ----------

Balance, March 31, 1995                   11,738,700   $     1,174   $ 2,548,545

Shares becoming free trading                    --            --            --
Shares issued through stock
 offering                                    833,570            83     2,599,917
Shares issued in exchange for
 services                                      6,000             1        29,999
Subscribed stock                                --            --            --

Shares issued for debt                        87,783             9       307,234
250,000 shares donated to the
 Company and reissued                           --            --         200,000
Net loss                                        --            --            --
                                         -----------   -----------   -----------

Balance, March 31,1996                    12,666,053         1,267     5,685,695
                                         -----------   -----------   -----------

Shares becoming free trade                      --            --            --
Minority interest                               --            --            --
Shares issued through
 stock offering                              450,788            44     1,546,307
Shares issued for services                     1,000             1         3,499
Subscribed stock                                --            --            --
Net loss                                        --            --            --
                                         -----------   -----------   -----------

Balance, March 31, 1997                   13,117,841         1,312     7,235,501

Subscribed stock                                --            --            --
Shares issued through stock offering         379,000            38       994,962
Shares issued for cash                       315,142            31        76,105
Shares issued in exchange for services       256,667            26       387,474
Shares issued for debt                        20,000             2        85,494
Option issued for compensation                  --            --          81,247
Options issued for rights                       --            --       6,000,000
Acquisition of minority interest                --            --         100,000
Net loss                                        --            --            --
                                         -----------   -----------   -----------

Balance, March 31, 1998                   14,088,650   $     1,409   $14,960,783
                                         ===========   ===========   ===========

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


                                       14
<PAGE>
<TABLE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
           Consolidated Statements of Stockholders' Equity (Continued)
                For the Years Ended March 31, 1998, 1997 and 1996
<CAPTION>


                                                                                          Total
                                          Accumulated     Subscribed      Minority      Stockholders'
                                            Deficit         Stock         Interest        Equity
                                         --------------   -------------  -------------  -------------

<S>                                      <C>               <C>            <C>            <C>
Balance, March 31, 1995                  $(3,787,774   )   $   850,000    $      --      $  (388,055)

Shares becoming free trading                    --                --             --             --
Shares issued through stock offering            --            (850,000)          --        1,750,000
Shares issued in exchange for services          --                --             --           30,000
Subscribed stock                                --             100,000           --          100,000
Shares issued for debt                          --                --             --          307,243
250,000 shares donated to the Company
  and reissued                                  --                --             --          200,000
Net loss                                  (1,879,015   )          --             --       (1,879,015)
                                         --------------   -------------  -------------  -------------

Balance, March 31, 1996                   (5,666,789   )       100,000           --          120,173
                                         --------------   -------------  -------------  -------------

Shares becoming free trade                      --                --             --             --
Minority interest                               --                --          100,000        100,000
Shares issued through stock offering            --            (100,000)          --        1,446,351
Shares issued for services                      --                --             --            3,500
Subscribed stock                                --             270,000           --          270,000
Net loss                                  (1,502,573   )          --             --       (1,502,573)
                                         --------------   -------------  -------------  -------------

Balance, March 31, 1997                   (7,169,362   )       270,000        100,000        437,451

Subscribed stock                                --           4,756,720           --        4,756,720
Shares issued through stock offering            --            (995,000)          --             --
Shares issued for cash                          --              (8,750)          --           67,386
Shares issued in exchange for services          --                --             --          387,500
Shares issued for debt                          --                --             --           85,496
Option issued for compensation                  --                --             --           81,247
Options issued for rights                       --                --             --        6,000,000
Acquisition of minority interest                --                --         (100,000)          --
Net loss                                  (8,024,045   )          --             --       (8,024,045)
                                         --------------   -------------  -------------  -------------

Balance, March 31, 1998                  $(15,193,407  )   $ 4,022,970    $      --      $ 3,791,755
                                         ==============   =============  =============  =============
</TABLE>

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

                                       15
<PAGE>
<TABLE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                      Consolidated Statements of Cash Flows
<CAPTION>


                                                       For the Years Ended March 31,
                                                       -----------------------------
                                                     1998           1997           1996
                                                  -----------    -----------    -----------


<S>                                               <C>            <C>            <C>
  Net loss                                        $(8,024,045)   $(1,502,573)   $(1,879,015)
  Adjustments to reconcile net loss to
   net cash used by operating activities:
   Amortization                                       427,575         62,183         78,496
   Depreciation                                        70,209         41,549         31,887
   Bad debt expense                                   107,480          4,602          4,646
   Reduction in product rights valuation            3,133,333           --             --
   Common stock and options issued for services
     rendered                                         651,517           --           47,327
 (Increase) decrease in:
   Accounts receivable                                (92,933)         9,546         (7,466)
   Prepaid expenses                                    (2,756)        (1,859)        (6,644)
   Inventory                                       (2,498,860)      (101,637)        39,191
   Note receivable                                       --             --           (8,894)
   Deposits                                             7,514          2,862          1,065
  Increase (decrease) in:
   Accounts payable                                 1,448,879         94,038        (61,411)
   Accrued interest payable                              --           (7,000)         3,421
   Customer deposits                                   54,724           --             --
   Short-term note payable                           (300,000)          --             --
   Accrued expenses                                   (60,213)        81,056        (15,646)
   Income taxes payable                                   100            400           --
                                                  -----------    -----------    -----------

