<PAGE>

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


                                   FORM 10-KSB


[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
        For the fiscal year ended December 31, 1998

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
        For the transition period from to

                        Commission file number 000-26856


                                QUADRATECH, INC.
                 (Name of small business issuer in its charter)

            Nevada                                      95-4396848
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


        300 N. Baldwin Park Blvd
      City of Industry, California                        91746
(Address of principal executive offices)                (Zip Code)

Issuer's telephone number (626)333-0260


Securities registered under Section 12(b) of the Exchange Act:

                                      None


Securities registered under Section 12(g) of the Exchange Act:

                               $0.001 Common Stock
                                (Title of class)

                                       1
<PAGE>

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

Check if there is no disclosure of delinquent filers in response to ITEM 405 OF
REGULATION S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

As of December 31, 1998, 18,611,228 shares of the Registrant's Common Stock,
$0.001 par value, were outstanding. The aggregate market value of the Common
Stock held by non-affiliates of the registrant (i.e. excluding shares held by
executive officers, directors, and control persons as defined in Rule 405) on
that date was $823,188 computed at the closing price on that date.

The registrant's revenue for the December 31, 1998 fiscal year was  $93,690.

                                       2
<PAGE>

                                TABLE OF COTENTS


                                                                            Page
Item 1. Description of Business................................................4

Item 2. Description of Property................................................7

Item 3. Legal Proceedings......................................................7

Item 4. Submission of Matter to Vote of Security Holders.......................8

Item 5. Market for Common Company Equity and Related Stockholder Matter........8

Item 6. Management's Discussion and Analysis or Plan of Operation..............9

Item 7. Financial Statements..................................................10

Item 8. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.............................10

Item 9. Executive Compensation................................................13

Item 10. Security Ownership of Certain Beneficial Owners and Management.......14

Item 11. Certain Relationships and Related Transactions.......................15

Item 12. Exhibits and Reports on Form 8-K.....................................15

                                       3
<PAGE>

Item 1. Description of Business
-------------------------------

Introduction.

        Quadratech, Inc. (the "Company") was incorporated on February 4, 1984
under the laws of the State of Utah. On March 19, 1990, the Company changed its
domicile from the State of Utah to the State of Nevada. Until August 1993, the
Company had no operations. In 1993, the Company entered into an agreement and
plan of reorganization with the shareholders of (OSA) Oil Scavenger Absorbent, a
California corporation ("OSA, Inc."). The shareholders of OSA, Inc. received
5,500,000 shares, representing 60% of the then outstanding shares, in exchange
for all of their issued and outstanding shares of stock in OSA, Inc.

        OSA, Inc. was incorporated in 1992 to act as a distribution company for
oil absorbent products. Its shareholders were Maria Comfort, Ed V. Lunenschloss,
William Snyder, Michael Montgomery, and John Sullivan. With dissatisfaction of
products then on the market, the Company developed its oil absorbent product.

Business of the Company.

        The Company is a developer and manufacturer of environmental products.
The development of a product consists of identifying and evaluating potential
products, and if the evaluation is favorable, obtaining all of the requisite
components required to complete the product, including financing and
governmental approvals.

The Industry.

        The manufacture of a product used for the clean-up of hazardous spills
of oil and oil-based petrochemicals was the initial market sought by the
Company. An oil absorbent material is used to absorb the spilled oil. The oil
can be removed from the absorbent material and returned to the refinery and the
absorbent material can be used again for absorption. The savings in landfill
costs begin with the acquisition and use of the recycled paper and continues
when the product is used again.

        Total remediation of the product by removing hazardous waste from the
customers manifest, and recycling the used absorbent and waste products into
government approved products, provides a significant advantage to our customers.

        The hazardous material industry is growing very rapidly, sparked by
increased governmental regulations concerning disposal of these types of
materials. Quadratech is currently emphasizing the value of their products and
services to those commercial and governmental agencies which are concentrating
their attentions on environmentally safe products which are non-toxic and afford
total redemption capability.

                                       4
<PAGE>

        As of the date hereof, the Company has focused attention on providing
products for four separate markets: oil and acid absorbents, agricultural
applications and pet litter. Each product line has its own market. The oil and
acid absorbent material is sold in the hazardous material market; the
agricultural market applies to several applications, i.e. egg washing, animal
bedding material, and effluent management; the pet litter is a grocery and
catalog item which has the unique capability of being flushed down the toilets
while providing odor removal and significant absorbent qualities.

Products.

     A.   Oil Absorbent Materials and Alternative-Energy Products. The Company
          obtained by assignment from Ed V. Lunenschloss U.S. Patent No.
          5,248,391 issued on September 28, 1993 for its oil absorbent material
          and currently has the rights/an unrestricted license as an oil-spill
          cleanup agent, in accordance with Title 23, Division 3, Chapter 10, of
          the California Code of Regulations. The Company believes that there
          are other licensed competitors whose products may be used on a
          restricted basis, i.e., their products, unlike the Company's cannot be
          deployed or used in free form in open waterways. Further, such
          absorbent products are classified as a renewable energy source.

     B.   Floor sweeps. The company's floor sweep products absorb and retrieve
          spilled oil and waste water from airplanes (jet fuel), gasoline
          stations (gas and diesel), machine shops, barge floors, repair shops
          and caustic acids, such as battery electrolytes, chromium acid and
          sulfuric acid.

     C.   Pet Litter. Flush it ( TM ) Pet Litter, made from recycled paper,
          primarily for the feline market, is more absorbent than clay, silica,
          and diatomaceous earth. It can be flushed down the toilet, and it
          helps in cleaning sludge build-up, with its oil and grease absorbency.
          It is deemed by the Company to be environmentally friendly,
          biodegradable, with excellent odor control and minimum tracking.
          Stable Mate, made from recycled paper, is a biodegradable, odor
          controllable absorbent utilized primarily for horse bedding or other
          animal uses. The Company's initial testing of the product indicates
          that it has no adverse health impact on animals. The Company has
          commenced marketing this product directly to horse owners and to
          entities who board, either permanently or temporarily (horse racing
          tracks) and/or transfer animals and to distributors.

