UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549
--------------------------------------------------------------------------------

                                   FORM 10-QSB

[X]  Quarterly  Report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 for the quarterly period ended December 31, 1999.

[    ] Transaction  Report under Section 13 or 15(d) of the Exchange Act for the
     transaction period from ------- to -------.

                           --------------------------

                         Commission file number 0-24005

                       -----------------------------------

                                UBARTER.COM INC.

        (Exact name of small business issuer as specified in its charter)

           NEVADA                                      91-1739746
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                      Identification No.)

                           2815 2nd Avenue, Suite 500

                                Seattle, WA 98121
                    (Address of principal executive offices)

                                 (206) 239-2728

                           (Issuer's telephone number)

             21400 International Blvd., Suite 207, Seattle, WA 98198
   (Former name, address and former fiscal year, if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  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
                -------                 -----

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date:  6,078,233 shares of Common Stock as
of February 4, 2000.

                                        1

<PAGE>

                                UBARTER.COM INC.
                              For the Quarter Ended

                                December 31, 1999

                              INDEX TO FORM 10-QSB

<TABLE>

                                                                                                   Page

                                                                                                   ----
<S>      <C>                                                                                         <C>
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements:

         Consolidated Balance Sheet:
         December 31, 1999 and March 31, 1999..........................................................3

         Consolidated Statement of Operations:
         For the Three and Nine Months Ended
         December 31, 1999 and 1998....................................................................4

         Consolidated Statement of Cash Flows:
         For the Nine Months Ended
         December 31, 1999 and 1998....................................................................5

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

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations..........................................................10

PART II - OTHER INFORMATION

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

Item 6. Exhibits and Reports on Form 8-K..............................................................16

SIGNATURES
</TABLE>

                                        2

<PAGE>

                                UBARTER.COM INC.
                           CONSOLIDATED BALANCE SHEET
                      DECEMBER 31, 1999 AND MARCH 31, 1999




                                               ASSETS
<TABLE>
                                                                        December 31,            March 31
                                                                            1999                  1999
                                                                     -------------------   ------------------
CURRENT ASSETS                                                          (Unaudited)
<S>                                                                   <C>                    <C>
    Cash and cash equivalents                                         $    1,846,400         $     442,700
    Accounts receivable, net                                                 321,200               305,700
    Inventory                                                                347,700               310,400
    Other current assets                                                     273,200                 9,200
                                                                     -------------------   ------------------
           Total Current Assets                                            2,788,500             1,068,000
                                                                     -------------------   ------------------
EQUIPMENT AND LEASEHOLDS, net                                                406,200               383,600
                                                                     -------------------   ------------------
OTHER ASSETS
    Goodwill                                                               2,150,000             2,750,900
    Prepaid advertising                                                      135,000               135,000
    Notes receivable                                                          22,700                23,500
    Other assets                                                               1,000                28,700
                                                                     -------------------   ------------------
           Total Other Assets                                              2,308,700             2,938,100
                                                                     -------------------   ------------------
                                                                      $    5,503,400         $   4,389,700
                                                                     ===================   ==================

                                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
    Accounts payable                                                  $       92,800         $     111,400
    Accrued liabilities                                                      349,300                28,200
    Unearned revenue                                                               -               186,300
    Trade dollars issued in excess of earned                               2,221,400             2,147,900
    Note payable to shareholder                                              302,800                66,200
    Current portion of long-term obligations                               2,188,900                35,400
                                                                     -------------------   ------------------
           Total Current Liabilities                                       5,155,200             2,575,400
                                                                     -------------------   ------------------
LONG-TERM OBLIGATIONS, net of current portion                                771,100                81,600
                                                                     -------------------   ------------------
COMMITMENTS                                                                        -                     -

STOCKHOLDERS' EQUITY (DEFICIT)
    Common stock                                                               6,100                 5,900
    Additional paid-in capital                                             3,477,600             2,649,300
    Accumulated deficit                                                   (3,922,700)             (909,500)
    Treasury stock                                                            (1,200)              (13,000)
    Accumulated other comprehensive income, net of tax                        17,300                     -
                                                                     -------------------   ------------------
           Total Stockholders' Equity (Deficit)                             (422,900)            1,732,700
                                                                     -------------------   ------------------
                                                                      $    5,503,400         $   4,389,700
                                                                     ===================   ==================
</TABLE>

                             See accompanying notes.


                                       3
<PAGE>

                                UBARTER.COM INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
             THREE AND NINE MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (Unaudited)