     NET CASH USED BY OPERATING ACTIVITIES         (5,077,476)    (1,316,833)    (1,773,043)
                                                  -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

  Proceeds from sale of fixed assets                  375,000           --             --
  Purchase/development of intangibles                    --         (222,706)          --
  Equipment purchases                                (194,392)      (101,121)       (23,076)
  Collection on notes receivable                         --            1,380           --
                                                  -----------    -----------    -----------

     NET CASH PROVIDED (USED) BY
       INVESTING ACTIVITIES                           180,608       (322,447)       (23,076)
                                                  -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

  Issuance of common stock                          1,071,234      1,549,851      2,800,000
  Subscribed stock                                  3,752,970        170,000       (750,000)
  Minority interest                                      --          100,000           --
  Issuance of notes payable                           135,000           --             --
  Payments made on notes payable                       (7,032)       (45,415)      (255,720)
                                                  -----------    -----------    -----------

     NET CASH PROVIDED BY FINANCING ACTIVITIES    $ 4,952,172    $ 1,774,436    $ 1,794,280
                                                  -----------    -----------    -----------
</TABLE>

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


                                       16
<PAGE>

                 CHEQUEMATE INTERNATIONAL, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                Consolidated Statements of Cash Flows (Continued)

                                                 For the Years Ended March 31,
                                                 -----------------------------
                                              1998          1997         1996
                                             --------     --------     --------

NET INCREASE (DECREASE) IN CASH              $ 55,304     $135,156     $ (1,839)

CASH AT BEGINNING OF YEAR                     165,536       30,380       32,219
                                             --------     --------     --------

CASH AT END OF YEAR                          $220,840     $165,536     $ 30,380
                                             ========     ========     ========



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


                                       17
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              The  Company's   accounting  policies  reflect  practices  of  the
              software  sales and services  industries  and conform to generally
              accepted  accounting  principles.  Certain prior year amounts have
              been  reclassified  to be  consistent  with  the  March  31,  1998
              presentation.   The  following   policies  are  considered  to  be
              significant:

              Principles of consolidation
              ---------------------------

              The consolidated  financial statements include the accounts of the
              Company  and its  subsidiaries,  Families  in  Focus,  Inc.,  AC&T
              Direct,  AC&T,  Chequemate  Third  Dimension,  Inc. and Chequemate
              Tele-Services,  Inc.  All  significant  intercompany  accounts and
              transactions have been eliminated.

              Revenue recognition
              -------------------

              Revenue  is  recognized  on an accrual  basis upon  deliver of the
              software or product.  Revenue consists of software sales,  product
              sales, license fees, and monthly service fees.

              Organization costs and product rights
              -------------------------------------

              Organization  and  production  costs  have  been  capitalized  and
              amortized over five years using a straight line method.  The total
              amortization of organizational and production costs for the twelve
              months ended March 31, 1998,  1997 and 1996  amounted to $427,575,
              $62,183 and $78,496, respectively.

              Property and equipment
              ----------------------

              Property and  equipment are stated at cost with  depreciation  and
              amortization  computed on the straight  line method.  Property and
              equipment  are  depreciated  over the following  estimated  useful
              lives:
                                                                   Years
                                                                   -----
                        Office equipment                             5
                        Office furniture                            5-7
                        Machinery and equipment                      5
                        Leasehold improvements                      3-5
                        Capital leases                              3-5

               Organization costs and product rights
               -------------------------------------
                                                           Net Book Value
                                                           --------------
                     Term          Cost    Amortization      1998        1997
                   --------    ----------  ------------   ----------   ---------
Product rights      5 years    $2,972,167   $  391,593   $2,580,574   $   88,141
Goodwill           15 years         --           --           --          96,865
Trademark          15 years         --           --           --          49,722
Client list        15 years         --           --           --          49,722
Training video      5 years       260,007      183,285       76,722      128,724
Organization cost   5 years        17,261       17,261         --          2,436
                   --------    ----------   ----------   ----------   ----------
                               $3,249,435   $  592,139   $2,657,296   $  415,610
                               ==========   ==========   ==========   ==========


                Intangibles sold in 1998 are shown at zero cost.


                                       18
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Earnings per share
              ------------------

              Earnings  per share are  calculated  using a weighted  average for
              common stock and common stock equivalents.

              Cash flows
              ----------

              For purposes of reporting  cash flows,  cash and cash  equivalents
              include cash on hand and cash on deposit with banks.

              Income taxes
              ------------

              The  Company's  tax basis is the same as the  Company's  financial
              statement basis. The Company has net operating loss  carryforwards
              of  approximately  $12,100,000  available to offset future federal
              and state income tax through 2013.  The Company has not recorded a
              tax benefit attributable to the carryforwards  because realization
              of such benefit cannot be assured.

