SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[ X ]   Annual report pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the fiscal year ended June 30, 1998

                                       or

[   ]  Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934.

                        Commission file number: 000-22329

                                POWERTRADER, INC.
             (Exact name of registrant as specified in its charter)

                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   98-0163116
                      (IRS Employer Identification Number)

       885 Dunsmuir Street, Suite 591, Vancouver, British Columbia V6C 1N5
             (Address of principal executive offices and zip code)

                                 (604) 685-1529
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

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

                          Common Stock, $0.01 par value
                                (Title of Class)

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  [  ]           No [ X ]

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 the  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. [ ]

State issuer's revenues for its most recent fiscal year: $59,500

The number of shares of the registrant's Common Stock outstanding as of June 30,
1998 was 8,283,115.  The aggregate market value of the registrant's Common Stock
held by  non-affiliates,  based  upon the  closing  price on June 30,  1998,  as
reported on the Nasdaq Over the  Counter  System,  was  approximately  $636,543.
Shares of Common  Stock held by each officer and director and by each person who
owns 5% or more of the outstanding  Common Stock have been excluded in that such
persons may be deemed to be affiliates.  This  determination of affiliate status
is not necessarily a conclusive determination for other purposes.

                       DOCUMENTS INCORPORATED BY REFERENCE

None

                                     PART I

Transitional small business disclosure format (check one)

                           Yes  [  ]           No [ X ]


<PAGE>



                                TABLE OF CONTENTS

                                                                        Page
                                                                        ----
                                     PART I

    Item 1            Description of Business
    Item 2            Description of Property
    Item 3            Legal Proceedings
    Item 4            Submission of Matters to a Vote of Security
                      Holders

                                     PART II

    Item 5            Market for Common Equity and Related
                      Stockholder Matters
    Item 6            Management's Discussion and Analysis or
                      Plan of Operation
    Item 7            Financial Statements
    Item 8            Change in and Disagreement with Accountants
                      on Accounting and Financial Disclosure

                                    PART III

    Item 9            Directors, Executive Officers, Promoters and
                      Control Persons; Compliance with Section 16(a)
                      of the Exchange Act
    Item 10           Executive Compensation
    Item 11           Security Ownership of Certain Beneficial
                      Owners and Management
    Item 12           Certain Relationships and Related Transactions
    Item 13           Exhibits and Reports on Form 8-K


    SIGNATURES
    INDEX TO EXHIBITS


<PAGE>



Item 1.  DESCRIPTION OF BUSINESS

Overview

PowerTrader,  Inc. (the "Company") was incorporated  under the laws of the State
of  Delaware  on August 22,  1996.  PowerTrader  Software  Inc.,  a  corporation
incorporated  in the  Province  of  British  Columbia,  Canada in 1988,  and its
shareholders, pursuant to a Share Exchange Agreement with the Company entered on
September  30, 1996,  sold all of their issued  shares to the Company.  For each
share of PowerTrader  Software Inc. sold the shareholders  received one share of
PowerTrader,  Inc.  The  Company  became  the sole  shareholder  of  PowerTrader
Software Inc.

The Company,  through its wholly owned  subsidiary  PowerTrader  Software  Inc.,
designs,  develops,  markets and supports  informational and analytical decision
support  systems for securities  brokerage  firms,  investment  advisers,  trust
companies  and  individual  investors.  The  Company's  products are designed to
enable  customers to capture market data from Market Data Vendors and store same
for future  reference,  display  data in tables  and  graphic  form and  analyze
trading  opportunities.   The  Company's  products  are  modular  and  scalable.
Independent  functionality  of components  provides the user with the ability to
integrate software with the Company's products.

Prior  to  June  30,  1998,  the  Company  had  been  exploring  other  business
opportunities  through a joint business venture with a Toronto-based  television
production  company,  such as, developing and marketing a financial Internet web
site  that  would  be  integrated  and  fully  interactive  with  a  traditional
television  broadcast  (the "Joint  Venture").  The Company had been involved in
such venture since  November  1997,  which  resulted in a shifting of resources,
including research and development, to such venture.

During the fourth  quarter of fiscal  1998,  the Company  continued  to seek out
additional  business  opportunities.  As  a  result,  the  Company  had  ongoing
discussions  with  a New  York-based  print  financial  magazine  regarding  the
possibility of combining the Company's web site  technology with the information
and print medium  provided by such magazine (the  "Combination").  The Company's
attempts  to develop a  relationship  with the  magazine  caused the  Company to
allocate substantial financial resources, time and effort to the Combination.

Industry Background

The securities  industry has, and continues to,  experience  rapid  demographic,
instrument  and  accounting  changes.  These  dynamics have required  securities
professionals  to  increasingly  utilize  information  systems  which  (i) lower
transaction   costs,   (ii)  manage  increasing  data  flow  and  (iii)  provide
value-added    services.    The   Company    believes    ongoing   advances   in
telecommunications and information technology, such as the Internet, will result
in the requirement for analytical  tools to manage data and disclose  investment
opportunities.  Current systems lack the requisite sophistication to provide the
tools necessary to address their evolving advances.

Products

Because the Company is still in the developmental  stage, its focus and products
continue to be affected by the success or failure of the  Company's  development
efforts and Beta testing.

The Company has continued to develop a suite of components  which,  if developed
successfully,  will permit a client to purchase a comprehensive  system to match
its  individual  needs.  The Company  had  previously  intended to market  these
components  as  separate  products,  namely,  as  PowerTrader  Pro-Vision,  Data
Manager,  Formula One,  Server and  PowerTrader  Analyst.  The Company has since
determined to combine the  functionality  of some or all of the components  into
PowerTrader Analyst, which, if developed, would feature a continuously refreshed
data base display in a  customizable  and tabular  format created by Server in a
charting    package    facilitating    technical    securities    analysis   and
custom/proprietary indicators using Microsoft Excel and Visual Basic.

However,  the Company has devoted  the  majority of its  resources  for the past
fiscal  year on the  creation  of a web  site  known  as  "Financial  Wire."  To
supplement the  disappointing  results  realized from the  distribution  of Beta
versions  of   PowerTrader   Analyst,   the  Company  has  attempted  to  market
subscriptions  for use of Financial  Wire.  This web site allows the  individual
investor to access the Company's products in conjunction with an end-of-day data
file retrieved through the Company's  Internet server.  The Company's  Financial
Wire products and services,  and related marketing strategy,  have been designed
to capitalize on the growing  acceptance  and use of Internet  services.  Future
achievement of growth and profit  objectives will be largely  dependent upon the
capacity,  reliability,  integrity  and  security of the  Internet,  its service
providers and  telecommunication  vendors.  Additionally,  implementation of the
Company's strategy will require substantial financial and operational resources,
which are  currently  not  available,  to be  devoted  to the  expansion  of the
Company's  Internet  infrastructure.  Inability  to  accomplish  this  goal will
materially and adversely affect the Company's  business,  operating  results and
financial  condition.  Sales of currently developed Financial Wire products have
fallen below expectations. (See "Product Development")

On May 2, 1997 the Company,  pursuant to an Asset Purchase Agreement and Bill of
Sale, acquired certain intellectual property rights in, and all right, title and
interest to, a securities database software,  known as DataMill, from West Coast
Title Search Ltd.  for the sum of  Cdn$285,000  (approximately  $193,878 in U.S.
dollars) cash plus the issuance of shares of Common Stock in the Company. (Note:
do we need to show  the  number  of  shares  and  value  i.e.  125,000  shares @
US$3.00/share?) The cash balance owing of Cdn$235,000 (approximately $159,863 in
U.S.  dollars) to West Coast Title Search Ltd. is evidenced by a Promissory Note
secured  by a General  Security  Agreement  and a  Software  Security  Agreement
maturing August 7, 1998. The Company intends to develop DataMill as a commercial
product which can be added to or replace its developing suite of products.

The Company's limited capital resources have caused its independent  auditors to
issue a report  which  indicates  substantial  doubt exists at the end of fiscal
1998  as  to  the  Company's  ability  to  continue  as  a  going  concern.  See
"Management's  Discussion  and  Analysis or Plan of  Operation  - Liquidity  and
Capital Resources" and "Subsequent Transactions".

Product Development

In 1998 and 1997 the Company's  product  research and  development  expenditures
were $274,940 and $265,303  respectively.  With the rapid  technological  change
characteristic  of the  industry,  the  Company  seeks to  develop  applications
incorporating  current  and new  technologies.  Such  development  requires  the
dedication of significant  expenditures to attract and retain employees with the
requisite  skills to  successfully  develop  new  products  or enhance  existing
versions.

The  Company  had hoped that  initial  revenues  would be largely  derived  from
subscriptions  to its  Financial  Wire  product and other  products and services
related thereto.  The reduction,  delay and/or cancellation of subscriptions for
these  products and services has had a material  adverse effect on the Company's
business, financial condition and results of operations.

As at June 30,  1998 the  Company's  negative  cash  flow  from  operations  has
resulted in its failure to achieve its  product  development  objectives  with a
resultant  failure to achieve its  expectations  with respect to product  sales,
including,  without  limitation,  the  sale  of  the  Financial  Wire  products.
Additionally,  the lack of sufficient funding has delayed the Company's research
and development program.

There can be no assurance the Company will be successful in obtaining additional
funding  sufficient to allow it to be successful in developing,  introducing and
marketing  products on a timely and cost effective  basis,  if at all. Delays in
the  commencement of commercial  shipments of new products and  enhancements may
result in further delay or loss of product revenues.

