<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                         For the Quarterly Period Ended

                                DECEMBER 31, 1998


                         Commission File Number: 0-24005


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


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



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

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




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


                  Number of Shares of Common Stock, $0.001 Par
                     Value Outstanding at February 9, 1999
                                    5,776,400


                                       1


<PAGE>   2
                           INTERNATIONAL BARTER CORP.
                              FOR THE QUARTER ENDED
                                DECEMBER 31, 1998
                              INDEX TO FORM 10-QSB


<TABLE>
<CAPTION>
                                                                                    PAGE   
                                                                                    ----   
<S>                                                                                 <C>
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements:

         Balance Sheets:
         - December 31, 1998 and March 31, 1998.....................................  3

         Statements of Operations:
         - For the Three Months and Nine Months
           Ended December 31, 1998 and 1997.........................................  4

         Statements of Cash Flow:
         - For the Nine Months Ended
           December 31, 1998 and 1997...............................................  5

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

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

PART II - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds..................................  17

Item 4.  Submission of Matters to a Vote of Security Holders.......................  17

Item 5. Other Information..........................................................  18
</TABLE>


                                       2


<PAGE>   3
                           INTERNATIONAL BARTER CORP.
                                 BALANCE SHEETS
                      DECEMBER 31, 1998 AND MARCH 31, 1998


<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,           MARCH 31,
                                                                                         1998                  1998
                                                                                      -----------           -----------
<S>                                                                                   <C>                   <C>
                                        ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                           $ 1,141,331           $   382,564
  Accounts receivable, net of allowance for
    doubtful accounts of $3,102 and $1,956 for
    December 31, 1998 and March 31, 1998, respectively                                     63,424                63,259
  Notes receivable - current                                                                2,406                 2,406
  Trade dollars earned in excess of issued                                                 18,130                    --
  Other current assets                                                                      1,163                   571
                                                                                      -----------           -----------
      Total Current Assets                                                              1,226,454               448,800
                                                                                      -----------           -----------
PROPERTY AND EQUIPMENT, at cost, net of
  accumulated depreciation                                                                 59,553                42,259
                                                                                      -----------           -----------
OTHER ASSETS
  Notes receivable - noncurrent                                                            26,573                32,791
  Prepaid advertising and scrip inventory                                                 157,875                    --
  Note receivable                                                                         328,350                    --
  Other assets                                                                              1,200                 1,200
                                                                                      -----------           -----------
      Total Other Assets                                                                  513,998                33,991
                                                                                      -----------           -----------
                                                                                      $ 1,800,005           $   525,050
                                                                                      ===========           ===========

                         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                                                    $    20,542           $     9,274
  Trade Dollars issued in excess of earned                                                     --                 5,439
  Current portion of long-term debt                                                        11,387                13,074
  Other current liabilities                                                                 3,959                 7,683
                                                                                      -----------           -----------
      Total Current Liabilities                                                            35,888                35,470
                                                                                      -----------           -----------
LONG-TERM DEBT                                                                              9,324                19,097
                                                                                      -----------           -----------
STOCKHOLDERS' EQUITY
  Common stock, $.001 par value; authorized 25,000,000
   shares; issued and outstanding 5,775,200 shares and
   3,832,900 shares as of December 31, 1998 and March 31,
    1998, respectively                                                                      5,775                 3,833
  Additional paid-in capital                                                            2,081,926               540,618
  Treasury stock, 10,980 shares as of December 31, 1998                                   (13,012)                   --
  Subscribed shares, 1,200 shares and 195,000 shares (giving effect to stock
    split) as of December 31, 1998 and March 31, 1998, respectively                         1,200                37,500

  Accumulated deficit                                                                    (321,096)             (111,468)
                                                                                      -----------           -----------
      Total Stockholders' Equity                                                        1,754,793               470,483
                                                                                      -----------           -----------
                                                                                      $ 1,800,005           $   525,050
                                                                                      ===========           ===========
</TABLE>