     D.   B4tk Disinfecting Sanitizer. B4tk is a bacteria and virus killing
          product, applicable to agricultural animals, that is sprayed in the
          animal stalls, pens and on animal bedding.

     E.   Acid Absorbent. A battery acid floor sweep-absorbent also made from
          recycled paper, is capable of neutralizing caustic acids such as
          battery electrolytes, chromium acid, and sulphuric acid. Upon
          absorption the sweep may be discarded as a non-hazardous product.

                                       5
<PAGE>

Marketing and Sales.

        In 1999 the Company markets its products principally through sales
representatives in the United States. Though several independent distributors
were involved in product sales, this market, both domestic and foreign, still
needs further development. The Company has marketed its products successfully
for specific emergency spills in Korea, Japan and Hong Kong and looks forward to
further development of this market.

        The Company is also developing plans for promotion of their Pet Litter
product through nationally known distributors.

The Competition, Other Products.

        The Company competes on a national basis with a large number of
environmental service firms. These range in size from small local companies to
large national firms, many of which have considerably greater resources than the
Company. While the service capabilities of these competitors overlap with
several of the service areas provided by the Company, few compete in all areas
of the Company's markets. Factors influencing the Company's competitiveness are
price, reputation for quality, the availability and skills of engineering and
construction personnel, financial strength, knowledge or markets, site
conditions and estimating abilities. Although the environmental business is
highly competitive, particularly for competitively bid projects, the Company
believes its experience and skill make it well positioned to compete
effectively.

        The Company encounters substantial competition from companies in the
polypropylene absorbent materials field. Major polypropylene competitors include
large chemical equipment manufactures substantially larger than the Company,
with substantially greater financial capabilities. The natural non-toxic
absorbent materials field is relatively new and rapidly growing, and the nature
of the competition is not yet defined.

Proprietary Information.

        The Company holds a patent for the Oil Absorbent Material and plans to
pursue additional patents for B4tk, floor sweep, pet litter and acid absorbent
products.

Employees.

        As of December 31, 1998 the Company had three full time employees and
one part time employee. The Company also uses part time help as needed in
manufacturing, packing, warehousing, mailing, and shipping. A significant amount
of production capability has been out-sourced to independent manufacturing
contractors.

                                       6
<PAGE>

Item 2. Description of Property.
--------------------------------

        The Company's offices and manufacturing plant is located at 126 West
Maple Avenue, Monrovia, CA 91016. The property consists of approximately 2,000
square feet of offices and 6,000 square feet of indoor manufacturing. The
property is leased from an unaffiliated party at $700 per month for the first
seven and a half months and $735 per month commencing August 15, 1998 for the
balance of 1998.


Item 3. Legal Proceedings.
--------------------------

        On May 15, 1998, the Securities and Exchange Commission ("the
Commission") filed a Complaint against the Company. In connection therewith, the
Company entered a general appearance, waived service upon it of a Summons and of
the Complaint of the Commission and admitted the jurisdiction of the Court over
it and over the subject matter of this action. The Company admitted that
pursuant to Section 13(a) of the Securities Exchange Act of 1934 ("Exchange
Act") [15 U.S.C. Section 78m(a)] and Rules 12b-25, 13a-13 [17 C.F.R. Sections
240.12b-25, 240.13a-1 and 240.13a-13] promulgated thereunder, it was required to
file, and it has filed: (a) to file with the Commission its Annual Reports on
Form 10-K [17 C.F.R. Section 249.310]: (1) for its fiscal year ended December
31, 1996, which was due on or before March 31, 1997; and (2) for its fiscal year
ended December 31, 1997, which was due on or before March 31, 1998; (b) to file
with the Commission its Quarterly Reports on Form 10-Q [17 C.F.R. Section
249.308a]: (1) for its fiscal quarter ended March 31, 1997, which was due on or
before May 15, 1997; (2) for its fiscal quarter ended June 30, 1997, which was
due on or before August 14, 1997; and (3) for its fiscal quarter ended September
30, 1997, which was due on or before November 14, 1997; (c) to file with the
Commission its Notifications of Late Filing on Form 12b-25 [17 C.F.R. Section
249.322]: (1) for its Annual Reports on Form 10-K; (i) for its fiscal year ended
December 31, 1996, which was due before April 1, 1997; and (ii) for its fiscal
year ended December 31, 1997, which was due on or before April 1, 1998; and (2)
for its Quarterly Reports on Form 10-Q: (i) for its fiscal quarter ended March
31, 1997, which was due on or before May 16, 1997; (ii) for its fiscal quarter
ended June 30, 1997, which was due on or before August 15, 1997; and (iii) for
its fiscal quarter ended September 30, 1997, which was due on or before November
17, 1997; The Company, without trial, argument or adjudication of any issue of
fact or law, waived entry of findings of fact and conclusions of law pursuant to
Rule 52 of the Federal Rules of Civil Procedure, except as set forth herein and
in the Final Judgment of Permanent Injunction as to the Company (the "Final
Judgment") to be entered in the action. The Company waived any right it may have
had to appeal from the Final Judgment to be entered in the action. The Company
waived service upon it of the Final Judgment and agreed that the entry of the
Final Judgment by the Court and filing with the Clerk in the United States
District Court for the District of Columbia will constitute notice to the
Company of the terms and conditions of such Final Judgment. The Company entered
the Consent voluntarily and represented that no offer, promise or threat of any
kind whatsoever had been made by the Commission or any of its members, officers,
employees, agents or representatives in connection with or in consideration
therefore. The Company agreed that the Consent shall be incorporated by
reference into the Final Judgment, a copy of which was to be entered by the
Court in this action. The Company consented, before the taking of any testimony