Competition

The market for the Company's products is evolving rapidly. Prospective customers
tend to be highly  sophisticated  and  engage  in  extensive  investigation  and
comparison of competitive software  applications offered by prospective vendors,
including  the Company.  The Company  competes  directly  with a large number of
software vendors and indirectly with existing and potential clients who have, or
may have,  developed  risk  management  and other  decision  support  systems to
satisfy  particular needs. Many of the Company's  competitors have significantly
greater  financial,  managerial,  development,  technical,  marketing  and sales
resources. These competitive forces are compounded by the Company's lack of such
resources. The Company believes that the principal competitive factors affecting
the market for its  products  include  product  performance  and  functionality,
product and Company reputation,  product  architecture,  ease of use, ability to
integrate,  rapidity and ease of  implementation,  quality of client support and
price.  There  can be no  assurance  that the  Company  will be able to  compete
successfully   against  current  and  future  competitors  or  that  competitive
pressures will not result in price reductions, reduced operating margins and the
loss of market share,  any one of which would  materially  adversely  affect the
Company's business, operating results and financial condition.

Marketing

The Company's strategy for marketing its products contemplates the allocation of
substantial  resources  for the hiring and  training  of a  marketing  staff and
direct sales force. Delays in the development of a commercial product,  the lack
of capital and the attendant  inability to increase its sales force personnel as
had been  previously  anticipated  has, to date,  resulted in the Company having
conducted only limited sales, marketing and distribution activities. The Company
has attempted to market its available products  primarily through  telemarketing
and electronic means, use of direct mail, press releases, customer referrals and
tradeshow  participation.  There  can be no  assurance  in the  future  that the
Company  will have the  resources  to be able to attract  and  retain  qualified
marketing  and sales  personnel  necessary  to  generate  significant  growth in
revenue from sales of its software products.

The  Company  expects  to attempt  to market  and sell its  developing  products
through  licensing  or  other  distribution  arrangements  with  third  parties.
Revenues,  if any,  received  by the  Company  in this  regard  will be  largely
dependent  on the efforts of such third  parties and no  assurance  can be given
that such efforts will be successful.

<PAGE>

Intellectual Property

The  Company  has   registered  the  trade  names   "PowerTrader   Analyst"  and
"PowerTrader"  in the United  States and  Canada,  respectively.  The  Company's
ability to compete effectively depends to a significant extent on its ability to
protect  its  proprietary   technology.   The  Company  relies  primarily  on  a
combination of copyright and trademark laws,  trade secrets,  software  security
measures,  confidentiality  agreements  and license  agreements to establish and
protect its intellectual property rights.  Despite these precautions,  it may be
possible for a third party to copy or otherwise  obtain and use certain portions
of the  Company's  products  and  technology  or to  reverse  engineer  or other
otherwise obtain and use proprietary information.  The Company does not have any
patents  on its  software  and  existing  copyright  laws  afford  only  limited
protection.  In  addition,  the Company  cannot be certain  that others will not
develop substantially equivalent or superseding proprietary technology,  or that
equivalent  products  will not be marketed  in  competition  with the  Company's
products,  thereby substantially reducing the value of the Company's proprietary
rights. There can be no assurance that the steps taken by the Company to protect
its proprietary information will be adequate to prevent  misappropriation of its
intellectual  property,  which could  adversely  affect the Company's  business,
operating results and financial condition.

The Company is not currently engaged in any intellectual  property litigation or
proceedings.  However,  there can be no  assurance  that third  parties will not
assert  such claims or that any such claim will not require the Company to enter
into  licensing  agreements  or  result in  protracted  and  costly  litigation,
regardless  of the merits of such  claims.  No  assurance  can be given that any
necessary licenses will be available or that, if available, such licenses can be
obtained  on  commercially  reasonable  terms.  Furthermore,  litigation  may be
necessary to enforce the Company's  intellectual property rights, to protect the
Company's trade secrets,  to determine the validity and scope of the proprietary
rights of others or to defend against claims of  infringement.  Such  litigation
could result in  substantial  costs and  diversion of resources and could have a
material  adverse  affect on the  Company's  business,  financial  condition and
results of operation.

Employees

During  fiscal 1998 the Company  experienced  significant  reduction in its work
force  due to its lack of  revenue  and  diminishing  financial  resources.  The
Company at fiscal year end had one full time and one part time employee  engaged
in product development, client service and support and, prior to Mr. Furlonger's
resignation,  effective June 25, 1998, two in administration and management. The
Company's  future  success  will  depend on its  ability to  attract  and retain
qualified  technical  and  management  personnel.  Due to the  small  number  of
employees,  the loss of any  additional  employees  may have a material  adverse
effect on the Company. None of the Company's employees is represented by a labor
union.  The Company has not  experienced  any work  stoppage and  considers  its
relations with its employees to be good.

Item 2.  DESCRIPTION OF PROPERTY

The Company leases  approximately 3068 square feet of office space in Vancouver,
British  Columbia  under a lease  expiring in April,  1999.  The  monthly  lease
payment  under  the  lease is  Cdn$4,600  gross  (approximately  $3,129  in U.S.
dollars).  The Company believes that its existing facilities will be adequate to
meet its current needs and that suitable additional or alternative space will be
available in the future on commercially reasonable terms as needed.

Item 3.  LEGAL PROCEEDINGS

As at June 30, 1998 the Company's  subsidiary,  PowerTrader Software Inc., was a
defendant in an action commenced  October,  1997 in the Supreme Court of British
Columbia by Digidyne Inc., claiming judgment for an unpaid account for supply of
computer  equipment  services in the amount of Cdn$34,748.42,  plus interest and
costs.   The  Company  has  initiated  a   counterclaim   for  damages   against
Hewlett-Packard as the supplier of the computer equipment.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

The  Company  did not submit any  matters to a vote of  shareholders  during the
fiscal year covered in this report.

<PAGE>

                                     PART II


Item 5.   MARKET FOR COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

The Company's  common stock is traded on the Nasdaq OTC under the symbol "PWTD".
The common stock was approved for trading on August 19, 1997.The following table
summarizes  the high and low bid  prices as  reported  by the Nasdaq OTC for the
periods indicated:

                                                          Bid Range
                                                     --------------------
         Fiscal Year 1998                            High           Low
         ----------------                            -----          -----
         First Quarter                               $0.30          $0.04
         Second Quarter                              $0.50          $0.05
         Third Quarter                               $0.25          $0.06
         Fourth Quarter                              $0.26          $0.07


The quotations reflect inter-vendor pricing without retail mark-up, mark-down or
commission and may not represent actual transactions.

The Company had approximately 217 stockholders of record at June 30, 1998.

The Company  has not  declared or paid any cash  dividends  on its Common  Stock
since its inception, and the Board of Directors presently intends to retain cash
flow for the development of the Company's  business for the foreseeable  future.
The  declaration  and  payment of cash  dividends  in the future  will be at the
discretion of the Company's  Board of Directors and will depend upon a number of
factors,   including,  among  others,  future  earnings,   operations,   capital
requirements,  the  general  financial  condition  of the Company and such other
factors as the Board of Directors may deem relevant.

During the year ended June 30, 1998 the Company issued the following  securities
in unregistered transactions exempted from the provisions of the Securities Act:

On July 14, 1997 the Company granted a non-qualified stock option to an employee
covering  60,000 shares of the Company's  common stock with an exercise price of
$3.00 per  share,  being the fair  market  value per share at the time of grant.
Such option was granted in reliance  upon the  exemptive  provisions  of Section
4(2) of the Securities  Act. Such option was cancelled  upon  termination of the
employee's  employment  during fiscal 1998, in accordance with the provisions of
the stock option plan.

On July 21,  1997 the Company  completed  its sale of 250,000  units,  each unit
consisting  of one share of the Company's  common stock and two  warrants,  each
warrant to purchase one additional share of common stock at an exercise price of
$3.50,  to  an   institutional   investor   located  in  the  Bahamas  for  cash
consideration  in  the  aggregate  amount  of  $812,500.  Such  transaction  was
consummated   in  reliance  upon  the  exemptive   provisions  of  Regulation  S
promulgated under the Securities Act.

On  September  17, 1997 the Company  granted  non-qualified  stock  options to a
director and an employee,  each covering  50,000 shares of the Company's  common
stock with an exercise price of $3.00 per share, being the fair market value per
share at the time of grant.  Such  options  were  granted in  reliance  upon the
exemptive  provisions of Section 4(2) of the Securities  Act. The 50,000 options
granted to the  employee  were  cancelled  upon  termination  of the  employee's
employment during fiscal 1998. The remaining  50,000options issued to a director
were  cancelled and reissued in February 1998 with an amended  exercise price of
$0.35  per  share,  being  the fair  market  value  per share at the time of the
reissuance.

On January  30,  1998 the  Company  granted a  non-qualified  stock  option to a
company  controlled by a director and officer,  covering  150,000  shares of the
Company's common stock with an exercise price of $0.35 per share, being the fair
market  value per share at the time of  grant.  Such  options  were  granted  in
reliance upon the exemptive provisions of Section 4(2) of the Securities Act. On
that date the Company reissued approximately 460,000 non-qualified stock options
(including the 60,000 and 50,000 options  granted on July 14, 1997 and September
17, 1997,  respectively,  which were subsequently cancelled prior to fiscal year
end),  originally issued in fiscal 1997 with an exercise price of $2.00 or $3.00
per share, as applicable,  to certain  consultants,  some of whom were companies
controlled  by a director  and  officer,  all at an exercise  price of $0.35 per
share, being the fair market value per share at the time of reissuance.  A total
of  110,000 of such  options,  issued to  employees  who  subsequently  left the
Company's  employment,  have  been  cancelled  subsequent  to  the  year  end in
accordance with the provisions of the stock option plan.