<TABLE>
                                                   Three         Three          Nine          Nine
                                                  Months        Months         Months        Months
                                                   Ended         Ended          Ended         Ended
                                                 12/31/99      12/31/98       12/31/99      12/31/98
                                               ------------  ------------   ------------  ------------
<S>                                                <C>          <C>           <C>            <C>
REVENUE
     Exchange revenue                           $  744,000    $ 200,200     $ 2,015,200    $ 476,400
     Corporate trading revenue                     277,400            -         655,600            -
                                               ------------  ------------   ------------  ------------
                                                 1,021,400      200,200       2,670,800      476,400
                                               ------------  ------------   ------------  ------------
OPERATING EXPENSES
     Cost of corporate trading revenue             160,300       34,000         475,300       68,200
     Sales and marketing                            43,000            -         298,400            -
     Product development                           112,100            -         598,600            -
     General and administrative                  1,465,900      249,500       4,116,900      647,100
                                               ------------  ------------   ------------  ------------
                                                 1,781,300      283,500       5,489,200      715,300
                                               ------------  ------------   ------------  ------------
INCOME (LOSS) FROM OPERATIONS                     (759,900)     (83,300)     (2,818,400)    (238,900)
                                               ------------  ------------   ------------  ------------
OTHER INCOME (EXPENSE)
     Interest expense                                 (400)        (700)       (203,500)      (2,800)
     Interest income                                 2,300       13,700           8,700       29,200
                                               ------------  ------------   ------------  ------------
                                                     1,900       13,000        (194,800)      26,400
                                               ------------  ------------   ------------  ------------
INCOME (LOSS) BEFORE INCOME TAXES                 (758,000)     (70,300)     (3,013,200)    (212,500)

INCOME TAX BENEFIT (PROVISION)                           -            -               -          600
                                               ------------  ------------   ------------  ------------
NET INCOME (LOSS)                               $ (758,000)   $ (70,300)    $(3,013,200)   $(211,900)
                                               ============  ============   ============  ============
NET INCOME (LOSS) PER COMMON
     SHARE
     Basic                                      $    (0.12)   $   (0.01)    $     (0.50)   $   (0.04)
                                               ============  ============   ============  ============
     Diluted                                    $    (0.12)   $   (0.01)    $     (0.50)   $   (0.04)
                                               ============  ============   ============  ============
AVERAGE COMMON AND EQUIVALENT
     SHARES
     Basic                                       6,065,122    5,776,400       6,013,526    5,421,400
                                               ============  ============   ============  ============
     Diluted                                     6,065,122    5,776,400       6,013,526    5,421,400
                                               ============  ============   ============  ============
</TABLE>



                             See accompanying notes.


                                       4
<PAGE>

                                UBARTER.COM INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                  NINE MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                   (Unaudited)


<TABLE>
                                                                 December 31,        December 31,
                                                                     1999                1998
                                                               -----------------   ------------------
<S>                                                                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                             $ (3,013,200)          $ (211,900)
     Adjustments to reconcile net income (loss) to net
             cash provided by operating activities
         Depreciation and amortization                                1,433,400                9,800
         Non-cash charges related to stock option grants                 56,200                    -
         Non-cash charges related to stock issuance                      28,100                    -
         Foreign currency loss                                           17,300                    -
         Deferred income taxes                                                -                 (600)
         Bad debts                                                        1,500                1,100
         Net trade dollars expended                                     (29,400)            (161,400)
     Change in operating assets and liablilites
         Accounts receivable                                            (17,000)              (1,300)
         Other assets                                                  (136,300)             (13,800)
         Accounts payable and other liabilities                         116,200                9,900
                                                               -----------------   ------------------
                                                                     (1,543,200)            (368,200)
                                                               -----------------   ------------------
CASH FROM INVESTING ACTIVITIES
     Acquisition of equipment and leaseholds                           (272,200)             (27,100)
     Note receivable collections                                            800                    -
                                                               -----------------   ------------------
                                                                       (271,400)             (27,100)
                                                               -----------------   ------------------
CASH FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                             124,300            1,493,900
     Proceeds from notes payable                                      3,327,900             (328,300)
     Repayment of notes payable                                        (233,900)             (11,500)
                                                               -----------------   ------------------
                                                                      3,218,300            1,154,100
                                                               -----------------   ------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                               1,403,700              758,800

CASH AND CASH EQUIVALENTS
     Beginning of period                                                442,700              382,500
                                                               -----------------   ------------------
     End of period                                                 $  1,846,400           $1,141,300
                                                               =================   ==================
SUPPLEMENTAL CASH FLOW INFORMATION
     Cash paid during the period for:
         Interest                                                  $         -            $    2,800
                                                               =================   ==================
         Income taxes                                              $         -            $        -
                                                               =================   ==================

NON-CASH INVESTING AND FINANCING
     ACTIVITIES
     Purchase of BBE (Windsor) stock  for Trade Dollars
         and Ubarter.com stock                                     $   134,900            $        -
                                                               =================   ==================
     Prepaid advertising and scrip acquired for Ubarter.com
         Trade Dollars                                             $         -            $  135,400
                                                               =================   ==================
     Discount on warrants issued in connection with
         note payable                                              $   451,700            $        -
                                                               =================   ==================
</TABLE>



                             See accompanying notes.


                                       5
<PAGE>

                                UBARTER.COM INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly,  they do not include  all of the  footnotes  required by  generally
accepted accounting principles for complete financial statements. In the opinion
of management,  all adjustments  (consisting of normal,  recurring  adjustments)
considered  necessary for fair presentation  have been included.  The results of
operations for the three and nine month periods ended December 31, 1999 and 1998
are not necessarily  indicative of the results to be expected for the full year.
The consolidated  financial statement combines the Company's balance sheet as of
December  31,  1999 with the balance  sheet of Barter  Business  Exchange,  Inc.
("BBE") as of November  30,  1999.  The  consolidated  statement  of  operations
presents the results of  operations of the Company for the three and nine months
ended December 31, 1999, however, due to the differing year-ends, the results of
operations of BBE from March 1, 1999 (the date of purchase) through November 30,
1999 are  consolidated  with the Company's  results of operations  for the third
quarter of 1999.  Certain prior year amounts have been  reclassified  to conform
with current year presentation.  For further information, refer to the financial
statements and footnotes included in the company's report on Form 10-KSB for the
year ended March 31, 1999.