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


                                       3


<PAGE>   4
                           INTERNATIONAL BARTER CORP.
                            STATEMENTS OF OPERATIONS
            FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 AND
                THE NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                  THREE                 THREE                 NINE                   NINE
                                                  MONTHS                MONTHS               MONTHS                 MONTHS
                                                 12-31-98              12-31-97              12-31-98             12-31-97
                                               -----------           -----------           -----------           -----------
<S>                                            <C>                   <C>                   <C>                   <C>        
REVENUE                                        $   200,226           $   211,327           $   476,397           $   538,811
COST OF SALES                                       34,033                59,404                68,201               126,241
                                               -----------           -----------           -----------           -----------
      Gross Profit                                 166,193               151,923               408,196               412,570
                                               -----------           -----------           -----------           -----------
OPERATING EXPENSES
  Selling, general and administrative              245,566               141,444               637,296               408,788
  Depreciation                                       3,948                 2,270                 9,807                 6,810
                                               -----------           -----------           -----------           -----------
    Total Operating Expenses                       249,514               143,714               647,103               415,598
                                               -----------           -----------           -----------           -----------
Income (Loss) from Operations                      (83,321)                8,209              (238,907)               (3,028)
                                               -----------           -----------           -----------           -----------
OTHER INCOME (EXPENSE)
  Interest income                                   13,771                 3,392                29,188                 6,054
  Interest expense                                    (738)               (1,512)               (2,806)               (4,039)
                                               -----------           -----------           -----------           -----------
    Total Other Income (Expense)-net                13,033                 1,880                26,382                 2,015
                                               -----------           -----------           -----------           -----------
Net Income (Loss) Before Income Taxes              (70,288)               10,089              (212,525)               (1,013)
Income Tax Expense (Benefit)                            --                    --                  (591)                   -- 
                                               -----------           -----------           -----------           -----------

Net Income (Loss)                              $   (70,288)          $    10,089           $  (211,934)          $    (1,013)
                                               ===========           ===========           ===========           ===========
Average Common and Equivalent Shares:
  Basic                                          5,776,400             1,550,000             5,421,400             1,550,000
                                               ===========           ===========           ===========           ===========
  Diluted                                        5,776,400             1,550,000             5,421,400             1,550,000
                                               ===========           ===========           ===========           ===========
Net Income (Loss) Per Common Share:
  Basic                                        $      (.01)          $       .01           $      (.04)          $      (.00)
                                               ===========           ===========           ===========           ===========
  Diluted                                      $      (.01)          $       .01           $      (.04)          $      (.00)
                                               ===========           ===========           ===========           ===========

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


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


                                       4


<PAGE>   5
                           INTERNATIONAL BARTER CORP.
                            STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                                   1998                  1997 
                                                               -----------           -----------
<S>                                                            <C>                   <C>         
CASH USED IN OPERATING ACTIVITIES:
Net loss                                                       $  (211,934)          $    (1,013)
Adjustments to reconcile net loss to cash
  provided by operating activities:
    Depreciation                                                     9,807                 6,700
    Bad debts                                                        1,146                    --
    Deferred income taxes                                             (591)                 (351)
    Net trade revenue earned over (under) trade costs             (161,444)              (57,035)
Changes in operating assets and liabilities:
  Accounts receivable                                               (1,311)               11,982
  Contracts receivable                                               6,218                 1,818
  Prepaids and other assets                                        (20,000)                   64
  Accounts payable and other liabilities                             9,849                17,136
                                                               -----------           -----------
      Net Cash Used by Operating Activities                       (368,260)              (20,699)
                                                               -----------           -----------

CASH USED IN INVESTING ACTIVITIES:
                                                                                     -----------
Acquisition of property and equipment                              (27,101)              (27,650)
                                                               -----------           -----------
      Net Cash Used by Investing Activities                        (27,101)              (27,650)
                                                               -----------           -----------

CASH PROVIDED BY FINANCING
  ACTIVITIES:
  Proceeds from sale of common stock                             1,493,938                    --
  Increase in notes receivable                                    (328,350)                   --
  Repayment of notes payable                                       (11,460)              (21,006)
                                                               -----------           -----------
    Net Cash Provided (Used) by Financing Activities             1,154,128               (21,006)
                                                               -----------           -----------
  Net Increase (Decrease) in Cash                                  758,767               (69,355)
  Cash at Beginning of Period                                      382,564               162,327
                                                               -----------           -----------
  Cash at End of Period                                        $ 1,141,331           $    92,972
                                                               ===========           ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest                                       $     2,806           $     4,039
  Cash paid for income taxes                                            --                    --
</TABLE>


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


                                       5


<PAGE>   6
                           INTERNATIONAL BARTER CORP.
                          NOTES TO FINANCIAL STATEMENTS

1 - BASIS OF PRESENTATION

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

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

2 - TRADE DOLLARS

At December 31, 1998, the Company had earned 18,130 IBC Trade Dollars in excess
of the amount of Trade Dollars expended by the Company. At March 31, 1998, the
Company had expended 5,439 IBC Trade Dollars in excess of the amount of Trade
Dollars earned by the Company. This situation is commonly referred to in the
commercial barter industry as a "negative trade balance". Trade Dollars expended
in excess of earned by the Company is provided for in the IBC Trading Rules that
govern the Exchange. Such provisions allow the Company to expend Trade Dollars
in excess of earned within certain guideline amounts. The Company would be
ultimately obligated to provide goods and services for sale to Exchange members
to offset any amounts of Trade Dollars expended in excess of earned.