On February  22, 1998 the Company  completed  its sale of 400,000  shares of the
Company's  common stock to a private  individual  residing in New York State for
cash  consideration  in the aggregate  amount of $50,000.  Such  transaction was
consummated  in reliance  upon the  exemptive  provisions of Section 4(2) of the
Securities Act.

<PAGE>

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATION.

This report contains  forward-looking  statements  within the meaning of Section
21E of the  Securities  Exchange Act of 1934,  as amended and Section 27A of the
Securities Act of 1933, as amended.  For this purpose,  any statements contained
herein that are not statements of historical fact may be deemed  forward-looking
statements. Without limiting the foregoing, the words "believes", "anticipates",
"plans",   "expects"   and  similar   expressions   are   intended  to  identify
forward-looking statements. Readers are cautioned not to place undue reliance on
forward-looking statements,  which speak only as of the date hereof. The Company
undertakes  no  obligation  to publicly  release the results of any revisions to
these  forward-looking  statements  which  may be  made  to  reflect  events  or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated  events.  These  forward-looking  statements  should  be  read  in
conjunction  with  the  Company's  disclosures  under  the  heading  "Cautionary
Statements - Additional Important Factors to be Considered" in Exhibit 99.1.

The following  should be read in conjunction  with the Financial  Statements and
Notes thereto.  Unless otherwise  indicated,  all dollar values are expressed in
U.S. Dollars.

Overview

PowerTrader,  Inc., through its subsidiary  PowerTrader  Software Inc., designs,
develops,  markets and supports  informational  and analytical  decision support
systems for securities brokerage firms, investment advisers, trust companies and
individual  investors.  Revenues  have resulted  from the  distribution  of Beta
products and product development work continued during fiscal 1998; however, the
Company remains a development stage company.  At June 30, 1998 and June 30, 1997
the  Company  had  an   accumulated   deficit  of  $3,293,050   and   $1,953,330
respectively.

In view of the  disappointing  product sales the Company  actively pursued other
business opportunities in an effort to generate revenue. Prior to June 30, 1998,
the Company had been  exploring  other  business  opportunities  through a joint
business venture with a Toronto-based  television  production company to develop
and market a  financial  Internet  web site that would be  integrated  and fully
interactive with a traditional  television broadcast (the "Joint Venture").  The
Company had been involved in such venture since November 1997, which resulted in
a shifting of resources,  including research and development personnel and time,
to assess the viability of the proposed venture.

Also,   during  the  fourth  quarter  of  fiscal  1998the  Company  had  ongoing
discussions  with  a New  York-based  print  financial  magazine  regarding  the
possibility of combining the Company's web site  technology with the information
and print medium  provided by such magazine (the  "Combination").  The Company's
attempts  to develop a  relationship  with the  magazine  caused the  Company to
allocate substantial resources, including time and effort, to the Combination.

Results of Operations for the Years Ended June 30, 1998 and June 30, 1997

Sales.  Revenues  increased by 34% from $44,373 in 1997 to $59,500 in 1998. Cost
of Sales  decreased by 28% from $28,255 in 1997 to $20,217 in 1998.  Net Revenue
increased by 244% from $16,118 in 1997 to $39,283 in 1998.  Substantially all of
the Company's net revenues were derived from domestic sales and  installation of
Beta site licenses.

Selling,  General and Administrative Costs. Selling,  General and Administrative
costs ("SGA") increased by 69% from $653,812 in 1997 to $1,104,063 in 1998. Such
expenses were incurred in an effort to develop the organizational infrastructure
to implement the Company's  business  plan.  Certain of the SGA costs related to
the Company's  effort to raise  working  capital and to pursue the Joint Venture
and Combination.  SGA includes  salaries and benefits for corporate  management,
administrative  and sales personnel,  as well as rent expenses for the Company's
office premises.

Development  Costs.  Development  costs increased by 4% from $265,303 in 1997 to
$274,940  in  1998.  Such  increase  in  development   expenses  were  primarily
attributable to salary increases to staff engaged in the ongoing  development of
the PowerTrader suite of products.

Net Loss.  The Company  experienced  further net losses in 1998 in the amount of
$1,339,720,  an  increase  of 48% from the  1997  net  loss of  $902,997.  Total
cumulative  net losses for the period ending  December 29, 1988 to and including
June 30,  1998  were  $3,293,050.  The  Company  believes  additional  personnel
expenses related to further research and development expense will be required to
establish the Company's  competitive and market position and build the requisite
infrastructure  to support the Company's  ongoing growth  strategy.  The Company
therefore  expects  to incur  further  losses in the future  which  will  likely
continue to have a negative impact on the Company's results of operation.

Liquidity and Capital Resources.

The principal  source of funds to the Company and its  subsidiaries  since their
respective  formations  has been derived  from net  proceeds of certain  private
placements of  securities  which,  together  with sales,  have been used to fund
continued  research and development  expenses as well as necessary SGA costs. To
date the Company has sold only Beta product and support services.  Major product
development work continues.  The Company has not yet recorded  significant sales
and is,  accordingly,  still a development  stage company.  The Company requires
additional financing to fund its operations and planned capital expenditures for
at least the next twelve months.  The Company currently has no avenues to secure
any such additional financing. The inability of the Company to obtain additional
financing  on  acceptable  terms  could  have a material  adverse  effect on the
Company's business, financial condition and results of operations.

The Company's  limited capital  resources have caused the Company's  independent
accountants to issue a report which indicates that  substantial  doubt exists as
to the Company's ability to continue as a going concern.

Year 2000 Readiness Disclosure.

The Company  intends to develop a Year 2000 Action Plan with the  identification
of  specific  tasks and goals to be  implemented  before  the advent of the Year
2000.  These tasks and goals include the  assessment  of the  Company's  current
computer  systems,   current  product   offerings,   and  internally   developed
information  systems,  identification  of potential  problems and remediation of
identified  problems and testing of newly  implemented  systems.  In view of the
reliance  of the  Company  upon  vendor-supplied  information  systems  all  key
information  technology  vendors  and  suppliers  will be  contacted  to provide
assurances  on their  ability  to deal with the Year 2000  issues.  Changes,  as
required,  will be  implemented  by the Company to address  any vendor  supplied
information  systems  which are,  in the  opinion of the  Company,  not going to
achieve Year 2000  compliance.  Based upon the  responses of both the  Company's
customers  and third party  suppliers,  the Company  will  formulate a Year 2000
contingency  plan to obviate the impact of any disruptions in the supply or sale
of the Company's products.

Readers are cautioned that this Year 2000  disclosure  contains  forward-looking
statements.  Readers should understand the Company's  current  assessment of the
Year 2000 issue is based upon management's best estimates.  These estimates were
derived  utilizing  numerous   assumptions  of  future  events,   including  the
availability  of certain  resources,  third party  modification  plans and other
factors.  There can be no  guarantee,  however,  that  these  estimates  will be
achieved,  or that there will not be a delay in, or increased  costs  associated
with the  implementation  of our Year  2000  Action  Plan.  A delay in  specific
factors that might cause  differences  between the estimates and actual  results
include,  but are not limited to, the availability and cost of personnel trained
in these areas,  the ability of locating and  correcting  all relevant  computer
code,  timely  responses to and corrections by third parties and suppliers,  and
the  ability to  implement  interfaces  between  any new systems and systems not
being replaced.


<PAGE>


Item 7.  FINANCIAL STATEMENTS

The  following  financial  statements  of  PowerTrader,  Inc.  and the Report of
Independent Accountants are included as a separate section of this report, which
begins on page F-1:

         Consolidated Balance Sheets - June 30, 1998 and 1997

         Consolidated Statements of Operations - Years Ended June 30, 1998, 1997
         and 1996.

         Consolidated Statements of Stockholders' Equity - Years Ended June 30,
         1998, 1997 and 1996

         Consolidated Statements of Cash Flows - Years Ended June 30, 1998, 1997
         and 1996

         Notes to Consolidated Financial Statements

         Report of Independent Accountants


Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

          None


                                    PART III


Item 9   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following sets forth certain information regarding the executive officers of
PowerTrader, Inc. as of June 30, 1998:

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

Michael C. Withrow              35             Chairman of the Board, President
                                               and Chief Executive Officer

David C. Furlonger (1)          36             Director, Chief Financial
                                               Officer and Secretary

George McCord                   58             Director, Chief Information
                                               Officer

(1)  Mr. Furlonger's resignation and the cancellation of the agreement with
     Peridot International became effective June 25, 1998.

The services of each of Mr.  Withrow and Mr.  Furlonger  are  provided  under an
agreement with corporations wholly owned by such persons. Mr. McCord,  exclusive
of his  obligations  as a director,  devotes up to an  aggregate  of 120 hours a
month to the Company's  business pursuant to a consulting  agreement under which
he  is  entitled  to be  paid  up to  $88,800  annually.  Set  forth  below  are
descriptions of the  backgrounds of the executive  officers and directors of the
Company.

Mr. Withrow was a founding director of PowerTrader  Software Inc. and has served
as a director since 1988. In 1994 Mr. Withrow was named  President and Chairman.
Mr. Withrow has been a director, Chairman and President of the Company since its
inception in August,  1996.  Mr.  Withrow has previous  experience as an account
executive for a multinational distributor of computer equipment and as a private
and institutional securities trader.