                                       7
<PAGE>

and without trial, argument or adjudication of any issue of fact or law therein
to the entry, without further notice, of the Final Judgment: (a) restraining and
enjoining the Company and its officers, agents, servants and employees and
attorneys, and those persons in active concert or participation with them, who
receive actual notice of the Final Judgment by personal service or otherwise,
and each of them, from failing or causing the failure to file timely and in
proper form with the Commission at its headquarters office, accurate and
complete information and reports as are required to be filed with the Commission
pursuant to Section 13(a) of the Exchange Act and Rules 12b-25, 13a-1 and
13a-13, promulgated thereunder, including, among others, Annual Reports,
Quarterly Reports and Notifications of Late Filing; (b) ordering the Company to
require any outgoing chief executive officer or president of the Company to
deliver or cause to be delivered a copy of the Final Judgment and of the Consent
to any incoming chief executive officer or president of the Company to deliver
or cause to be delivered a copy of the Final Judgment and of the consent to any
incoming chief executive officer or president of the Company; and (c) ordering
the Company to file with the Commission at its headquarters office in
Washington, D.C.: (1) a complete and accurate Annual Report on Form 10-K for its
fiscal year ended December 31, 1996 by May 29, 1998; (2) complete and accurate
Quarterly Reports on form 10-Q for its fiscal quarters ended March 31, June 30
and September 30, 1997 by June 15, 1998; (3) a complete and accurate Annual
Report of Form 10-K for its fiscal year ended December 31, 1997 by June 30,
1998; and (4) such other periodic reports which may become due prior to the
entry of the Final Judgment.

        As of December 31, 1998 the Company had filed with the SEC, all four
quarters of 10-K Reports due for 1997, plus the first and second quarters of
1998 Reports due.

Item 4. Submission of Matter to Vote of Security Holders.
---------------------------------------------------------

        None.


Item 5. Market for Common Company Equity and Related Stockholder Matter.
------------------------------------------------------------------------

        As of December 31, 1998 The Company had Two Hundred and One(201)
shareholders of record of its common stock. The Company has not paid cash
dividends on its common stock. The Company anticipates that for the foreseeable
future any earnings will be retained for use in its business, and no cash
dividends will be paid on the common stock. Declaration of common stock
dividends will remain within the discretion of the Company's Board of Directors
and will depend upon the Company's growth, profitability, financial condition
and other relevant factors.

        The Company common stock is traded on the bulletin board system under
the symbol "QUDT." The table below reflects the high and low bid and ask
quotations for each of the Company's fiscal quarters for the two fiscal years
covered by this report. The prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and do not necessarily represent actual
transactions.

                                       8
<PAGE>

         As of December 31, 1997, the company had issued and outstanding
14,472,699 shares of Common Stock. As of December 31, 1998 the Company had
issued and outstanding 18,611,228 shares of Common Stock. The sale and issuance
of the shares of Common Stock in 1997 was for cash or in the cancellation of
indebtedness, said shares were not registered under the Securities Act of 1933,
as amended, and were issued in reliance upon an exemption from registration. All
of said share of stock have restrictive legends imposed thereon and stop
transfer order have been issued to the Company's transfer agent.

                                              1997

                                              HIGH                LOW
                                              ----                ---
1st Quarter                                   $ .72               $ .375
2nd Quarter                                   $ .63               $ .25
3rd Quarter                                   $ .61               $ .25
4th Quarter                                   $ .35               $ .16

                                              1998

                                              HIGH                LOW
                                              ----                ---
1st Quarter                                   $ .37               $ .20
2nd Quarter                                   $ .26               $ .125
3rd Quarter                                   $ .30               $ .04
4th Quarter                                   $ .41               $ .04

Dividends.

        The payment of dividends is within the discretion of the Board of
Directors of the Company. The Company currently intends to retain all earnings,
if any, in the foreseeable future for use in the development of the Company's
business. The Company has not paid dividends since inception. It is not
anticipated that any dividends will be paid in the foreseeable future and there
can be no assurance that dividends can or will ever be paid. The payment of
dividends is contingent upon future earnings, if any, the Company's financial
condition and capitol requirements, general business conditions and other
factors.

Item 6. Management's Discussion and Analysis or Plan of Operation.
------------------------------------------------------------------

        Comparison of Years ended December 31, 1998 and December 31, 1997.

Results of Operation.

        In 1997 and 1998, the Company focused its major effort on marketing its
oil absorbent products to commercial and government accounts as its priority
product. There was also a continuing effort to develop distributors for the
Flush-it per litter product. Initial efforts to develop an agricultural product
were begun but no sales of product to this market area were achieved, as
additional development and research were required to adequately prepare the
product for market.

                                       9
<PAGE>

        During 1997, the Company determined that its patented formula could also
be utilized in the poultry industry. The business opportunities include, but are
not limited to, supplying bedding material, facility decontamination and egg
washing. Governmental approval is required in connection with poultry industry
use and the Company is currently undertaking testing with the intent to obtain
all necessary and applicable approvals. Revenues are not expected from the
poultry industry application during the current fiscal year.

        Total revenues for fiscal 1998 were $93,690, a decrease of $12,830 over
1997 revenues. The decrease is primarily due to a decline in international
revenues.

        The Company's net loss of $322,677 for the year ended December 31, 1998
represents a decreased loss of $219,037 compared to the net loss in the prior
year.

        Selling, general and administrative costs decreased substantially as a
result of a reduction in personnel and decreased marketing costs associated with
the sale of products to its customers.

Liquidity and Capital Resources:

        The liquidity of the Company and its available capital resources have
not improved.

        The Company believes that internally generated funds and the sale and
issuance of stock for cash or in cancellation of indebtedness will provide
minimum capitol resources to finance operations, fund capital expenditures and
planned research activities. The Company's need for funds has been reduced
predicated upon the significant reduction in property rental and maintenance
expenses and the reduction of marketing costs.

        At December 31, 1998, the Company had no material commitments to acquire
additional assets.

Item 7. Financial Statements.
-----------------------------

        The Financial Statements are set forth as an Exhibit hereto.