3 - CAPITAL STOCK

In July of 1998, the Company received cash for common stock and warrants through
a private placement whereby, 800,000 units were sold at $1.25 per unit. Each
unit consists of one share of common stock and one warrant exercisable at $1.50
per share. The warrants expire June 30, 2000. As of September 30, 1998, the
shares were unissued and thereby classified as subscribed stock. During the
quarter ended December 31, 1998, all of these previously unissued (subscribed)
shares were issued. Also during the current quarter, $1,200 was received by the
Company for the exercise of warrants for 1,200 shares of common stock. As of
December 31, 1998, the shares had not been issued by the Company and were thus,
classified as subscribed stock.

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

A brokerage account was opened and funded for the sole purpose of repurchasing
up to 250,000 shares of the Company's common stock in the open market. In
October of 1998, 10,980 shares were repurchased for $13,012 and classified as
treasury stock.

4 - INCOME (LOSS) PER SHARE

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


                                       6


<PAGE>   7
                           INTERNATIONAL BARTER CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4 - INCOME (LOSS) PER SHARE (CONTINUED)

prior year earnings per share data are restated to conform with Statement 128
for consistent presentation of all years.

As explained in Note 3, on July 9, 1998, the Board of Directors passed a
resolution for a 2-for-1 stock split of the Company's common stock to be
distributed to shareholders of record after the close of market on July 24,
1998. In order to properly reflect earnings per share on a prospective basis,
the Company has provided earnings per share disclosures assuming the stock split
had occurred retroactively, along with the earnings per share disclosures based
upon actual shares outstanding as of December 31, 1997 and for the three and
nine months ended December 31, 1997.

Following, is a reconciliation of the numerators of the basic and diluted income
(loss) per share for the three months ended December 31, 1998 and 1997 and the
nine months ended December 31, 1998 and 1997:


<TABLE>
<CAPTION>
                                                    THREE                 THREE                   NINE                  NINE
                                                    MONTHS                MONTHS                 MONTHS                MONTHS
                                                    12-31-98             12-31-97                12-31-98             12-31-97
                                                 -------------        -------------           -------------        -------------
<S>                                              <C>                  <C>                     <C>                  <C>           
Net income (loss) available to
common shareholders                              $     (70,288)       $      10,089           $    (211,934)       $      (1,013)
                                                 =============        =============           =============        =============

Weighted average shares                              5,776,400            1,550,000               5,421,400            1,550,000
Effect of dilutive securities
  Warrants and options                                      --                   --                      --                   -- 
                                                 -------------        -------------           -------------        -------------

                                                     5,776,400            1,550,000               5,421,400            1,550,000
                                                 =============        =============           =============        =============
Basic income (loss) per share (based on
   weighted average shares)                      $        (.01)       $         .01           $        (.04)       $        (.00)
                                                 =============        =============           =============        =============
Diluted income (loss) per share                  $        (.01)       $         .01           $        (.04)       $        (.00)
                                                 =============        =============           =============        =============

Giving Effect to Stock Split:
Weighted average shares                                                    3,100,000                                   3,100,000
Effect of dilutive securities                                                                               
  Warrants and options                                                            --                                          -- 
                                                                       -------------                               -------------
                                                                                                            
                                                                           3,100,000                                   3,100,000
                                                                       =============                               =============
Basic income (loss) per share (based on                                                                     
   weighted average shares and giving                                                                       
   effect to stock split)                                              $         .00                               $        (.00)
                                                                       =============                               =============
Diluted income (loss) per share (giving                                                                     
   effect to stock split)                                              $         .00                               $        (.00)
                                                                       =============                               =============
</TABLE>


5 -  REVENUE

The following table summarizes the cash and trade (consisting of IBC Trade
Dollars) components of revenue for the three months ended December 31, 1998 and
1997 and the nine months ended December 31, 1998 and 1997:


<TABLE>
<CAPTION>
                THREE             THREE              NINE             NINE
                MONTHS            MONTHS            MONTHS            MONTHS
               12-31-98          12-31-97          12-31-98          12-31-97
               --------          --------          --------          --------
<S>            <C>               <C>               <C>               <C>     
Trade          $123,241          $120,102          $257,185          $298,990
Cash             76,985            91,225           219,212           239,821
               --------          --------          --------          --------
               $200,226          $211,327          $476,397          $538,811
               ========          ========          ========          ========
</TABLE>


                                       7


<PAGE>   8
                           INTERNATIONAL BARTER CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6 - STOCK OPTION PLAN

The Company adopted a Stock Option Plan (Plan) effective June 1, 1998 whereby,
stock options for up to 20% of the shares of common stock outstanding may be
granted at the fair market price at the date of grant to Directors, Officers,
Employees and Consultants. Pursuant to the Plan, effective June 1, 1998, the
Company granted 297,000 stock options to eleven individuals and entities;
exercisable at $0.8125 per share for up to 5 years. Also, on August 31, 1998,
30,000 stock options were granted to four individuals; exercisable at $0.937 per
share for up to 5 years. All options are vested 50% one year after the date of
grant, and are fully vested after two years.