              Computer software costs
              -----------------------

              The  Company  classifies  the  costs  of  planing,  designing  and
              establishing the  technological  feasibility of computer  software
              product as software  development  costs and charges those costs to
              expense when  incurred.  Costs incurred for  duplicating  computer
              software  from  product   masters,   documentation   and  training
              materials and  packaging  costs are  capitalized  as inventory and
              charged to cost of sales  when  revenue  is  recognized.  Costs of
              maintenance and customer support are charged to expense when costs
              are incurred.

              Estimates
              ---------

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and  liabilities  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.

NOTE 2 -      INVENTORY
                                                            March 31,
                                                            ---------
                                                    1998                 1997
                                                 ----------           ----------
              Finished goods                     $1,238,258           $  185,518
              WIP                                124,243                 --
              Raw goods                          1,321,877                 --
                                                 ----------           ----------
                                                 $2,684,378           $  185,518
                                                 ==========           ==========

       The        Company inventories are stated at the lower of cost or market,
                  using the first-in, first-out (FIFO) method.



                                       19
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 3 -      PROPERTY AND EQUIPMENT

              Property and  equipment as of March 31, 1998 and 1997 are detailed
              in the following summary:


                                         Accumulated     Net Book Value
                                Cost    Depreciation     1998      1997
                              --------  ------------  --------   --------

Office furniture and fixtures   $ 64,398   $ 31,161   $ 33,237   $ 30,575
Software                            --         --         --      295,000
Machinery and equipment          270,704    109,240    161,464    117,790
Capital leases                    26,877     24,170      2,707      7,024
Leasehold improvements             4,581      1,654      2,927      3,785
                                --------   --------   --------   --------

     Total                      $366,560   $166,225   $200,335   $454,174
                                ========   ========   ========   ========

              Depreciation  expense is computed principally on the straight line
              method in amounts  sufficient to write off the cost of depreciable
              assets over their estimated useful lives. Depreciation expense for
              the years ended March 31, 1998, 1997 and 1996 amounted to $70,209,
              $41,549 and $31,887,  respectively.  Assets sold in 1998 are shown
              at zero cost.

NOTE 4 -      STOCKHOLDERS' EQUITY

              The Company is  authorized to issue  500,000,000  shares of common
              stock,  par  value  $.0001.   Currently  the  Company  has  issued
              14,088,650 shares of common stock.

              During the period from April 1993 through March 1997,  the Company
              issued  1,387,226  shares of common  stock  pursuant  to a private
              placement.  These  shares were offered  under  Regulation S to non
              U.S. persons and can be exchanged for free trading stock within 40
              days after the closing of the offering.

              The Company  continued  the placement of Regulation S stock in the
              current year and issued  379,000 shares to non U.S.  persons.  The
              Company's  plans are to continue  placing  stock  through  private
              placements to fund the growth requirements of the Company. As part
              of the private placement,  the Company received $4,031,720 for the
              sale of  approximately  1,344,000  shares  of  common  stock.  The
              Company has accounted  for the  transaction  as  subscribed  stock
              until the stock could be issued.


                                       20
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 5 -      RELATED PARTIES
<TABLE>

              Notes payable to related parties as of March 31, 1998 and 1997 are
              detailed in the following summary:
<CAPTION>
                                                                           1998          1997
                                                                         --------       --------

<S>               <C>                                                    <C>            <C>
Note payable to CEO; due on demand, with an
 interest rate of 10.4%                                                  $135,000       $   --

Note  payable  to CEO;  due in  monthly  interest
 installments  of $930 with an interest rate of 
 12%; due December 31, 1998; unsecured;
 accrued interest of $65,903 is due                                        21,802         90,000
                                                                         --------       --------

     Total related party notes payable                                    156,802         90,000

     Less: current portion                                               (156,802)          --
                                                                         --------       --------

     Long-term portion                                                   $   --         $ 90,000
                                                                         ========       ========
Maturities of the related party notes payable are as follows:

                      Period ending March 31,                            1998           $ 156,802
                                                                                        ---------
                                                                         1999               --


                                                           Total        $156,802
</TABLE>
                                                                        ========
NOTE 6 -      LONG-TERM DEBT

<TABLE>
              Notes  payable as of March 31,  1998 and 1997 are  detailed in the
following summary:

<CAPTION>
                                                         1998                  1997
                                                 -----------------     -----------------

 <S>                                             <C>                   <C>
 Note payable to a company; due in monthly
  installments of $3,244 which includes
  interest at 8%; due July, 1999, unsecured       $          62,056     $          80,367
                                                  -----------------     -----------------

      Total long-term debt                                   62,056                80,367

      Less: current portion                                 (50,080)              (33,533)
                                                  -----------------     -----------------

      Long-term portion                           $          11,976     $          46,834
                                                  =================     =================

</TABLE>


                                       21
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 6 -      LONG-TERM DEBT (Continued)

              Maturities of long-term debt are summarized below:

Period ending March 31,        1998          $50,080
                               1999           11,976
                               2000             --
                               2001             --
                               2002             --
                                             -------

                              Total          $62,056
                                             =======

NOTE 7 -      LEASES

              All  noncancelable  leases with an initial  term  greater than one
              year have been  categorized  as  capital  or  operating  leases in
              conformity with the definitions in Financial  Accounting Standards
              Board Statement No. 13, "Accounting for Leases".

