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



                                   FORM 10-KSB
(Mark One)

[X]  Annual Report under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934 for the fiscal year ended March 31, 1999.

                                       Or

[]   Transition Report under Section 13 or 15(d) of the Securities  Exchange Act
     of  1934  for  the   transition   period   from -------- to --------.

                       -----------------------------------
                         Commission file number 0-24005
                       -----------------------------------

                                UBARTER.COM INC.
                 (Name of small business issuer in its charter)

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

   21400 International Blvd. #207
          Seattle, WA                                         98198
(Address of principal executive offices)                    (Zip Code)

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

         Securities Registered Under Section 12(b) of the Exchange Act:
                                      None
         Securities Registered Under Section 12(g) of the Exchange Act:
                         Common Stock, $0.001 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 Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
         Yes  [X]                No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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.    [X]



<PAGE>

State issuer's revenues for most recent fiscal year: $504,500

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates  based on the average bid and asked price as of June 1, 1999:
$17,361,000.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date:  5,915,420 shares of Common Stock as
of March 31, 1999.

Documents Incorporated by Reference

Portions of Company's  Proxy  Statement  relating to its 1999 Annual  Meeting of
Shareholders  and the Current  Report on Form 8-K/A (for event on March 2, 1999)
dated May 14,  1999 are  incorporated  by  reference  into Part III of this Form
10-KSB.

Transitional Small Business Format.         Yes [  ]  No [X]














                                       2

<PAGE>


                               TABLE OF CONTENTS



<TABLE>

                                     PART I
                                                                                                      Page

<S>                                                                                                     <C>
Item 1.     Description of Business   ...............................................................   4

Item 2.     Description of Property   ...............................................................  13

Item 3.     Legal Proceedings .......................................................................  13

Item 4.     Submission of Matters to a Vote of Security Holders......................................  13

PART II

Item 5.     Market for Common Equity and Related Stockholder Matters.................................  14

Item 6.     Management's Discussion and Analysis of Financial Condition
              and Results of Operations..............................................................  16
Item 7.     Financial Statements.....................................................................  31

Item 8.     Changes In and Disagreements With Accountants on
              Accounting and Financial Disclosure....................................................  31

PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
              Compliance With Section 16(a) of the Exchange Act.....................................   32

Item 10.    Executive Compensation .................................................................   32

Item 11.    Security Ownership of Certain Beneficial Owners and Management........................     32

Item 12.    Certain Relationships and Related Transactions..........................................   32

Item 13.    Exhibits and Reports on Form 8-K........................................................   32


</TABLE>

Forward Looking Statements

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

                                       3

<PAGE>

                                     PART I

Item 1.  Description of Business

General

     Ubarter.com  provides  business-to-business  barter  services  for  retail,
professional,  media and other corporate clients.  Currently,  we offer services
through our offices in Seattle, Washington, Toronto, Ontario, Vancouver, British
Columbia and Windsor, Ontario. We are developing an expanded and technologically
advanced  business-to-business  barter  system  which will  include an  Internet
website at http://www.ubarter.com, to provide our clients an e-commerce solution
to barter over the  Internet.  With the growing  adoption of the Web, we believe
the  creation of a Web-based  barter  community  in which buyers and sellers are
brought together in an efficient and convenient manner offers us the opportunity
to expand  significantly the number of clients and products and services offered
through our barter system.

     As a result of our  acquisition  of Barter  Business  Exchange,  Inc.,  the
largest trade exchange in Canada, in March 1999, we now have approximately 3,200
clients who offer over 7,000  products and services.  We expect these clients to
transact approximately $25 million of annual trading volume and to generate over
$3  million  of annual  revenue,  based on the  historical  trading  volume  and
revenues  of the  combined  companies.  Our  revenue is derived  primarily  from
transaction  fees.  We charge a cash fee on both sides (i.e.  to both the seller
and buyer) of each barter transaction.

     We manage a private barter currency,  "Ubarter Dollars(TM)",  to enable our
clients to sell their  products  or  services  to our other  clients for Ubarter
Dollars.  Trade dollars allow clients to purchase  goods and services from other
exchange  members instead of cash. In turn, these clients then use their Ubarter
Dollars to purchase  products and services for which they would  otherwise spend
cash.  We  market   products  and  services   offered  by  our  clients  through
directories,  newsletters,  e-mail,  faxes, trade brokers and other means. Sales
are generally conducted by clients directly, but can be facilitated by our trade
brokers. Generally, sales are made at or near prevailing retail prices.