Item 8. Directors, Executive Officers, Promoters and Control Persons; Compliance
--------------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        ---------------------------------------

                                       10
<PAGE>

At December 31, 1998, the officers and directors of the Company were:

Name and address                          Age                  Position
----------------                          ---                  --------

Perry Cope                                 63             Chief Executive
126 West Maple Ave.                                        Officer and President
Monrovia, Ca  91016

Ted D. Kimbrough                           63             Director & Secretary
1933 Durango Avenue
Los Angeles, CA  90034

Lilly V. Lee                               68             Director & Treasurer
4751 Wilshire Blvd., Suite 207
Los Angeles, CA  90010

Michael Montgomery                         62             Director & General
10501 Valley Blvd., Suite 121                              Counsel

Maria Comfort                              57             Director
14411 Riverside Drive, Apt 17
Encino, CA  91315

William Snyder                             73             Director
509 South Hindry
Inglewood, CA  90301

Christopher Wiles                          42             Director
23535 Windom Street
West Hills, CA  91304

Craig Glen Robitaille                      39             Director
21391 Dockside Circle
Huntington Beach, CA  92646

        The directors of the Company are elected to serve until the next annual
shareholders' meeting or until their successors are duly elected and qualified.

Background of Current Officers and Directors.

        Perry Cope received his Bachelor of Administration in Marketing from the
University of Houston, Texas and a Master of Business Administration Degree from
the University of Southern California. Mr. Cope has over 35 years experience in
marketing and executive management with North American Philips and Xerox
Corporation. He was at Xerox for twenty-seven years where he served as Vice
President of Marketing for Xerox Medical Systems, and was later Director of
Sales and Service for Philips Medical, Ultrasound division. Mr. Cope founded Sea
to Sea International Consulting Company in 1991 and acted as a consultant to
medical product manufacturers for six years. Mr. Cope joined the Board on
November 1, 1997. In 1997 Mr. Cope became Chief Executive Officer of the
Company.

                                       11
<PAGE>

        Maria Comfort hold an Associate of Science Degree in Fine Arts from
Santa Barbara City College, Santa Barbara, CA., June 1975. She has an additional
year of college credits from Santa Barbara and UCLA. Ms. Comfort began her
career in 1968 as a paralegal with Ashland Oil And Chemical Company, Columbus
Ohio. She helped to establish the Credit Card Division for Ashland Oil's main
company in Ashland, Kentucky. She also worked with multi-million dollar
acquisitions and sales contracts for Ashland's Chemical Company. She remained
with Ashland until 1972. From 1972 until 1985 Ms. Comfort was self-employed as a
personal manager in the entertainment industry. She managed young actors' and
actresses' careers in television and film. From 1985 until 1990, Ms. Comfort
worked for the George Williams and Associates Corporation of Los Angeles, CA in
the capacity of Financial Manager. During this time she was able to analyze,
justify and qualify budgets and financial plans for customers. She worked on the
highest level with banks and other financial institutes. In late 1990, Ms.
Comfort established (OSA) Oil Scavenger Absorbent. She is its president. In
1993, when OSA, Inc. was acquired by the Company, Ms. Comfort was made President
and Chief Executive Officer. As of the date hereof, Maria Comfort is the
President of the Company.

        Bill Snyder is the founder and CEO of Caprice Engineering Company, which
he established in 1972. Mr. Snyder started it as a supplier to the U.S.
Government of miscellaneous aircraft spare parts. During his tenure, (since
1972) the firm increased its yearly sales from $100,000 to $3,000,000. His
experience ranges from sales and inventory control through manufacturing and
quality control, with emphasis on the day to day administration of a
Government-controlled business. From 1968 to 1972, Mr. Snyder was sales manager
of Sparkadyne Corporation, a military spare parts manufacturing company. From
1950 to 1967, Mr. Snyder was Purchasing Supervisor at Rockwell Aviation, a
supplier of aircraft and space equipment to the U.S. Government.

        Michael Montgomery graduated from UCLA in 1960 with a Bachelor of
Science degree in Finance, and received his Juris Doctor from the University of
Southern California Law School in 1963. Mr. Montgomery is admitted to the Bars
of California, Florida, and Hawaii, and admitted to practice before the United
States Supreme Court. Mr. Montgomery has been appointed to and served on
federal, state, and local bar committees. Since 1964 he has been engaged in the
practice of law, both in private practice as a solo practitioner and as
corporate counsel for several corporations. Mr. Montgomery has acted as special
counsel on over $1.5 billion of Municipal Bonds, including one $395 Million
offering. Mr. Montgomery is a past State Chairman of the California Republican
Party and was both the Mayor and Councilman of the City of South Pasadena for
two terms. He is currently serving as legal counsel to several public agencies.

        Christopher Willes received a Bachelor of Science degree in Accounting
from San Francisco State University, California in 1978. From 1983 to 1988 he
was National Sales Manager Teraco, Inc., a company engaged in the manufacture of
promotional goods and from 1982 until was Vice President-Sales for Ocean
Manufacturing Corporation, a company engaged in the manufacture of promotional
products. From 1993 to the present Mr. Wiles has been engaged in the business of
marketing promotional products under the name of CW Marketing & Promotional
Services. Mr. Wiles joined the Board on December 27, 1996.

                                       12
<PAGE>

        Peter Olsen received his Bachelor of Science degree at University of
Utah and a Master of Business Administration degree from Brigham Young
University. For the past five years he has been the Chairman and Chief Executive
Officer of Olsen Farms, Inc., a business engaged in the production, processing
and distribution of eggs in the Western United States. Mr. Olsen also serves as
a Chairman of the California Egg Commission and is past President of Pacific Egg
& Poultry Association. Mr. Olsen joined the Board on January 30, 1998.

        Ted D. Kimbough received his Bachelor of Science in Education from
Northern Illinois State University, his Master of Science in Education from
California State University, Los Angeles, did Post graduate studies at Peperdine
University, University of California at Los Angles and University of Southern
California and an Honorary Juris Doctorate from the University of West Los
Angeles. Mr. Kimbrough is the President and Owner of Multi-Kim & Associates,
Inc. and the former Superintendent of Schools for the Sacramento Unified School
District (1996-1997), Chicago Unified School District (1990-1993); Compton
Unified School District (1982-1990). Previously, he had been employed by the Los
Angeles Unified School District.

