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

                                    FORM 10-K/A

(Mark One)

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

                   For the fiscal year ended December 31, 1998

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

Commission file number: 0 - 7619

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

         DELAWARE                                       93-0636333
 ------------------------------                 -------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

              650 West Georgia Street, Suite 1600, P.O. Box 11586,
                   Vancouver, British Columbia, CANADA    V6B 4N8
              ------------------------------------------------------
               (Address of principal executive offices)  (Zip Code)

                                 (604) 685-8318
                          -----------------------------
                         (registrant's telephone number)

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

     Title of Each Class:                 Name of exchange on which registered:
$0.01 Par Value common stock                      OTC Bulletin Board
----------------------------              ------------------------------------

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the past 12 months (or for such shorter  period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.
                                                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of June 17, 1999, the aggregate market value of the voting common equity held
by  non-affiliates  of the  registrant,  based on the closing price of $0.022 on
that date, was approximately $158,028.

As of October 7, 1999,  the  registrant  had  outstanding  15,559,542  shares of
common stock.



<PAGE>



                              INDEX TO FORM 10-K/A
                                       OF
                          POWERSOFT TECHNOLOGIES, INC.

                                                                            Page
                                     PART I


Item 1.    Business                                                            3

Item 2.    Description of Property                                             7

Item 3.    Legal Proceedings                                                   7

Item 4.    Submission of Matters to a Vote of Security Holders                 7

                                     PART II

Item 5.    Market for registrant's Securities and Related Stockholder Matters  7

Item 6.    Selected Financial Data                                             9

Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                 9

Item 7a.   Quantitative and Qualitative Disclosures About Market Risk         13

Item 8.    Financial Statements                                               14

Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosures                               15

                                    PART III

Item 10.   Directors and Executive Officers of the registrant                 15

Item 11.   Executive Compensation                                             16

Item 12.   Security Ownership of Certain Beneficial Owners and Management     18

Item 13.   Certain Relationships and Related Transactions                     19

                                     PART IV

Item 14.   Exhibits and Reports on Form 8-K                                   20

           (a)  Exhibits
           (b)  Reports on Form 8-K

Signatures                                                                    21


                                 2

<PAGE>

                                     PART I

ITEM 1.   BUSINESS

Powersoft Technologies,  Inc. ("Company") was originally organized in California
on March 24, 1958 as Time Saver  Markets,  Inc.  From 1958 to 1994,  the Company
effected  numerous  name changes and engaged in  businesses  other than those it
presently  operates.  In August 1994, the Company changed its corporate domicile
to Delaware.  In November 1994, the Company,  then known as Alpine International
Corp.  changed its name to Heng Fai China  Industries,  Inc. On March 31,  1998,
Heng Fai China Industries,  Inc. changed its name to Powersoft Technologies Inc.
The  Company  has signed an  agreement  ("SAR  Agreement"),  to sell most of its
subsidiaries,  and as a result,  most of its operations to SAR Trading  Limited,
("SAR"),  a company  wholly  owned by Fai H.  Chan,  an  officer,  director  and
shareholder of the Company. Upon shareholder approval of the SAR Agreement,  the
Company  intends  to  focus  its  operations  on the  acquisition  of  companies
operating   in  the   fields   of   computer   technology   and  the   Internet,
telecommunications  and  financial  software  applications  for  the  securities
industry.

As of December 31, 1998, the Company's investments were as follows:


Name                             % Owned           State/Foreign Incorporation
--------------------------       -------           ---------------------------
Cangzhou Min You                  19%(1)           People's Republic of China
   Cement Co., Ltd.

Vancouver Hong Kong               100%(2)          Canada
   Properties Ltd.

America & China Business          100%             Canada
   and Development Inc.

Heng Fai Management Inc.          100%(2)          British Virgin Islands

Heng Fai China & Asia             100%(2)          Hong Kong
   Industries Limited

Heng Fai China                    100%(2)          Hong Kong
   Industries Limited

Worldwide Container               100%(2)          Hong Kong
   Company Limited

Heng Fai China Industries         100%(2)          Hong Kong
   Acquisition Limited

Greatly Hong Kong Limited         100%(2)          Hong Kong

(1)  As of July 24, 1998,  the Company  divested 81% of its interest in Cangzhou
     Min You Cement Co., Ltd.

(2)  On January 18, 1999, the Company entered into an agreement with SAR Trading
     Limited  ("SAR")  wherein SAR agreed to buy and the Company  agreed to sell
     all of its interests in the majority of its subsidiaries for  approximately
     $4,838,000  in the  form  of the  assumption  of  certain  liabilities.  In
     consideration of the assumption of liabilities, the Company agreed to issue
     two notes payable to SAR in the amounts of $1,000,000 and  $3,838,000.  The
     $1,000,000  note will be immediately  convertible  into  20,000,000  common
     shares of the Company.  The $3,838,000 note will be convertible into shares
     of common stock of the Company,  in minimum increments of $250,000 each, at


                                       3
<PAGE>


     the  average 15 day  trading  price at the option of the  Company by giving
     seven  trading  days notice in writing to SAR.  SAR is owned 100% by Fai H.
     Chan. On June 18, 1999,  the Company  agreed to offset the amounts due from
     related parties  resulting from the sale, of $1,365,278 with the $3,838,000
     note payable. The agreements are subject to shareholder approval.

                 Agreement with CyberConstruction Company, Inc.

On February 12, 1999, the Company entered into a Technology License and Services
Agreement (the  "Agreement") with  CyberConstruction  Company,  Inc.  ("Cyber").
Cyber has  developed  and continues to develop  certain  software  applications,
methods, operating procedures,  Internet infrastructure design and Internet site
template  development  (collectively the  "Technology").  The Agreement grants a
nontransferable  license  to the  Company  to use and  execute  this  Technology
developed by Cyber,  along with related services,  for the Company's  customers.
The Company  agrees to grant and transfer to Cyber,  as a  consideration  of the
license  and  related  services,  its  preferred  stock with a face value of $10
million,  as part of an issuance of up to $50 million of its  preferred  shares.
The Company has agreed that upon the sooner of (i) the licensing or  acquisition
of  technologies  utilizing the $50 million  proceeds from the sale of preferred
shares; or (ii) February 13, 2001. The transaction contemplated by the agreement
has not yet been consummated and consequently, has not yet been recorded.

                             Historical Information

In 1994, the Company  acquired  Vancouver Hong Kong Properties  Ltd., a Canadian
corporation  ("Vancouver Hong Kong"),  which owns an apartment building in North
Vancouver, British Columbia ("Apartment Building").

In January 1995, the Company acquired a wholly-owned subsidiary,  Heng Fai China
& Asia Industries Limited ("Asia"),  a company  incorporated in Hong Kong, along
with  Asia's  wholly-owned   subsidiary,   Heng  Fai  China  Industries  Limited
("China").  China is incorporated  in Hong Kong and owned options  ("Option") to
acquire, through its wholly owned subsidiary, Cangzhou Min You Cement Co., Ltd.,
a foreign-owned  enterprise registered in the People's Republic of China ("PRC")
("Min You"),  direct or joint venture operating lease interests in the following
three cement factories in the Hebei province of PRC: (i) the Hebei Cangzhou City
Chemical  Corporation  Factory  ("Cangzhou  Factory");  (ii) the Qingxian Cement
Factory  ("Qingxian  Factory");  and (iii) the Hebei Cangzhou Area  Construction
Materials  Factory  ("Hebei  Factory").  Min You did not exercise its Options to
acquire  interests  in the  Qingxian  Factory  and the Hebei  Factory,  and such
Options have since expired.

In April 1995,  Min You  exercised an Option to lease a  production  line at the
Cangzhou  Factory.  Such lease  provided for the use of the  production  line at
Cangzhou Factory for a five year period commencing January 1, 1995.

In September 1996, the Company,  through its wholly owned subsidiary,  Worldwide
Container Company, Ltd.  ("Worldwide"),  acquired a 70% interest in Wuhan Monkey
King  Container  Co.,  Ltd.  ("Wuhan"),  in exchange  for 727,272  shares of the
Company's  restricted Common Stock. Wuhan is a sino-foreign equity joint venture
registered in PRC which is engaged in the design, manufacture,  lease and repair
of standard and non-standard containers and related steel structure products.

In January 1997, the Company acquired from Fai H. Chan, an officer, director and
shareholder of the Company, 100% of the outstanding common stock of Greatly Hong
Kong Limited  ("Greatly HK") in exchange for nominal  consideration.  Greatly HK
had a 25% interest in Hebei Cherry Valley Duck Ltd. ("Duck Farm"), a cooperative
joint venture  established  in the PRC which was engaged in the  management  and
operation  of a duck farm in PRC.  The  investment  was  wholly  financed  by an
interest free, short term advance from Fai H. Chan. Other than the investment in
the Duck Farm and  advance  from Fai H. Chan,  Greatly HK had no other  material
assets and liabilities, or operations at the time of acquisition.

                                       4
<PAGE>


In March 1997, the Company  acquired from Fai H. Chan, an officer,  director and
shareholder of the Company,  100% of the outstanding common stock Heng Fai China
Industries  Acquisition Limited ("Heng Fai Acquisition") in exchange for nominal
consideration.  Heng Fai Acquisition  had an option to form a cooperative  joint
venture  in PRC,  but  otherwise  had no  material  assets and  liabilities,  or
operations  at the time of  acquisition.  Heng Fai  Acquisition  entered  into a
conditional  agreement  ("Agreement")  with an  unaffiliated  party in PRC ("PRC
Party") to establish a joint  venture,  Heng Li  (Zhangjiagang  Free Trade Zone)
International  Trading and  Development  Co.,  Ltd.  ("Heng Li"), to develop and
construct a commercial  building in Zhangjiagang  Free Trade Zone, PRC. However,
the Agreement was not completed and an application  has been submitted to cancel
the registration of Heng Li.

                                1997 Divestitures

After  several  years of direct  investments  in PRC, as  described  above,  the
Company  believed  the  returns on such  investments  were  unsatisfactory.  The
Company  believed its best course of action was to write-off  or  discontinue  a
substantial   part  of  its  PRC   operations   ("Divestiture").   Pursuant   to
reorganization,  the Company  commenced  the  Divestiture  and entered  into the
following  agreements to terminate or  substantially  reduce its interest in its
PRC operations as follows:

Min You. In December 1997, the Company,  through China,  transferred  81% of its
interest  in Min You to two  unrelated  parties  in Hong  Kong  and  PRC.  China
retained a 19%  interest in Min You and full  provisions  have been made against
the  remaining  cost of investment  in Min You.  Applications  for the change in
ownership in Min You have been approved by the respective authorities in PRC.

Wuhan.  In December  1997,  the Company  effected  an  agreement  to reverse the
acquisition  by  returning  its 70%  interest in Wuhan and to redeem the 727,272
shares of restricted Common Stock previously issued pursuant to the acquisition.
Applications  for the change in  ownership  in Wuhan have been  approved  by the
respective authorities of PRC during 1998.

Duck Farm. In December 23, 1997,  Greatly HK effected an agreement to dispose of
its 25% interest in the Duck Farm.  Applications  for the change in ownership of
the Duck Farm have been  approved by the  respective  authorities  in PRC during
1998.

Heng Li. Heng Fai  Acquisition  did not  exercise  its option to form Heng Li as
certain  conditions  of the joint  venture  agreement  were not met. In December
1997, the Company canceled the registration of Heng Li.

                               Segment Information

Information pertaining to the Company's two operating segments,  Investments and
Real  Estate,  are in Footnote  13 in the  accompanying  consolidated  financial
statements.

                             Real Estate Operations

The Company operates an apartment building, Lord Highlands Apartments,  260 East
12  Street,  North  Vancouver,  British  Columbia,  Canada  V7L 2J6  ("Apartment
Building"),  located  within  the  Central  Lonsdale  area of the  City of North
Vancouver,  British  Columbia.   Developments  in  the  immediate  area  consist
primarily  of  low  to  medium  density   residential   units,  with  commercial
development  focused along  Lonsdale  Avenue to the west and the more  prominent
cross  streets  such as 13th  Street and 15th  Street.  Lions Gate  Hospital,  a
principal medical facility,  is located just north of the apartment  building at
the intersection of East 13th Street and St. George Avenue.


                                       5
<PAGE>


The Central Lonsdale  corridor serves as the primary  commercial  center for the
city and the surrounding  areas of North Vancouver.  Residential  development in
the  surrounding  areas consists of a variety of 3-story rental and strata tiled
apartments, plus lower density townhouse developments.  The area also has higher
density  development in the area. Thus, the apartment building is located within
a stable multiple residential oriented neighborhood,  located in close proximity
to local retail, recreational and public amenities.

The  following   information   has  been   extracted  from  the  Canada  Housing
Corporation's ("CMHC") Vancouver CMA Rental Market Report.

Vacancy Rates


Region                               12/98           12/97            12/96
----------------------------         -----           -----            -----

City North of Vancouver               1.9%            0.6%             0.6%

District North of Vancouver           1.2%            0.2%             0.2%

Metro Vancouver                       1.5%            1.5%             1.2%

Apartment Rental Rates


City North of Vancouver              12/98           12/97            12/96
-----------------------              -----           -----            -----

Bachelor                            CDN$607         CDN$574          CDN$572

One Bedroom                         CDN$705         CDN$703          CDN$688

Two Bedroom                         CDN$859         CDN$971          CDN$967

The Apartment Building is a 60 unit, three-story wood frame building constructed
in the late  1960's.  The  building has a below grade  basement  containing  the
mechanical rooms,  various storage rooms,  workshops and recreational areas. The
apartment building has a total of 60 suites consisting of one bachelor suite, 38
one  bedroom  suites  and 21 two  bedrooms  suites.  Twelve of the two  bedrooms
suites,  located on the corners of the building  offer wood burning  fireplaces.
The suites are  generally  larger than average and on the whole,  have been well
maintained.  General  finishing  details include hardwood floors or wall-to-wall
carpeting  with  vinyl   flooring  in  the  kitchens  and  bathrooms,   adequate
cabinet/counter  space in the kitchens with two appliances,  partly tiled shower
surrounds in the bathroom  and covered  balconies or patios.  Paved open parking
for 60 vehicles is provided at the rear of the apartment building. Access/egress
is available by a paved rear service lane off St. Andrews Avenue.