2 - TRADE DOLLARS

In accordance with the guidelines  established by the  International  Reciprocal
Trade  Association,  the Company has the right to borrow from the  exchange  and
spend within the exchange systems.  Such a practice is used by barter exchanges,
worldwide, to cover inventory purchases,  capital purchases,  operating expenses
and to control the supply of trade dollars in the exchange economy.  The Company
is obligated  to provide  goods and services to clients to offset any amounts of
Ubarter Dollars TM (trade  dollars) issued in excess of earned.  At December 31,
1999 and March 31, 1999,  the Company had  expended  $2,221,400  and  $2,147,900
Ubarter Dollars respectively,  in excess of the amount of Ubarter Dollars earned
by the Company.

3 - CAPITAL STOCK

In October 1999, the Company received  approximately $2,000 from the exercise of
stock options to purchase 2,500 shares of common stock. Also in October of 1998,
10,980  shares were  repurchased  for  approximately  $13,000 and  classified as
treasury  stock and  subsequently,  in December of 1999,  10,000 of these shares
were issued as payment for services, valued at $2.81 per share. Also in December
of 1999,  33,333 shares of common stock,  valued at $3.00 per share, were issued
as part of a retainer  against future  invoices  related to  software-consulting
services.  At December 31, 1999,  the Company had  6,076,233  shares  (including
treasury  shares) of common stock issued and outstanding at a par value of $.001
per share, with total authorized shares of 25,000,000.

On July 9, 1998, the Board of Directors authorized a 2-for-1 split of its common
stock to be  distributed to  stockholders  of record at the close of business on
July 24, 1998.  All per-share and shares  outstanding  data in the  accompanying
consolidated financial statements have been restated to reflect the stock split.




                                       6
<PAGE>

4 - INCOME (LOSS) PER SHARE

Following, is a reconciliation of the numerators of the basic and diluted income
(loss) per share for the three and nine months ended December 31, 1999 and 1998:

<TABLE>
                                                   Three         Three          Nine          Nine
                                                  Months        Months         Months        Months
                                                   Ended         Ended          Ended         Ended
                                                 12/31/99      12/31/98       12/31/99      12/31/98
                                               -------------- ------------  -------------- ------------
<S>                                               <C>           <C>          <C>            <C>
Net  income (loss) available to common
     shareholders                              $ (758,000)     $  (70,300)   $ (3,013,200)  $ (211,900)
                                               ============== ============  ============== ============

Weighted average shares                         6,065,122       5,776,400       6,013,526    5,421,400
Effect of dilutive securities
     Options                                            -               -               -            -
     Warrants                                           -               -               -            -
                                               -------------- ------------  -------------- ------------
                                                6,065,122       5,776,400       6,013,526    5,421,400
                                               ============== ============  ============== ============
Basic income (loss) per share (based on
     weighted average shares)                  $    (0.12)     $   (0.01)    $      (0.50)  $    (0.04)
                                               ============== ============  ============== ============
Diluted income (loss) per share                $    (0.12)     $   (0.01)    $      (0.50)  $    (0.04)
                                               ============== ============  ============== ============
</TABLE>


Options and warrants to purchase  shares of common stock were  excluded from the
computation in 1999 and 1998 because their effect would be antidilutive.

5 - STOCK OPTIONS

The Company  adopted a Stock  Option Plan ("the  Plan")  effective  June 1, 1998
whereby, nonqualified and incentive stock options for shares of common stock may
be granted to Directors,  Officers,  Employees and Consultants.  Options granted
under the Plan are not to have a life in excess of five  years  from the date of
grant  and vest 50% after 12  months,  75% after 18  months,  and 100%  after 24
months from the date grant. The provisions of the Plan allow the  administrators
to determine the vesting period of options granted.

In October through  December of 1999, the Company granted options under the Plan
to purchase  12,000 shares of common stock at exercise prices ranging from $2.63
per share to $3.13 per share.

6 - NOTES PAYABLE

Alpine Capital Group - In August 1999,  funds totaling  $1,000,000  ("the Note")
were loaned to the Company by Alpine Capital Group,  LLC. The Note is payable on
September 1, 2002, with interest accruing at the rate of 5 1/2% per annum on the
unpaid principal  amount. If the Company closes a financing or financings in the
aggregate  amount of at least  $2,500,000  through public or private sale of its
debt or equity  securities on or before June 1, 2000, the Company must repay any
unpaid  principal and interest  within 5 business  days of such closing.  If, on
June 1, 2000,  there remains unpaid  principal on the Note, the Payee shall have
the option  exercisable at any time thereafter,  but not later than September 1,
2002, to convert such unpaid  principal into 1,333,333 shares of common stock at
the rate of $.75 per  share.  After  June 1,  2000,  the  holder of the note may
exercise the conversion  option any time prior to the maturity date of the note.
Alpine Capital Group,  Inc. also received  183,333  warrants to purchase  common
shares at $2.00 per share.  Accordingly,  the Company has allocated  $451,700 of
the proceeds to the




                                       7
<PAGE>

warrants and is  amortizing  this amount of interest  expense from the period of
issuance to June 1, 2000. The effective  rate of the note payable is 20.5%.  The
warrants may be exercised from September 1, 1999 through September 1, 2004.