Mr. Furlonger has been a director,  Secretary and Chief Financial Officer of the
Company since its inception in August,  1996.  From April 1995 to March 1996 Mr.
Furlonger served as Senior Proprietary Trader for Commerzbank,  London,  England
and for five years prior  thereto was  employed  within the treasury and trading
operations of Baring Brothers & Co. in England.

Mr. McCord was elected by the Board to fill a vacancy on the Board in June 1997.
For the last nine years Mr.  McCord has acted as a  Principal  in the  Financial
Markets  Consulting Group, New York, N.Y. Prior to this he served for five years
as Vice President Information Systems Development at Instinet  Corporation,  New
York, N.Y.

<PAGE>

The Board of Directors of the Company consists of three members,  subject to Mr.
Furlonger's  resignation on June 25, 1998. The Company's  Certificate and Bylaws
provide  that the Board of  Directors  will  consist  of three  classes  serving
staggered  three year terms,  so that  approximately  one-third of the directors
will be elected at each annual meeting.  The number of directors  comprising the
Board of Directors  may be increased or decreased by  resolution  adopted by the
affirmative vote of a majority of the Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's Executive Officers and Directors, and persons who own more than 10% of
a  registered  class of the  Company's  equity  securities,  to file  reports of
ownership and changes in ownership with the Securities and Exchange  Commission.
Such individuals are required by Securities and Exchange Commission  regulations
to furnish the Company  with  copies of all Section  16(a) forms they file.  The
Company believes that three reporting persons, (Messrs.  Withrow,  Furlonger and
McCord)  failed to file on a timely  basis one Form 4, each of which  would have
disclosed an amended, or a repricing, of non-qualified stock options.


<PAGE>


Item 10.  EXECUTIVE COMPENSATION

The  following  table  sets  forth  certain  information,  as of June 30,  1998,
regarding the compensation paid to the Chief Executive Officer. No other officer
of the Company  received total  compensation in excess of $100,000 during fiscal
1998.

<TABLE>
<CAPTION>

                           Summary Compensation Table

                              Annual Compensation              Long-Term Compensation
                              -------------------              ----------------------
                                                          Other      Securities
Name and Principal                                        Annual     Underlying      All Other
Position               Year    Salary($)  Bonus($)     Compensation  Compensation  Compensation
------------------     ----    ---------  --------     ------------  ------------  ------------
<S>                 <C>       <C>        <C>            <C>         <C>             <C>

Michael C. Withrow     1998     $87,333                    ----       350,000(1)      -----
President/Chief        1997     $62,693                    ----       200,000         -----
Executive Officer

</TABLE>

                        Option Grants in Last Fiscal Year

                      Number of     Percent of
                     Securities    Total Options
                     Underlying     Granted to
                       Options     Employees in     Exercise
Name                   Granted      Fiscal Year      Price      Expiration Date
----                 ----------    -------------    --------    ---------------
Michael C. Withrow   150,000           24.6%         $0.35       February, 2000
                     200,000(1)        32.8%         $0.35       April, 2000

(1)   Includes 200,000 shares covered by an option which was repriced in fiscal
      1998.


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

                                                  Number of
                                                  Unexercised         Value Of
                                                  Securities        Unexercised
                                                  Underlying        In-The Money
                          Shares                 Options/SARs       Option/SARs
                      Acquired on       Value    At FY-End (#)     At FY-End ($)
                        Exercise      Realized   Exercisable/       Exercisable/
      Name                 (#)           ($)     Unexercisable     Unexercisable
      ----            -----------     --------   -------------     -------------

Michael C. Withrow          0             0        350,000/0            0/0


Repricing of Options

On January 30,  1998 the Board of  Directors  of the Company  decided to reprice
options held by Mr. McCord,  and corporations  controlled by Mr. Withrow and Mr.
Furlonger,  covering  350,000 shares of common stock. As a result,  the exercise
price of the option was  reduced to $0.35 per  share,  the then  current  market
price of the common stock.

The Board  based its  decision  to reprice  the  options on the efforts of these
persons on behalf of the Company  and to provide  further  incentive  to them to
continue in their capacities.

Employment Agreements

Precision  Investment Services Inc. (now PowerTrader Software Inc.) entered into
an employment  agreement with 458468 B.C. Ltd., a British  Columbia  corporation
wholly  owned by Michael C.  Withrow  ("458468"),  the  Company's  Chairman  and
President.  Pursuant to that  agreement  458468 will provide the services of Mr.
Withrow to manage PowerTrader Software's  operations.  The agreement with 458468
will expire in September 1999, subject to renewal,  at the option of PowerTrader
Software,  for an additional three year term. The agreement with 458468 contains
non-competition clauses that provide, in pertinent part, that during the term of
the  agreements,  as  they  may be  extended,  and  for a  period  of  one  year
thereafter, 458468 will not engage in any activity competitive with the business
of PowerTrader  Software,  will not solicit nor attempt to solicit  customers or
employees  of  PowerTrader  Software,  and will  not  otherwise  interfere  with
PowerTrader Software's business relationships.

<PAGE>

Director Compensation

Under the Company's  present  policy,  no director of the Company is entitled to
receive  compensation  for  services  rendered  to the  Company  as a  director.
Directors  are  entitled  to be  reimbursed  for  expenses  incurred  by them in
attending meetings of the Board of Directors and its committees.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

The following tables sets forth certain  information,  as of June 30, 1998, with
respect to beneficial ownership of shares of Common Stock by (i) such persons as
are known to the Company to  beneficially  own more than 5% of the issued shares
of Common  Stock,  (ii) the directors and nominees for directors of the Company,
(iii) the Chief  Executive  Officer and the four other most  highly  compensated
executive  officers who were  serving as executive  officers as at June 30, 1998
(the "Named Executive  Officers") and (iv) all directors and executive  officers
of the  Company as a group.  Each person  named has sole  voting and  investment
power with respect to the shares  indicated,  except as otherwise  stated in the
notes to the table:

                                             No. of Shares
Name and Address                             Beneficially            Percent
of Beneficial Owner                             Owned                of Class
-------------------                          -------------           --------

Michael C. Withrow                           1,817,697 (1)                 22%
12-1850 Argue Street
Port Coquitlan, British Columbia

David C. Furlonger                             100,000 (2)                1.2%
11837 190th Street
Pitt Meadows, British Columbia

George E. McCord                                50,000 (3)                   *
885 Dunsmuir Street
Suite 591
Vancouver, British Columbia

All directors and executive                  1,967,697                   24.6%
officers as a group (3 persons)

*     Less than 1%.

(1)    The stated  number of shares are held of record by 458468  B.C.  Ltd.,  a
       British Columbia corporation  ("458468") of which Mr. Withrow is the sole
       shareholder.  The total includes 350,000 shares subject to acquisition by
       458468 upon exercise of currently exercisable options.

(2)    The stated  number of shares are held of record by Peridot  International
       Enterprises Ltd., a British Columbia corporation ("Peridot") of which Mr.
       Furlonger  is  the  controlling  shareholder.  Upon  termination  of  Mr.
       Furlonger's  services to the Company on June 25, 1998  Peridot  forfeited
       any right to any  additional  150,000  shares  after the  second  year of
       service and a further  100,000 shares after the third year of service and
       forfeited  the right to exercise a stock option to purchase up to 100,000
       shares of Common Stock of the Company in accordance with the PowerTrader,
       Inc. 1996 Stock Option Plan.

(3)    The  stated  number  of  shares  are  comprised  of  shares   subject  to
       acquisition by Mr. McCord upon exercise of currently exercisable options.


Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

From time to time the Company and  PowerTrader  Software  Inc.  have  engaged in
various transactions with its directors, executive officers and other affiliated
parties.  The following  paragraphs  summarize  certain  information  concerning
transactions  which  have  occurred  in the past two years or which are  current
proposed.

On October 25, 1996  PowerTrader  Software  Inc.  executed  an  agreement,  (the
"Consultant  Agreement")  effective October 25, 1996, with Peridot International
Enterprises Ltd.  ("Peridot"),  a company  controlled by Mr. David C. Furlonger.
Pursuant  to the  Consultant  Agreement  Peridot  provided  the  services of Mr.
Furlonger as a director,  Chief Financial  Officer and Secretary of PowerTrader,
Inc. His duties also  included  acting as the  principal  accounting  manager of
PowerTrader  Software Inc.. The Consultant Agreement was for a term of three (3)
years and Peridot was to be paid $70,000 in the first two years,  $80,000 in the
third year.  In addition the Company  would grant to Peridot  350,000  shares of
Common Stock with 100,000 vesting after the first year of service, 150,000 after
the second  year of service  and  100,000  after the third year of  service.  In
addition  Peridot would receive a stock option to purchase up to 100,000  shares
of Common  Stock of the  Company in  accordance  with the  Company's  1996 Stock
Option Plan. These options were repriced in January,  1998 and were subsequently
cancelled after year end upon termination of Mr. Furlonger's  employment on June
25, 1998.