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


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


7 - NOTE RECEIVABLE

Funds totaling $328,350 were loaned to an individual, payable upon demand along
with accrued interest at 8% per annum. The note is collateralized by shares in a
privately-held corporation.

8 - SUBSEQUENT EVENT

Effective February 9, 1999, the Company granted 40,000 stock options to one
employee; exercisable at $2.00 per share for up to 5 years.


                                       8


<PAGE>   9
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

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

RESULTS OF OPERATIONS:

THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THE THREE MONTHS ENDED 
DECEMBER 31, 1997:

OVERALL OPERATING RESULTS

Revenues are generally derived from transaction fees charged (cash and trade)
based upon a percentage of the dollar amount of client trades in addition to
monthly dues from each member. Total revenue decreased 6% to $200,226 in the
third quarter of fiscal 1999 from $211,327 in the third quarter of fiscal 1998.
The Company had a net loss from operations of $83,321 in the third quarter of
fiscal 1999 and a net income from operations of $8,209 in the third quarter of
1998.

The Company's gross profit increased from $151,923 in the third quarter of
fiscal 1998 to a gross profit of $166,193 in the third quarter of fiscal 1999.
From time to time, the Company arranges sales of inventory acquired in corporate
transactions. During the first nine months of fiscal 1998, the Company sold all
of its available inventory for trade dollars. There were no corresponding
inventory sales during fiscal 1999. Since the gross profit on inventory sales is
lower than from other types of revenues, the fiscal 1998 period reflects a lower
gross margin.

The Company reported a net loss of $70,288, or $(0.01) per share in the third
quarter of fiscal 1999 and a net income of $10,089, or $0.01 per share ($0.00
per share assuming stock-split) in the third quarter of fiscal 1998.

REVENUE

Total Revenue. Total revenue decreased 6% to $200,226 for the three months ended
December 31, 1998 from $211,327 for the three months ended December 31, 1997.
Following, is a summary of the components of revenue for the three months ended
December 31, 1998 and 1997:


<TABLE>
<CAPTION>
                 1998              1997 
               --------          --------
<S>            <C>               <C>     
Trade          $123,241          $120,102
Cash             76,985            91,225
               --------          --------
               $200,226          $211,327
               ========          ========
</TABLE>


Trade Exchange Revenue. Cash revenues for the three months ended December 31,
1998 decreased 18% from cash revenues for the three months ended December 31,
1997. During the third quarter of fiscal 1999, the Company's trade revenue was
$123,241, up slightly from trade revenue in the third quarter of fiscal 1998.
The reduction in cash revenue for the 1998 three-month period reflects the
absence of special inventory sales during 1998, compared to significant
inventory sales during the 1997 three-month period.


                                       9


<PAGE>   10
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

COSTS, EXPENSES AND GROSS MARGINS

Costs of Trade Exchange Revenue. Costs of trade exchange revenue decreased to
$34,033 in the third quarter of fiscal 1999 from $59,404 in the third quarter of
fiscal 1998. The gross margin from trade exchange operations was $166,193 in the
third quarter of fiscal 1999 as compared to $151,923 in the third quarter of
fiscal 1998. Costs of trade exchange revenue were 17% of trade exchange revenue
in the third quarter of fiscal 1999 and 28% in the third quarter of fiscal 1998.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including depreciation) increased from $143,714 in the
third quarter of fiscal 1998 as compared to $249,514 in the third quarter of
fiscal 1999. The increase was primarily attributable to the following factors:

(a) Significant resources were devoted in the third quarter to the development
    of the "Ubarter.com" Internet website. The Company plans to invest much of
    its available resources into the future development of Ubarter.com with the
    objective of attracting a significant share of the Internet barter commerce
    market.*

(b) During the third quarter of fiscal 1999, salaries increased due to the
    addition of several key personnel. Two full-time employees were hired to
    work primarily on the future development of Ubarter.com. A Chief Financial
    Officer was hired to fill a new position in the Company. Two new trade
    brokers and an Executive Assistant were also hired.