Apartment Building Rental Rates

The current monthly rents* are as follows:


Suite Type                               Monthly Rent
----------                               ------------

Bachelor                                    CDN$580
One Bedroom                                 CDN$660
Two Bedroom                                 CDN$805
-------------
* Rent includes heat, hot water, parking and cable television.


                                       6
<PAGE>



The above  survey  supports  the  conclusion  that the monthly  rents within the
subject are  reasonably in line with market rents,  taking into account the size
and condition of the units plus the inclusions in the monthly rent.

                                    Employees

The Company  currently  employs 5 persons,  2 of which oversee the operations of
the  Apartment  Building,  and 1 monitors  the  operations  in PRC.  The Company
believes that its relationship with its employees is good.

                              Government Regulation

The Company is not aware of any  government  regulations in the United States or
Canada which could  materially  adversely  affect its business or  operations in
Canada. The Company's  participation in the operations of the Apartment Building
are subject to  significant  governmental  regulation  in Canada and the Company
believes it is in compliance  with such  regulations  to the extent the same are
applicable to the Company.

ITEM 2.   DESCRIPTION OF PROPERTY

The Company leases its principal  executive  offices at 650 West Georgia Street,
Vancouver,  British Columbia,  Canada. The offices are suitable for the needs of
the Company.

In June 1998,  the Company  transferred a lease for an office at 45 Wall Street,
New  York,  New York to  eVision  USA.Com,  Inc.,  formerly  known  as  Fronteer
Financial Holdings, Ltd., a company of which Fai H.
Chan is an officer, director and shareholder.

The Company also  operates the  Apartment  Building,  composed of 60  individual
residential units in a three story frame building situated at the corner of East
12 Street and St. Andrews Avenue in North Vancouver,  British Columbia,  Canada.
The Apartment  Building is  approximately  57,340 square feet and is situated on
approximately 1,109 acres of land. It is owned by the Company,  subject to first
and second mortgages.  The land underlying the Apartment  Building is leased and
such lease terminates on May 31, 2032, subject to earlier termination in certain
circumstances.  The annual lease cost for the land is fixed at $71,115 until the
year 2010, after which time it will be renegotiated for the remaining term.

ITEM 3.   LEGAL PROCEEDINGS

The Company is not a party to any material pending or ongoing litigation.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter  ended  December 31, 1998,  no matters were placed before the
stockholders of the Company for consideration.

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock is quoted on the OTC Bulletin Board ("OTC"). However,
there is no established  public  trading market for the Company's  common stock.
The following table sets forth, for the periods indicated, the reported high and
low bid price  quotations  for the Common Stock for the periods such  securities
have been reported on the OTC. Such quotations reflect  inter-dealer prices, but
do  not  include  retail  mark-ups,   mark-downs  or  commissions  and  may  not
necessarily represent actual transactions.


                                       7
<PAGE>

                                  Common Stock


                                                 High Bid              Low Bid
Year ended December 31, 1998:                    --------              -------
----------------------------

First Quarter                                 $    0.245            $    0.10
Second Quarter                                     0.210                 0.12
Third Quarter                                      0.130                 0.09
Fourth Quarter                                     0.085                 0.05

Year ended December 31, 1997:
----------------------------

First Quarter                                      1.875                 0.53
Second Quarter                                     0.813                 0.34
Third Quarter                                      0.600                 0.24
Fourth Quarter                                     0.265                 0.11

As of June 17, 1999,  there were  approximately  1,447  holders of record of the
common stock based upon information furnished by OTR/Oxford Transfer & Registrar
Securities  Agent, the transfer agent for the common stock. The number of record
holders does not include  holders whose  securities are held in street name. The
closing price of the common stock as reported on the Bulletin  Board on June 17,
1999 was $0.022.  As of June 17, 1999,  there were  15,559,542  shares of common
stock outstanding.

The Company has never paid and does not anticipate  paying any cash dividends on
its common stock in the  foreseeable  future.  The Company intends to retain all
earnings for use in the Company's  business  operations  and in the expansion of
its business.

On  February 5, 1999,  13,700,000  shares of common  stock of the  Company  were
issued  erroneously  to SAR in exchange  for a portion of the debt that is to be
issued pursuant to the agreements with SAR.  Because the agreements have not yet
been approved by the Company's  shareholders,  the  13,700,000  shares of common
stock have been canceled.

                   Recent Issuance of Unregistered Securities

There were no issuances of the Company's common stock during 1998.

On January 18, 1999,  the Company  entered  into an  agreement  with SAR Trading
Limited  ("SAR") wherein SAR agreed to buy and the Company agreed to sell all of
its interests in the majority of its subsidiaries for  approximately  $4,838,000
in the form of the assumption of certain  liabilities.  In  consideration of the
assumption of liabilities,  the Company agreed to issue two notes payable to SAR
in the  amounts  of  $1,000,000  and  $3,838,000.  The  $1,000,000  note will be
immediately  convertible  into  20,000,000  common  shares of the  Company.  The
$3,838,000 note will be convertible  into shares of common stock of the Company,
in minimum  increments of $250,000  each, at the average 15 day trading price at
the option of the Company by giving seven trading days notice in writing to SAR.
SAR is owned 100% by Fai H. Chan. On June 18, 1999, the Company agreed to offset
the amounts due from related parties resulting from the sale, of $1,365,278 with
the $3,838,000 note payable. The agreements are subject to shareholder approval.
The issuance of the note convertible into common stock was made in reliance upon
the exemption from  registration  provided by Section 4(2) of the Securities Act
of 1933,  as amended (1933 Act).  The  purchaser had access to full  information
concerning  the Company and  represented  that it purchased the common stock for
the purchaser's own account and not for the purpose of distribution.  The common
stock will contain a restrictive legend advising that the securities represented


                                       8
<PAGE>


by the common stock may not be offered for sale,  sold or otherwise  transferred
without  having  first  been  registered  under the 1933 Act or  pursuant  to an
exemption from registration under the 1933 Act. No underwriters were involved in
the transaction.

ITEM 6.   SELECTED FINANCIAL DATA

The following  table sets forth  selected  financial data of the Company and its
subsidiaries.  The  selected  consolidated  financial  data in the table for the
Company's five years ended  December 31, 1998,  1997,  1996,  1995 and 1994, are
derived primarily from the consolidated  financial statements included elsewhere
herein. The data should be read in conjunction with "Management's Discussion and
Analysis of Results of Operations  and Financial  Condition,"  the  consolidated
financial  statements  of the  Company  and  related  notes  thereto  and  other
financial information included elsewhere herein. All dollar amounts reflect U.S.
Dollars.

<TABLE>
<CAPTION>

                                 1998           1997           1996           1995           1994
                                 ----           ----           ----           ----           ----
<S>                        <C>                 <C>            <C>            <C>            <C>
Net operating revenues     $    320,630        571,921        428,858        354,952        333,319


(Loss) income from
  continuing operations      (1,077,133)    (1,217,418)    (2,061,732)    (1,880,672)        27,315

Total assets                  1,215,766      2,388,062     10,625,380      1,723,856      1,129,696

Long-term obligations:
   Mortgage loans
   payable                      710,277        837,966        865,594        975,108        971,611
   Long-term note payable          --             --           88,744         91,415           --

Per common share, basic
   and diluted:
(Loss) income from
  continuing operations           (0.07)         (0.08)         (0.18)         (0.18)          0.02

Cash dividends per
   common share                    --             --             --             --             --
</TABLE>

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

The following  discussion  should be read in conjunction  with the  Consolidated
Financial  Statements  of the  Company  and  related  Notes  thereto,  and other
financial information included elsewhere herein. The financial statements of the
Company  are  prepared  in  conformity  with United  States  generally  accepted
accounting principles.

Introduction

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

The Company owns an Apartment Building in North Vancouver, British Columbia, and
until June 1995 the Company's  operations were comprised of that single segment.
In 1995 and 1996, the Company,  through various  subsidiaries,  acquired certain
interests in PRC, including:

     (i)  Min You,  which has an option to lease a  production  line in Cangzhou
          Factory for cement manufacturing;
     (ii) a 70% interest in Wuhan, a PRC container manufacturer;
     (iii)an interest in the Duck Farm pursuant to which the Company  operated a
          duck farm in PRC; and

                                       9
<PAGE>

     (iv) an option to form Heng Li in order to develop a commercial building in
          Zhangjiagang Free Trade Zone, PRC.

In the fourth quarter of 1997, the Company  determined that it would discontinue
substantially  all of its  operations in PRC. The  Divestiture  included (i) the
transfer of 81% of the Company's  interest in Min You to two unrelated  parties;
(ii)  effecting  an agreement  to reverse the  acquisition  of a 70% interest in
Wuhan;  (iii) the  termination  of the Company's  interest in the Duck Farm; and
(iv) the termination of the Heng Li joint venture agreement.

As of December  31,  1998,  the Company  retained a 19% interest in Min You, but
full  provisions  have been made against the remaining cost of investment in Min
You, and 100% of the outstanding capital stock of Vancouver Hong Kong.

On January 18, 1999,  the Company  entered  into an  agreement  with SAR Trading
Limited  ("SAR") wherein SAR agreed to buy and the Company agreed to sell all of
its interests in the majority of its subsidiaries for  approximately  $4,838,000
in the form of the assumption of certain  liabilities.  In  consideration of the
assumption of liabilities,  the Company agreed to issue two notes payable to SAR
in the  amounts  of  $1,000,000  and  $3,838,000.  The  $1,000,000  note will be
immediately  convertible  into  20,000,000  common  shares of the  Company.  The
$3,838,000 note will be convertible  into shares of common stock of the Company,
in minimum  increments of $250,000  each, at the average 15 day trading price at
the option of the Company by giving seven trading days notice in writing to SAR.
SAR is owned 100% by Fai H. Chan. On June 18, 1999, the Company agreed to offset
the amounts due from related parties resulting from the sale, of $1,365,278 with
the $3,838,000 note payable. The agreements are subject to shareholder approval.
This  transaction  essentially  liquidates  the  operations  of the  Company and
transfers control of the Company to SAR.

Results of Continuing Operations

YEAR ENDED DECEMBER 31, 1998 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1997

There were no significant  changes in the revenues and expenses  attributable to
the  operation  of  Vancouver  Hong Kong's  real  estate  between the year ended
December 31, 1998 and the year ended December 31, 1997.

Investment income decreased from income of $138,794 through December 31, 1997 to
a loss of $25,154  through  December  31,  1998.  The Company has not engaged in
investment  activity during the year ended December 31, 1998. This is because of
the  uncertainty  related  to the  international  securities  markets.  The  net
investment  loss in 1998  consists  of the  loss  due to the  expiration  of the
warrants, amounting to $145,800 and interest income.

Consulting  expense  decreased  from an aggregate of $772,250 for the year ended
December  31, 1997 to $562,500  for the year ended  December  31,  1998,  due to
amortization  period of certain  consulting  agreements  expiring early in 1998.
Interest expense increased from $309,201 for the year ended December 31, 1997 to
$492,804 for the same period in 1998.

The Company's net loss from  continuing  operations  was $1,077,133 for the year
ended  December 31, 1998, as compared to a net loss of  $1,217,418  for the year
ended  December 31, 1997.  The reasons for the trend are the  reductions  in the
other  operating  administrative  expenses and  consulting  fees during the year
ended December 31, 1998.

YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

The Company's net loss from  continuing  operations  for the year ended December
31,  1997  was  $1,217,418,  a  change  of  $844,314  compared  to a net loss of
$2,061,732  for the year ended  December 31, 1996.  The decrease in the net loss


                                       10
<PAGE>


was primarily due to (i) an increase in  investment  income;  (ii) a decrease in
consulting fees paid.

Consolidated  revenues  increased  to $571,921  for the year ended  December 31,
1997,  from  $428,858 for the year ended  December 31, 1996.  This is due to the
gains that have been recorded in connection with its investment securities.

In the operation of Vancouver Hong Kong's real estate,  the Company  experienced
an increase in rental income of $9,884 from 1996 to 1997. Also property expenses
decreased  by  $20,637  in 1997 as  compared  to 1996.  This is  because of cost
controls applied to repairs, utilities and management fee expenses.

Operating  expenses decreased from $2,490,590 in 1996 to $1,789,339 in 1997. The
decrease  is  primarily  due to the  reduced  use of  consultants  for  investor
relations and financial  advice.  Such expenses have declined from $1,368,567 in
1996 to an aggregate of $272,250 in 1997.

In addition to the above consulting fees, there has been an increase in interest
expense, from $121,436 in 1996 to $309,201 in 1997. This is primarily due to the
increase in margin  borrowings  in 1997,  from $489,193 at December 31, 1996, to
$3,058,295 at December 31, 1997.

The Company holds certain  equity  securities  that are available for sale.  The
Company records  unrealized gains and losses, as a component of equity.  The net
unrealized losses so recorded during 1997 amounted to $2,228,442. The cumulative
net losses charged to equity as of December 31, 1997 are $2,307,267.