              The following analysis  represents property under capital lease at
              March 31, 1998 and 1997.

                                         1998           1997
                                      --------       --------

Equipment                             $ 26,877       $ 26,877
Less: accumulated depreciation         (24,170)       (19,853)
                                      --------       --------

Net property under capital lease      $  2,707       $ 7,024
                                      ========       ========

              At March  31,  1998,  the  Company  is  liable  under the terms of
              non-cancelable leases for the following minimum lease commitments:

                                                       Capital      Operating
                                                       Leases        Leases
                                                      ---------      --------
Period ended March 31,
   1999                                               $  5,520      $ 184,649
   2000                                                  3,561        166,941
   2001                                                  --           146,169
   2002                                                  --            31,368
    later years                                          --             --
                                                      ---------      --------
Total minimum lease payments                             9,081        529,127
    Less: interest                                      (1,304)
                                                      ---------
    Present value of net minimum lease payment           7,777
    Less: current portion                               (4,989)
                                                      ---------
    Capital lease obligations payable long-term       $  2,788
                                                      =========

        Rental  expense  for the  years  ended  March  31,  1998,  1997 and 1996
            amounted to $187,961, $86,094 and $90,305, respectively.


                                       22
<PAGE>


                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 8 -      CASH FLOW AND NON CASH INVESTING AND FINANCING ACTIVITIES

              Cash flow information
              ---------------------
                                                             March 31,
                                                             ---------
                                                      1998                 1997
                                                      ----                 ----

              Interest paid                         $18,478              $24,230

              Interest received                     $24,152              $ 2,585

              Income taxes paid                     $   400              $   300

              Non-cash investing and financing activities
              -------------------------------------------

              For the years ending March 31, 1998 and 1997, the Company incurred
              the following non-cash investing and financing activities.

                                                       March 31,       March 31,
                                                        1998             1997
                                                        ----             ----

              Capital lease obligations incurred    $    -          $      -

              Issuance of stock and options for
               services rendered                    $   651,517     $      -

NOTE 9 -      FINANCIAL INSTRUMENTS

              Concentrations of credit risk
              -----------------------------

              Financial  instruments  which  potentially  subject the Company to
              concentrations  of  credit  risk  consist   principally  of  trade
              receivables.  The Company  provides credit to its customers in the
              normal course of business.  However,  the Company performs ongoing
              credit  evaluations of its customers and maintains  allowances for
              potential  credit  losses.  The Company  places its temporary cash
              investments  with high quality  financial  institutions.  At times
              such investments may be in excess of the FDIC insurance limit.

NOTE 10 -RIGHTS TO SOFTWARE PRODUCT

              The Company  obtained  all the rights  associated  with the sexual
              harassment and OSHA  compliance  software  through  assuming third
              party debt associated with  development of the product.  In May of
              1997, the Company  obtained  exclusive  rights to an  intellectual
              property from Advance Technology Group (See Note 14).


                                       23
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 11 -         ACQUISITIONS

              On  February  27,  1997,   the  Company   established   Chequemate
              Tele-Services,  Inc.  (CTS)  along  with  another  individual  and
              received fifty-one percent (51%) of the company.  CTS then entered
              into an asset  purchase  agreement to acquire all of the assets of
              Quality Products Distribution, Inc. The assets consisted mainly of
              credit  card  processing  software  and  certain  intangibles.  In
              November of 1997,  the Company  sold the  processing  software and
              related intangibles.

NOTE 12 -         GOING CONCERN

              The Company's  financial  statements are prepared using  generally
              accepted accounting principles applicable to a going concern which
              contemplates   the   realization  of  assets  and  liquidation  of
              liabilities  in the normal  course of  business.  The  Company has
              incurred  losses from its inception  through  March 31, 1998.  The
              Company does not have an established source of revenues sufficient
              to cover  its  operating  costs and to allow it to  continue  as a
              going concern.  It is the intent of the Company to seek additional
              financing through private placements of its common stock.

              Management has formulated a plan to seek additional financing from
              outside  investors  and  through  Reg.  S  offerings  to non  U.S.
              persons.  Management  is  proceeding  with  a  merger  with a U.S.
              company  to better  enhance  marketing  of its '3-D'  product.  In
              addition,  the Company is seeking a joint  venture with a national
              hotel chain to use its '3-D' technology.

NOTE 13 -         COMMON STOCK OPTIONS

              Effective  May 17, 1995,  the  stockholders  approved an Incentive
              Stock Option Plan  granting to key  employees  options to purchase
              Company  common stock over a ten year  period,  at the fair market
              value at time of grant.  The aggregate  number of common shares of
              the Company which may be granted under the plan is 800,000 shares.
              The plan expires on March 23, 2004.