(c)  Additional costs were incurred in the first three quarters of 1999 which
     were not incurred in the first three quarters of 1998, including such items
     as legal and other professional fees for assistance with regulatory
     filings, strategic development costs, and increased investor relations
     costs.

One of the advantages available to barter businesses is the ability to pay a
significant portion of its operating costs such as graphic design, advertising
and printing using Trade Dollars. The balance of Trade Dollars held by the
Company was $18,130 at December 31, 1998, compared to an accumulated deficit of
$5,439 at March 31, 1998.

NINE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THE NINE MONTHS ENDED DECEMBER
31, 1997:

OVERALL OPERATING RESULTS

Revenue decreased 13% to $476,397 in the first three quarters of fiscal 1999
from $538,811 in the first three quarters of fiscal 1998. The Company had a net
loss from operations of $238,907 in the first three quarters of fiscal 1999 and
a net loss from operations of $3,028 in the first three quarters of 1998. The
Company's gross margin decreased to a gross profit of $408,196 in the first
three quarters of 1999 from $412,570 in the first three quarters of fiscal 1998.

The gross margin in the first three quarters of fiscal 1999 was higher than the
gross margin in the first three quarters of fiscal 1998. The Company sold
inventory on consignment from its showroom. In the first three quarters of
fiscal 1998, the Company focused on selling all of its showroom inventories and
did not rebuild them in fiscal 1999. There was therefore, a decrease in revenue
from sales of showroom inventory from fiscal 1998 to 1999. Since the gross
profit on sales of showroom inventory is much lower than from other types of
revenues, the gross margin was higher in the first three quarters of 1999 than
it was in the first three quarters of 1998.

The Company reported a net loss of $211,934, or $(0.04) per share in the first
nine months of 1998 and a net loss of $1,013, or $(0.00) per share ($0.00 per
share assuming stock-split) in the first nine months of 1997.


                                       10


<PAGE>   11
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

REVENUE

Total Revenue. Total revenue decreased 13% to $476,397 in the first nine months
ended December 31, 1998 from $538,811 for the first nine months ended December
31, 1997. Following, is a summary of the components of revenue for the nine
months ended December 31, 1998 and 1997:


<TABLE>
<CAPTION>
                1998              1997 
               --------          --------
<S>            <C>               <C>     
Trade          $257,185          $298,990
Cash            219,212           239,821
               --------          --------
               $476,397          $538,811
               ========          ========
</TABLE>


Trade Exchange Revenue. Cash revenues for the nine months ended December 31,
1998 decreased 9% from cash revenues for the nine months ended December 31,
1997. During the 1998 nine-month period, the Company's trade revenue was
$257,185, down 16% from trade revenue in the 1997 nine-month period. The
reduction in both cash and trade revenues for the 1998 nine-month period
reflects the absence of special inventory sales during 1998, compared to
significant inventory sales during the 1997 nine-month period.

COSTS, EXPENSES AND GROSS MARGINS

Costs of Trade Exchange Revenue. For the nine months ended December 31, 1998,
the costs of trade exchange revenue were $68,201, or 14% of revenue, compared to
$126,241, 23% of revenue, during the 1997 nine-month period. The gross margin
from trade exchange operations was $408,196 for the 1998 nine-month period,
compared to $412,570 for the 1997 nine-month period. As a percentage of revenue,
however, the 1998 gross margin was greater than for the 1997 nine-month period.
This is attributable to 1997 inventory sales, as discussed above.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including depreciation) increased from $415,598 in the
first three quarters of fiscal 1998 as compared to $647,103 in the first three
quarters of fiscal 1999. The increase was primarily attributable to the
following factors:

(a) Significant resources were devoted in the third quarter to the development
    of the "Ubarter.com" Internet website. The Company plans to invest much of
    its available resources into the future development of Ubarter.com with the
    objective of attracting a significant share of the Internet barter commerce
    market.*

(b) During the third quarter of fiscal 1999, salaries increased due to the
    addition of several key personnel. Two full-time employees were hired to
    work primarily on the future development of Ubarter.com. A Chief Financial
    Officer was hired to fill a new position in the Company. Two new trade
    brokers and an Executive Assistant were also hired.

(c)  Additional costs were incurred in the first three quarters of fiscal 1999
     which were not incurred in the first three quarters of fiscal 1998,
     including such items as legal and other professional fees for assistance
     with regulatory filings, strategic development costs, and increased
     investor relations and telephone costs.


                                       11


<PAGE>   12
      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its activities primarily through its equity financing
activities, most recently in July 1998 through a $1.0 million private placement
of units, consisting of common stock and E Warrants.