The Company holds certain  equity  securities  that are available for sale.  The
Company  records  unrealized  gains and losses,  net of applicable  taxes,  as a
component of equity.  The  cumulative  net  unrealized  losses so recorded as of
December 31, 1996 amounted to $78,825.

Inflation

The effect on inflation on the  Company's  operations is not material and is not
anticipated to have any material effect in the future.

Discontinued Operations

YEAR ENDED DECEMBER 31, 1997 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

In 1997, the cement operation of Min You recorded sales of $306,398  compared to
$540,191 in the year ended  December  31, 1996.  At the same time,  the net loss
amounted to $157,117 in 1997 compared to a loss of $62,487 in 1996.

In 1997,  the  container  operation of Wuhan  recorded  sales of  $2,934,871  as
compared  to  $1,082,317  in 1996.  At the same time,  the net loss  amounted to
$248,210 in 1997 compared to a loss of $241,208 in 1996.

During 1997,  the Company  acquired and later  disposed of a 25% interest in the
Duck Farm. The aggregate of the Company's share of the loss in the Duck Farm and
the loss on disposition was approximately $300,000.

Liquidity and Capital Resources

The net cash used by operating  activities  for the year ended December 31, 1998
amounted to $26,606. The Company meets its working capital requirements from the
proceeds of margin  loans,  described  below and the  collection of amounts from
related parties.


                                       11
<PAGE>


During the year ended  December  31, 1998,  the Company did not make  additional
cash investments in securities or facilities.

The net cash provided by financing  activities  amounted to $56,682 for the year
ended  December  31, 1998.  This is due  primarily to the increase in the margin
loan payable.

The net cash used in  operating  activities  for year ended  December  31,  1997
amounted  to  $4,034,680.  This  was  primarily  due  to  the  operating  losses
experienced,  increases in receivable from the container segment and the payment
of amounts  that were  payable to related  parties.  The Company met its capital
requirements  from the  proceeds of bank  borrowings  and the issuance of common
shares.

The net cash provided by financing  activities  amounted to  $7,179,780  for the
year  ended  December  31,  1997.  This is due to the  increases  in short  term
borrowings, margin loans, and the issuance of common shares.

As discussed in Note 2 of the notes to the  consolidated  financial  statements,
the  Company's  operating  losses and  deficiency  in net tangible  assets raise
substantial  doubts  concerning  the  Company's  ability to  continue as a going
concern.  However, the Company's principal shareholder has agreed to continue to
provide the Company with necessary financial support.

New Accounting Standards Not Yet Adopted

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting  standards  for  derivative  instruments.  It  requires  an  entity to
recognize all  derivatives  as either assets or  liabilities in the statement of
financial  position and measure those  instruments at fair value. This statement
was effective for years beginning  after June 15, 1999,  although early adoption
was permitted.  In July 1999, the FASB issued Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB  Statement No. 133," which  provides the  effective  date is for all fiscal
quarters of all fiscal years beginning after June 15, 2000.

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

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

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

Regional Economic Developments

Several countries in Asia have recently experienced significant adverse economic
developments including substantial exchange rate fluctuations, inflation, social
unrest,  increased  interest rates,  reduced  economic  growth rates,  corporate
bankruptcies,  declines in the market value of shares listed on stock exchanges,
emergency   loan   agreements   with  the   International   Monetary   Fund  and
government-imposed  austerity  measures.  To date, neither the PRC nor Hong Kong
has experienced these developments will not occur in the PRC or Hong Kong in the
future, which could have a material effect on a Company's financial condition or
results of operations.


                                       12
<PAGE>


The Year 2000

The Year  2000  issue  refers  to the  fact  that  many  computer  systems  were
originally  programmed  using two digits rather than four digits to identify the
applicable  year.  When the year 2000 occurs,  these systems could interpret the
year as 1900 rather than 2000. Unless hardware, system software and applications
are corrected to be Year 2000 compliant,  computers and the devices they control
could generate miscalculations and create operational problems.  Various systems
could be affected ranging from complex  information  technology  ("IT") computer
systems to non-IT  devices such as an individual  machine's  programmable  logic
controller.

To address this issue,  the Company  developed a corporate  plan  including  the
formation of a team consisting of internal  resources and, as deemed  necessary,
third-party experts. The phases of the plan include: conducting inventory of the
affected technology and assessing the impact of the Year 2000 issue;  developing
solution  plans;  modification or replacement;  testing and  certification;  and
developing  contingency  plans.  All  components of software and hardware of the
Company are presently in various phases. The Company expects to have critical IT
systems  tested  and  installed,  and  expects  to be  Year  2000  compliant  by
mid-calendar year 1999.

The Company  relies on  third-party  suppliers for many services and the Company
will be adversely  impacted if these suppliers do not make the necessary changes
to their own systems  and  products  successfully  and in a timely  manner.  The
Company has  implemented a plan to communicate  with its customers and suppliers
on this  issue in an effort  to  minimize  any  potential  Year 2000  compliance
impact; however, it is not possible to guarantee their compliance.

The total cost of the program is estimated to be less than $5,000, of which none
has been spent through December 31, 1998.

Management  of the  Company  believes  it has an  effective  program in place to
resolve  the  Year  2000  issues.  Nevertheless,  since  it is not  possible  to
anticipate  all possible  future  outcomes,  especially  when third  parties are
involved,  there could be  circumstances in which the Company would be unable to
take customer  orders,  or collect  payments.  In addition,  disruptions  in the
economy  generally  resulting from Year 2000 issues could  materially  adversely
affect the  Company.  The Company  could be subject to  litigation  for computer
systems product failure, for example,  equipment shutdown or failure to properly
date  transaction  records.  The amount of potential  liability and lost revenue
cannot be reasonably estimated at this time.

The Company has an informal  contingency plan for its applications.  The Company
is working  continually  with the third party  suppliers of software and related
services in resolving Year 2000 issues.  The Company's formal  contingency plans
are currently being developed in conjunction with these suppliers.  Testing will
be performed and completed by mid-calendar  year 1999. The Company will continue
to monitor the progress of the  suppliers in the  resolution of Year 2000 issues
and continue to evaluate the necessity of an independent contingency plan.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market  risk  generally  represents  the risk of loss that may  result  from the
potential  change  in  the  value  of a  financial  instrument  as a  result  of
fluctuations  in interest  and currency  exchange  rates,  equity and  commodity
prices,  changes in the implied  volatility of interest rate,  foreign  exchange
rate,  equity and  commodity  prices and also  changes in the credit  ratings of
either the issuer of the financial  instrument or its related country of origin.
Market  risk is  inherent  to many  non-derivative  financial  instruments,  and
accordingly,  the  scope of the  Company's  market  risk  management  procedures
includes all market risk sensitive financial instruments.


                                       13
<PAGE>


The  Company  faces two types of market  risk:  foreign  exchange  rate risk and
equity price risk.

Foreign  Exchange  Rate  Risk.  Foreign  exchange  rate  risk  arises  from  the
possibility  that  changes in foreign  exchange  rates will  impact the value of
financial  instruments.  When the Company  buys or sells a financial  instrument
denominated in a currency other than U.S.  dollars,  exposure  exists from a net
open currency position.  The Company is then exposed to a risk that the exchange
rate may move against it. At September 30, 1998, the currency  creating  foreign
currency risk for the Company was the Hong Kong dollar.

Equity Price Risk.  The Company is exposed to equity price risk as a consequence
of making  investments  in equity  securities.  Equity  price risk  results from
changes in the level or volatility of equity  prices,  which affect the value of
equity  securities  or  instruments  that derive  their value from a  particular
stock, a basket of stocks or a stock index.  The Company  attempts to reduce the
risk of loss  inherent in its  inventory of equity  securities  by entering into
transactions designed to mitigate the Company's market risk profile.

The  Company  utilizes  a  wide  variety  of  market  risk  management  methods,
including:  limits for each trading activity; marking all positions to market on
a timely basis; timely profit and loss statements;  and independent verification
of pricing.  The Company  believes  that these  procedures,  which stress timely
communication, are the most important elements of the risk management process.

Efforts  to further  strengthen  the  Company's  management  of market  risk are
continuous,  and the enhancement of risk management systems is a priority of the
Company. This includes the development of quantitative methods,  profit and loss
and variance reports, and the review and approval of pricing models.

The table below  provides a comparison of the carrying  amount to the fair value
of the securities owned by the Company that are classified as available-for-sale
securities.

                                December 31, 1998

                                             Carrying Amount          Fair Value
                                             ---------------          ----------
     Foreign Exchange Rate Risk:
        Equity securities denominated in       $  439,290             $  439,290
           Hong Kong dollars

     Equity Price Risk:
        Equity securities*                        439,290                439,290

     *Includes equity securities denominated in Hong Kong dollars.

In  accordance  with  generally  accepted  accounting   principles,   securities
classified  as  available-for-sale   securities  are  marked-to-market  and  the
resulting unrealized gain or loss is reflected in the statement of comprehensive
income. For the year ended December 31, 1998, the Company recognized  unrealized
losses of $1,048,813 on the equity securities denominated in Hong Kong dollars.

ITEM 8.   FINANCIAL STATEMENTS

The Consolidated Financial Statements that constitute Item 8 are attached at the
end of this  Annual  Report  on Form  10-K/A.  An Index  to  these  Consolidated
Financial  Statements  is also  included in Item 14 (a) of this Annual Report on
Form 10-K/A.


                                       14
<PAGE>


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURES

There have been no changes in or  disagreements  with accountants on accounting,
financial disclosure or other matters, which would require disclosure herein.

                                    PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The names and ages of all directors and executive officers of the Company are as
follows:

Name                     Age     Position
----------------         ---     --------

Fai H. Chan               54     President, Chief Executive Officer and Director

Robert H. Trapp           44     Secretary, Treasurer and Director


Management Biographies

Fai H. Chan has been the president and a director of the Company since June 1994
and has served as the  Company's  Chief  Executive  Officer  since June 1995. In
1998, Mr. Chan was appointed president and chairman of the board of directors of
eVision USA.Com,  Inc., formerly known as Fronteer Financial  Holdings,  Ltd., a
holding  company  which  among other  things,  owns a  securities  broker/dealer
located in Colorado.  From June 1993 to the  present,  he has been a director of
Inter-Asia  Equities,  Inc., a Canadian  company.  Since  September  1992 to the
present, he has been a director of Heng Fung Holdings Co., Ltd. ("Heng Fung"), a
public company in Hong Kong, which is listed on the Hong Kong Stock Exchange. In
1995,  Mr. Chan was appointed  managing  director and chairman of Heng Fung, for
which he still  serves.  In May 1998,  he was appointed a director of Global Med
Technologies,  Inc.  Since  March  1988,  he has been  chairman  of the board of
directors of American Pacific Bank, a bank in Oregon, and between April 1991 and
April 1993, he was the chief executive officer of said bank.

Robert H. Trapp has been the  secretary  and  treasurer  and a  director  of the
Company  since June 1994. In May 1998, he was appointed a director of Global Med
Technologies,  Inc. In 1997 and 1998, Mr. Trapp was appointed  managing director
and director of eVision  USA.Com,  Inc.,  formerly  known as Fronteer  Financial
Holdings,  Ltd.  Since May 1995,  Mr.  Trapp  has been a  director  of Heng Fung
Holdings Co., Ltd., a public  company in Hong Kong,  which is listed on the Hong
Kong Stock  Exchange.  Since April 1994, Mr. Trapp has been the secretary of the
Company.  Since  February  1995,  Mr.  Trapp has been a director  of  Inter-Asia
Equities,  Inc.  a  Canadian  company.  Since  July  1991,  he has also been the
Canadian   operational   manager  of  Pacific  Concord  Holding  (Canada)  Ltd.,
responsible for management,  marketing,  and financial  reporting  operations of
such company to Pacific  Concord  Holding Ltd. of Hong Kong.  Between  March and
June  1991,  Mr.  Trapp  was  a  securities  trainee  at  Pacific  International
Securities in Vancouver, B.C., Canada. Between September 1985 and June 1989, Mr.
Trapp served as an executive officer and a director of Inter-Asia Equities, Inc.

All  officers of the Company are elected to serve in such  capacities  until the
next  annual  meeting of the Board of  Directors  of the Company and until their
successors are duly elected and qualified.

The Board of  Directors  met twice during the year ended  December 31, 1998.  No
incumbent  director attended fewer than all of the meetings held by the Board of
Directors.


                                       15
<PAGE>


There are no material proceedings to which any director, officer or affiliate of
the Company, any owner of record or beneficially of more than 5% of any class of
voting  securities  of the  Company,  or any  associate  of any  such  director,
officer,  affiliate of the Company or security  holder is a party adverse to the
Company or any of its subsidiaries.

                    Indemnification of Directors and Officers

Section 145 of the Delaware  General  Corporation  Law empowers a corporation to
indemnify its directors and officers and to purchase  insurance  with respect to
liability  arising out of their  capacity or status as  directors  and  officers
provided  that this  provision  shall not  eliminate of limit the liability of a
director:  (i)  for  any  breach  of  the  director's  duty  of  loyalty  to the
corporation or its shareholders; (ii) for acts or omissions not in good faith or
which  involve  intentional  misconduct  or a knowing  violation  of law;  (iii)
arising under Section 174 of the Delaware  General  Corporation Law; or (iv) for
any transaction  from which the director derived an improper  personal  benefit.
The Delaware General  Corporation Law provides further that the  indemnification
permitted  thereunder shall not be deemed exclusive of any other rights to which
the directors and officers may be entitled under the corporation's  by-laws, any
agreement,  vote of  shareholders  or otherwise.  The Company's  Certificate  of
Incorporation  eliminates the personal  liability of directors to fullest extent
permitted by Section 102(b)(7) of the Delaware General Corporation Law.