        Lilly V. Lee is Chairman of Lilly International, Inc. Ms. Lee's business
activities include real estate investments, trade, trucking, retail, franchise
consultant strategic alliances with various sectors of business in the U.S.A.
Australia, China, Hong Kong, Indonesia, Thailand and the Philippines. Ms. Lee is
currently the Chairman of the World Trade Center association, Los Angeles Long
Beach which is linked with other trade offices in 97 countries, and is the
Chairman of Southern California Asian Pacific American Legal Center, Executive
Council. Ms. Lee is on the Executive Boards of Bank Plus Corporation and
Fidelity Federal Bank and is a member of the Board of Directors of Gateway
Investment Services, Inc.

        In addition, Ed V. Lunenschloss had been a Director. Mr. Lunenschloss
died on March 17, 1998.

Item 9. Executive Compensation.
-------------------------------

        The following table sets forth the cash compensation which was paid by
the Company for services rendered to the Company. During fiscal years ended 1997
and 1998 the following payments were made:

                                       13
<PAGE>
<TABLE>
<CAPTION>

                                                                 Remuneration
                                                                 ------------
Name                                Position                   1997         1998
--------------------------------------------------------------------------------------------
<S>                                 <C>                        <C>         <C>
Maria Comfort                       President                  $17,560     $32,000

Ed V. Lunenschloss                  Executive Vice President   $26,000      none

Darlene Foreman                     Controller                 $25,000      none

Perry Cope                          President and Chief
                                    Executive Officer          $2,000      $45,000

All Executive officers as a group                              $70,000      none
</TABLE>

        No compensation is payable to Directors of the Company in connection
with attendance at Board Meetings, except as to such Directors who also serve as
Officers of the Company in capacities other than Directors and/or Officers. At
this time no other compensation has been scheduled for any other member of the
Board of Directors or Officers of the Corporation.

        Future compensation of Officers will be determined by the Board of
Directors based upon the financial condition and performance of the Company, the
financial requirements of the Company, and upon individual performance of each
Officer. The Board of Directors intents to ensure that the salaries paid to the
Company's Officers and employees are reasonable and prudent and are based upon
both the financial condition and performance of the Company and upon the
performance of the individual Officers.

Item 10. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

         The following table sets forth as at December 31, 1998, certain
information as to the common stock of the Company owned of record and/or
beneficially by each person who is known to the Company to own more than five
(5%) percent of the outstanding common stock, and by all officers and directors
of the Company.

Name and Address                    Amount Beneficially
of Owner                            and/or Owned Record               Approx. %
-------------------------------------------------------------------------------

Perry Cope                                   201,000                   1.08%
126 West Maple Avenue
Monrovia, CA  91016

Maria Comfort                              1,001,176                   5.38%
126 West Maple Avenue
Monrovia, CA  91016

Michael Montgomery                           650,000                   3.49%
10501 Valley Blvd., #121
El Monte, CA  91731

William Snyder                             1,879,259                  10.09%
409 South Hindry
Inglewood, CA  90301

Christopher Wiles                            260,000                   1.39%
22535 Windham Street
West Hills, CA  91304

                                       14
<PAGE>

        900,000 shares are registered in the name of Joyce Lunenschloss. Ed V.
Lunenschloss, prior to his death in 1998, had advised the Company that, at the
time said shares of stock were transferred to Joyce Lunenschloss, he retained
the right to vote said stock. Said retention, if any and valid, are the property
of his estate.

Item 11. Certain Relationships and Related Transactions.
--------------------------------------------------------

        In 1998 there were significant conversions of debt and accrued interest
to stock by Caprice Engineering, David Comfort, Francis Rigney and Bill Snyder
as follows:

        To Caprice Engineering 826,951 shares for $192,690; to David Comfort
110,000 shares for $19,784; to Bill Snyder 699,328 shares for $ 159,926, and to
Francis Rigney 1,100,000 shares for $149,500 debt and $28,668 consulting fees.

        The Company also converted $11,475 accounts payable into common stock:
to Falcon Finance 5,000 shares for $1,250; to Ronald Stauber, ESQ. 100,000
shares for $6,000; and to Corley Fox 42,250 shares for $4,225.

        Moreover a shareholder assumed $11,000 accounts payable from the
Company. This was treated as paid in capital.

Item 12. Exhibits and Reports on Form 8-K.
------------------------------------------

        There are no reports on Form 8-K incorporated herein by reference. The
following documents are filed as part of this report:

               (1)Financial Statements filed as part of this report, prepared by
                  Harold Y. Spector, Certified Public Accountant for the fiscal
                  year ended December 31, 1998 and 1997, with the related
                  consolidated statements of operations and accumulated deficit,
                  and cash flow for the year then ended.

                                       15
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.



                                                     QUADRATECH INC.



                                                     ___________________________
                                                            (company)
                                                     Date: December 17, 1999


                                                     By: /s/ Perry Cope
                                                     ---------------------------
                                                     Perry Cope
                                                     President

                                       16
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page

INDEPENDENT AUDITOR'S REPORT.................................................F18

CONSOLIDATED BALANCE SHEETS..................................................F19

CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED
  DEFICITS...................................................................F21

COST OF SALES................................................................F22

OPERATING EXPENSES...........................................................F23

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY...................F24

CONSOLIDATED STATEMENTS OF CASH FLOWS........................................F25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................F27

                                       17
<PAGE>

                         [HAROLD Y SPECTOR'S LETTERHEAD]




                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and stockholders of Quadratech, Inc.

I have audited the accompanying consolidated balance sheets of Quadratech, Inc.
(a Nevada corporation) and its wholly-owned subsidiary, Oil Scavenger Absorbent,
Inc. (a California corporation), as of December 31, 1998 and 1997, and the
related consolidated statements of operations and accumulated deficit, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these consolidated financial statements based on my audits.