At December 31, 1998, the Company's working capital was $1,190,566, a ratio of
34.2 to 1, based on current assets of $1,226,454 and current liabilities of
$35,888. The Company's working capital was $413,330 at March 31, 1998, a ratio
of 12.7 to 1, based on current assets of $448,800 and current liabilities of
$35,470. The increase in working capital resulted primarily from the increase in
the Company's cash to $1,141,331 at December 31, 1998, from $382,564 at March
31, 1998. This primarily resulted from the Company's financing activities during
the period. Proceeds from sale of common stock were $1,506,950 during the 1998
nine-month period. There were no comparable proceeds from common stock sales
during the 1997 nine-month period.

The cash supplied by financing activities during the fiscal year ended March 31,
1998 totaled $282,138, which primarily reflected the receipt of $298,850 in net
proceeds from the exercise of warrants. The cash generated by financing
activities during fiscal 1997 was $135,540, which is primarily attributable to
proceeds of $150,000 from the sale of common stock.

During the nine-month period ended December 31, 1998, the Company used net cash
of $368,260 in its operations, compared to the use of $20,699 for operations in
the nine-month period ended December 31, 1997. The increase in cash used in
operations was primarily attributable to increased personnel and development
costs during the 1998 nine-month period over the comparable 1997 nine-month
period.

The net cash used for operating activities during the fiscal year ended March
31, 1998 was $47,986. During that fiscal year there was $32,509 in net income.
The primary adjusting item was the deficit of $106,570 in net trade revenue
earned over trade costs. During fiscal 1998, there were increases in accounts
payable and other liabilities of $12,931, and $10,755 of depreciation. By
comparison, the net cash used for operating activities during fiscal 1997
totaled $21,768. The cash used in fiscal 1997 reflected a $62,672 net loss,
$125,000 of common stock issued for services, a deficit of $39,549 in net trade
revenue earned over trade costs, and $9,080 in depreciation.

During the nine-month period ended December 31, 1998, the Company used net cash
of $27,101 for the acquisition of property and equipment, compared to $27,650
during the 1997 nine-month period. The total cash used for investing activities
during the fiscal year ended March 31, 1998 was $13,915. No net cash was used
during fiscal 1997 for investing activities.

Total stockholders' equity increased to $1,754,793 at December 31, 1998, from
$470,483 at March 31, 1998. This increase was directly attributable to cash
provided by the financing activities of the Company during the nine-months ended
December 31, 1998.

The Company maintains its major cash balances at one financial institution
located in Las Vegas, Nevada. Funds not required for the immediate needs of the
Company may be invested in certificates of deposit, short-term government
obligations, or money market funds.

The Company leases its office facility in Seattle, Washington. Future minimum
rental commitments pursuant to this lease are $22,200 for fiscal 1999. Of the
minimal rental commitment due in fiscal 1999, $15,600 is payable in cash and
$6,600 is payable in trade dollars.


                                       12


<PAGE>   13
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPTTAL RESOURCES (CONTINUED)

The Company believes its existing working capital and anticipated cash from
financing activities will be sufficient to allow it to achieve its expected
expansion goals and demands for its services through the end of the 1999
calendar year.* Despite this belief, there is no assurance that the Company's
resources will be sufficient. The Company anticipates that a significant portion
of its anticipated near-term capital resources, up to $1,200,000, will be
provided through the exercise of outstanding E Warrants issued in a prior
offering, which are exercisable at the price of $1.50.* The perceived value of
these warrants at any given time is related to the market price of the Company's
common shares, which trade over the counter on the OTC Bulletin Board. If the
Company is unable to obtain anticipated financing through the exercise of
warrants, the Company may be unable to successfully implement its short-term
plans for expansion or meet its working capital requirements.

The Company anticipates having to raise additional capital by equity issuance
during the next several years, as the Company expects to grow at rates that will
require more funds than will be generated by its operations. The Company does
not have any commitments for additional financing at this time. The Company's
ability to obtain additional capital may be dependent on market conditions, the
national economy and others factors outside the Company's control. If adequate
funds are not available or are not available at acceptable terms, the Company's
long-term ability to finance its expansion, develop or enhance services or
respond to competitive pressures would be significantly limited.

Insofar as funds may be required for operations, the Company occasionally
engages in barter trading for its own account, and may expend trade dollars in
excess of the amount of trade dollars earned. This negative trade balance
provides the Company with a certain measure of additional liquidity and the
opportunity to complete advantageous purchase transactions that benefit the
Company and barter exchange clients. At December 31, 1998, the Company had
earned 18,130 trade dollars in excess of the amount of trade dollars expended by
the Company, and at March 31, 1998, the Company had expended 5,439 trade dollars
in excess of the amount of trade dollars earned. The Company considers the
current level manageable.