                                       24
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 13 -                                                     COMMON STOCK
OPTIONS (Continued)

              Activity regarding stock options is summarized as follows:

                                                            Number of Shares
                                                            ----------------
                                                         1998              1997
                                                         ----              ----
Options Granted:
     Beginning of year                                 354,800           154,800
     Additional granted                                   --             200,000
                                                       -------           -------
     End of year                                       354,800           354,800
                                                       =======           =======

Options Exercised:
     Beginning of year                                     100              --
     Additional exercised                                 --                 100
     Expired                                              --                --
                                                       -------           -------
     End of year                                           100               100
                                                       =======           =======

Options Outstanding at End of Year                        --                --
                                                       =======           =======

              Option  prices range from $6.25 to $7.00 per share.  Options price
              for regional directors and executive officers is $3.50 per share.

              The Company granted  several stock options to various  individuals
              for service performed or for future services. The option price for
              the  services  performed  was  stated at $5.00 per share on 14,000
              shares.  The option price granted on future services was the lower
              of the bid  price or $7.50  per share on  100,000  shares.  In the
              current year the option price was $0.01 per share.

NOTE 14 -ACQUISITION OF TECHNOLOGY

              In May of 1997,  the Company formed the  wholly-owned  subsidiary,
              Chequemate Third  Dimension,  Inc, (CTD). CTD then entered into an
              agreement to acquire technology  relating to certain  intellectual
              property from Advanced Technology Group, LLC. The agreement called
              for CMI to contribute to CTD three  million  dollars  within sixty
              (60) days of signing.  In  addition,  the  agreement  requires the
              Company to  establish  a  non-qualified  stock  option for certain
              members of the LLC. The  non-qualified  stock option plan provides
              various  individuals  the  option to acquire  2,000,000  shares of
              stock at a grant price of $0.01 per share.

NOTE 15 -SHORT TERM DEBT

              On  February  27,  1997,  the  Company,   through  its  subsidiary
              Chequemate Tele-Services,  Inc. (CTS) purchased certain intangible
              assets (see Note 11 - Acquisitions).  As part of the purchase, the
              Company is obligated to pay $300,000 through monthly  installments
              starting in June 1997 and ending in December 1997.



                                       25
<PAGE>

                 CHEQUEMATE TECHNOLOGIES, INC. AND SUBSIDIARIES
                    (Formerly Chequemate International, Inc.)
                   Notes to Consolidated Financial Statements
                             March 31, 1998 and 1997


NOTE 16 -RELATED PARTY TRANSACTIONS

              The Company owes certain officers and directors royalties from the
              revenue of book  sales.  In  addition,  the  Company  owes a major
              shareholder  royalties on active users of the Chequemate  product.
              The total amount owing to these  individuals  as of March 31, 1998
              and 1997 was $42,034 and $19,413, respectively.

NOTE 17 -MARKETING DEVELOPMENT AGREEMENT

              In December  1996,  the  Company  entered  into a venture  with an
              individual to enhance and improve its  marketing  capacity as well
              to strengthen its in-house  administrative  capacity.  The Company
              has incurred  monthly  expenses of  approximately  $10,000 on this
              venture.  The  alliance  between  the parties  indicates  that the
              individual  will earn 50% of all net  profits  directly  generated
              from  revenues  created   specifically  and  exclusively  by  this
              agreement.   Upon  termination  of  this  alliance,  the  specific
              revenues will revert back to the individual.

ITEM 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

     The Company has a disagreement  with  evaluation with the 3D product rights
its  accountants on the accounting and financial  disclosures  contained in this
Form 10-KSB report.


                                    PART III
                                    --------


ITEM 9.  Directors and Executive Officers

              The following table contains  certain  information  concerning the
nominees for the Board of Directors of the Company.

<TABLE>
<CAPTION>

Name and Principle Occupation or          Age      First          Shares of            Percentage of
Employment                                         Became a       Common Stock         Common
                                                   Director       Beneficially         Stock
                                                                  Owned                Outstanding
----------------------------------------------------------------------------------------------------
<S>                                       <C>      <C>            <C>                  <C>
Blaine Harris                             59       1994           2,377,000            15%
CEO and President of the Company.
Elected as an officer of the Company in
1994
Harold P. Glick                           56       1995             528,962             3%
Partner in the real estate company of
Moore Warfield & Glick
Robert E. Warfield                        58       1995           1,000,000             6%
Partner in the real estate company of
Moore Warfield & Glick
Chuck Coonradt                            54       1996               7,000           .04%
Chairman and CEO of the Game of
Work, Inc. a management consulting
firm
----------------------------------------------------------------------------------------------------
</TABLE>


                                       26
<PAGE>


Business Experience

Blaine Harris.  Chairman,  Director, CEO and President. Mr. Harris is an alumnus
of Idaho State  University,  where he majored in  Business  and  Marketing.  Mr.
Harris has  extensive  experience  in real estate  with his primary  focus being
commercial and residential project development.  From 1986 to 1991, he served as
Chief  Executive  Officer and Chairman of the Board of Directors of Help-U-Sell,
Inc. and was involved with  Help-U-Sell as a partner of Conquest  Management,  a
Utah partnership, which managed and owned a 49% interest in Help-U-Sell.  During
his administration,  Help-U-Sell grew from 118 franchises to 650 plus franchises
and was listed as the fastest  growing real estate  franchising  organization in
the country.  In 1991, the Help-U-Sell parent company,  Mutual Benefit Life, was
taken over by the New Jersey State  Insurance  Regulators  and its  subsidiaries
were liquidated,  including Help-U-Sell, Inc. In 1991, Mr. Harris formulated and
began development of Chequemate International, Inc.