The effect of the  foregoing is to require the Company to indemnify the officers
and directors of the Company for any claim arising against such persons in their
official  capacities  if such person acted in good faith and in a manner that he
reasonably  believed  to be in or not  opposed  to  the  best  interests  of the
corporation,  and,  with respect to any criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.

Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to directors,  officers or persons controlling the Company pursuant
to the foregoing  provisions,  the Company has been informed that in the opinion
of the  Securities  and Exchange  Commission,  such  indemnification  is against
public policy as expressed in Securities Act and is therefore unenforceable.

                      Committees of the Board of Directors

The Board of Directors has not established any committees.

             Section 16(a) Beneficial Ownership Reporting Compliance

To the Company's knowledge,  during the year ended December 31, 1998, there were
no directors,  officers or more than 10% shareholders of the Company that failed
to timely  file a Form 3, Form 4 or Form 5; other than Fai H. Chan who failed to
timely file a Form 5.

ITEM 11.  EXECUTIVE COMPENSATION

                           Summary Compensation Table

During the year ended  December 31, 1998,  Heng Fai  Management,  Inc., a wholly
owned subsidiary of the Company, paid $500,000 in consulting and management fees
to Tight Hold  Investment  Limited,  a company  wholly owned by Fai H. Chan, the
Company's chief executive officer.

Name and                  Year Ended  Compensation  Other Annual Compensation
Principal Positions                                           ($)
-------------------       ----------  ------------  -------------------------

Fai H. Chan, President       1998       $ 500,000             --
   CEO, and Director         1997       $ 500,000             --
                             1996       $ 500,000             --

                                       16
<PAGE>

                               Stock Option Plans

The Company currently has no stock option plans.

                         Option/SAR Grants in Last Year

There were no options granted during the year ended December 31, 1998.

   Aggregate Option/SAR Exercises in Last Year And Year-End Options/SAR Values

No options were exercised during the year ended December 31, 1998 and there were
no unexercised options as of the end of the year ended December 31, 1998.

                              Employment Agreements

There  are no  employment  agreements  between  the  Company  and its  executive
officers.

                            Remuneration of Directors

Directors do not receive compensation for attendance at meetings of the Board of
Directors.  All directors are entitled to reimbursement of reasonable travel and
lodging expenses related to attending meetings of the Board of Directors.


                                       17
<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The following table sets forth, as of October 7, 1999, certain  information with
respect  to stock  ownership  of:  (i) all  persons  known by the  Company to be
beneficial owners of five percent or more of its outstanding  common stock: (ii)
each of the Company's directors and executive officers;  and (iii) all directors
and executive officers as a group.  Unless otherwise  indicated,  the beneficial
owners have sole  voting and  investment  power over the shares of common  stock
listed below.

                                                        % of Outstanding Shares
   Name and Address               Number of Shares          of Common stock
 of Beneficial Owner (1)        Beneficially Owned (1)    Beneficially Owned (1)
-----------------------         ---------------------   -----------------------

SAR Trading Limited                     --                        --
10th Floor, Lippo Protective Tower
231-235 Gloucester Road
Wanchai, Hong Kong 040

Fai H. Chan                         6,392,886(2)(4)               41.09%
Lippo Protective Tower
10th Floor
231-235 Gloucester Road
Wanchai, Hong Kong 040

Robert H. Trapp                       100,000                       **
1700 Lincoln Street
32nd Floor
Denver, Colorado 80203

Keow Y. Chan                        2,772,886(3)(4)               17.82%
Unit B, 13th Floor
Lippo, Leighton Tower
103-109 Leigton Road
Causeway Bay, Hong Kong

All Executive Officers & Directors
  As a Group (2 Persons)(5)         6,492,886                     41.73%

--------------------------
**   Less than 1%

(1)  Unless  otherwise  noted,  the Company believes that all of such shares are
     owned of record by each individual  named as beneficial owner and that such
     individual has sole voting and dispositive power with respect to the shares
     of common stock owned by each of them. Such person's  percentage  ownership
     is determined by assuming that the options or convertible  securities  that
     are held by such  person  which  are  exercisable  within 60 days have been
     exercised or converted, as the case may be.

(2)  Includes  5,800,000  shares owned of record by Mr. Chan.  Also includes (i)
     37,500   shares  of  common  stock  held  by  Inter-Asia   Equities,   Inc.
     ("Inter-Asia"); (ii) 37,500 shares of common stock underlying warrants held
     by Inter-Asia;  (iii) 258,943 shares of common stock held by Excess Pension
     Fund,  Inc.  ("Fund");  (iv)  258,943  shares  of common  stock  underlying
     warrants held by the Fund. Mr. Chan is an officer, director and stockholder
     of Inter-Asia,  and a beneficial owner of the Fund.  Excludes the 2,180,000
     shares owned of record by Mr. Chan's wife. See Footnote (3) below.

                                       18
<PAGE>

(3)  Includes (i) 258,943 shares of common stock held by the Fund;  (ii) 258,943
     shares of common stock  underlying  warrants held by the Fund; (iii) 37,500
     shares of common stock held by Inter-Asia; and (iv) 37,500 shares of common
     stock underlying warrants held by Inter-Asia. Ms. Chan is the president and
     a director of  Inter-Asia,  and a  beneficial  owner of the Fund.  Excludes
     5,800,000  shares owned of record by Ms. Chan's  husband,  Fai H. Chan. See
     Footnote (2) above.

(4)  In the event that Mr. Chan is deemed to beneficially  own all of the shares
     owned of record by his spouse, Mr. Chan would be deemed to beneficially own
     22,272,886 shares or approximately  75.36% of the outstanding  common stock
     of the Company.

On  February 5, 1999,  13,700,000  shares of common  stock of the  Company  were
issued  erroneously  to SAR in exchange  for a portion of the debt that is to be
issued pursuant to the agreements with SAR.  Because the agreements have not yet
been approved by the Company's  shareholders,  the  13,700,000  shares of common
stock have been canceled.

There are no agreements or other  arrangements  or  understandings  known to the
Company  concerning  the voting of the Common  Stock of the Company or otherwise
concerning  control of the Company which are not disclosed herein.  There are no
preemptive rights applicable to the Company's securities.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company maintains deposits in accounts at American Pacific Bank. Fai H. Chan
(an officer,  director  and  stockholder  of the  Company) is an officer  and/or
director of such bank.

The Company owns 48,535,276 shares of common stock of Heng Fung Holdings Company
Limited. Messrs. Chan, and Trapp (officers, directors and/or stockholders of the
Company) are officers, directors and /or stockholders of such company.

At  December  31,  1998 and 1997,  the second  mortgage  of $77,579  and related
interest  payable of $25,368  and  $38,623,  respectively,  were  payable to the
Silverstein  Foundation,  Inc.,  a Panama  company,  in which Mr. Fai H.  Chan's
children have beneficial ownership  interests.  The related interest expense was
$8,269 in 1998, $7,774 in 1997 and $8,947 in 1996.

On January 18, 1999,  the Company  entered  into an  agreement  with SAR Trading
Limited  ("SAR") wherein SAR agreed to buy and the Company agreed to sell all of
its interests in the majority of its subsidiaries for  approximately  $4,838,000
in the form of the assumption of certain  liabilities.  In  consideration of the
assumption of liabilities,  the Company agreed to issue two notes payable to SAR
in the  amounts  of  $1,000,000  and  $3,838,000.  The  $1,000,000  note will be
immediately  convertible  into  20,000,000  common  shares of the  Company.  The
$3,838,000 note will be convertible  into shares of common stock of the Company,
in minimum  increments of $250,000  each, at the average 15 day trading price at
the option of the Company by giving seven trading days notice in writing to SAR.
SAR is owned 100% by Fai H. Chan. On June 18, 1999, the Company agreed to offset
the amounts due from related parties resulting from the sale, of $1,365,278 with
the $3,838,000 note payable. The agreements are subject to shareholder approval.

On  February 5, 1999,  13,700,000  shares of common  stock of the  Company  were
issued  erroneously  to SAR in exchange  for a portion of the debt that is to be
issued pursuant to the agreements with SAR.  Because the agreements have not yet
been approved by the Company's  shareholders,  the  13,700,000  shares of common
stock have been canceled.


                                       19
<PAGE>


Heng Fai  Management,  Inc., a wholly owned  subsidiary of the Company,  entered
into a consultation and management agreement with Tight Hold Investment Limited,
a company wholly owned by Fai H. Chan,  president and chief executive officer of
the  Company.  The term of this  agreement  is for ten  years  having  commenced
November 1, 1996 and ending October 31, 2006. The remuneration the Company shall
pay for services rendered pursuant to this agreement is as follows:  (i) the sum
of $500,000  per year for the duration of the  agreement,  a rate of $41,667 per
month;  and  (ii)  upon  the  Company  meeting  NASDAQ  National  Market  System
("NASDAQ")  requirements  of  having  $4,000,000  in net  tangible  assets,  and
obtaining  the  other  requirements  which  allow  the  Company's  stock  to  be
marginable  on NASDAQ and  having  declared  at least a minimum  $0.10 per share
earning and $0.05  dividend to common  shareholders,  the fee shall  increase to
$1,000,000  per year for the  duration of the  agreement,  a rate of $83,333 per
month. This agreement was terminated during June 1999.


                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)   Financial Statements and Financial Statement Schedules

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                                                            Page
         Independent Auditors' Report                                       F-3
         Consolidated Balance Sheets as of December 31, 1998 and 1997       F-4
         Consolidated Statements of Income and Comprehensive Income for
               each of the three years in the period ended
               December 31, 1998                                            F-6
         Consolidated Statements of Stockholders' Equity (Deficit)for
              each of the three years in the period ended
              December 31, 1998                                             F-8
          Consolidated Statements of Cash Flows for each of the three
              years in the period ended December 31, 1998                   F-9
         Notes to Consolidated Financial Statements                         F-11

All schedules  are omitted  because the required  information  is not present in
amounts  sufficient  to  require  submission  of the  schedule  or  because  the
information  required is included in the Consolidated  Financial  Statements and
Notes thereto.

(a)(2)  Financial Statement Schedules.  None.

(a)(3)  Exhibits. See "EXHIBIT INDEX" on page 22.


(b) Current Reports on Form 8-K

The Company had not filed any reports on Form 8-K during the last quarter of the
year ended December 31, 1998.



                                       20
<PAGE>


                                   SIGNATURES


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


                                       POWERSOFT TECHNOLOGIES, INC.

                                       By:   /s/ Fai H. Chan
                                          --------------------------------------
                                          Fai H. Chan, President

Date:October 8, 1999


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following  persons on behalf of the registrant and in the
capacities and on the dates indicated.


Date:  October 8, 1999                 By:   /s/ Fai H. Chan
                                          --------------------------------------
                                          Fai H. Chan, President, CEO & Director


Date: October 8, 1999                   By:   /s/ Robert H. Trapp
                                          --------------------------------------
                                          Robert H. Trapp, Secretary,
                                           Treasurer & Director












                                       21
<PAGE>

                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
                         REPORT AND FINANCIAL STATEMENTS
                      For the Year Ended December 31, 1998





                                    CONTENTS
                                                                           PAGES



Report of Independent Auditors                                            F - 3


Consolidated Balance Sheets                                               F - 4


Consolidated Statements of Income and Comprehensive Income                F - 6


Consolidated Statements of Shareholders' Deficit                          F - 8


Consolidated Statements of Cash Flows                                     F - 9


Notes to the Consolidated Financial Statements                            F - 11









                                      F - 2

<PAGE>





REPORT OF INDEPENDENT AUDITORS

To The Board of Directors and Shareholders of
POWERSOFT TECHNOLOGIES, INC.
(Formerly known as Heng Fai China Industries, Inc.)

We have  audited  the  accompanying  consolidated  balance  sheets of  Powersoft
Technologies,  Inc. (the "Company") and its subsidiaries as of December 31, 1998
and 1997, and the related  consolidated  statements of income and  comprehensive
income,  shareholders' deficit and cash flows for each of the three years in the
period  ended   December  31,  1998.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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  present fairly, in all
material respects,  the financial position of Powersoft  Technologies,  Inc. and
its  subsidiaries  as of December  31,  1998 and 1997,  and the results of their
operations  and cash  flows  for each of the  three  years in the  period  ended
December 31, 1998 in conformity with accounting principles generally accepted in
the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  note 2 to the
financial statements, the Company's recurring losses from operations and minimal
net tangible assets raise  substantial  doubt as to its ability to continue as a
going  concern,  however,  the principal  shareholder  has committed to continue
providing  financial  support.  The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

As discussed in note 16(b), the accompanying 1998 financial statements have been
restated.




Deloitte Touche Tohmatsu
/s/ Deloitte Touche Tohmatsu

Hong Kong
April 16, 1999 (except as to note 16(a) as to which the date is June 18, 1999
                and note 16(b) as to which the date is October 6, 1999)


                                      F - 3

<PAGE>

<TABLE>
<CAPTION>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
                           CONSOLIDATED BALANCE SHEETS
                             (United States Dollars)


                                                                 As of December 31,
ASSETS                                                           1998         1997
------                                                           ----         ----

<S>                                                          <C>          <C>
Current assets:
   Cash and cash equivalents .............................   $   44,949   $   36,173

   Available-for-sale securities (note 5) ................      439,290    1,507,345

   Accounts receivable, trade, less allowance for doubtful
     accounts of $0 in 1998 and 1997 .....................       29,830        7,521

   Prepaid and other current assets ......................       24,260       32,153

   Amounts receivable from related parties (note 9) ......       15,632       18,950
                                                             ----------   ----------

   Total current assets ..................................      553,961    1,602,142

PROPERTY, PLANT AND EQUIPMENT, NET (NOTE 6) ..............      661,805      785,920
                                                             ----------   ----------

Total assets .............................................   $1,215,766   $2,388,062
                                                             ==========   ==========
</TABLE>



















See accompanying notes to the consolidated financial statements.