Convertible  Note Payable - In December  1999,  the Company  issued a $2,000,000
8.5%  convertible  promissory  note to  ShopNow.com  Inc. which matures June 22,
2000.  Upon the occurrence of certain  events,  the note will  automatically  be
converted  into common stock of the Company.  The note may be converted at $2.15
per share or $3.58 per share,  depending upon the event causing the  conversion.
In addition,  warrants to purchase up to 1,200,000  common shares of the Company
will be issued upon conversion. The warrants shall have a term of 7 years and an
exercise price equal to the conversion price. (See Note 9.)

Momentous  Note  Payable - In  December  1999,  the  Company  issued a  $100,000
convertible  promissory  note, to an entity related to a  vice-president  of the
Company,  which matures  March 1, 2000.  The holder of the note has the right to
convert the note into a future  round of  financing  that the Company  completes
prior to repayment or conversion of the note, upon the same terms and conditions
as other investors  participating in such future financings.  If the note is not
repaid by March 1, 2000, the holder of the note shall have the option to convert
the note into shares of common stock of the Company  equal to the lower of $1.50
per share or 50% of the average  closing  price of the common stock  through the
OTC  Bulletin  Board on the 10 days prior to March 1,  2000.  If the note is not
paid or converted by March 1, 2000,  the note will remain  outstanding  and bear
interest at 16% per annum until paid in full.



                                       8
<PAGE>

7 - REVENUE

The following  table  summarizes  the cash and trade  (consisting of Ubarter.com
Trade  Dollars)  components  of  revenue  for the  three and nine  months  ended
December 31, 1999 and 1998:

                           Three         Three          Nine          Nine
                           Months        Months         Months        Months
                           Ended         Ended          Ended         Ended
                          12/31/99      12/31/98       12/31/99      12/31/98
                        -----------   ------------   ------------   -----------
Trade                   $  584,700     $ 123,200     $ 1,461,400    $ 257,200
Cash                       436,700        77,000       1,209,400      219,200
                        -----------   ------------   ------------   -----------
                        $1,021,400     $ 200,200     $ 2,670,800    $ 476,400
                        ===========   ============   ============   ===========

8 - COMPREHENSIVE INCOME

As of April 1, 1999, the Company adopted SFAS No. 130,  Reporting  Comprehensive
Income,   which   established   standards  for  the  reporting  and  display  of
comprehensive loss and its components in the financial statements. Comprehensive
loss for the nine month period  ended  December  31, 1999 was  $3,905,400  which
consisted of net loss and foreign currency translation adjustments. There was no
difference  between  comprehensive  income  (loss) and net income  (loss) in the
periods prior to the nine months ended December 31, 1999.

9 - CONSULTING AGREEMENT

In December  1999, the Company  entered into an agreement  with AXC  Corporation
("AXC") to retain  future  services  with the firm to provide  Internet  related
software-consulting.  The  Company  paid AXC  $250,000  ($100,000  in stock  and
$150,000 in cash) as a retainer  against  future  invoices.  The Company  issued
33,333  shares  of its  common  stock at $3.00 per  share;  such  shares  having
"piggyback"  registration  rights  that  AXC  may  exercise  in the  event  of a
subsequent public offering of Company shares. The Company further agreed that in
the event the price of Company  shares at the close of market shall be less than
$2.50  per  share  on the  earlier  of two  events  following  (i) the one  year
anniversary  of the transfer of these shares to AXC or (ii) the day  immediately
prior to a subsequent  public offering of the Company  shares;  then the Company
shall  transfer  to AXC  sufficient  additional  shares of its  common  stock to
compensate for the  difference  between $3.00 per share and the closing price on
the dates mentioned in (i) and (ii).

10 - SUBSEQUENT EVENT

On  January  20,  2000,  the  Company  entered  into  a  merger  agreement  with
ShopNow.com Inc. ("ShopNow").  The agreement provides for ShopNow to acquire all
of the Company's equity for  approximately  $45 million of ShopNow common stock.
The  purchase  price  will be  reduced  by  certain  adjustments,  including  an
adjustment  for the  Company's  outstanding  liabilities  at the  closing of the
merger.  The merger is subject to  satisfaction  of  conditions  and  receipt of
applicable  approvals,  including  approval of the Company's  shareholders.  The
ShopNow  common  stock is to be  exchanged  at a price of $17.31 per share.  The
Company expects the transaction to close in the second quarter of 2000.