Harold P. Glick.  Director.  Mr. Glick received his BS degree in Accounting from
the University of Maryland in 1965 and became a Certified Public  Accountant the
following year. Mr. Glick successfully  built and managed a family-owned  retail
business  prior to joining Mr.  Robert  Warfield as a partner in the real estate
Company of Moore,  Warfield and Glick.  Additionally,  since 1988, Mr. Glick has
been a  regional  owner  of  Help-U-Sell  Real  Estate  in  Virginia,  Maryland,
Washington D.C. and Delaware. Mr. Glick served as President of the Greater Ocean
City, Maryland,  Board of Realtors in 1988, is a member of the Advisory Board of
Nations  Bank  and  serves  on  the  Maryland  Governor's  Economic  Development
Committee.

Robert E.  Warfield.  Director.  Mr.  Warfield has a BS Degree in Economics from
Western  Maryland  College.  He has an extensive  background  in real estate and
regional sales management with the Weyerhaeuser Corporation.  Mr. Warfield first
became  licensed  in real  estate in 1962,  and in 1975  started  Warfield  Real
Estate.  He has been in the real estate and development  business in Ocean City,
Maryland  since 1971.  For the past 18 years Mr.  Warfield has been President of
Moore,  Warfield and Glick,  Inc.,  with real estate sales over $100 million and
rentals of $12  million.  Additionally,  since  1988,  Mr.  Warfield  has been a
regional owner of help-U-Sell Real Estate in Virginia, Maryland, Washington D.C.
and  Delaware.  Mr.  Warfield  currently  serves  on the Board of  Directors  of
Atlantic General Hospital and Ocean City Golf and Yacht Club. He has also served
as a director of Second National Service Corp., and Salisbury School.

Chuck Coonradt.  Director.  Mr. Coonradt is Chairman of the Board and CEO of The
Game of Work,  a Utah-based  corporation  engaged in  providing  management  and
personnel  training for its corporate  clients in the fields of goal-setting and
profit  improvement.  Clients of the firm  include  Quaker  Oats,  Wendy's,  The
Chicago Tribune, First Interstate Bank, Dow Chemical and Pepsi-Cola.

Executive Officers
<TABLE>

              The  following  table  outlines  the  executive  officers  of  the
Company. This table does not include those officers that serve as Directors.
<CAPTION>


Name                 Age                  Positions Held          Current Term of Office or
                                                                  Directorship and period of Service
----------------------------------------------------------------------------------------------------


<S>                  <C>                                                             <C>
Ken Redding          35                   Executive Vice         Current Term August 1997-August
                                          President              1998.  Service since November 1994

John Garrett         56                   CFO                    Current Term August 1997 - August
                                                                 1998.  Service since June 1996
Marci Redding        34                   Secretary/Treasurer    Current Term December 1997-
                   August 1998. Service since
                                  November 1994
-----------------------------------------------------------------------------------------------------
</TABLE>


Business Experience

Kenneth D.  Redding.  Executive  Vice  President.  Mr.  Redding is an alumnus of
California   State   University,   Sacramento   where  he  majored  in  Business


                                       27
<PAGE>


Administration and Marketing. From 1985 to 1992, Mr. Redding was involved in the
ownership and operation of several  Help-U-Sell  real estate  franchise  offices
throughout Northern California. Mr. Redding is the son-in-law of Blaine Harris.

John Garrett.  Vice President,  Financial Advisor to the President.  Mr. Garrett
received his BS Degree in finance from Brigham Young University in 1967. He also
graduated from Pacific Coast Banking  School,  University of Washington in 1983.
He has 15 years  executive  management  experiences in banking and was a founder
and executive officer of First Beverly Bank,  Beverly Hills  California.  He has
developed,  owned  and/or  managed a variety  of  financial,  manufacturing  and
industrial businesses over the past 20 years.

Marci Redding.  Management  Services Director/  Secretary.  Ms. Redding has a BS
Degree in Management Information Systems Development and Business Administration
from  Utah  State  University.  Since  1986,  she  has  worked  directly  on the
development of automated  operational and accounting  systems as Director of MIS
Services for a large real estate franchise  organization and through independent
client consultation. In 1992 Ms. Redding joined with Chequemate International as
the Chief  Operating  Officer.  Throughout her employment with  Chequemate,  Ms.
Redding has been involved  extensively  in all areas of  department  and company
administration  encompassing product development,  training, finance, personnel,
legal and the general operational aspects of the business.