DEVELOPMENT ACTIVITIES

Ubarter.com. Ubarter.com is an Internet website for electronic barter trading
that was launched by the Company on July 20, 1998. The software, at that time,
had design flaws that made transacting trades somewhat cumbersome for the user.
As a result, customer participation was moderate and the project got off to a
slow start. In September 1998, an updated version was released with certain
improvements but which failed to provide full functionality. In December 1998,
the Company retained MindCorps Inc., a website developer based in Seattle,
Washington, to redesign and develop a new Ubarter.com site. The development of
Ubarter.com is not yet completed, and the Company intends to invest much of its
available resources into the future development of Ubarter.com in order to
attract a significant share of the related Internet barter commerce market.

The full development and implementation of the Company's Ubarter.com Internet
website will require additional capital. There can be no assurance that working
capital will be available or will be adequate to develop the website.
Furthermore, if developed, it is uncertain whether Ubarter.com will produce
material revenue for the Company or whether it even can be run profitably.

--------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section.


                                       13


<PAGE>   14
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

DEVELOPMENT ACTIVITIES (CONTINUED)

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

TRADE EXCHANGE ACQUISITIONS

The Company also intends to devote significant financial and human resources to
a strategic plan of acquiring existing profitable barter trade exchanges in the
United States and in other selected countries throughout the world. Such
acquisitions could result in negative cash flows and operating losses initially
but are expected in the long term to provide positive cash flows and increase
the overall profitability of the Company.* However, there can be no assurance
that adequate funds will be available to successfully acquire additional barter
trade exchanges as planned. One of the Company's assumptions in making
acquisitions is that it will be able to utilize its common stock as a primary
medium of exchange, rather than cash. This assumption may prove to be incorrect.

In addition to increasing its level of expenditures to further develop
Ubarter.com and assimilate other barter exchanges, the Company expects to
increase its operating expenses to expand its operations and enlarge its
organization. These anticipated increases in operating expense levels and
developmental costs will adversely effect operating results for the near term.
Further, if the Company successfully accomplishes its plan of acquiring existing
barter trade exchanges, the Company believes that the acquisitions could result
in additional negative cash flows and operating losses until the acquisitions
can be successfully integrated into the Company's operations. If it is
successful in its plans, the Company may experience rapid growth and may require
additional funds to expand its operations. Consequently, the Company believes
that it will continue to incur losses during the 1999 fiscal year.* If
acquisitions of other exchanges are consummated, period-to-period comparisons of
the Company's financial results may not be necessarily meaningful and should not
be relied upon as an indication of future performance.

The Company hopes to acquire at least one regional trade exchange during fiscal
1999.* From time to time in its marketing efforts, the Company identifies barter
exchanges that may be suitable for integration into the Company's system and
contacts the operators of these exchanges. The Company has recently entered into
negotiations to acquire one such exchange, which if consummated, would be a
significant acquisition. However, the Company's obligations will be subject to
numerous contingencies and conditions. If these discussions result in a
definitive agreement, of which there is no assurance, it is anticipated that the
Company would utilize a combination of cash, trade dollars and common stock as
consideration for the acquisition.


                                       14


<PAGE>   15
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

REAL ESTATE ACQUISITIONS

The Company may from time to time invest in real estate as part of its barter
activities for its own account. The Company has no policy regarding its possible
investment in real estate, including the percentage of assets which may be
invested in any one investment, the type of real estate, or whether assets may
be acquired primarily for potential capital gain or for income. Shareholder
approval is not required for real estate investment activities. The Company does
not expect that real estate investments will form a substantial portion of its
future business activities.

During July 1991, the Company acquired six 10-acre parcels located in Spokane,
Washington for $120,000. The property was sold during the period from August
1991 to November 1994. Consideration for the sale included ten-year and
fifteen-year notes receivable totaling $37,700, with interest at rates from 10%
to 10.75%, respectively. These notes receivable are secured by the property and
totaled $28,979 at December 31, 1998. The Company's purpose of this investment
was primarily for possible capital gain.

DISCUSSION OF THE YEAR 2000 ISSUE

Background. Many computer programs have been written using two digits rather
than four to identify the year. Any computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. Systems that do not properly recognize this information could fail or
generate miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. This situation is commonly
referred as the year 2000 or "Y2K" problem.

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

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

Uncertainties and Contingencies. The Company presently believes that with
modifications to existing software and conversions to new software, the Y2K
issue can be mitigated. Management does not believe that the Company will incur
significant operating expenses or be required to invest heavily in computer
system improvements to be Y2K compliant. However, even if such modifications or
conversions are not made, or are not completed timely, the Company would be able
to continue operations manually. This would result in more cumbersome and less
efficient operations but is not currently expected to have a material adverse
effect on the Company's business, operations or financial condition.