On February 26, 1996 Precision Investment Services Inc., the predecessor company
to PowerTrader  Software Inc., the Company's  wholly owned  subsidiary,  entered
into an  agreement  for the services of Michael C.  Withrow,  a director and the
President  and Chief  Executive  Officer of the  Company.   This  Agreement  has
subsequently,  with the  approval of the Company,  been  assigned to 458468 B.C.
Limited, a company  controlled by Mr. Withrow.  Under the terms of the agreement
Mr. Withrow was appointed  President and was to (i) provide  services related to
the technical  revision and development of the Company's  products,  (ii) direct
the long term  strategy of the Company and (iii)  oversee the  marketing  of the
Company's  systems  until  development  of a marketing  plan.  In return for his
services Mr. Withrow  received an annual  compensation  of $85,000 for the first
two years and $92,000 for the third year.

On June 12, 1997 PowerTrader  Software Inc. entered into a consulting  agreement
with George E. McCord to act as the Chief  Information  Officer of the  Company.
Mr. McCord also became a Class I Director of the Company. Under the terms of the
agreement Mr. McCord, in his capacity as Chief Information Officer, provides the
Company with up to 120 hours per month of telephonic or other advice and counsel
regarding  the  Company's  business  in  exchange  for an annual fee of $88,800,
payment of 66.67% of all travel,  accommodation and incidental expenses incurred
with respect to travel and the right to receive a certain  number of shares upon
the first annual anniversary of the date of the agreement.

On September 17, 1997 the Company  granted to Mr. McCord a  non-qualified  stock
option  covering  50,000 shares of the  Company's  common stock with an exercise
price of $3.00. This option was repriced in January 1998.

On January 30, 1998 the Company granted a  non-qualified  stock option to 458468
B.C. Limited,  a company  controlled by Mr. Withrow,  covering 150,000 shares of
common stock with an exercise price of $0.35 per share.

All  future  transactions  between  the  Company  and its  officers,  directors,
principal  stockholders and affiliates are required to be approved by a majority
of the independent and  disinterested  outside directors and must be on terms no
less favorable to the Company than could be obtained from an unaffiliated  third
party under similar circumstances.


<PAGE>


Item 13.  EXHIBITS AND REPORTS ON FORM 8-K

          (a)      The following documents are filed as part of this Annual
                   Report on Form 10-KSB:

                   1.  Consolidated  Financial  Statements  required  to be
                       filed  by Item 7 of  Form  10-KSB.  See the  list of
                       Financial Statements contained in Item 7 of this Report.

                   2.  Exhibits.

                       The Exhibits listed on the accompanying Index to Exhibits
                       immediately following the signature page are filed as
                       part of, or incorporated by reference into, this Form
                       10-KSB.

          (b)      Reports on Form 8-K

                   None

<PAGE>




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

                                                                Auditors' Report

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


To The Shareholders
PowerTrader, Inc.


We  have  audited  the  Consolidated  Balance  Sheet  of  PowerTrader,  Inc.  (A
Development  Stage Company) as at June 30, 1998 and the Consolidated  Statements
of Loss, Cash Flow and Changes in  Shareholders'  Equity (Deficit) for the years
ended June 30, 1998 and 1997. We have also audited the  Consolidated  Statements
of Loss, Cash Flow and Changes in Shareholders'  Equity (Deficit) for the period
from December 29, 1988 (inception of PowerTrader Software Inc.) to June 30, 1998
(cumulative). These financial statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial  position of PowerTrader,  Inc. as at June 30,
1998 and the  results of its  operations  and its cash flows for the years ended
June 30, 1998 and 1997 and the period from December 29, 1988 (inception) to June
30,  1998  (cumulative)  in  accordance  with  generally   accepted   accounting
principles in the United States.



                                                        /s/ BDO Dunwoody LLP

                                                        Chartered Accountants
Vancouver British Columbia
January 12, 1999

                                      F-1
<PAGE>


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

                                             Comments by Auditors for US Readers
                                              On Canada-US Reporting Differences

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


In the United States,  reporting  standards for auditors require the addition of
an explanatory  paragraph  (following the opinion  paragraph) when the financial
statements are affected by conditions and events that cast substantial  doubt on
the Company's ability to continue as a going concern, such as those described in
Note 1 to the consolidated financial statements.  Our report to the shareholders
dated  January 12, 1999 is  expressed  in  accordance  with  Canadian  reporting
standards  which do not permit a reference to such events and  conditions in the
auditors'   report  when  these  are  adequately   disclosed  in  the  financial
statements.

                                                       /s/ BDO Dunwoody LLP

                                                       Chartered Accountants

Vancouver, British Columbia
January 12, 1999

                                      F-2
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                                     Consolidated Balance Sheets
                                                                    (US Dollars)


June 30                                                  1998              1997
-------------------------------------------------------------------------------

Assets

Current
   Cash                                         $       6,000    $       99,986
   Receivables                                              -            12,883
                                                -------------    --------------
                                                        6,000           112,869

Fixed assets, note 3                                  464,182           754,741
                                                -------------    --------------
                                                $     470,182    $      867,610

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

Liabilities

Current
   Accounts payable and accrued
     liabilities, notes 3 and 9                 $     507,352    $      362,520
   Notes payable, note 4                               15,000            74,248
   Current portion of capital
     lease obligations, note 5                          2,657             5,894
                                                  -----------     -------------
                                                      525,009           442,662

Capital lease obligations, note 5                           -             2,555
                                                -------------    --------------
                                                      525,009           445,217
                                                -------------    --------------

Shareholders' Equity (Deficit)
Share capital, note 6
   Authorized
   The company is authorized to issue
     23,000,000 common shares and 2,000,000
     preferred shares with a $.01 par value
     per share.

Issued and outstanding common shares                  992,530           986,030
   8,283,115 Common shares (1997 - 7,633,115)
Capital surplus                                     2,245,693         1,389,693
Accumulated deficit during development stage       (3,293,050)       (1,953,330)
                                                -------------    --------------
                                                      (54,827)          422,393
                                                -------------    --------------
                                                $     470,182    $      867,610
-------------------------------------------------------------------------------


The accompanying  summary of significant  accounting  policies and notes from an
integral part of these consolidated financial statements.


                                      F-3

<PAGE>
                                                              PowerTrader, Inc.
                                                  (A Development Stage Company)
                                                Consolidated Statements of Loss
                                                                   (US Dollars)

                                                                    December 29,
                                                                            1988
                                                                  (inception) to
                       Year Ended     Year Ended    Year Ended          June 30,
                         June 30,       June 30,      June 30,              1998
                             1998           1997          1996      (cumulative)
--------------------------------------------------------------------------------



Revenue             $      59,500     $   44,373    $   50,971   $      198,870
Cost of Sales              20,217         28,255        40,910          106,793
                     ------------     ----------    ----------     ------------
                           39,283         16,118        10,061           92,077

Selling, general &      1,104,063        653,812       405,099        2,532,884
 administrative
 costs

Development costs         274,940        265,303       203,933          852,243
                     ------------     ----------     ----------    ------------
Net loss            $  (1,339,720)    $ (902,997)   $ (598,971)    $ (3,293,050)
--------------------------------------------------------------------------------


Loss per share            $(0.17)        $(0.16)       $(0.14)
--------------------------------------------------------------------------------


The accompanying  summary of significant  accounting  policies and notes from an
integral part of these consolidated financial statements.


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                                                                         PowerTrader, Inc.
                                                                             (A Development Stage Company)
                                                                      Consolidated Statements of Cash Flow
                                                                                              (US Dollars)


                                                                                               December 29
                                                                                                      1988
                                                                                            (inception) to
                                         Year Ended        Year Ended       Year Ended            June 30,
                                           June 30,          June 30,         June 30,                1998
                                               1998              1997             1996        (cumulative)
----------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>               <C>               <C>

Cash provided (used) by:

Operating activities
Operations
Net loss                              $  (1,339,720)   $     (902,997)   $    (598,971)   $   (3,293,050)
Item not involving cash
   Amortization                             355,743            42,210           26,589           439,798
Increase (decrease) from
   changes in:
Receivables                                  12,883           (10,491)            (620)                -
Accounts payable and
   Accrued liabilities                      144,832           193,865           71,997           507,351
                                      -------------    --------------    -------------    --------------

                                           (826,262)         (677,413)        (501,005)       (2,345,901)
                                      -------------    --------------    -------------    --------------
Financing activities
Notes payable financing
   received                                  15,000            74,248                -            89,248
Notes payable paid                          (74,248)                                             (74,248)
Lease financing received                          -                             11,074            18,790
Repayment of obligations
   under capital leases                      (5,792)           (5,527)          (3,732)          (16,132)
Shareholders' advances                            -                 -          253,917           646,222
Issuance of share capital
   and subscriptions                        862,500           632,049          408,089         1,902,747
                                      -------------    --------------    -------------    --------------
                                            797,460           700,770          669,348         2,566,628
                                      -------------    --------------    -------------    --------------
Investing activity
   Net assets acquired on
     Reverse Acquisition                          -           314,254                -           314,254
   Investment in fixed assets               (65,184)         (364,702)         (43,690)         (528,981)
                                      --------------   ---------------   --------------   ---------------
                                            (65,184)          (50,448)         (43,690)         (214,727)
                                      -------------    --------------    -------------    --------------
Increase (decrease) in cash                 (93,986)          (27,091)         124,653             6,000
Cash, beginning of period                    99,986           127,077            2,424                 -
                                      -------------    --------------    -------------    --------------
Cash, end of period                   $       6,000    $       99,986    $     127,077    $        6,000
--------------------------------------------------------------------------------------------------------


Non-cash transactions
   Shares issued for debt             $           -    $            -    $     646,222    $      646,222
Shares issued for software
   acquisition                        $           -    $      375,000    $           -    $      375,000
Shares issued on Reverse
   acquisition                        $           -    $      314,254    $           -    $      314,254
--------------------------------------------------------------------------------------------------------
Interest paid                         $      14,516    $        4,254    $       1,584    $       20,354

</TABLE>

The accompanying  summary of significant  accounting  policies and notes from an
integral part of these consolidated financial statements.