11 - LEGAL MATTER

In  December  1999,  the  Company  received a letter  from a party with whom the
Company had previously worked in connection with certain financing  alternatives
considered by the Company.  No such financings  were ever concluded.  The letter
demands  reimbursement  for  out-of-pocket  expenses  (not to  exceed  $125,000)
incurred by the third  party,  the issuance of 300,000  shares of the  Company's
common stock, and the right to act as exclusive  financial advisor in connection
with the proposed  acquisition  of the Company by ShopNow.com as a result of the
Company's termination of the relationship.  The Company believes the allegations
made against it are without  merit.  The Company  intends to  vigorously  defend
itself against the allegations being made. The parties have agreed to submit the
matter to non-binding mediation in February 2000.



                                       9
<PAGE>

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

Forward Looking Statements

The discussion in this report contains  forward-looking  statements,  including,
without  limitation,  statements,  which are made  pursuant  to the safe  harbor
provisions of the Private Securities  Litigation Reform Act of 1995. Although we
believe that the expectations  reflected in the  forward-looking  statements are
reasonable,  we give no  assurance  that  such  expectations  will  prove  to be
correct.  The  forward-looking  statements  involve risks and uncertainties that
affect  Ubarter.com's  operations,  financial  performance  and other factors as
discussed herein and in our filings with the Securities and Exchange Commission.

Overview

Ubarter.com   provides   business-to-business   barter   services   for  retail,
professional, media and other corporate members primarily through its offices in
Seattle,  Washington and Toronto, Ontario. It manages a private barter currency,
Ubarter  Dollars,  to enable its  members to sell their  products or services to
other members for Ubarter Dollars. The Company currently has approximately 3,800
members who offer products and services. In September 1999, the Company launched
the initial phase of its e-commerce solution to barter over the Internet.

Substantially  all cash revenues are derived from  transaction fees paid in cash
by buyers and sellers in a barter  transaction.  The Company currently charges a
5% cash fee on both sides  (i.e.  to both the  seller and buyer) of most  barter
transactions. The Company has also derived revenues from monthly and set-up fees
charged to members.  The Company does not anticipate  charging set-up or monthly
fees for members doing  business over the  Internet.  Revenues from  transaction
fees are billed on a monthly basis. The Company  recognizes revenue equal to the
cash to be  received  from its  commission  earned  when the  buyer  has made an
unconditional  commitment to pay and the earnings  process has been completed by
the finalization of a transaction commission.  Revenue is recognized for monthly
fees after the fees have been earned and collected.

A Ubarter Dollar is an accounting  unit used to record the value of transactions
as determined by the buying and selling parties in barter transactions.  Ubarter
Dollars  denote  the right to receive  goods or  services  available  from other
members or the  obligation  to provide  products or  services to other  members.
Ubarter Dollars may not be redeemed for cash. When BBE was acquired,  all of the
BBE Trade Dollars were converted to Ubarter Dollars.

Ubarter.com  uses the ratio of one Ubarter Dollar to one local  currency  dollar
(currently, United States or Canadian) in measuring and accounting for purchases
and  sales.  This  one-to-one  ratio  is  consistent  with  industry  standards.
Ubarter.com  does not recognize any accounting  implications  if differences are
noted between  Ubarter  Dollars and the applicable  local currency dollar prices
that are within  reasonable  ranges that might exist  between  prices of similar
U.S. dollar or Canadian dollar transactions.

Recent Development

On  January  20,  2000,  the  Company  entered  into  a  merger  agreement  with
ShopNow.com Inc. ("ShopNow").  The agreement provides for ShopNow to acquire all
of the Company's equity for  approximately  $45 million of ShopNow common stock.
The  purchase  price  will be  reduced  by  certain  adjustments,  including  an
adjustment for the Company's outstanding liabilities at the closing of the



                                       10
<PAGE>

merger.  The merger is subject to  satisfaction  of  conditions  and  receipt of
applicable  approvals,  including  approval of the Company's  shareholders.  The
ShopNow  common  stock is to be  exchanged  at a price of $17.31 per share.  The
Company expects the transaction to close in the second quarter of 2000.

Three Months Ended December 31, 1999 Compared to the Three Months Ended December
31, 1998

Total revenue in the third quarter of fiscal 2000 was  $1,021,400  compared with
total revenue of $200,200 in the third  quarter of fiscal 1999.  This was a 510%
increase in fiscal 2000 from  fiscal  1999.  Revenue  increased  primarily  as a
result of the acquisition of BBE effective March 1, 1999.  Primarily as a result
of the BBE  acquisition,  the Company  substantially  increased  its members and
products  and  services  offered to members in the third  quarter of fiscal 2000
compared with the comparable quarter in fiscal 1999.

Costs and Operating Expenses

Cost of revenue consists of the cost of inventories acquired for resale and sold
during the period.  The cost of revenue for the third quarter of fiscal 2000 was
$160,300.  This cost was all  incurred by BBE. No such cost was  incurred by the
Company because  inventory sales were made on consignment.  In the third quarter
of fiscal 1999, the cost of revenue was $34,000.

Other  costs  and  operating  expenses  (including  depreciation)  increased  to
$1,621,000  in the third  quarter  of fiscal  2000  from  $249,500  in the third
quarter of fiscal 1999. The increase in operating  expenses related primarily to
recurring operating expenses incurred by BBE,  significant  increases in product
development  and general  administrative  expenses  and an increase in sales and
marketing  expense in the third  quarter of fiscal 2000 in  connection  with the
launch of the Company's website in September 1999.