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

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial positions of Quadratech, Inc.
and its subsidiary as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in the Note 9 to
the consolidated financial statements, the Company's significant operating
losses, working capital deficiency and deficit in stockholders' equity raise
substantial doubt about their abilities to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


/S/ Harold Y. Spector
Pasadena, CA
February 8, 1999

                                                                             F18
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997


                                     ASSETS

                                                      1998              1997
                                                  ------------      ------------
Current Assets
  Cash                                            $    12,261       $    49,600
  Account Receivables                                  36,528             4,777
  Inventories                                           3,838             3,838
                                                  ------------      ------------

    Total Current Assets                               52,627            58,215
                                                  ------------      ------------

Property and Equipment
  Furniture and Equipment                              84,502            82,702
  Plant and Equipment                                  66,900            66,900
  Motor Vehicles                                        8,818            20,818
                                                  ------------      ------------
                                                      160,220           170,420
  Less: Accumulated Depreciation                     (105,450)          (83,522)
                                                  ------------      ------------

    Total Property and Equipment                       54,770            86,898
                                                  ------------      ------------

Other Assets
  Patents, Marks and Copyrights, net of
   accumulated amortization of $2,878
   and $2,020                                          12,667            13,525
  Deposits                                              6,825             4,125
                                                  ------------      ------------

    Total Other Assets                                 19,492            17,650
                                                  ------------      ------------

TOTAL ASSETS                                      $   126,889       $   162,763
                                                  ============      ============


                                                                             F19
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      1998              1997
                                                  ------------      ------------
Current Liabilities
  Accounts Payable                                $    14,248       $    77,660
  Accrued Expenses                                      3,567            76,009
  Notes Payable, current portion                      316,500           479,441
                                                  ------------      ------------

    Total Current Liabilities                         334,315           633,110
                                                  ------------      ------------

Long-Term Debt, net of current                         50,500            50,500
                                                  ------------      ------------

    Total Liabilities                                 384,815           683,610
                                                  ------------      ------------

Stockholders' Equity
  Common Stock, $.001 par value,
   50,000,000 shares authorized;
   18,611,228 shares issued and
   outstanding in 1998, and 14,472,699
   shares in 1997                                      18,611            14,473
  Paid-in Capital                                   2,891,707         2,315,302
  Accumulated Deficit                              (3,168,244)       (2,850,622)
                                                  ------------      ------------

    Total Stockholders' Equity (Deficit)             (257,926)         (520,847)
                                                  ------------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY                                           $   126,889       $   162,763
                                                  ============      ============

            See accompanying notes and independent auditor's report.
                                                                             F20
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
         CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICITS
                   For Years ended December 31, 1998 and 1997


                                                      1998              1997
                                                  ------------      ------------
SALES                                             $    93,820       $   107,864
Less: Discount Taken                                     (130)           (1,343)
                                                  ------------      ------------

NET SALES                                              93,690           106,521

COST OF SALES - SCHEDULE A                             68,895           115,741
                                                  ------------      ------------

GROSS PROFIT (DEFICIT)                                 24,795            (9,220)

OPERATING EXPENSES - SCHEDULE B                       278,563           460,675
                                                  ------------      ------------

INCOME (LOSS) FROM OPERATIONS                        (253,768)         (469,895)
                                                  ------------      ------------

OTHER INCOME (EXPENSES)
  Interest Income                                          32               254
  Other Income                                          3,992            89,334
  Depreciation and Amortization                       (29,374)          (35,236)
  Interest Expenses                                   (16,858)          (20,485)
  Gain (Loss) on Disposal of Assets                     1,087           (61,683)
  Late Charges and Penalties                             (738)             (243)
  Officer's Salaries                                  (26,250)          (42,960)
                                                  ------------      ------------

    Total Other Income (Expenses)                     (68,109)          (71,019)
                                                  ------------      ------------

NET INCOME (LOSS) BEFORE TAXES                       (321,877)         (540,914)

PROVISION FOR INCOME TAXES                                800               800
                                                  ------------      ------------

NET INCOME (LOSS)                                    (322,677)         (541,714)

ACCUMULATED DEFICITS
  Beginning Balance                                (2,850,622)       (2,308,908)
  Prior year adjustments                                5,055                 -
                                                  ------------      ------------

  Ending Balance                                  $(3,168,244)      $(2,850,622)
                                                  ============      ============

NET (LOSS) PER SHARE                              $     (.019)      $     (.043)
                                                  ============      ============

WEIGHTED AVERAGE SHARES OUTSTANDING                16,541,964        12,556,556
                                                  ============      ============

            See accompanying notes and independent auditor's report.
                                                                             F21
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                                  COST OF SALES
                   For Years ended December 31, 1998 and 1997


                                                            SCHEDULE A
                                                      1998              1997
                                                  ------------      ------------
COST OF SALES
  Beginning Inventory                             $     3,838       $    41,780
  Purchases                                            37,634            21,561
  Freight-in                                                -             3,753
  Production Salaries                                  28,911            52,076
  Warehouse Supplies                                    2,350               409
                                                  ------------      ------------
                                                       72,733           119,579
  Less: Ending Inventory                               (3,838)           (3,838)
                                                  ------------      ------------

    Total Cost of Sales                           $    68,895       $   115,741
                                                  ============      ============

            See accompanying notes and independent auditor's report.
                                                                             F22
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                               OPERATING EXPENSES
                   For Years ended December 31, 1998 and 1997

                                                     SCHEDULE A
                                                      1998              1997
                                                  ------------      ------------
OPERATING EXPENSES
  Accounting                                      $    23,965       $    24,424
  Advertising                                           2,724            13,193
  Bad Debts                                             1,967            57,672
  Bank and Finance Charges                              1,533             8,186
  Car Allowances and Expenses                          10,649             6,554
  Commissions                                           6,587            22,887
  Consulting                                           83,058                 -
  Contributions                                             -                74
  Customer and Public Relations                            11                 -
  Directors' Meetings                                     630                 -
  Dues and Subscriptions                                  265             1,761
  Employee Benefits                                         -             1,449
  Entertainment                                         1,970             3,091
  Equipment Rental                                        359            (5,531)
  Freight and Postage                                     711             2,904
  Insurance                                            21,785             8,533
  Legal and Professional                               13,042            42,473
  Legal Settlement                                      2,225                 -
  Licenses & Permits                                      531               555
  Maintenance                                           6,602            22,263
  Marketing Research                                        -               200
  Office Supplies                                       3,117             6,635
  Operating Supplies                                        -             5,149
  Other Expenses                                          584             1,708
  Outside Services                                        110             5,013
  Parking                                                  64                 -
  Payroll Service Fees                                  1,776                 -
  Payroll Taxes                                         8,186            25,186
  Printing and Reproduction                               578                 -
  Rent                                                  9,352            65,441
  Research and Development                                600                93
  Royalties                                                 -             3,246
  Sales Promotion                                           -             2,064
  Salaries and Wages                                   29,772            49,429
  Selling                                                 443                 -
  Shipping                                              4,174             4,758
  Supplies                                                346               680
  Taxes - Property                                      4,001             2,453
  Telephone                                            15,809            36,894
  Temporary Labor                                       7,062                 -
  Trade Shows                                           4,515             1,213
  Travel                                                4,849            20,479
  Utilities                                             4,566            19,546
                                                  ------------      ------------