                                      F-5
<PAGE>


<TABLE>
<CAPTION>

                                                                                          PowerTrader, Inc.
                                                                              (A Development Stage Company)
                                       Consolidated Statements of Changes in Shareholders' Equity (Deficit)
                                                                                               (US Dollars)

                                                                                                    Deficit
                                                                                                Accumulated
                               Class "A"          Class "B"                                      During the
                                Common             Common              Common        Capital    Development
                           Shares   Amount     Shares  Amount      Shares  Amount    Surplus          Stage
-----------------------------------------------------------------------------------------------------------
<S>                      <C>        <C>       <C>      <C>        <C>     <C>         <C>       <C>

Shares issued for cash
December 29, 1988               -     $    -        -    $   -        100    $    70    $     -    $       -
Shares redeemed and
cancelled
September 12, 1989              -          -        -        -       (100)       (70)         -            -
Shares issued
September 12, 1989            100         72      100       73          -          -          -            -
Shares redeemed and
cancelled
July 12, 1990                 (35)       (24)     (16)     (12)         -          -          -            -
                ---------------------------------------------------------------------------------------------
Balance at
July 1, 1994                   65         48       84       61          -          -          -            -
Net Loss                        -          -        -        -          -          -          -     (451,362)
                ---------------------------------------------------------------------------------------------
Balance at
July 30, 1995                  65         48       84       61          -          -          -     (451,362)
Shares issued
for debt                4,174,448    646,222        -        -          -          -          -            -
Net loss                        -          -        -        -          -          -          -     (598,971)
                ---------------------------------------------------------------------------------------------
Balance at
June 30, 1996           4,174,513    646,270       84       51          -    646,331          -   (1,050,333)
Reverse acquisition
January 1, 1997                 -          -        -       -   5,088,598    314,254          -            -
Shares issued for
Software share
subscriptions                   -          -        -       -   2,319,517     23,195    691,943            -
Computer software
acquired                                   -        -       -     125,000      1,250    373,750            -
Cash                            -          -        -       -     100,000      1,000    324,000            -
Net loss                        -          -        -       -           -          -          -     (902,997)
                ---------------------------------------------------------------------------------------------
Balance at
June 30, 1997                   -          -        -       -   7,633,115    986,030  1,389,693   (1,953,330)
Shares issued
for cash
September 10, 1997              -          -        -       -     250,000      2,500    810,000            -
March 16, 1998                  -          -        -       -     400,000      4,000     46,000            -
Net loss                        -          -        -       -           -          -          -   (1,339,720)
                ---------------------------------------------------------------------------------------------
Balance at
June 30, 1998                   -          -        -       -   8,283,115   $992,530  $2,245,693 $(3,293,050)

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

</TABLE>

The accompanying  summary of significant  accounting  policies and notes from an
integral part of these consolidated financial statements.

                                      F-6
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Summary of Significant Accounting Policies
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------

Consolidation        These   financial   statements   include  the  accounts  of
                     PowerTrader,   Inc.   and   its   wholly-owned   subsidiary
                     PowerTrader Software Inc.  ("Software")  (collectively "the
                     Company")  which was  acquired in a "Reverse  Acquisition".
                     Software  (and not  PowerTrader,  Inc.) is  treated  as the
                     "acquiring" or "continuing" entity for financial accounting
                     purposes,  notwithstanding  that  PowerTrader,  Inc. is the
                     continuing  entity  for legal  purposes.  Accordingly,  the
                     consolidated  statements  of  loss  are a  continuation  of
                     Software's financial statements,  and therefore reflect (i)
                     the  operations  of Software from  inception  (December 29,
                     1988) and (ii) the  operations of  PowerTrader,  Inc. after
                     January 2, 1997, the date of acquisition.

                     All significant intercompany  transactions and balances are
                     eliminated on consolidation.

Basis of             The consolidated financial statements have been prepared in
Presentation         accordance with generally accepted accounting principles in
                     the United States.

Foreign Currency     Foreign monetary assets and liabilities are translated into
Translation          US  dollars  at the  rates of  exchange  in  effect  at the
                     balance sheet dates.  Non-monetary assets are translated at
                     historical rates.  Revenue and expense items are translated
                     at average  exchange  rates  prevailing  during the period,
                     except for  amortization  which is  translated  at the same
                     rate as the assets to which it applies.

                     Foreign  currency  translation  adjustments are included in
                     income.

                     Exchange  ratios  between  the  Canadian  and US dollar for
                     periods  presented  in  these  financial   statements  with
                     bracketed  figures  reflecting  the  average  rate  for the
                     period are:

                      June 30, 1998         US$1.00          $1.465 (1.423)
                      June 30, 1997         US$1.00          $1.381 (1.366)
                      June 30, 1996         US$1.00          $1.384 (1.360)


Fixed Assets         Fixed assets are recorded at cost. Amortization is provided
                     at the following annual rates:

                     Computer equipment              30%    declining balance
                     Computer software              100%    declining balance
                     Furniture and equipment         20%    declining balance

                     One half the normal  amortization is recorded in the period
                     in which the assets become available for use.


                                      F-7

<PAGE>

                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                          Summary of Significant Accounting Policies - continued
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------



Revenue              The  Company  records  revenue  from the  sale of  computer
Recognition          software upon shipment of products.

Research and         Research  and development  costs are charged  to expense as
Development Costs    incurred.

Capitalized          Certain  software  development  and  production  costs  are
Software Costs       capitalized   upon  a  product's   reaching   technological
                     feasibility.  The  capitalization  of these costs will stop
                     when a product is ready for sale. Technological feasibility
                     is considered to be attained when the company has completed
                     all planning, designing, coding and testing activities that
                     are necessary to establish that the product can be produced
                     to meet  its  design  specifications  including  functions,
                     features  and  technical  performance   requirements.   The
                     Company has attained  technological  feasibility on certain
                     products,  however,  it has not incurred any  capitalizable
                     costs with respect to these products.

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

Fair Value of        The  respective carrying value of certain  on balance sheet
Instruments          financial instruments approximated their fair values. These
                     financial  instruments  include cash,  accounts payable and
                     accrued  liabilities,   notes  payable  and  capital  lease
                     obligations.   Fair  values  were  assumed  to  approximate
                     carrying values for these financial  instruments since they
                     are  short  term  in   nature,   their   carrying   amounts
                     approximate  fair values or they are  receivable or payable
                     on demand.

Loss Per Share       Loss per share is calculated  based on the weighted average
                     number of shares outstanding.

Uncertainty Due      The  Year  2000  Issue  arises  because  many  computerized
to the Year          systems use two digits rather than four to identify a year.
2000 Issue           Date-sensitive  systems may recognize the year 2000 as 1900
                     or some other date,  resulting  in errors when  information
                     using year 2000 dates is  processed.  In addition,  similar
                     problems may arise in some systems  which use certain dates
                     in 1999  to  represent  something  other  than a date.  The
                     effects of the Year 2000 Issue may be  experienced  before,
                     on, or after January 1, 2000,  and, if not  addressed,  may
                     range  from minor  errors to  significant  systems  failure
                     which could  affect an entity's  ability to conduct  normal
                     business operations.  It is not possible to be certain that
                     all  aspects of the Year 2000 Issue  affecting  the entity,
                     including  those  related  to  the  effects  of  customers,
                     suppliers, or other third parties, will be fully resolved.


                                      F-8
<PAGE>

                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                          Summary of Significant Accounting Policies - continued
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


New Accounting       Statement  of  Financial   Accounting  Standards  No.  128,
Pronouncements       "Earnings  Per  Share"  ("SFAS  No.  128")  issued  by  the
                     Financial  Accounting  Standards  Board  is  effective  for
                     financial  statements  with fiscal  years  beginning  after
                     December 15, 1997. The new standard  simplifies  guidelines
                     regarding the calculation and  presentation of earnings per
                     share.  The  Company  does not  expect  adoption  to have a
                     material  effect  on the  presentation  of its  results  of
                     operations.

                     In June 1997,  the  Financial  Accounting  Standards  Board
                     issued Statement of Financial Accounting Standards No. 130,
                     Reporting   Comprehensive   Income  ("SFAS   130"),   which
                     establishes   standards   for   reporting  and  display  of
                     comprehensive   income,   its  components  and  accumulated
                     balances.  Comprehensive  income is defined to include  all
                     changes in equity except those  resulting from  investments
                     by  owners  and   distributions  to  owners.   Among  other
                     disclosures,  SFAS 130  requires  that all  items  that are
                     required  to  be  recognized   under   current   accounting
                     standards as components of comprehensive income be reported
                     in a financial  statement  that is displayed  with the same
                     prominence as other financial statements.

                     SFAS 130 is effective for financial  statements for periods
                     beginning after December 15, 1997 and requires  comparative
                     information  for earlier  years to be restated.  Management
                     has not fully  evaluated  the impact,  if any, SFAS 130 may
                     have on future financial statement disclosures.  Results of
                     operations  and  financial  position,   however,   will  be
                     unaffected by implementation of this standard.