Product development expense increased to $112,100 in the third quarter of fiscal
2000 compared with minimal expense in the third quarter of fiscal 1999.  Product
development  expenses  consist  primarily  of  payments  to outside  contractors
related to website  development  and, to a lessor  extent,  of  depreciation  on
equipment used for development and overhead  costs.  Ubarter.com's  policy is to
expense  product  development  costs as they are  incurred.  The increase in the
third quarter of fiscal 2000 was primarily  attributable to development efforts,
including  retaining outside  consultants  related to technologies  necessary to
support an e-commerce  barter site. The Company  expects to incur  approximately
$1.5 million in product  development  costs through the second quarter of fiscal
2001 as the website is launched and e-commerce functionality is enhanced.

General and administrative expenses increased to $1,465,900 in the third quarter
of fiscal 2000 from $249,500 in the third quarter of fiscal 1999.  This increase
was primarily due to recurring  operating expenses incurred by BBE, the addition
of several key personnel and  additional  employees  hired to work on developing
the Company's website. In addition,  the Company incurred  substantially greater
legal  and other  professional  fees,  such as  accounting  and  investor/public
relations,  as a  result  of the  public  company  status  and to  assist  it in
executing its business strategy. Other significant noncash expenses in the third
quarter of fiscal  2000  related  to the  amortization  of the cost of  goodwill
resulting from the acquisition of BBE and  amortization  of interest  expense on
the note payable to Alpine Capital Group (see Note 6).  Amortization  expense of
$545,000 was  recognized  during the third quarter of fiscal 2000 from these two
items.  Goodwill  resulting  from  the  acquisition  of  BBE  was  estimated  by
management   to  be   primarily   associated   with  the   acquired   workforce,
infrastructure   and  technological   expertise.   As  a  result  of  the  rapid
technological  changes  occurring  in the  Internet  industry  and  the  intense
competition   for   qualified   professionals,   goodwill  is   amortized  on  a
straight-line basis over the estimated life of the benefit of 24 months.



                                       11
<PAGE>

Sales  and  marketing  expense  primarily  consists  of  advertising  and  other
promotional costs.  Ubarter.com  expects sales and marketing expense to increase
significantly in fiscal 2001 primarily related to the promotion and marketing of
its website.  The Company currently has $135,000 of prepaid advertising which it
expects to utilize in the future promotion and marketing of its website.

Nine Months Ended  December 31, 1999 Compared to the Nine Months Ended  December
31, 1998

Total  revenue in the first nine months of fiscal 2000 was  $2,670,800  compared
with total revenue of $476,400 in the first nine months of fiscal 1999. This was
a 560% increase in fiscal 2000 from fiscal 1999. Revenue increased  primarily as
a result of the acquisition of BBE effective March 1, 1999.  Excluding  revenues
from BBE, revenues decreased in the nine months ended December 31, 1999 compared
with the comparable  period in 1998 as a result of concentrating a large portion
of   its   financial   and   labor   resources   on  the   development   of  its
business-to-business  e-commerce site for barter.  Much of the effort,  which in
prior years focused on increasing transaction fees from barter transactions, was
shifted to its  website  development  and to  e-commerce  strategic  development
activities in the first quarter of fiscal 2000.

Costs and Operating Expenses

Cost of revenue consists of the cost of inventories acquired for resale and sold
during the period.  The cost of revenue for the first nine months of fiscal 2000
was  $475,300.  These costs were all incurred by BBE. No costs were  incurred by
the Company  because  inventory  sales were made on  consignment,  as  described
above. In the first nine months of fiscal 1999, the cost of revenue was $68,200.

Other  costs  and  operating  expenses  (including  depreciation)  increased  to
$5,013,900  in the first nine months of fiscal  2000 from  $647,100 in the first
nine months of fiscal 1999. The increase in operating expenses related primarily
to  recurring  operating  expenses  incurred by BBE,  significant  increases  in
product development and general administrative expenses and an increase in sales
and marketing expense in the first six months of fiscal 2000.

Product  development  expense  increased to $598,600 in the first nine months of
fiscal 2000  compared  with minimal  expenses in the first nine months of fiscal
1999.  Product  development  expenses  consist  primarily of payments to outside
contractors  related  to  website  development  and,  to  a  lessor  extent,  of
depreciation on equipment used for development and overhead costs. Ubarter.com's
policy  is to  expense  product  development  costs  as they are  incurred.  The
increase in the first nine months of fiscal 2000 was primarily  attributable  to
development   efforts,   including  retaining  outside  consultants  related  to
technologies necessary to support an e-commerce barter site.