                                      F - 4

<PAGE>


<TABLE>
<CAPTION>
                               POWERSOFT TECHNOLOGIES, INC.
                    (Formerly known as Heng Fai China Industries, Inc.)
                           CONSOLIDATED BALANCE SHEETS-continued
                                  (United States Dollars)


                                                                         As of December 31,
LIABILITIES AND SHAREHOLDERS' DEFICIT                                    1998           1997
-------------------------------------                                    ----           ----
<S>                                                                 <C>            <C>
Current liabilities:
   Mortgage loans payable - current portion (note 10) ...........   $   109,159    $   115,251
   Accounts payable .............................................        96,967         48,701
   Margin loan payable (note 8) .................................     3,136,264      3,058,295
   Accrued expenses and other liabilities .......................        80,091        154,756
   Amounts payable to related parties (note 9) ..................     1,861,216        904,756
                                                                    -----------    -----------

   Total current liabilities: ...................................     5,283,697      4,281,759
                                                                    -----------    -----------

Long-term liabilities:
   Mortgage loans payable (note 10) .............................       710,277        837,966
                                                                    -----------    -----------

Commitments and contingencies (note 15)

Shareholders' deficit:
   Preferred stock, $5 par value, 25,000,000 shares
     authorized; unissued .......................................          --             --
   Common stock, $.01 par value, 30,000,000 shares
     authorized; issued and outstanding 1998 and 1997;
     15,559,542 shares ..........................................       155,595        155,595
   Additional paid-in capital ...................................     5,385,296      5,385,296
   Accumulated deficit ..........................................    (6,981,436)    (5,904,303)
   Unrealized loss on available-for-sale securities (note 5) ....    (3,356,080)    (2,307,267)
   Cumulative exchange adjustments ..............................        18,417          1,516
                                                                    -----------    -----------

                                                                     (4,778,208)    (2,669,163)
   Common stock issued for consulting services to be
     received (note 7) ..........................................          --          (62,500)
                                                                    -----------    -----------

   Total shareholders' deficit ..................................    (4,778,208)    (2,731,663)
                                                                    -----------    -----------

Total liabilities and shareholders' deficit .....................   $ 1,215,766    $ 2,388,062
                                                                    ===========    ===========
</TABLE>





See accompanying notes to the consolidated financial statements.


                                      F - 5

<PAGE>

<TABLE>
<CAPTION>


                                           POWERSOFT TECHNOLOGIES, INC.
                                (Formerly known as Heng Fai China Industries, Inc.)
                            CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                              (United States Dollars)


                                                                      Year ended December 31,
                                                                1998          1997            1996
                                                                ----          ----            ----
Revenues:
   Rental income .......................................   $   307,327    $   346,528    $   336,644
   Interest ............................................         1,011            515          1,490
   Investment income - securities ......................          --          210,380         56,552
   Others ..............................................        12,292         14,498         34,172
                                                           -----------    -----------    -----------

Total revenues .........................................       320,630        571,921        428,858
                                                           -----------    -----------    -----------

Expenses:
   Depreciation ........................................        35,186         41,161         41,815
   Legal and professional fees .........................        31,620        149,900         82,831
   Consulting fees (note 7) ............................        62,500        272,250      1,368,567
   Consulting fees paid to a related company
      (note 9) .........................................       500,000        500,000        500,000
   Interest on long-term debt ..........................          --             --           85,990
   Interest on short-term debt .........................       492,804        309,201         35,446
   Investment banking fees .............................          --          164,252           --
   Utilities ...........................................        47,806         23,522         48,924
   Foreign exchange (gain) loss ........................            (5)        (1,695)        10,477
   Land lease ..........................................        71,115         80,321         80,321
   Real estate management fees .........................        21,625         36,784         13,056
   Salaries ............................................          --            4,527          4,358
   Traveling ...........................................          --           17,717         40,841
   Other operating and administrative expenses .........       135,112        191,399        177,964
                                                           -----------    -----------    -----------

Total expenses .........................................     1,397,763      1,789,339      2,490,590
                                                           -----------    -----------    -----------

Loss from continuing operations ........................    (1,077,133)    (1,217,418)    (2,061,732)
                                                           -----------    -----------    -----------

(Continued)









See accompanying notes to the consolidated financial statements.


                                      F - 6

<PAGE>

<CAPTION>

                                           POWERSOFT TECHNOLOGIES, INC.
                                (Formerly known as Heng Fai China Industries, Inc.)
                                      CONSOLIDATED STATEMENTS OF INCOME AND
                                          COMPREHENSIVE INCOME-continued
                                              (United States Dollars)


                                                                      Year ended December 31,
                                                                1998          1997            1996
                                                                ----          ----            ----
<S>                                                        <C>            <C>            <C>
Discontinued operations (note 3)
   Loss from Cangzhou cement ...........................   $       --     $   (157,117)  $    (62,487)
   Gain on disposal of Cangzhou cement .................           --          148,775           --
   Loss from Wuhan .....................................           --         (248,210)      (241,208)
   Gain on reversal of Wuhan acquisition ...............           --          307,442           --
   Share of loss for the investment in Duck Farm .......           --         (107,229)          --
   Loss on disposal of the investment in Duck Farm .....           --         (194,095)          --
                                                           ------------   ------------   ------------

Loss from discontinued operations ......................           --         (250,434)      (303,695)
                                                           ------------   ------------   ------------

Loss before income taxes ...............................     (1,077,133)    (1,467,852)    (2,365,427)
Provision for income taxes (note 12) ...................           --             --             --
                                                           ------------   ------------   ------------

Loss before minority interest ..........................     (1,077,133)    (1,467,852)    (2,365,427)

Minority interest from discontinued operations .........           --           74,463         77,099
                                                           ------------   ------------   ------------

Net loss ...............................................     (1,077,133)    (1,393,389)    (2,288,328)
                                                           ------------   ------------   ------------


Other comprehensive income (loss), net of tax:
   Foreign exchange adjustments ........................         16,901         (5,452)          --
   Unrealized loss on available-for-sale securities ....     (1,048,813)    (2,228,442)       (34,884)
                                                           ------------   ------------   ------------

Other comprehensive loss ...............................     (1,031,912)    (2,233,894)       (34,884)
                                                           ------------   ------------   ------------

Comprehensive loss .....................................   $ (2,109,045)  $ (3,627,283)  $ (2,323,212)
                                                           ============   ============   ============

Loss per share (basic and diluted):
   From continuing operations ..........................   $      (0.07)  $      (0.08)  $      (0.18)
   Effect of discontinued operations ...................           --            (0.01)         (0.02)
                                                           ------------   ------------   ------------

   Net loss per share ..................................   $      (0.07)  $      (0.09)  $      (0.20)
                                                           ============   ============   ============

Weighted average number of shares of
   common stock outstanding ............................     15,559,542     14,873,091     11,223,288
                                                           ============   ============   ============
</TABLE>



See accompanying notes to the consolidated financial statements.


                                      F - 7

<PAGE>

<TABLE>
<CAPTION>

                                           POWERSOFT TECHNOLOGIES, INC.
                                (Formerly known as Heng Fai China Industries, Inc.)
                                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                              (United States Dollars)


                                                Common stock
                                           -----------------------
                                           Number                      Additional      Accumulated
                                           of shares        Amount   paid-in capital     deficit
                                           ---------        ------   ---------------   -----------
<S>                                       <C>           <C>            <C>           <C>
At December 31, 1995 .................    10,859,542    $   108,595    $ 2,812,546   $ (2,288,328)

Issued to effect
   a consulting
   agreement
   (note 11a) ........................       400,000          4,000        895,750           --
Amortization of
   consulting fees ...................          --             --             --             --
Issued for
   acquisition of a
   subsidiary
   (note 11b) ........................       727,272          7,273        992,727           --
Net loss .............................          --             --             --       (2,288,328)
Other comprehensive loss:
   Unrealized loss
     on securities
     available-for-sale ..............          --             --             --             --
                                         -----------    -----------    -----------    -----------

At December 31, 1996 .................    11,986,814        119,868      4,701,023     (4,510,914)

Private placements
   (note 11) .........................     1,700,000         17,000      1,003,000           --
Private placements
   (note 11) .........................     2,500,000         25,000        575,000           --
Issue to effect a
   consulting
   agreement (note 11e) ..............       100,000          1,000         99,000           --
Amortization of
   consulting fees ...................          --             --             --             --
Redemption to reverse
   the purchase
   of a subsidiary
   (note 11f) ........................      (727,272)        (7,273)      (992,727)          --
Net loss .............................          --             --             --       (1,393,389)
Other comprehensive loss:
   Unrealized loss
     on securities
     available-for-
     sale ............................          --             --             --             --
                                         -----------    -----------    -----------    -----------

At December 31, 1997 .................    15,559,542        155,595      5,385,296     (5,904,303)

Amortization of ......................          --             --             --             --
  consulting fees
Net loss .............................          --             --             --       (1,077,133)
Other comprehensive income (loss):
   Unrealized loss
     on securities
     available-for-sale ..............          --             --             --             --
   Foreign exchange
     translation
     adjustment ......................          --             --             --             --
                                         -----------    -----------    -----------    -----------

At December 31, 1998 .................    15,559,542    $   155,595    $ 5,385,296    $(6,981,436)
                                         ===========    ===========    ===========    ===========

See accompanying notes to the consolidated financial statements.

                                    F - 8(a)
<PAGE>
<CAPTION>

                                              Accumulated other
                                              comprehensive loss
                                        -----------------------------      Common
                                         Unrealized                     stock issued
                                           loss on        Cumulative   for consulting
                                         available for     exchange    services to be
                                        sale securities   adjustments     received        Total
                                        ---------------   -----------  --------------     -----
<S>                                      <C>            <C>            <C>            <C>
At December 31, 1995 .................   $   (43,941)   $     6,968    $  (703,567)   $   (41,985)

Issued to effect
   a consulting
   agreement
   (note 11a) ........................          --             --         (899,750)         --
Amortization of
   consulting fees ...................          --             --        1,368,567      1,368,567
Issued for
   acquisition of a
   subsidiary
   (note 11b) ........................          --             --             --        1,000,000
Net loss .............................          --             --             --       (2,288,328)
Other comprehensive loss:
   Unrealized loss
     on securities
     available-for-sale ..............          --          (34,884)          --          (34,884)
                                         -----------    -----------    -----------    -----------

At December 31, 1996 .................       (78,825)         6,968       (234,750)         3,370

Private placements
   (note 11) .........................          --             --             --        1,020,000
Private placements
   (note 11) .........................          --             --             --          600,000
Issue to effect a
   consulting
   agreement (note 11e) ..............          --             --         (100,000)          --
Amortization of
   consulting fees ...................          --             --          272,250        272,250
Redemption to reverse
   the purchase
   of a subsidiary
   (note 11f) ........................          --           (5,452)          --       (1,005,452)
Net loss .............................          --             --             --       (1,393,389)
Other comprehensive loss:
   Unrealized loss
     on securities
     available-for-
     sale ............................    (2,228,442)          --             --       (2,228,442)
                                         -----------    -----------    -----------    -----------

At December 31, 1997 .................    (2,307,267)         1,516        (62,500)    (2,731,663)

Amortization of ......................          --             --           62,500         62,500
  consulting fees
Net loss .............................          --             --             --       (1,077,133)
Other comprehensive income (loss):
   Unrealized loss
     on securities
     available-for-sale ..............    (1,048,813)          --             --       (1,048,813)
   Foreign exchange
     translation
     adjustment ......................          --           16,901           --           16,901
                                         -----------    -----------    -----------    -----------

At December 31, 1998 .................  $ (3,356,080)  $     18,417    $      --      $(4,778,208)
                                         ===========    ===========    ===========    ===========
</TABLE>

See accompanying notes to the consolidated financial statements.