                     In June 1997,  the  Financial  Accounting  Standards  Board
                     issued  SFAS  No.  131,  Disclosures  and  Segments  of  an
                     Enterprise  and  Related  Information  ("SFAS  131")  which
                     supersedes SFAS No. 14, Financial Reporting for Segments of
                     a Business Enterprise.  SFAS 131 establishes  standards for
                     the way that  public  companies  report  information  about
                     operating  segments  in  annual  financial  statements  and
                     requires reporting of selected  information about operating
                     segments  in  interim  financial  statements  issued to the
                     public.  It  also  establishes  standards  for  disclosures
                     regarding products and services, geographic areas and major
                     customers.   SFAS  131   defines   operating   segments  as
                     components  of a company  about  which  separate  financial
                     information  is  available  that is  regularly  used by the
                     chief operating  decision maker in deciding how to allocate
                     resources and in assessing performance.


                                      F-9
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                          Summary of Significant Accounting Policies - continued
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


New Accounting       SFAS 131 is effective for financial  statements for periods
Pronouncements -     beginning after December 15, 1997 and requires  comparative
Continued            information  for earlier  years to be restated.  Management
                     has not fully  evaluated  the impact,  if any, SFAS 131 may
                     have on future financial statement disclosures.  Results of
                     operations  and  financial  position,   however,   will  be
                     unaffected by implementation of this standard.

                     In June 1998,  the  Financial  Accounting  Standards  Board
                     issued SFAS No. 133, Accounting for Derivative  Instruments
                     and Hedging Activities.  SFAS No. 133 requires companies to
                     recognize  all  derivatives  contracts as either  assets or
                     liabilities  in the  balance  sheet and to measure  them at
                     fair value. If certain conditions are met, a derivative may
                     be  specifically  designated  as a hedge,  the objective of
                     which is to match the timing of gain or loss recognition on
                     the  hedging  derivative  with the  recognition  of (i) the
                     changes in the fair value of the hedged  asset or liability
                     that  are  attributable  to the  hedged  risk or  (ii)  the
                     earnings effect of the hedged instrument,  the gain or loss
                     is recognized  in income in the period of change.  SFAS No.
                     133 is  effective  for all fiscal  quarters of fiscal years
                     beginning after June 15, 1999.

                     Historically,  the Company has not entered into derivatives
                     contracts either to hedge existing risks or for speculative
                     purposes. Accordingly, the Company does not expect adoption
                     of the  new  standards  on  July  1,  1999  to  affect  its
                     financial statements.



                                      F-10
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                          Summary of Significant Accounting Policies - continued
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


New Accounting       In October  1997,  the AICPA  issued  Statement of Position
Pronouncements -     (SOP) 97-2, Software Revenue Recognition,  which supersedes
Continued            SOP 91-1.  The Company  was  required to adopt SOP 97-2 for
                     software  transactions  entered into  beginning  January 1,
                     1998 and retroactive application to years prior to adoption
                     is prohibited.  SOP 97-2 generally  requires revenue earned
                     on software arrangements  involving multiple elements (i.e.
                     software  products,   upgrades/enhancements,   postcontract
                     customer  support,  installation,  training,  etc.)  to  be
                     allocated to each element based on the relative fair values
                     of the elements. The fair value of an element must be based
                     on evidence  which is  specific to the vendor.  The revenue
                     allocated  to  software   products   (including   specified
                     upgrades/enhancements)   generally   is   recognized   upon
                     delivery  of  the  products.   The  revenue   allocated  to
                     postcontract   customer  support  generally  is  recognized
                     ratably over the term of the support and revenue  allocated
                     to service  elements  (such as training  and  installation)
                     generally is recognized as the services are performed. If a
                     vendor  does not have  evidence  of the fair  value for all
                     elements  in a  multiple-element  arrangement,  all revenue
                     from the arrangement is deferred until such evidence exists
                     or until all elements are  delivered.  The Company  follows
                     the guidance of SOP 97-2.


                                      F-11
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------



1.      Nature of Business and Continued Operations

        PowerTrader,  Inc.  and  Software  design,  develop,  market and support
        informational   and  analytical   desktop   decision  support  and  risk
        management systems. Software was originally incorporated on December 29,
        1988 under the name Corporate Media Solutions, Inc. On November 6, 1989,
        it changed its name to  Precision  Investment  Services and on April 16,
        1996,  changed  its name from  Precision  Investment  Services,  Inc. to
        PowerTrader  Software Inc. Software was inactive until July 1994 when it
        commenced  development  of its current  suite of software  products.  On
        January 2, 1997, PowerTrader, Inc. was acquired in a Reverse Acquisition
        by PowerTrader Software, Inc. (Note 2).

        To date,  since  the  Company  has only sold Beta  product  and  support
        services,  major product  development work continues and the Company has
        not yet recorded significant sales, accordingly,  the Company is still a
        development  stage  company  with its  principal  business and assets in
        Canada and its revenue earned in Canada.

        These  financial  statements  are  stated  in US  dollars  and have been
        prepared in accordance with United States generally accepted  accounting
        principles,  on a going concern basis.  As reflected in these  financial
        statements,  the Company has at June 30, 1998 an accumulated  deficit of
        $(3,293,050) and a working capital deficiency of $519,009.  In addition,
        the  Company  has  incurred  operating  losses in each of the last three
        years.  These factors among others,  raise  substantial  doubt about the
        Company's ability to be able to continue as a going concern. The ability
        of the  Company  to  continue  as a going  concern is  dependent  on the
        Company obtaining  additional  financing through private or public share
        offerings  or  debt.  The  financial   statements  do  not  include  any
        adjustments related to the recoverability and classification of recorded
        asset amounts or the amounts and  classification of liabilities that may
        be  necessary  should  the  Company  be  unable to  continue  as a going
        concern.   However,  it  is  reasonably  possible,   based  on  existing
        knowledge,  that  changes  in future  conditions  in the near term could
        require a material  change in the recognized  amounts for the assets and
        liabilities.

        Management's  plans in this regard are to obtain  financing from private
        or public  share  offerings  or debt  until  such  time that  sufficient
        revenue can be generated to sustain continuing operations. In connection
        therewith, the Company entered the agreement described in Note 12.

2.      Acquisition

        On January 2, 1997, PowerTrader, Inc. entered into an agreement with the
        shareholders  of  Software  whereby it acquired  all of the  outstanding
        shares  of  Software  in  exchange  for  5,088,598  common  shares.  The
        transaction  was  accounted  for  as a  Reverse  Acquisition,  utilizing
        historical costs. Software is in the same business as PowerTrader,  Inc.
        The  financial  position of  PowerTrader,  Inc. as of January 2, 1997 is
        summarized as follows:

                     Tangible assets                  $ 314,468
                     Liabilities                           (214)
                                                    -----------
                     Shareholders' equity             $ 314,254
                                                    -----------

                                      F-12
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


2.      Acquisition - continued

        The  following is a summary of pro-forma  sales,  pro-forma net loss and
        pro-forma loss per share for the Company under the  assumption  that the
        Reverse Acquisition was completed on July 1, 1996.

                                                      1997               1996
                                                  (Unaudited)       (Unaudited)
                                                  -----------       -----------

            Pro-forma sales                          $ 44,373          $ 50,971

            Pro-forma net loss                    $ 1,164,029         $ 698,971

            Pro-forma loss per share                  $(0.20)           $(0.14)


3.      Fixed Assets

                                         Accumulated
                               Cost      Amortization    1998 Net      1997 Net
                          -----------    ------------   ---------    -----------
 Computer equipment       $   208,382    $    85,808    $ 122,574    $   139,224
 Computer software            668,164        346,501      321,608        596,576
 Furniture and equipment       26,779          6,834       19,945         23,942
                          ------------------------------------------------------
                          $   903,325    $   439,143    $ 464,182    $   754,741
                          ------------------------------------------------------


        The  estimated  useful life of the fixed assets  varies  between one and
        five years.

        In connection  with the  acquisition of computer  software,  the Company
        signed a promissory  note payable in the amount of $160,400  ($C235,000)
        bearing  interest  at 8% per  annum and due on July 24,  1998.  The note
        payable  was  collateralized  by  the  software,   a  Software  Security
        Agreement and a General Security Agreement.  The note payable was repaid
        subsequent to July 24, 1998.


4.      Notes Payable

        The note payable bears  interest at 10% per annum,  is unsecured and due
        on demand.


5.      Capital Lease Obligation

        The balance of the Company's capital lease obligations are due in 1999.



                                      F-13
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


6.      Share Capital

        Warrants

        350,000  warrants were  outstanding  at June 30, 1998.  (1997 - 100,000)
        Each warrant  entitles the holder to purchase  one  additional  share of
        common  stock at an  exercise  price of $3.50  per share for a five year
        period, expiring between May 2002 and July 2002.

        Shares Issued to Director

        250,000  (1997 - 350,000)  shares issued to a Director are subject to an
        agreement,  which contains certain restrictions on transfer over a three
        year period and provisions for forfeiture upon the occurrence of certain
        events.  The holder of these  shares has  resigned as a Director and the
        Company intends to cancel the shares.


7.      Stock Options and Stock Compensation Plans

        At June  30,  1998,  all of the  Company's  common  stock  options  were
        exercisable.  The following options, which are not part of the Company's
        1996 Stock Option Plan, were  outstanding at June 30, 1998 and cancelled
        subsequent to year end.