    Total Operating Expenses                      $   278,563       $   460,675
                                                  ============      ============

            See accompanying notes and independent auditor's report.
                                                                             F23
<PAGE>
<TABLE>
<CAPTION>

                                                    QUADRATECH, INC. & SUBSIDIARY
                                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                               Years ended December 31, 1998 and 1997


                                           Common Stock      Paid-in      Accumulated
                                        Shares      Amount   Capital        Deficit      Total
                                        -----------------------------------------------------------

<S>                                     <C>         <C>     <C>          <C>            <C>
Balance at December 31, 1996            13,093,974  13,094   2,184,179    (1,754,373)      442,900

Prior year adjustment                                                       (554,535)     (554,535)
                                        -----------------------------------------------------------

Adjusted balance                        13,093,974  13,094   2,184,179    (2,308,908)     (111,635)

Issuance stocks                          1,378,725   1,379     131,123                     132,502

Net Loss                                                                    (541,714)     (541,714)
                                        -----------------------------------------------------------

Balance at December 31, 1997            14,472,699 $14,473  $2,315,302   $(2,850,622)   $ (520,847)

Prior year adjustment                                                          5,055         5,055
                                        -----------------------------------------------------------

Adjusted balance                        14,472,699 $14,473  $2,315,302   $(2,845,567)   $ (515,792)

Issuance stocks for
 accounts payable                          147,250     147      11,328                      11,475

Issuance stocks for notes
 payable and consulting fees             2,736,279   2,736     547,832                     550,568

Paid-in capital for
 accounts payable                                               11,000                      11,000

Reclassify from deposits
 payable                                                         7,500                       7,500

Issuance stocks                          1,255,000   1,255      (1,255)                          0

Net Loss                                                                    (322,677)     (322,677)
                                        -----------------------------------------------------------

Balance at December 31,1998             18,611,228 $18,611  $2,891,707   $(3,168,244)   $ (257,926)
                                        ===========================================================
</TABLE>

            See accompanying notes and independent auditor's report.
                                                                             F24
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 1998 and 1997


                                                      1998            1997
                                                  ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income (Loss)                               $  (322,677)    $  (541,714)
  Adjustments to reconcile net loss to net
   cash provided by operating activities
   Depreciation and amortization                       29,374          35,236
   (Gain) Loss on Disposal of Assets                   (1,087)         61,683
   Prior year adjustments                               5,055               -
   (Increase) Decrease in:
      Accounts Receivable                             (31,751)         16,889
      Other Receivables                                     -          30,687
      Inventory                                             -          37,942
      Prepaid Expenses                                      -           5,832
      Deposits                                         (2,700)         21,501
   Increase (Decrease) in:
      Accounts Payable                                (40,937)        (11,672)
      Accrued Expenses                                 (6,483)        (52,486)
                                                  ------------    ------------

NET CASH (USED) BY OPERATING ACTIVITIES              (371,206)       (396,102)
                                                  ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of Equipment                                (1,800)         (6,002)
  Disposal of Equipment                                 6,500               -
                                                  ------------    ------------

NET CASH PROVIDED (USED) BY INVESTING
 ACTIVITIES                                             4,699          (6,002)
                                                  ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Increase in Paid in Capital                          36,168         132,502
  Net Proceeds from Notes Payable                     293,000         312,679
                                                  ------------    ------------

NET CASH (USED) BY FINANCING ACTIVITIES               329,168         445,181
                                                  ------------    ------------

NET INCREASE (DECREASE) IN CASH                       (37,339)         43,077

BEGINNING OF YEAR                                      49,600           6,523
                                                  ------------    ------------

END OF YEAR                                       $    12,261     $    49,600
                                                  ============    ============

SUPPLEMENTAL DISCLOSURES:
  Cash Paid During the Year for:
     Interest                                     $     5,092     $       451
                                                  ============    ============

     Income Tax                                   $         -     $       800
                                                  ============    ============

                                                                             F25
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                     Years ended December 31, 1998 and 1997


  Noncash investing and financing activities:
     In 1998, Issuance of stocks for:
        Accounts Payable                                      $ 11,475
                                                              ========
        Notes Payable and Accrued Interest                    $521,900
                                                              ========
     Paid-in capital for accounts payable                     $ 11,000
                                                              ========

     In 1997, a receivable from an officer incurred for an abandoned motor
vehicle for $3,865.

                                                                             F26
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 1 - GENERAL

Quadratech, Inc. ("the Company") was formed under the laws of Nevada on February
4, 1994.

Quadratech, Inc., and its wholly-owned subsidiary, Oil Scavenger Absorbent, Inc.
("OSA", a California corporation formed in August, 1993), was established to
offer significant solutions for certain major environmental problems from the
development and manufacturing a range of environmentally safe bio-degradable
products.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, OSA, after elimination of all material
intercompany accounts and transactions.

Use of estimates

The preparation of the accompanying consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses. Actual results may differ
from these estimates.

Cash Equivalents

The Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. As of December 31, 1998
and 1997, there were no cash equivalents.

The Company prepares its consolidated statements of cash flows using the
indirect method as defined under Financial Accounting Standards Board Statement
No. 95.