                                    F - 8(b)

<PAGE>

<TABLE>
<CAPTION>
                                           POWERSOFT TECHNOLOGIES, INC.
                                (Formerly known as Heng Fai China Industries, Inc.)
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (United States Dollars)

                                                                         Year ended December 31,
                                                                   1998           1997           1996
                                                                   ----           ----           ----
<S>                                                           <C>            <C>            <C>
Cash flow from operating activities:

   Net loss ...............................................   $(1,077,133)   $(1,393,389)   $(2,288,328)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Minority interest ..................................          --          (74,463)       (77,099)
       Depreciation and amortization ......................        35,186        208,214        194,939
       Consulting fees ....................................       562,500        772,250      1,868,567
       Allowance for doubtful accounts ....................          --             --           70,258
       Available-for-sale securities written off ..........        19,242           --             --
       Provision for stock obsolescence ...................          --             --           52,322
       Gain on disposal of a subsidiary ...................          --         (148,775)          --
       Gain on the reversal of the purchase
         of a subsidiary ..................................          --         (307,442)          --
       Loss on investment in Duck Farm ....................          --          301,324           --
       Changes in working capital components:
         Accounts receivable ..............................       (22,309)    (3,033,177)    (1,021,123)
         Inventories ......................................          --        2,364,197     (1,935,180)
         Prepaid and other current assets .................        29,193       (799,162)         4,851
         Amounts receivable from related parties ..........         3,318     (1,653,988)      (124,800)
         Value added taxes recoverable ....................          --         (177,674)      (611,790)
         Accounts payable .................................        48,266        649,881        576,792
         Bills payable ....................................          --         (481,928)       722,892
         Accrued expenses and other liabilities ...........       (74,665)       414,288        206,679
         Foreign exchange difference ......................        (6,664)          --             --
         Amounts payable to related parties ...............       456,460       (703,752)       487,258
         Prepaid rental ...................................          --           28,916         28,683
                                                              -----------    -----------    -----------

   Net cash used in operating activities ..................       (26,606)    (4,034,680)    (1,845,079)
                                                              -----------    -----------    -----------

Cash flow from investing activities:

   Purchase of available-for-sale securities ..............          --       (6,098,426)      (264,688)
   Proceeds from sale of available-for-sale securities ....          --        3,044,970         28,308
   Purchase of property, plant and equipment ..............          --          (91,414)      (158,987)
   Cash acquired on purchase of subsidiary (note 4) .......          --             --           21,940
   Cash given up on the reversal of the purchase
     of a subsidiary ......................................          --         (142,973)          --
   Proceeds from disposal of a subsidiary .................          --            8,657           --
                                                              -----------    -----------    -----------

Net cash used in investing activities .....................          --       (3,279,186)      (373,427)
                                                              -----------    -----------    -----------

(Continued)

See accompanying notes to the consolidated financial statements.

                                      F - 9

<PAGE>

<CAPTION>

                                           POWERSOFT TECHNOLOGIES, INC.
                                (Formerly known as Heng Fai China Industries, Inc.)
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS-continued
                                              (United States Dollars)

                                                                        Year ended December 31,
                                                                   1998           1997           1996
                                                                   ----           ----           ----
<S>                                                           <C>            <C>            <C>
Cash flow from financing activities:

   Common stock issued for cash ...........................   $      --      $ 1,620,000    $      --
   Increase in margin loan payable ........................        77,969      2,569,102        243,081
   Repayment of margin loan ...............................          --             --          (28,308)
   Increase in short-term borrowings ......................          --        3,056,287      1,092,930
   Repayment of mortgage loans ............................       (21,287)       (20,446)       (18,770)
   Repayment in long-term payable .........................          --          (45,163)        (2,671)
   Advance from a minority shareholder ....................          --             --        1,047,502
                                                              -----------    -----------    -----------

Net cash provided by financing activities .................        56,682      7,179,780      2,333,764
                                                              -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents ......        30,076       (134,086)       115,258
Cash and cash equivalents at beginning of year ............        36,173        170,259         55,001
                                                              -----------    -----------    -----------

Cash and cash equivalents at end of the year ..............   $    66,249    $    36,173    $   170,259
                                                              ===========    ===========    ===========

Cash paid during the year for:

   Interest ...............................................   $   458,171    $   301,972    $   184,078
                                                              ===========    ===========    ===========

Non-cash financing activities:

   Advances from a related party for investment
     in Duck Farm (note 3) ................................   $      --      $   301,324    $      --
                                                              ===========    ===========    ===========

   Issuance of common stock for consulting services .......   $      --      $   100,000    $ 1,368,567
                                                              ===========    ===========    ===========
</TABLE>











See accompanying notes to the consolidated financial statements.


                                     F - 10

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             (United States Dollars)

1.   ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS

     On March  23,  1998,  the  Company  changed  its name  from  Heng Fai China
     Industries, Inc. to Powersoft Technologies, Inc. (the Company).

     On December 31, 1998, the Company and its subsidiaries'  principal activity
     is the operation of a rental property in North Vancouver,  British Columbia
     in Canada.  Changes in the property  market in that  location  could have a
     material  impact  on  the  Company.  See  Note  13 for  information  on the
     geographic location of the Company's assets.

     At December 31, 1998, details of the subsidiary companies, all of which are
     wholly-owned, are as follows:

<TABLE>
<CAPTION>
                                                                     Place of
                                                                  Incorporation/
                  Name of subsidiary                              Establishment             Principal activities
     ---------------------------------------------                --------------            ---------------------
<S>                                                              <C>                          <C>
     Heng Fai China & Asia Industries Limited                        Hong Kong                   Investment holding
     Heng Fai China Industries Acquisition Limited                   Hong Kong                        Inactive
     Heng Fai China Industries Limited                               Hong Kong                   Investment holding
     Greatly Hong Kong Limited                                       Hong Kong                   Investment holding
     Worldwide Container Company Limited                             Hong Kong               Investment holding trading
     Vancouver Hong Kong Properties Ltd.                              Canada                     Property investment
                                                                                                    and management
     America & China Business Development Inc.                        Canada                          Inactive
     Heng Fai Management Inc.                                     British Virgin               Provision of management
                                                                      Islands                         Services
</TABLE>

     The Company holds certain  investments  in  marketable  equity  securities,
     which are  carried at fair  value.  Future  changes in the market  value of
     these securities could materially affect the Company's financial position.

2.   GOING CONCERN

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


                                     F - 11

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

2.   GOING CONCERN-continued

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

3.   ACQUISITIONS, REVERSAL AND DISPOSAL

     During 1996 and 1995 the Company made two  acquisitions  both of which have
     either  been  reversed  or  disposed  of in  1997.  The  acquisitions  were
     accounted  for as a purchase and their  operating  results were included in
     the  consolidated  statements  of income  from  their  respective  dates of
     acquisition.

     On  September  4, 1996,  through a  wholly-owned  subsidiary,  the  Company
     acquired a 70% interest in Wuhan Monkey King Container Co., Ltd.  ("Wuhan")
     in exchange for 727,272 shares of the Company's restricted common stock. No
     goodwill arose on the acquisition. Wuhan is a joint venture incorporated in
     the People's  Republic of China  ("PRC")  which was formed to engage in the
     design,  manufacture,   lease  and  repair  of  standard  and  non-standard
     containers and related steel structure products.

     As a result  of the  unsatisfactory  performance  of Wuhan in both 1996 and
     1997, the Company effected an agreement on December 29, 1997 to reverse the
     acquisition  by  returning  a 70%  interest  in Wuhan to redeem the 727,272
     shares of restricted  common stock  previously  issued for the acquisition.
     The 1997 results of Wuhan have been disclosed under discontinued operations
     and the comparatives have been restated accordingly. In 1998, the change in
     ownership in Wuhan had been approved by the relevant government authorities
     in PRC.

     Revenues  from the  discontinued  operation  in Wuhan were  $2,934,871  and
     $1,082,317 in 1997 and 1996, respectively.

     On January 9, 1995,  the  Company  acquired  from Fai H. Chan,  an officer,
     director and stockholder of the Company,  100% of the issued ordinary share
     capital of Heng Fai China & Asia  Industries  Limited  ("Heng Fai Asia") in
     exchange for nominal consideration.  Heng Fai Asia through its wholly-owned
     subsidiaries  had various  options to acquire  interests  in various  lease
     interests or operating  joint  ventures in the PRC,  but  otherwise  had no
     material assets and liabilities or operations at the time of acquisition.


                                     F - 12

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

3.   ACQUISITIONS, REVERSAL AND DISPOSAL-continued

     Heng Fai Asia, through its wholly-owned subsidiary, Cangzhou Min You Cement
     Co.,  Ltd. (the  "Cangzhou  Cement")  formed in January 1995  exercised its
     option to enter into a lease, for a period of five years commencing January
     1,  1995,  of a  production  line  at  the  Hebei  Cangzhou  City  Chemical
     Corporation Factory (the "Cangzhou Factory").  Cangzhou Cement was entitled
     to lease the production  line for five years for a rental of RMB1.2 million
     ($144,288)  payable  through  expenditures,  which  were  made in 1995,  to
     renovate and modernize the Cangzhou Factory.

     On December  10, 1997,  the Company  disposed of a 75% and a 6% interest in
     the  Cangzhou   Cement  to  the  Chinese  joint  venture   partner  and  an
     unaffiliated company for a consideration of $nil and $8,657,  respectively.
     At December 31, 1997,  the Company's  interest in Cangzhou  Cement has been
     reduced from 100% to 19% and full  provision was made against the remaining
     cost of  investment  in the  Cangzhou  Cement.  The change in  ownership in
     Cangzhou Cement has been approved by the relevant government authorities in
     PRC.

     Revenues from the  discontinued  operation in Cangzhou Cement were $306,398
     and $540,191 in 1997 and 1996, respectively.

     Heng Fai Asia's other options lapsed in 1995.

     In  January  1997,  the  Company  acquired  from Fai H. Chan,  an  officer,
     director and stockholder of the Company,  100% of the issued ordinary share
     capital of Greatly Hong Kong Limited ("Greatly HK") in exchange for nominal
     consideration.  Greatly HK had a 25% interest in Hebei  Cherry  Valley Duck
     Ltd.  ("Duck  Farm"),  a cooperative  joint venture  established in the PRC
     which was engaged in the  management  and  operation of a duck farm in PRC.
     The investment was wholly financed by an interest free,  short-term advance
     of  RMB2,500,000  from Fai H. Chan.  Other than the  investment in the Duck
     Farm and the  advance  from Fai H. Chan,  Greatly HK had no other  material
     assets and liabilities or operations at the time of acquisition.

     As a result of the unsatisfactory  performance of the Duck Farm, Greatly HK
     effected an  agreement  in December  1997 to dispose of its 25% interest in
     the Duck Farm at a consideration  of $nil. In 1998, the change in ownership
     in the Duck Farm was approved by the  relevant  government  authorities  in
     PRC.

     The share of 1997  results  and the loss on  disposal of the Duck Farm have
     been disclosed under discontinued operations.


                                     F - 13

<PAGE>



                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

3.   ACQUISITIONS, REVERSAL AND DISPOSAL-continued

     On March 3,  1997,  the  Company  acquired  from Fai H. Chan,  an  officer,
     director and stockholder of the Company,  100% of the issued ordinary share
     capital  of Heng  Fai  China  Industries  Acquisition  Limited  ("Heng  Fai
     Acquisition") in exchange for nominal  consideration.  Heng Fai Acquisition
     had an option to form a cooperative joint venture in the PRC, but otherwise
     had no  material  assets  and  liabilities  or  operations  at the  time of
     acquisition.

     Heng  Fai  Acquisition  had  entered  into  a  conditional  agreement  (the
     "Agreement")  with an  unaffiliated  party in PRC,  (the  "PRC  Party")  to
     establish a joint venture,  in Zhangjiagang  Free Trade Zone, PRC. However,
     the Agreement was not completed and the  registration  of the joint venture
     was canceled during 1997.

4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying  consolidated  financial  statements have been prepared in
     accordance  with  accounting  principles  generally  accepted in the United
     States.  The following  sets forth the  significant  accounting  principles
     utilized in the preparation of the consolidated financial statements:

     Principles of  consolidation  - The  consolidated  financial  statements of
     Powersoft Technologies, Inc. include the assets, liabilities,  revenues and
     expenses of the Company and all its subsidiaries. All material intercompany
     transactions and balances have been eliminated.

     Cash and cash equivalents - The Company's cash and cash equivalents include
     cash on hand and  short-term  bank  deposits,  with original  maturities of
     three months or less.

     The following  supplemental  schedule  summarizes  the fair value of assets
     acquired,  cash paid net of cash  acquired,  common  stock  issued  and the
     liabilities assumed in conjunction with the acquisition of equity interests
     in subsidiaries in 1996:

          Fair value of non-cash assets acquired             $    5,083,943
          Cash acquired                                              21,940
          Common stock issued                                      (100,000)
                                                               ------------
          Liabilities assumed                                $    4,105,883
                                                               ============

     Investment  securities - The Company has classified  the marketable  equity
     securities  it  holds  as  available-for-sale.   Accordingly,  pursuant  to
     Statement  of Financial  Accounting  Standard  No. 115 the  securities  are
     measured at fair value, with unrealized gains and losses, net of applicable
     taxes, reported as a separate component of equity.


                                     F - 14

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-continued

     Property, plant and equipment - Properties,  plant and equipment are stated
     at cost. Depreciation and amortization is based on the respective estimated
     useful lives as calculated on the following bases:


          Building in Canada               5% declining balance method

          Leasehold land                   Amortized over the term of the lease,
                                           which expires on May 31, 2032  using
                                           the straight line method.

          Furniture and equipment          10% to 20% straight line method

     Upon sale or retirement,  the costs and related accumulated depreciation or
     amortization  are  eliminated  from the accounts and any resulting  gain or
     loss is included in income.

     Foreign  currency  translation  -  Financial  statements  of  international
     subsidiaries  are translated  into U.S.  dollars using the exchange rate at
     each balance sheet date for assets and liabilities  and a weighted  average
     exchange  rate for each period for revenue  and  expenses.  Where the local
     currency is the functional currency,  translation  adjustments are recorded
     as a separate component of shareholders' (deficit) equity.

     Revenues recognition - Rental income is recognized on a straight-line basis
     over  the  periods  of the  leases.  Investment  income  from  the  sale of
     securities  is  recognized  on  the  transaction  date  when  title  of the
     securities has passed.  Dividend income from investments is recognized when
     shareholders' rights to receive payment have been established.

     Income  taxes  -  Certain  items  are  treated  differently  for  financial
     reporting purposes than for income tax purposes.  Pursuant to the provision
     of Statement of Financial  Accounting  Standards No. 109,  "Accounting  for
     Income Taxes",  deferred tax is provided,  under the liability method,  for
     the resulting temporary differences between the financial reporting and tax
     bases of assets and liabilities, using the currently enacted tax rates.