General and  administrative  expenses  increased to $4,116,900 in the first nine
months of fiscal 2000 from  $647,100  in the first nine  months of fiscal  1999.
This increase was primarily due to recurring operating expenses incurred by BBE,
the addition of several key personnel and additional  employees hired to work on
developing   the  Company's   website.   In  addition,   the  Company   incurred
substantially  greater legal and other professional fees, such as accounting and
investor/public  relations,  as a result of its  public  company  status  and to
assist it in executing its business strategy. Other significant noncash expenses
in the first nine months of fiscal 2000 related to the  amortization of the cost
of goodwill  resulting from the acquisition of BBE and  amortization of interest
expense on the note payable to Alpine  Capital Group (see Note 6).  Amortization
expense of $1,184,000 was recognized during the first nine months of fiscal 2000
from  these  two  items.  Goodwill  resulting  from the  acquisition  of BBE was
estimated by management to be primarily  associated with the acquired workforce,
infrastructure   and  technological   expertise.   As  a  result  of  the  rapid
technological  changes  occurring  in the  Internet  industry  and  the  intense
competition for



                                       12
<PAGE>

qualified professionals, goodwill is amortized on a straight-line basis over the
estimated life of the benefit of 24 months.

Liquidity and Capital Resources

Since its inception in 1996,  Ubarter.com has financed its operations  primarily
from the sale of common stock and  warrants  and  proceeds  from the exercise of
those warrants.

At December 31, 1999, Ubarter.com had a working capital (deficit) of $2,366,700.
Working  capital was  $1,190,600  at December 31, 1998.  The decrease in working
capital  resulted  primarily  from a  $2,255,000  (deficit)  balance  of Ubarter
Dollars issued in excess of earned that existed on the books of BBE as of August
31, 1999.  Excluding the deficit balance of Ubarter  Dollars,  the Company had a
working capital (deficit) of $145,300 at December 31, 1999.

In accordance with the guidelines  established by the  International  Reciprocal
Trade  Association,  Ubarter.com  has the right to borrow from its  exchange and
spend within its  exchange  system.  Such a practice is commonly  used by barter
exchanges, worldwide, to cover inventory purchases, capital purchases, operating
expenses  and to control  the supply of trade  dollars.  Ubarter.com  engages in
barter  to pay for  some  of its  operating  costs.  Ubarter.com  is  ultimately
obligated  to provide  products  and services to clients to offset any amount of
Ubarter  Dollars  issued in excess of earned.  BBE also engaged in barter to pay
for some of its operating costs. At December 31, 1999,  Ubarter.com had expended
$2,221,400 of Ubarter  Dollars in excess of the amount of Ubarter Dollars earned
by it  compared  with  $18,130  Ubarter  Dollars  earned  in excess of issued at
December 31, 1998. The Company considers the current level manageable.

The cash  provided by  financing  activities  was  $3,218,300  in the first nine
months of fiscal  2000  compared  with  $1,154,100  in the first nine  months of
fiscal 1999. Net cash provided by financing  activities in the first nine months
of 2000 and 1999 resulted  primarily  from the exercise of warrants and proceeds
from notes payable. In August 1999, funds totaling $1,000,000 were loaned to the
Company  by  Alpine  Capital  Group,  LLC.  In  December  1999,  funds  totaling
$2,000,000 and $100,000 were loaned to the Company by ShopNow and Momentous Inc.
Pension and Trust,  respectively.  See Note 6 to the financial  statements for a
description of notes payable. The Company currently has a $67,000 revolving note
payable with a bank. The note payable is subject to annual renewal.  There was a
balance of $26,000 at  December  31,  1999.  Borrowings  under the note  require
security  deposits of cash and cash  equivalents  with the bank. The Company did
not have any credit facility in the first nine months of fiscal 1999.

The net cash used by  operating  activities  was  $1,543,200  in the first  nine
months of fiscal 2000 and $368,200 in the first nine months of fiscal 1999.  For
the  nine  months  ended  December  31,  1999,  Ubarter.com  had a net  loss  of
$3,013,200.  The primary  adjusting items were  $1,433,400 in  depreciation  and
amortization  of goodwill and  interest,  $84,300 in non-cash  charges for stock
issued for services and option  grants,  and $29,400 net  expenditure in Ubarter
Dollars.  During the first nine months of fiscal 2000,  there were  decreases in
accounts  receivable  of $17,000,  decreases in other  assets of  $136,300,  and
increases in accounts  payable and other  liabilities  of $116,200.  In December
1999,  the Company  entered into an  agreement  with ACX  Corporation  to retain
future services with the firm to provide Internet  related  software-consulting.
The Company  paid  $150,000  in cash and issued  33,333  shares of common  stock
valued at $3.00 per share as a retainer to be applied  against future  invoices.
Total  Internet  related   software-consulting   costs  of  $250,000  have  been
classified  as  prepaid  expenses.  The cash  used in  operating  activities  of
$368,200  for the nine months ended  December 31, 1998,  reflected a net loss of
$211,900.  The increase in cash used in operations was primarily attributable to
increased  personnel and product  development  costs in the first nine months of
fiscal 2000  compared  with the first nine months of fiscal  1999.  In the first
nine months of fiscal 2000, Ubarter.com used net cash of $272,200 for the



                                       13
<PAGE>

acquisition of property,  equipment and  leaseholds,  compared to $27,100 in the
first nine months of fiscal 1999.

Ubarter.com maintains its major U.S. cash balances at two financial institutions
located in Las Vegas,  Nevada and Seattle,  Washington  and  maintains its major
Canadian cash balances at one financial institution located in Toronto,  Canada.
Funds not required for our immediate  needs may be invested in  certificates  of
deposit, short-term government obligations, or money market funds.