Revenue Recognition

Revenue from sales is recognized when products are shipped and accepted by the
customer.

                                                                             F27
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable

No allowance for uncollectible accounts has been provided. Management has
evaluated the accounts and believes they are all collectible. Bad debt expense
for years ended December 31, 1998 and 1997, was $1,967 and $57,672,
respectively.

Inventories

Costs incurred for materials, technology and shipping are capitalized as
inventories and charged to cost of sales when revenue is recognized.

Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.

Property and Equipment

Property and Equipment are valued at cost. Maintenance and repair costs are
charged to expenses as incurred. Depreciation is computed on the straight-line
and accelerated methods based on the estimated useful lives of the assets.
Depreciation expense was $35,236 and $39,065 for 1998 and 1997, respectively.

Intangible Assets

Patents, marks and copyrights are capitalized and amortized over five years
using the straight-line method.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company accounts income taxes in accordance with Financial Accounting
standards Board Statement No. 109.

Reclassifications

Certain reclassifications have been made to the 1997 consolidated financial
statements to conform with the 1998 consolidated financial statement
presentation. Such reclassification had no effect on net loss as previously
reported.

                                                                             F28
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 3 - NOTES PAYABLE
                                                      1998          1997
                                                  -----------   -----------
a.)Notes to Caprice Engine, interest
   at 6% to 8% per annum, due on
   demand; unsecured                              $        -    $  165,657

b.)Notes to Bill Synder, including
   $100,000 LOC, interest at 6.75%
   to 10.5% per annum, due on
   demand; unsecured                                       -       121,000

c.)Note to David Comfort, interest
   at 8 1/2% commencing 8/1/98;
   unsecured; due on demand                                -        19,784

d.)Note to William Kroes, interest at
   10% per annum due monthly from
   4/15/98; due on demand; unsecured                  50,500        50,500

e.)Note to Frances Rigney, interest
   only at 8 1/2% commencing 8/1/98;
   unsecured; due on demand                          316,500       173,000
                                                  -----------   -----------

Total                                             $  367,000    $  529,941

Less current maturities                              316,500       479,441
                                                  -----------   -----------

Long-term debt, net                               $   50,500    $   50,500
                                                  ===========   ===========

Maturities on notes payable are as follows:

   December 31,
   ------------
   1999                                  $  316,500
   2000                                      50,500
                                         ----------
                                         $  367,000
                                         ==========

NOTE 4 - INCOME TAXES

The Company files consolidated federal and state income tax returns with its
subsidiary.

Provision for income taxes in the consolidated statements of operations for
years ended December 31, 1998 and 1997 consist of $800 minimum state income
taxes in each year.

                                                                             F29
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 4 - INCOME TAX (Continued)

As of December 31, 1998, the Company has approximately federal net operating
loss carryforwards of $2,938,581, and California NOL of $3,014,868 to reduce
future taxable income. To the extent not utilized, both carryforwards will begin
to expire beginning 2000 and 1998 respectively.


NOTE 5 - COMMON STOCK TRANSACTIONS

In 1998, the Company issued stocks to reduce accounts payable of $11,475 and
notes payable with accrued interest of $521,900. The Company also issued stocks
for consulting fees of $28,668.


NOTE 6 - RELATED PARTY TRANSACTIONS

Notes Payable

As described in Note 3, the Company had various unsecured borrowings from the
stockholders.

Paid-in Capital

$11,000 of accounts payable was paid by a stockholder and credited to paid-in
capital.


NOTE 7 - COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases its office facilities for $700 per month on a month-to-month
basis. Rent expense totaled $9,352 and $65,441 for 1998 and 1997, respectively.

In addition, the Company is responsible for its pro rata share of property
taxes.


NOTE 8 - PRIOR YEARS ADJUSTMENTS

Certain errors, resulting in both the overstatement and understatement of assets
and liabilities of 1997 were corrected in 1998. These errors have no effect on
year of 1998. The changes to accumulated deficit as of December 31, 1998 are
summarized as follows:

                                                                             F30
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 8 - PRIOR YEAR ADJUSTMENTS

As previously reported, December 31, 1997                 $(2,850,622)

Adjustments:
  Understatement of Accounts Payable                           (1,179)
  Understatement of Accounts Receivable                         6,937
  Understatement of Payroll Taxes Payable                      (1,553)
  Overstatement of Income Taxes Payable                           850
                                                          ------------

As adjusted                                               $(2,845,567)
                                                          ============

NOTE 9 - GOING CONCERN

The accompanying consolidated financial statements are presented on the basis
that the Companies are going concerns. Going concern contemplates the
realization of assets and the satisfication of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
consolidated financial statements, the Company incurred a net loss of $322,677
and $541,714 in 1998 and 1997, respectively, and as of December 31, 1998, the
Company has an accumulated deficit of $3,168,244, a deficit in stockholders'
equity of $257,926 and current liabilities exceed current assets by $281,688.

Management is currently involved in active negotiations to obtain additional
financing and actively increasing marketing efforts to increase revenues. The
Company continued existence depends on its ability to meet its financing
requirements and the success of its future operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.


NOTE 10 - YEAR 2000

The Company believes that it has identified each of its computer systems that
will require modifications to enable it to perform satisfactorily on and after
January 1, 2000. The financial impact of making such modifications to the
Company's systems is not expected to be material to the Company's consolidated
financial position or results of operations. In addition, the Company is
currently corresponding with vendors that provide products and systems to the
Company in order to determine if such products and systems will be required to
be upgraded or replaced. Although management believes the Company has an
adequate program in place to address the year 2000 issue, the costs of upgrades
to, or replacements of, its purchased products or systems has not been
determined and there can be no assurance that the program will ultimately be
successful.

                                                                             F31
<PAGE>

                          QUADRATECH, INC. & SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     Years ended December 31, 1998 and 1997


NOTE 11 - SUBSEQUENT EVENT

The Company is negotiating a merger. The terms has not been determined yet. The
merged entity will be the Company and the other company will acquire 51% of the
outstanding shares of common stock of the Company.

                                                                             F32