     Loss per common  share - Basic  earnings  (loss) per common  share has been
     calculated   based  upon  the  net  earnings  (loss)  available  to  common
     stockholders  divided  by the  weighted  average  number of  common  shares
     outstanding  during the period.  Diluted  earnings  (loss) per common share
     would not be different than basic  earnings  (loss) per common share due to
     the fact  that  including  the  potential  common  shares  would  result in
     antidilution as a result of the loss from continuing operations.


                                     F - 15

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

4.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     Use of 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 the  disclosures 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
     these estimates.

     Reclassifications  - Certain prior year amounts have been  reclassified  to
     conform to the current year's presentation.

     Effects  of  recent  accounting  standards  - In 1998 the  Company  adopted
     Statement of  Financial  Accounting  Standards  (SFAS)  No.130,  "Reporting
     Comprehensive  Income",  SFAS  No.131,  "Disclosures  about  Segments of an
     Enterprise   and  Related   Information"   and  SFAS  No.132,   "Employers'
     Disclosures about Pensions and Other Postretirement Benefits".

     SFAS No. 130 requires that an enterprise  reports,  by major components and
     as a single  total,  the  change in its net assets  during the period  from
     non-owner  sources.  The Company has  presented  its  comprehensive  income
     (loss) in the consolidated statements of income.

     SFAS No.  131,  which  superseded  SFAS No. 14,  "Financial  Reporting  for
     Segments of Business  Enterprise,"  establishes  standards for the way that
     public enterprises report information about operating segments in financial
     statements  issued  to  the  public.  It  also  establishes  standards  for
     disclosures  regarding  products and services,  geographic  areas and major
     customers.  The adoption of SFAS No. 131 did not require any changes to the
     Company's existing financial statement disclosures.

     SFAS No.132  amends the  disclosure  requirements  for  pensions  and other
     postretirement  benefits.  The  adoption of SFAS No.132 had no  significant
     impact on the Company's current financial statement disclosures.

     New  accounting  standards  not  yet  adopted  - The  Financial  Accounting
     Standards  Board has issued a new  standard  SFAS No.133,  "Accounting  for
     Derivative  Instruments  and Hedging  Activities."  Management  has not yet
     completed  the  analysis  of the impact  this  would have on the  financial
     statements of the Company.


                                     F - 16

<PAGE>



                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

5.   AVAILABLE-FOR-SALE SECURITIES

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

                                                   As of December 31,
     Corporate equity securities:            1998                   1997
                                             ----                   ----

     Cost                              $   3,795,370         $    3,814,612
     Less:  Gross unrealized losses       (3,356,080)            (2,307,267)
                                         -----------            -----------

     Estimated fair value              $     439,290         $    1,507,345
                                         ===========            ===========
     Carrying value                    $     439,290         $    1,507,345
                                         ===========            ===========

     All investment  securities are pledged to secure the Company's  margin loan
     payable (See note 8).

     Included in the above securities are 48,535,276 shares at December 31, 1998
     (1997: 48,535,276 shares) representing 3.9% (1997: 3.9%) of the outstanding
     common stock of Heng Fung Holdings  Company Limited,  ("Heng Fung").  These
     securities were acquired in 1997 at a cost of $3,814,612 and had a carrying
     value of $439,290 at December 31, 1998 and $1,507,345 at December 31, 1997.
     Fai H. Chan and Robert H. Trapp, directors of Heng Fung, are also officers,
     directors and/or shareholders of the Company.

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





                                     F - 17

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

6.   PROPERTY, PLANT AND EQUIPMENT

     The components of property, plant and equipment are as follows:

                                                            As of December 31,
                                                           1998          1997
                                                           ----          ----

     Buildings                                        $   639,718   $   722,538
     Leasehold land                                       514,334       580,922
     Furniture and equipment                               11,347        11,347
                                                        ---------    ----------

     Total                                              1,165,399     1,314,807
     Less:  Accumulated depreciation and amortization    (503,594)     (528,887)
                                                        ---------     ---------

                                                      $   661,805   $   785,920
                                                        =========     =========

7.   DEFERRED EXPENDITURE

     (a)  In June 1995, the Company  entered into a consulting  agreement with a
          previously  unaffiliated  party pursuant to which it received  various
          investor  relations and financial  advisory  services.  The consulting
          agreement  had a term of 12 months,  subject  to  earlier  termination
          thereof or renewal for  subsequent  periods.  Pursuant to the terms of
          the agreement, the Company: (a) in June 1995, issued to the consultant
          an aggregate of 260,000  shares of common stock and (b) was  obligated
          to issue to the  consultant  20,000  shares of common stock each month
          during the term of the agreement.

          The unamortized  portion of the amount recorded for the 260,000 shares
          of common stock initially issued brought forward from 1995 of $703,567
          was fully amortized in 1996 and recognized as consulting fees.

          During  1996,  100,000  shares  of  common  stock  were  issued to the
          consultant  pursuant to the terms of the  agreement in (b) above.  The
          value  attributable  to the 100,000  shares of common  stock issued of
          $581,000 was charged to the statement of income in 1996 and recognized
          as consulting fees.


                                     F - 18

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

7.    DEFERRED EXPENDITURE-continued

     (b)  In September  1996,  the Company  entered into a consulting  agreement
          with  another  previously  unaffiliated  party  pursuant  to  which it
          received various investor  relations and financial  advisory services.
          The consulting  agreement had a term of 12 months,  subject to earlier
          termination thereof or renewal for subsequent periods. Pursuant to the
          terms of the  agreement,  the Company  issued an  aggregate of 300,000
          shares of common stock to the consultant in September  1996. The value
          attributable  to  the  300,000  shares  of  common  stock  issued  was
          $319,500,  which had been  capitalized  and was amortized  over the 12
          months term of the consulting agreement.

          The unamortized  portion of the amount recorded for the 300,000 shares
          of common stock initially issued brought forward from 1996 of $234,750
          was fully amortized in 1997 and recognized as consulting fees.

     (c)  In August 1997, the Company entered into a consulting agreement with a
          previously  unaffiliated  party pursuant to which it received  various
          investor  relations and financial  advisory  services.  The consulting
          agreement  had a term of 12 months,  subject  to  earlier  termination
          thereof or renewal for  subsequent  periods.  Pursuant to the terms of
          the  agreement,  the Company was obligated to issue 100,000  shares of
          common stock to the consultant.

          During  1997,  100,000  shares  of  common  stock  were  issued to the
          consultant  pursuant to the terms of the  agreement  above.  The value
          attributable  to  the  100,000  shares  of  common  stock  issued  was
          $100,000,  which has been capitalized and was being amortized over the
          12-month term of the consulting agreement.  The unamortized portion of
          the amount  recorded for the 100,000  shares of common stock issued is
          presented as a reduction of shareholders' equity.

          During 1998, the  unamortized  portion of the amount  recorded for the
          62,500  shares of common  stock issued  brought  forward from 1997 was
          fully amortized and recognized as consulting fees.

8.   MARGIN LOAN PAYABLE

     The margin  loan  payable is  collateralized  by the  Company's  investment
     securities with a carrying value of $439,290 (1997:  $1,507,345).  The loan
     is payable  on demand and bears  interest  at Hong Kong best  lending  rate
     (12.5% at December 31, 1998) plus 3.5% per annum.


                                     F - 19

<PAGE>




                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

9.   RELATED PARTY TRANSACTIONS

     At the  balance  sheet date the  Company had the  following  balances  with
     related parties,  which are interest-free,  payable on demand and unsecured
     unless otherwise stated:

                                                         As of December 31,
                                                      1998              1997
                                                      ----              ----
     Amounts receivable from:
        Parties related to certain directors    $    15,632        $   18,950
                                                 ==========         =========
     Amounts payable to:
        Certain directors                       $   901,097       $   620,067
        Parties related to certain directors        960,119           284,689
                                                 ----------         ---------
                                                $ 1,861,216       $   904,756
                                                 ==========         =========

     In addition at December 31, 1998 and 1997,  the second  mortgage of $77,579
     and related  interest  payable of $25,368 and  $38,623,  respectively,  are
     payable to the Silverstein Foundation, Inc., a Panama company, in which Mr.
     Fai H. Chan's children have  beneficial  ownership  interests.  The related
     interest expense was $8,269 in 1998, $7,774 in 1997 and $8,947 in 1996.

     On November 1, 1996,  the Company  entered  into a 10 year  consulting  and
     managerial  agreement with Tight Hold Investment  Limited ("Tight Hold"), a
     company in which Fai H. Chan has a beneficial ownership interest. According
     to the  consulting  and  managerial  agreement,  Tight Hold  shall  provide
     consulting and  managerial  services to the Company in return for an annual
     consulting fee of $500,000. Consulting fees paid to Tight Hold during years
     ended December 31, 1998, 1997 an 1996 were $500,000, $500,000 and $500,000,
     respectively.

     On February 1, 1997, the Company issued an aggregate of 1,700,000 shares of
     common stock at $0.60 per share to Fai H. Chan (1,300,000  shares),  Ronald
     M. Lau (100,000 shares),  Robert H. Trapp (100,000 shares) and Keow Y. Chan
     (200,000 shares) pursuant to private  placements for aggregate  proceeds of
     $1,020,000.  Except for Keow Y. Chan who is Fai H. Chan's wife,  all of the
     above  parties  were  directors  of the Company at that time.  (See note 11
     (c)).


                                     F - 20

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

9.   RELATED PARTY TRANSACTIONS-continued

     On June 25, 1997,  the Company issued  2,500,000  shares of common stock at
     $0.24 per share to Fai H. Chan pursuant to a private placement for proceeds
     of $600,000. (See note 11 (d)).

     The Company maintains deposits in accounts at American Pacific Bank and Fai
     H. Chan is an officer and a director of such bank.



10.  MORTGAGE LOANS PAYABLE

                                                           As of December 31,
                                                           1998         1997
                                                           -----        ----
     First mortgage, principal due monthly through
        June 15, 2003 with fixed interest at 6.70%      $ 741,857   $  865,594

     Second mortgage, principal payable on demand
        with interest at Canadian prime (6.00% as at
        December 31, 1998) plus 4%                         77,579       87,623
                                                         --------     --------

                                                          819,436      953,217
     Less:  current portion                              (109,159)    (115,251)
                                                         --------     --------
                                                        $ 710,277   $  837,966
                                                         ========     ========


     The mortgage loans are denominated in Canadian  dollars.  The maturities of
     the mortgage loans as of December 31, 1999 are as follows:


               1999                      $ 109,159
               2000                         33,596
               2001                         36,019
               2002                         38,474
               2003                        602,188
                                          --------
                                         $ 819,436
                                          ========


     The Company has pledged  property with a net book value of $652,560  (1997:
     $775,834) at December 31, 1998 to secure the mortgage loans.


                                     F - 21

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

11.  CAPITAL STOCK

     During the three years ended  December 31, 1998 there were several  changes
     of the Company's capital as set forth below:

     In 1996,
     a)   the Company issued 100,000 and 300,000 shares of common stock at $5.81
          and $1.0625,  respectively,  pursuant to  consulting  agreements  (See
          notes 7 (a) and (b)).
     b)   the Company issued 727,272 shares of common stock at $1.375 to acquire
          a 70% interest in a subsidiary (See note 3).

     In 1997,
     c)   the Company issued 1,700,000 shares of common stock to related parties
          at $0.60 per share  pursuant  to private  placements  for  proceeds of
          $1,020,000. (See note 9)
     d)   the Company issued  2,500,000 shares of common stock to Fai H. Chan at
          $0.24 per  share  pursuant  to a private  placement  for  proceeds  of
          $600,000. (See note 9)
     e)   the Company  issued  100,000 shares of common stock at $1.00 per share
          pursuant to a consulting agreement (see note 7(c)).
     f)   the  Company  redeemed  727,272  shares of  common  stock at $1.375 to
          reverse the purchase of a 70% interest in a subsidiary (See note 3).

     There were no transactions in the Company's capital during 1998.

     As of December 31, 1998, there were also  outstanding  warrants to purchase
     an aggregate of 296,443  shares of common  stock,  at an exercise  price of
     $3.20 per share  through  September  2, 1999.  No  warrants  were issued or
     exercised during 1998.

















                                     F - 22

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

12.  INCOME TAXES

     No  provision  for  income  taxes  has  been  made as the  Company  and its
     subsidiaries had losses for all years presented.

     At December 31, 1998 certain of its  subsidiaries  had  operating  tax loss
     carry  forwards  for  income tax  purposes,  which may be applied to reduce
     future taxable income of the same company.  At December 31, 1998 there were
     tax loss  carryforwards in Hong Kong Special  Administrative  Region ("Hong
     Kong") of approximately $455,000 with no expiration date.

     The Company has established a valuation  allowance for the entire amount of
     these losses. There were no other material temporary differences.

     The Company has not filed corporate income tax returns in the United States
     for the  periods  ended June 30,  1996,  June 30,  1997,  June 30, 1998 and
     December 31, 1998.  The returns are in the process of being  completed  and
     will  be  filed  as soon as  possible.  The  Company  does  not  anticipate
     significant penalties, taxes or interest.
