ITEM 10. Executive Compensation

              The table set forth on the  following  page  contains  information
about the  remuneration  received and accrued  during fiscal years 1997 and 1998
from the Company and its subsidiaries by the Chief Executive officer and each of
the most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>

Name and                                                                          All Other Annual
Principal Position      Fiscal Year      Salary ($)        Bonus ($)              Compensation
---------------------------------------------------------------------------------------------------

<S>                     <C>              <C>               <C>                    <C>
Blaine Harris, CEO      1998             $100,000          $1,457                 $ 10,000
                        1997             $100,000          $1,015                 $ 24,174 (1)

Lavar Butler,           1998             $ 60,000          $1,491                 $  1,083
Senior VP               1997             $ 60,000          $  585                 $  2,166
Ken Redding,            1998             $ 54,000          $1,491                 $      0
Executive VP            1997             $ 54,000          $  585                 $  3,249
Marci Redding,          1998             $ 42,000          $1,491                 $      0
Secretary/Treasurer     1997             $ 42,000          $  455                 $  1,750
Albert Alvey,           1998             $110,000          $    0                 $      0
President (CE)          1997             $      0          $    0                 $      0
John Garrett, CFO       1998             $ 54,000          $1,491                 $    875
                        1997             $ 48,370          $  390                 $  1,642
---------------------------------------------------------------------------------------------------
</TABLE>


        The  following  chart shows the stock  options  that were granted to any
  executive officer of the Company during the last completed fiscal year.


Name and Principal Position       Total Options Granted  Total Options Vested

--------------------------------------------------------------------------------
Blaine Harris, CEO                70,000                 42,000
Ken Redding, Executive VP         70,000                 35,000
Marci Redding, Secretary          70,000                 35,000
John Garrett, Vice President      70,000                 14,000
Other Executive Officers          60,000                 21,000
(2)
--------------------------------------------------------------------------------

----------
1This  amount  includes  a payment  of $17,174  in  deferred  compensation  from
 previous fiscal years.


                                       28
<PAGE>


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

              The table on the following page sets forth certain  information as
of July 7, 1998 with  respect to each person who owns of record,  or is known to
the  Company to  beneficially  own,  more than 5% of the  outstanding  shares of
Voting Common Stock,  and the  beneficial  ownership of such  securities by each
officer and director who owns any stock,  and by all officers and directors as a
group. The original directors and officers of the Company, whose aggregate share
holdings are now less than three percent of the total shares outstanding, may be
deemed to have been promoters of the Company. 
<TABLE>
<CAPTION>



Name and Address of Beneficial        Amount and Nature of          Percent of currently issued and
Owner                                 Ownership of Voting Stock     Subscribed Common Stock
---------------------------------------------------------------------------------------------------
<S>                                   <C>                           <C>
Blaine Harris                         2,377,0002
57 West 200 South Suite 350           Direct Ownership              14.8%
Salt Lake City, Utah 84101
Robert Warfield                       1,000,000
10481 Golf Course Road                Direct Ownership              6.2%
Ocean City, MD 21842
Don Christensen                       941,617
1321 East 1700 South                  Direct Ownership              5.9%
Bountiful, Utah 84010
Harold P. Glick                       528,962
10706 Piney Island Drive              Direct Ownership              3.3%
Bishipville, MD 21842
Chuck Coonradt                        7,000
3797 W. Blacksmith Road               Direct Ownership              0.04%
Park City, Utah 84060
Ken Redding                           35,0002
57 West 200 South  Suite 350          Direct Ownership              0.2%
Salt Lake City, Utah 84101
Marci Redding                         35,0002
57 West 200 South Suite 350           Direct Ownership              0.2%
Salt Lake City, Utah 84101
John Garrett                          14,0002
57 West 200 South Suite 350           Direct Ownership              0.2%
Salt Lake City, Utah 84101
Officers and Directors as a group     4,938,579                     30.8%
--------------------------------------------------------------------------------
</TABLE>


        The Company knows of no arrangements, including any pledge by any person
of securities of the Company, the operation of which may at a subsequent
               date result in a change in control of the Company.



ITEM 12.  Certain Relationships and Related Transactions.

              In calendar year 1992, the limited  liability company ( the "LLC")
of John C. Wilkinson,  a former  director of the Company,  received a CEDO grant
for the development of the Compliance  Software.  Of this amount, the LLC loaned
$120,000 to the Company.  In fiscal year 1993, the Company borrowed $30,000 from
WAC  Research,  Inc.  (WAC).  Donald  M.  wood,  than a member  of the  board of
directors of the Company,  was an officer,  director and shareholder of WAC. The
$30,000  loan  from  WAC was  paid in May of  1993.  In a  restructuring  of the
financial
--------
   2 Includes  shares which these  individuals  have the right to acquire within
     sixty  days  pursuant  to  options  granted  through  May  31,  1997 in the
     following amounts;  Harris 42,000;  Redding 35,000; Redding 35,000; Garrett
     14,000.