                  Number              Exercise Price          Expiry Date
                  ------              --------------          -----------
                  149,999                   $0.37             Dec 1998
                  100,000                    1.00             Feb 1999
                  100,000                    3.00             Feb 1999
                  -------
                  349,999


        Stock Option Plan

        Pursuant to the Company's 1996 Stock Option Plan ("the Plan"), officers,
        key  employees,  advisors  and  consultants,  of the Company may receive
        stock  options to purchase up to an aggregate  of 750,000  shares of the
        Company's Common Stock.  Under the Plan, stock options awarded under the
        Plan  may not  have a term  of more  than 10  years  or  provide  for an
        exercise price of less that the fair market value of the Common Stock on
        the date of grant.


                                      F-14
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


7.      Stock Options and Stock Compensation Plans - continued

        A summary of options granted under the Plan is as follows:

                                                                        Exercise
                                         Number        Expiry Date        Price
                                         ------        -----------      --------
        Outstanding, June 30, 1996            -
        Granted                         300,000       April 16, 2000      $0.35
                                        -------
        Outstanding, June 30, 1997      300,000
        Cancelled                      (100,000)      April 16, 2000      $0.35
        Granted                          50,000       April 16, 2000      $0.35
        Granted                          60,000        June 18, 2001      $0.35
        Granted                         150,000     February 2, 2001      $0.35
                                        -------
        Outstanding, June 30, 1998      460,000
                                        -------

        All  but  20,000  options  expiring  on June  18,  2001  were  cancelled
        subsequent to year end.

        Stock Based Compensation

        The Company has elected to provide pro-forma  information  regarding net
        income and earnings per share as if compensation  cost for the Company's
        stock options  granted had been  determined in accordance  with the fair
        value  based  method  prescribed  in FASB  Statement  123.  The  Company
        estimates the fair value of each stock option at the grant date by using
        the    Black-Scholes    option-pricing    model   with   the   following
        weighted-average  assumptions  used for  grants in 1998,  1997 and 1996:
        dividend yield of Nil; expected  volatility of Nil;  risk-free  interest
        rates of 1998 - 5.31%;  1997 - 6.25%, 1996 - 5.02% to 5.70%) based on US
        Treasury  Bill yields and an expected  life of two years.  The  weighted
        average  fair  value of  options  granted  during  1998 was $Nil (1997 -
        $0.24; 1996 - $0.65) per share.

        Under the accounting provisions of FASB Statement 123, the Company's net
        loss  per  share  would  have  been  reduced  to the  pro-forma  amounts
        indicated below:

                                 1998                1997                1996
                                 ----                ----                ----
        Net loss
        As reported        $ (1,339,720)      $    (902,997)      $    (598,971)
        Pro-forma            (1,467,871)      $    (956,792)      $    (598,971)

        Loss per share
        As reported        $      (0.17)      $       (0.16)      $       (0.14)
        Pro-forma          $      (0.18)      $       (0.16)      $       (0.14)


                                      F-15

<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------



8.      Share Subscriptions

        As at June 30,  1996,  Software  had  received a total of $408,089  with
        respect to  subscriptions  for  1,599,880  Class "A"  common  shares and
        received a further  $307,049 with respect to  subscriptions  for 689,637
        Class "A" common shares during 1997.  Software  shares were never issued
        for these share subscriptions,  accordingly the amounts were recorded as
        a liability  at June 30, 1996.  On the date of the Reverse  Acquisition,
        and shortly  thereafter,  these  liabilities  were  settled  through the
        issuance of 2,319,517 PowerTrader, Inc. shares.


9.      Related Party Transactions

        During 1998,  the Company  paid  consulting  and leasing  fees  totaling
        approximately   $102,300  (1997  -  $171,600  and  1996  -  $11,800)  to
        directors,  shareholders  and a company  controlled by a director of the
        Company. During 1997, the Company also acquired from a director,  office
        equipment for $7,100.

        As at June 30, 1998,  there was  approximately  $85,900 (1997 - $Nil) in
        trade payables to a director and a company controlled by a director.


10.     Income Taxes

        The  Company  has  income  tax  loss   carry-forwards  of  approximately
        $2,950,000  available to reduce future taxable income, the tax effect of
        which has not been recorded in these financial statements.  These losses
        will expire between 2002 and 2005.

        Deferred tax liabilities at June 30, 1998 and 1997 were not material.

        A  summary  of  deferred  tax  assets  at June  30,  1998 and 1997 is as
        follows:

                            Loss
                           Carry     Tax                   Valuation    Deferred
                          Forward    Rate      Amount      Allowance   Tax Asset
                          -------    ----      ------      ---------   ---------
1998
----
Tax benefit of loss
   carry forward       $2,950,000    .45     $1,327,500    $1,327,500      $   -

1997
----
Tax benefit of loss
   carry forward       $1,718,000    .45     $  773,100    $  773,100      $   -



                                      F-16
<PAGE>


                                                               PowerTrader, Inc.
                                                   (A Development Stage Company)
                                      Notes to Consolidated Financial Statements
June 30, 1998                                                       (US Dollars)
--------------------------------------------------------------------------------


10.     Income Taxes - continued

        Since in management's  opinion,  it is more likely than not that the tax
        benefits  would not be  realized,  they have been reduced by a valuation
        allowance of $1,327,500 (1997 - $773,100).


11.     Commitments

        The  Company  has  entered  into a  Lease  Agreement  for  its  premises
        requiring total minimum lease payments of $32,384 in 1999.

        During  1998,  1997 and 1996,  the  Company  had rent  expenses  for its
        premises of $48,405, $27,536 and $23,795, respectively.


12.     Subsequent Events

        Subsequent  to June 30,  1998,  the Company  entered an  agreement  with
        Financial  Models  Company  Inc.  ("FMC")  whereby  FMC,  amongst  other
        matters:

        (i) acquired  14,000,000  unissued common shares for a purchase price of
        $0.01 per share;

        (ii) settled  indebtedness  to the  former  president  in the  amount of
        $68,600; and

        (iii) paid $C75,000 in exchange for a license to use certain software.

        Subsequent to the completion of this  transaction,  FMC advanced working
        capital on an unsecured  basis to the Company in sufficient  quantity to
        settle the promissory note payable discussed in Note 3 and certain other
        outstanding trade payables.



                                      F-17

<PAGE>



                                   SIGNATURES


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


                                          POWERTRADER, INC.



Date:  March   22 , 2000                  By:  /s/ Stamos D. Katotakis
             -----                            ----------------------------------
                                              Stamos D. Katotakis
                                              President and Chief Executive
                                              Officer


We,  the  undersigned  officers  and  directors  of  PowerTrader,  Inc.,  hereby
severally  and  individually  constitute  and appoint  Stamos D.  Katotakis and
Richard W. Arnold, and each of them, the true and lawful attorneys and agents of
each of us to execute in the name,  place and stead of each of us  (individually
and in any capacity  stated below) any and all  amendments to this Annual Report
on  Form  10-KSB  and all  instruments  necessary  or  advisable  in  connection
therewith and to file the same with the Securities and Exchange Commission, each
of said attorneys and agents to have the power to act with or without the others
and to have full power and  authority to do and perform in the name an on behalf
of each of the  undersigned  every act  whatsoever  necessary or advisable to be
done in the  premises  as fully and to all  intents  and  purposes as any of the
undersigned  might or could do in person,  and we hereby  ratify and confirm our
signatures  as they may be signed by our said  attorneys  and  agents to each of
them to any and all such amendments and instruments.


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


Signature                     Title                                Date
---------                     -----                                ----


/s/ George McCord             Director                           March 22, 2000
-------------------------
 George McCord


/s/ Stamos D. Katotakis       President, Chief Executive         March 22, 2000
-------------------------     Officer, Principal Financial
Stamos D. Katotakis           Officer  and Director



<PAGE>


                                  EXHIBIT INDEX


Exhibit
Number        Description                                              Page
-------       -----------                                              ----

2.1(1)        Stock Acquisition Agreement

3.1(1)        Restated Certificate of Incorporation of the Registrant

3.2(1)        Bylaws of the Registrant

4.3(1)        Warrant Agreement with American Stock Transfer and
              Trust Company

10.1(1)+      Consultant Agreement with 458468 B.C. Ltd.

10.2(1)+      Consultant Agreement with Peridot International
              Enterprises, Ltd.

10.3(1)+      Restricted Stock Agreement with Peridot International
              Enterprises Ltd.

10.5(1)       License Agreement with North American Quotations Inc.

10.6(1)       License Agreement with Hong Kong Bank Discount
              Trading Corp.

10.7(1)+      PowerTrader, Inc. 1996 Stock Option Plan

10.8(2)       Asset Purchase Agreement dated as of May 2, 1997 between
              West Coast Title Search Ltd. and PowerTrader, Inc.

10.9(3)+      Consulting Agreement with George E. McCord

21.1(1)       Subsidiaries of the Registrant

23.1*         Consent of BDO Dunwoody

24.1*         Power of Attorney (included on signature page)

27.1*         Financial Data Schedule

99.1*         Cautionary Statement Identifying Important Factors
              that Could Cause PowerTrader, Inc.'s Actual Results
              to Differ from Those Projected in Forward-Looking
              Statements

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

*      Filed herewith

(1)    Incorporated by reference to Form SB-2  Registration  Statement (File No.
       333-20121)  declared  effective on April 4, 1997.

(2)    Incorporated by reference to Form 8-K dated May 2, 1997

(3)    Incorporated by reference to the annual report on Form 10-KSB for the
       fiscal year ended June 30, 1997.

+      Management Contract or Compensatory Plan or arrangement required to be
       filed as an Exhibit.