                                     F - 23


<PAGE>

                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

13.      SEGMENT INFORMATION

<TABLE>
<CAPTION>

                                                   Rental     Investment
For the year ended December 31, 1998               Income       Income       Consolidated
------------------------------------               ------     ----------     ------------

<S>                                           <C>            <C>            <C>
Revenues ..................................   $   307,327    $    13,303    $   320,630
                                                ---------     ----------     ----------
Income (loss) from operations .............        80,714        (25,154)        55,560
General corporate expenses ................                                    (639,889)
Interest Expense ..........................                                    (492,804)
                                                                             ----------
Loss from continuing operations ...........                                  (1,077,133)
                                                                             ----------
Discontinued operations:
   Cement .................................                                       --
   Containers .............................                                       --
   Investment in Duck Farm ................                                       --

Loss from discontinued operations..........                                       --
                                                                             ----------
Loss before income taxes ..................                                 $(1,077,133)
                                                                             ==========
Identifiable assets:
   Continuing operations ..................   $   703,003    $   474,435    $ 1,177,438

   Discontinued operations:
      Cement ..............................                                       --
      Containers ..........................                                       --
      Investment in Duck Farm .............                                       --
                                                                             ----------
                                                                              1,177,438
   Corporate assets .......................                                      38,328
                                                                             ----------
                                                                            $ 1,215,766
                                                                             ==========
Supplemental information
   Depreciation ...........................   $    34,346    $       840    $    35,186
                                               ==========     ==========     ==========
   Capital expenditures ...................   $      --      $      --      $      --
                                               ==========     ==========     ==========

</TABLE>


                                     F - 24

<PAGE>



                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

13.    SEGMENT INFORMATION - continued

<TABLE>
<CAPTION>

                                                  Rental     Investment
For the year ended December 31, 1997              Income       Income       Consolidated
------------------------------------              ------     ----------     ------------

<S>                                           <C>            <C>            <C>
Revenues ..................................   $   346,528    $   225,393    $   571,921
                                               ----------     ----------     ----------
Income (loss) from operations .............       116,404        138,794        255,198
General corporate expenses ................                                  (1,163,415)
Interest Expense ..........................                                    (309,201)
                                                                             ----------
Loss from continuing operations ...........                                  (1,217,418)
                                                                             ----------
Discontinued operations:
   Cement .................................                                      (8,342)
   Containers .............................                                      59,232
   Investment in Duck Farm ................                                    (301,324)
                                                                             ----------
Loss from discontinued operations .........                                    (250,434)
                                                                             ----------
Loss before income taxes ..................                                  (1,467,852)
                                                                             ==========
Identifiable assets:
   Continuing operations ..................   $   803,754    $ 1,531,620    $ 2,335,374

   Discontinued operations:
      Cement ..............................                                        --
      Containers ..........................                                        --
      Investment in Duck Farm .............                                        --
                                                                             ----------
                                                                              2,335,374
   Corporate assets .......................                                      52,688
                                                                             ----------
                                                                            $ 2,388,062
Supplemental information:                                                    ==========
   Depreciation ...........................   $    40,320    $       841    $    41,161
                                               ==========     ==========     ==========

   Capital expenditures ...................   $      --      $      --      $      --
                                               ==========     ==========     ==========
</TABLE>


                                     F - 25

<PAGE>

                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

13.   SEGMENT INFORMATION - continued


<TABLE>
<CAPTION>
                                                  Rental     Investment
For the year ended December 31, 1996              Income       Income       Consolidated
------------------------------------              ------     ----------     ------------
<S>                                           <C>            <C>            <C>

Revenues ..................................   $   336,644    $    92,214    $   428,858
                                               ----------     ----------     ----------
Income (loss) from operations .............        85,883        (59,955)        25,928
General corporate expenses ................                                  (1,966,224)
Interest Expense ..........................                                    (121,436)
                                                                             ----------
Loss from continuing operations ...........                                  (2,061,732)
                                                                             ----------
Discontinued operations:
   Cement .................................                                     (62,487)
   Containers .............................                                    (241,208)
   Investment in Duck Farm ................                                        --
                                                                             ----------
Loss from discontinued operations .........                                    (303,695)
                                                                             ----------
Loss before income taxes ..................                                 $(2,365,427)
                                                                             ==========
Identifiable assets:
   Continuing operations ..................   $   787,920    $   710,307    $ 1,498,227

   Discontinued operations:
      Cement ..............................                                     395,955
      Containers ..........................                                   8,560,939
      Investment in Duck Farm .............                                         --
                                                                             ----------

                                                                            $10,455,121
   Corporate assets .......................                                     170,259
                                                                             ----------
                                                                            $10,625,380
                                                                             ==========
Supplemental information:
   Depreciation ...........................   $    41,395    $       420    $    41,815
                                               ==========     ==========     ==========

   Capital expenditures ...................   $      --      $     3,363    $     3,363
                                               ===========   ===========    ===========
</TABLE>


                                     F - 26

<PAGE>

                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

13.  SEGMENT INFORMATION - continued

     The  following  is  a  summary  of  information   regarding  the  Company's
     continuing  operations  by  geographical  area for each of the three  years
     ended December 31, 1998:

                                         1998            1997             1996
                                         ----            ----             ----
Revenue:
   North America ...............   $    312,119    $    360,030    $    342,112
   Hong Kong ...................          8,511         211,891          86,746
                                   ------------    ------------    ------------
                                   $    320,630    $    571,921    $    428,858
                                   ============    ============    ============

Operating income (loss):
   North America ...............   $     80,714    $    116,404    $     91,351
   Hong Kong ...................       (517,958)       (170,407)       (186,859)
   General corporate expenses ..       (639,889)     (1,163,415)     (1,966,224)
                                   ------------    ------------    ------------

                                   $ (1,077,733)   $ (1,217,418)   $ (2,061,732)
                                   ============    ============    ============

Identifiable assets:
   North America ...............   $    703,003    $    803,754    $    787,920
   PRC .........................           --              --         8,956,894
   Hong Kong ...................        474,435       1,531,620         710,307
   Corporate assets ............         38,328          52,688         170,259
                                   ------------    ------------    ------------

                                   $  1,215,766    $  2,388,062    $ 10,625,380
                                   ============    ============    ============

14.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  following   disclosure  of  the  estimated  fair  value  of  financial
     instruments is made in accordance with the requirements of the SFAS No. 107
     "Disclosure about Fair Value of Financial Instruments".  The estimated fair
     value amounts have been determined by the Company,  using available  market
     information and appropriate valuation methodologies.  However, considerable
     judgment is  necessarily  required in  interpreting  market data to develop
     estimates of fair value.  Accordingly,  the estimates  presented herein are
     not necessarily indicative of the amounts that the Company could realize in
     a current market exchange.


                                     F - 27

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

14.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS-continued

     The carrying amounts of cash and cash equivalents,  short-term  borrowings,
     current  portion of mortgage  loans payable and margin loan payable,  are a
     reasonable  estimate  of their fair value due to the short  maturity of the
     instruments. The fair value for the available-for-sale  securities is based
     primarily on quoted market prices and such  securities  are carried at fair
     value.

15.  COMMITMENTS AND CONTINGENCIES

     The Company had no capital commitments as of December 31, 1998.

     The Company leases land in North  Vancouver,  British Columbia on which the
     Company's  rental  property  is  located.  The annual  rent of  CDN$110,000
     ($71,115) is fixed until May 31, 2010. The Company has the option to extend
     the lease to May 31, 2032 at a rent to be negotiated.

     Total rental expense charged to operations was $85,365 in 1998, $125,201 in
     1997 and $131,813 in 1996.

     At  December  31,  1998,  the  minimum  future  rental   commitments  under
     non-cancelable leases payable over the remaining lives of the leases are:


               1999                                $  71,115
               2000                                   71,115
               2001                                   71,115
               2002                                   71,115
               2003                                   71,115
               2004 through 2010                     456,321
                                                    --------
                                                   $ 811,896
                                                    ========


                                     F - 28

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

16.  SUBSEQUENT EVENTS (RESTATED)

     (a)  On January 18, 1999,  the Company  entered into an agreement  with SAR
          Trading  Limited  ("SAR")  wherein  SAR agreed to buy and the  Company
          agreed  to  sell  all  of  its   interests  in  the  majority  of  its
          subsidiaries  for   approximately   $4,838,000  in  the  form  of  the
          assumption of certain liabilities.  In consideration of the assumption
          of  liabilities,  the Company agreed to issue two notes payable to SAR
          in the amounts of $1,000,000 and $3,838,000.  The $1,000,000 note will
          be  immediately  convertible  into  20,000,000  common  shares  of the
          Company. The $3,838,000 note will be convertible into shares of common
          stock of the Company,  in minimum  increments of $250,000 each, at the
          average 15 day  trading  price at the option of the  Company by giving
          seven  trading days notice in writing to SAR. SAR is owned 100% by Fai
          H. Chan. On June 18, 1999, the Company agreed to offset the $1,365,278
          amount due from related  parties  against the $3,838,000 note payable.
          The agreements are subject to shareholder approval.

     (b)  On February 5, 1999,  13,700,000 shares of common stock of the Company
          were issued  erroneously  to SAR in exchange for a portion of the debt
          that is to be issued pursuant to the agreements with SAR.  Because the
          agreements  have not yet been approved by the Company's  shareholders,
          the 13,700,000 shares of common stock have been canceled.

          At December  31,  1998,  the  unaudited  pro forma effect of the above
          events as if they had occurred on that date and assuming all notes are
          converted into common stock is summarized as follows:


                                  December 31,                      December 31,
                                     1998          Pro forma            1998
                                   (actual)       adjustments        (pro forma)
                                  ------------    -----------       -----------
Total assets ................... $ 1,215,766     $   185,690  (1)   $    36,178
                                                  (1,365,278) (2)
                                 ===========     ===========        ===========

Total current liabilities ...... $ 5,283,697     $(4,488,781) (1)   $   794,916

Mortgage loans payable .........     710,277        (710,277) (1)         --

Notes payable ..................        --         3,838,000  (1)     2,472,722
                                                  (1,365,278) (2)
                                 -----------                        -----------
Total liabilities ..............   5,993,974                          3,267,638
                                 -----------                        -----------
Shareholders' deficit            $(4,778,208)      1,546,748  (1)   $(3,231,460)
                                 ===========     ===========        ===========


                                     F - 29

<PAGE>


                          POWERSOFT TECHNOLOGIES, INC.
               (Formerly known as Heng Fai China Industries, Inc.)
            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-continued
                             (United States Dollars)

16.    SUBSEQUENT EVENTS - continued

               (1)  To reflect  the effect of the sale of all the  interests  in
                    majority of its subsidiaries by way of the assumption of the
                    liabilities  and the  effect  of the  issuance  of the  note
                    payable  and the  conversion  of the  $1,000,000  note  into
                    20,000,000 common shares of the Company.

               (2)  To reflect  the effect of setting  off the  amounts due from
                    related  parties  with  the  $3,838,000  note  payable.  The
                    amounts   due   from   related   parties   arise   from  the
                    de-consolidation  of the  subsidiaries  sold and represented
                    intercompany receivables.

          (c)  On February  12,  1999,  the Company  entered  into a  Technology
               License  and  Services  Agreement  (the  "Agreement")  with Cyber
               Construction  Company,  Inc.  ("Cyber").  Cyber has developed and
               continues  to develop  certain  software  applications,  methods,
               operating procedures, Internet infrastructure design and Internet
               site template  development  (collectively the "Technology").  The
               Agreement grants a nontransferable  license to the Company to use
               and  execute  this  Technology  developed  by Cyber,  along  with
               related services, for the Company's customers. The Company agrees
               to grant and transfer to Cyber, as a consideration of the license
               and related  services,  its preferred  stock with a face value of
               $10  million,  as part of an issuance of up to $50 million of its
               preferred shares.  The Company has agreed that upon the sooner of
               (i) the licensing or  acquisition of  technologies  utilizing the
               $50 million proceeds from the sale of preferred  shares;  or (ii)
               February 13, 2001. The transaction  contemplated by the agreement
               has not yet been consummated and  consequently,  has not yet been
               recorded.









                                     F - 30

<PAGE>


                                  EXHIBIT INDEX


Exhibit No.              Description

3.1(a) Certificate of Incorporation of registrant,  as amended,  incorporated by
       reference from Form 10-K for the year ended December 31, 1996.

3.1(b) Agreement and Plan of Merger, as amended,  incorporated by Reference from
       the Company's Annual Report on Form 10-K for the Year ended  December 31,
       1996.

3.2    Bylaws of registrant, as  amended,  incorporated  by  reference  from the
       Company's Annual Report on Form 10K for the year ended December 31, 1996.

10.1   Wuhan  Container  Acquisition  Agreement  incorporated  by  reference to
       Exhibit 2 of the  registrant's  Current Report on Form 8-K filed with the
       SEC on September 20, 1996, as amended.

10.2   Consulting  Agreement between registrant and Thomas E. Waite incorporated
       by  reference to Exhibit 4.1 of the registrant's  Form S-8 filed with the
       SEC on March 20, 1997.

10.3   Consulting and Management  Agreement between Heng Fai   Management,  Inc.
       and Tight Hold Investment  Limited dated November 4, 1996 incorporated by
       reference  from  the  Company's  Annual  Report on Form 10-K for the year
       ended December 31, 1996.

10.4   Agreement between  the Company and SAR Trading Limited, dated January 18,
       1999.

10.5   Agreement between  the Company and Cyber Construction Co., dated February
       12, 1999.

10.6   Assignment Agreement between the Company, SAR Trading Limited and Mr. Fai
       H. Chan, dated June 18, 1999.

10.7   Agreement  to Cancel  Consulting  And  Management  Agreement  between the
       Company and Tight Hold Investment Limited, dated September 28, 1999.

10.8   Amendment to  Asset Sale  Agreement  between  the Company and SAR Trading
       Limited, dated June 18, 1999.

21     Subsidiaries of the registrant.

27     Financial Data Schedule.





                                       22