                                       29
<PAGE>


obligations of the Company, the Company paid $200,000 of expenses for the LLC of
Mr.  Wilkinson,  satisfying  the  $120,000  loan to the  Company  by the LLC and
resulting in a net payable of the LLC to the Company of $78,890 as of the end of
fiscal year 1993. As of April, 1993, the Company loaned to the LLC an additional
$30,043.  The LLC and John Wilkinson  executed a promissory  note reflecting the
foregoing transactions, resulting in an obligation of the LLC and John Wilkinson
to the Company, at that time, in the total amount of $108,933.  This note was an
unsecured  demand note  bearing  interest at the rate of 10%. On April 29, 1993,
the LLC was dissolved.  Pursuant to such dissolution, all assets and liabilities
of the LLC were distributed to the members of the LLC. Therefore, the promissory
note was  considered to be the  obligation of Mr.  Wilkinson.  As of October 30,
1994, other advances had been made pursuant to the transaction and the principal
balance of such loan was $151,202.  This amount was canceled in exchange for Mr.
Wilkinson's  return of his 290,000 shares of stock of the Company at the time of
the CMI acquisition.

              Pursuant to the  authorization  of the board of directors in their
December 31, 1992 directors'  meeting,  the Company issued  2,000,000  shares of
Non-Voting Common Stock of the Company. These shares reflected certain rights of
conversion to Voting  Commons Stock.  Subsequently,  1,000,000 of the Non-Voting
Common Stock shares were canceled. Of the remaining shares,  500,000 were issued
to John C.  Wilkinson,  an officer and  director of the Company and 500,000 were
issued to WAC Research,  Inc., a Utah  corporation.  Donald M. Wood,  the former
Chairman of the board of directors for the Company, was an officer, director and
shareholder  of WAC and is deemed to be a beneficial  owner of such shares.  Mr.
Wilkinson and WAC executed Non-Voting Stock Shareholder's Agreements principally
relating  to  the  conversion  rights  of the  stock.  These  transactions  were
effective  as  of  January  8,  1993.  The  non-voting  shares  were  issued  as
consideration for certain management, marketing and consulting services rendered
by the  shareholders.  On March 31, 1993,  the board of directors of the Company
authorized the  conversion of such stock to Voting Common Stock.  In conjunction
with the CMI  acquisition,  Mr.  Wood,  Mr.  Wilkinson,  and  their  transferees
returned a total of 1,820,425 shares of stock to the Company for cancellation.

              During  fiscal year 1995,  Mr. Hal Glick,  Bob Warfield and Oxford
International  Management  Inc.,  three  principal  shareholders  of the Company
including two directors loaned $273,140 to the Company. On March 29, 1996, these
loans plus accrued  interest  were  exchanged  for 87, 783 shares of  restricted
common stock of the Company.  The exchange  price for these shares was $3.50 per
share.

              Prior to March 31,  1994,  Blain  Harris,  CEO of the  Company and
president of its wholly owned subsidiary Chequemate International,  Inc., loaned
$215,000 to CMI.  During  fiscal year 1995,  this loan was paid down to $93,000.
Subsequently, Mr. Harris loaned an additional $200,000 to the Company. This loan
was paid in full in September  1995. The balance of $93,000,  owing on the first
loan  referred  to in this  paragraph,  bears  interest  at 12% and  matures  in
December 31, 1998. On January 29, 1998 the Company entered into a loan agreement
with Mr. Harris that as of March 31, 1998 the Company owed Mr. Harris $135,000.

              Blaine  Harris,  CEO and  Chairman  of the board  and a  principal
shareholder  of the  Company,  and Don  Christensen,  a Director  of  Chequemate
International,  Inc. and shareholder of the Company,  have an agreement with the
Company to receive a monthly fee based upon a certain  client base of Chequemate
International.  During fiscal year 1998, their compensation under this agreement
was less than $1,000.

ITEM 13. Exhibits and Reports on Form 8-K


              Reports Filed on Form 8-K
              -------------------------

              During fiscal year covered by this Form 10-KSB report, the Company
filed a Form 8-K March 30, 1998.


                                       30
<PAGE>

                                  (a)SIGNATURES
                                  -------------

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


                                      CHEQUEMATE INTERNATIONAL, INC.


By    /S/                                            Date    07-14-1998
  -------------------------------------                  -----------------------
Blaine Harris - CEO




By    /S/                                            Date    07-14-1998
  -------------------------------------                  -----------------------
John Garrett - CFO


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

   /S/                                                   07-14-1998         
---------------------------------------               -----------------
Blaine Harris Chief Executive Officer and Director         Date


   /S/                                                   07-14-1998         
----------------------------------------              -----------------
Harold P. Glick,  Director                                 Date


   /S/                                                   07-14-1998         
----------------------------------------              -----------------
Robert E. Warfield, Director                               Date


   /S/                                                   07-13-1998         
----------------------------------------              -----------------
Chuck Coonradt, Director                                   Date


                                       31