                                       15


<PAGE>   16
    ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                       RESULTS OF OPERATIONS (CONTINUED)

DISCUSSION OF THE YEAR 2000 ISSUE (CONTINUED)

However, there is no guarantee that the software of other companies on which the
Company's software relies will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company and its
operations. Significant uncertainty exists concerning the potential costs and
effects associated with any year 2000 compliance.


                                       16


<PAGE>   17
                          PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In July of 1998, the Company received cash for common stock and warrants through
a private placement whereby, 800,000 units were sold at $1.25 per unit. Each
unit consists of one share of common stock and one warrant exercisable at $1.50
per share. The warrants expire June 30, 2000. As of September 30, 1998, the
shares were unissued and thereby classified as subscribed stock. During the
quarter ended December 31, 1998, all of these previously unissued (subscribed)
shares were issued. Also during the current quarter, $1,200 was received by the
Company for the exercise of B warrants for 1,200 shares of common stock. As of
December 31, 1998, the shares had not been issued by the Company and were thus,
classified as subscribed stock.

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

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

The annual meeting of shareholders ("Annual Meeting") of International Barter
Corp. was held at the Double Tree Hotel Seattle Airport in Seattle, Washington
on Tuesday, November 24, 1998, beginning at 1:00 p.m. local time.

At the Annual Meeting, the following four directors were elected to serve for a
term of one year. No other director's term of office continued after the
meeting.


<TABLE>
<CAPTION>
                                            POSITIONS AND OFFICES HELD
                  DIRECTORS                 WITH THE COMPANY
                  ---------                 ----------------
<S>                                         <C>
                  Steven M. White           Chief Executive Officer, President
                                            Director, Chairman of the Board
                  Alan Zimmelman            Vice President, Director
                  Richard Mayer             Vice President, Director
                  Glen T. White             Director
</TABLE>


The Company's shareholders approved and ratified the 1998 Stock Option Plan
("1998 Plan"), and specific awards made under the 1998 Plan consisting of
options to purchase an aggregate of 297,000 shares of common stock.

The Company's common stock was the only type of security entitled to vote at the
Annual Meeting. Only shareholders of record at the close of business on October
12, 1998 ("Record Date") were entitled to receive notice of the Annual Meeting.
As of the Record Date, there were 4,975,200 shares of common stock outstanding.
There were 3,869,447 shares represented at the Annual Meeting in person or by
proxy, each share entitled to one vote on each matter to be voted upon.


                                       17


<PAGE>   18
                    PART II - OTHER INFORMATION (Continued)

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)

           The votes at the meeting were as follows:


<TABLE>
<CAPTION>
                                                                                                   Broker
                                           For                Against          Abstentions        Non-votes
                                           ---                -------          -----------        ---------
<S>                                     <C>                   <C>              <C>                <C>
Nominee Steven M. White                 3,865,477                  0              4,000
Nominee Alan Zimmelman                  3,866,747                  0              2,700
Nominee Richard Mayer                   3,867,347                  0              2,100
Nominee Glen T. White                   3,864,447                  0              5,000

Ratification of the 1998 Stock
Option Plan and option awards           2,871,232             19,400             10,175            968,640
</TABLE>


ITEM 5. OTHER INFORMATION

On January 29, 1999, the Company filed a registration statement and prospectus
on Form SB-2 covering 2,603,800 shares of common stock of the Company, which may
be offered and sold from time to time by one or all of the selling shareholders
named in the prospectus.

    All of the common stock offered by the prospectus consists of either:

o       Issued in private placements by the Company upon the exercise of
        outstanding warrants,

o       Issued by the Company to three selling shareholders in a private
        placement completed in July 1998; or

o       To be issued by the Company to three selling shareholders upon the
        exercise of 800,000 warrants previously issued by the Company in a
        private placement. Each warrant entitles the holder to purchase one
        share of common stock at a price of $1.50 per share until June 20, 2000.

The shares eligible for sale by selling shareholders represent approximately 40%
of the Company's issued and outstanding shares of common stock, assuming
exercise of the 800,000 warrants. The Company will not receive any of the
proceeds from the sale of the common stock by the selling shareholders, although
the Company will receive $1,200,000 upon exercise of all of the warrants, when
and if they are exercised.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:

27 Financial Data Schedule

No reports on Form 8-K have been filed during the quarter ended December 31,
1998.


                                       18


<PAGE>   19
SIGNATURES

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

INTERNATIONAL BARTER CORP.
--------------------------
(Registrant)



Date: February 12, 1999

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

Date: February 12, 1999

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


                                       19