As  of  December  31,  1999,  we  had  no  material   commitments   for  capital
expenditures.   Ubarter.com  leases  its  U.S.  office  facilities  in  Seattle,
Washington and leases its Canadian office  facilities in Toronto,  Vancouver and
Windsor.  Future minimum rental  commitments as of December 31, 1999 pursuant to
these leases are approximately $348,000.

As discussed above under "Recent  Development",  the Company expects to complete
the merger with ShopNow in the second quarter of 2000. The Company  believes its
existing  working capital and cash from financing  activities will be sufficient
to fund our operating activities through the end of fiscal year 2000. Unless the
Company is  successful  in  raising  additional  capital,  it may not be able to
achieve its expansion goals, including further development of its website. There
is no  assurance  that the  Company  will have or be able to  access  sufficient
capital  or  other  resources.  Ubarter.com  believes  that  a  portion  of  its
short-term  capital  resources,  up to  $1,059,000  may be provided  through the
exercise of outstanding E Warrants. The E Warrants are exercisable at a price of
$1.50 and expire in June 2000.  The  perceived  value of these  warrants  at any
given time is related to the market price of our common stock, which trades over
the counter on the OTC Bulletin Board. In addition, the Company will likely seek
to  raise  additional  capital  in  the  near  term  through  additional  equity
issuances.  If the Company is unable to obtain financing through the exercise of
warrants  or  other  means,  it  may be  unable  to  meet  its  working  capital
requirements  or implement its  short-term  plans for  expansion.  Additionally,
under the terms of certain  outstanding notes, if the Company is unable to repay
such  borrowings,  the lenders would have the ability to convert such notes into
shares of the Company's common stock. See Note 6 to the financial statements.

If the Company does not complete the proposed merger with  Shopnow.com  Inc., it
anticipates  having to raise  additional  capital by equity  issuance during the
next several years,  as it expects to grow at rates that will require more funds
than will be  generated  by its  operations.  The  Company's  ability  to obtain
additional  capital may be  dependent  on market  conditions,  the  national and
international economies and other factors outside its 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.

In  December  1999,  the  Company  received a letter  from a party with whom the
Company had previously worked in connection with certain financing  alternatives
considered by the Company.  No such financings  were ever concluded.  The letter
demands  reimbursement  for  out-of-pocket  expenses  (not to  exceed  $125,000)
incurred by the third  party,  the issuance of 300,000  shares of the  Company's
common stock, and the right to act as exclusive  financial advisor in connection
with the proposed  acquisition  of the Company by ShopNow.com as a result of the
Company's termination of the relationship.  The Company believes the allegations
made against it are without  merit.  The Company  intends to  vigorously  defend
itself against the allegations being made. The parties have agreed to submit the
matter to non-binding mediation in February 2000.



                                       14
<PAGE>

Impact of the Year 2000 Computer Problem

Prior to January 1, 2000, the Company  devoted  resources in an effort to ensure
that its proprietary  software,  the third-party  software on which we rely, and
the underlying systems and protocols did not contain errors associated with Year
2000  date  functions.  Since  January  1,  2000,  we have not  experienced  any
disruption as a result of any Year 2000 problems or otherwise.






















                                       15
<PAGE>

PART II -OTHER INFORMATION

Item  2.  Changes in Securities and Use of Proceeds

(1) During the three months ended  December  31, 1999,  33,333  shares of common
stock were issued for services and 10,000  treasury  shares were also issued for
services.

(2) Pursuant to the Company's 1988 Stock Option Plan, the Company  granted stock
options to certain  employees during the three months ended December 31, 1999 to
purchase  an  aggregate  of 12,000  shares of common  stock at  exercise  prices
ranging from $2.63 per share to $3.12 per share.  The granting of stock  options
did not require registration under the Securities Act.

(3) In October 1999, the Company received approximately $2,000 from the exercise
of stock options to purchase 2,500 shares of common stock.

Item 6. Exhibits and Reports on Form 8-K

(a)     Exhibits

Exhibit
Number         Description
------         -----------
  2            Agreement  and Plan of Merger  dated  January 20,  2000,  between
               Ubarter.com Inc., ShopNow.com Inc. and Shamu Acquisition, Inc.

 27            Financial Data Schedule


(b) Reports on Form 8-K

The Company  filed a Current  Report on Form 8-K on January 4, 2000  relating to
the proposed merger transaction with ShopNow.com.








                                       16

<PAGE>

                                   SIGNATURE

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                     UBARTER.COM INC.


                                     /s/ Kevin R. Andersen
                                     -------------------------------------------
February 8, 2000                     Kevin R. Andersen
                                     Chief Financial Officer


                                     /s/ Steven White
                                     -------------------------------------------
February 8, 2000                     Steven White
                                     President and CEO


<PAGE>

                                  EXHIBIT INDEX


Number         Description
------         -----------
  2            Agreement  and Plan of Merger  dated  January 20,  2000,  between
               Ubarter.com Inc., ShopNow.com Inc. and Shamu Acquisition, Inc.

 27            Financial Data Schedule