     By using our  services,  businesses  are able to increase  sales and market
share, decrease cash expenditures,  reduce surplus inventory,  take advantage of
underutilized  capacity and increase cash flow.  Barter is especially  useful to
businesses  where the  variable  costs of products  or services  are low such as
hospitality  and  professional  businesses.  For  example,  a hotel that has not
filled its rooms by the end of the day has lost potential  revenue but still has
the same overhead associated with owning and maintaining its facility.

     We  sometimes  engage in barter  trading for our account.  For example,  we
sometimes  acquire  merchandise  for our account and then remarket and trade the
merchandise  to other  clients for  Ubarter  Dollars.  Typically,  we do this to
establish  or maintain  client  relationships,  to take  advantage  of favorable
opportunities and to facilitate and enhance our barter business for clients.  We
also engage in barter to pay for some of our operating costs.

     Once we establish our web presence,  we like other companies doing business
on the  Internet,  plan to  create a sense of  community  among our  clients  by
offering chat rooms and other networking  events. We anticipate a soft launch of
the initial  phase of our website in September  1999,  subject to  completion of
beta testing and  depending  on certain  business  considerations.  We expect to
launch the remaining  phases of our website  throughout  the remainder of fiscal
year 2000.



                                       4
<PAGE>


     Through our data processing  system,  we act as a third party record keeper
of client barter  transactions  and account  balances.  When clients make barter
purchases  and sales,  we debit  Ubarter  Dollars  from the buyer's  account and
credit the seller's account. Clients receive a monthly account statement showing
all  activity  for the period.  In the future,  we intend to  institute a direct
payment  system by  charging  our  clients'  credit  cards or through  automatic
withdrawals  from  their bank  accounts.  We will  encourage  clients to use the
direct payment system by offering  lower  transaction  fees if they elect direct
payment.

     Ubarter  Dollars are based on the U.S.  dollar in the United States and the
Canadian  dollar in Canada.  We will expand this "currency  conversion" to other
countries  as we  move  into  other  markets.  We use  the  trade  dollar  as an
accounting unit to record the value of barter transactions as established by the
parties to the transactions. We do not redeem Ubarter Dollars for cash.

     Ubarter.com  was  incorporated  in Nevada in September  1996 under the name
International  Barter  Corp.  for the  purpose of  merging  with  Cascade  Trade
Association,  a Seattle based trade exchange.  Cascade Trade, founded in 1983 by
Steven  White,   Ubarter.com's   President  and  Chief  Executive  Officer,  had
approximately  500  clients  in the  Seattle  area at the  time  of the  merger.
Ubarter.com  began a direct public offering of common stock after the merger and
became  publicly  traded in February 1998. In March 1999, we acquired all of the
outstanding  stock of BBE, the largest trade exchange in Canada.  In April 1999,
International Barter Corp.'s name was changed to Ubarter.com Inc. to reflect our
change to an Internet-based business model.

     Our principal executive offices are located at 21400  International  Blvd.,
Suite 207, Seattle, Washington 98198. Our telephone number is (206) 870-9290 and
our website, which is currently under construction and in internal beta testing,
is located at http://www.ubarter.com.

Business Strategy

     Our goal is to expand our position in the barter  industry in North America
by focusing on customer  service,  by expanding  the range and  availability  of
products and services  offered in  Ubarter.com,  by increasing the number of our
clients,  by expanding  geographically  and by  establishing  an  efficient  and
easy-to-use  e-commerce barter site for clients.  To achieve this, we are in the
process of instituting the following business strategy.

     Develop technologically  advanced multi-channel barter system, including an
online barter  system.  We are in the process of  developing  front and back end
technology systems to create a technologically advanced barter system. The focus
of our new system will be to provide online barter transaction capability.  Once
these  systems  are  completed,  our  clients  will be able  to  execute  barter
transactions through any of the following three channels:

     o    electronically through our Internet site,

     o    by speaking with a trade broker located at one of our offices or

     o    directly with another client using a Ubarter.com card.


     Acquire key players in the barter industry. We intend to continue expanding
our business by acquiring  other  strategically  located trade  exchanges in the
United States and Canada




                                       5
<PAGE>


and integrating these exchanges into our operations. In considering acquisitions
of  trade  exchanges  we  intend  to look  for  candidates  with  the  following
attributes:

     o    regional presence complimenting our presence,

     o    significant  client  base  offering  a wide  variety of  products  and
          services,

     o    sound credit management and

     o    positive cashflow.

These  acquisitions  would  provide us with the  critical  mass of products  and
services in their respective  regions and,  therefore,  would support our online
growth plans.

     Create  strategic  marketing  alliances.  We are and will pursue  strategic
marketing  alliances in order to obtain access to thousands of businesses  which
do not engage in bartering and/or may be unaware of the advantages of bartering.
We have an  agreement  in place,  and intend to enter into more  agreements,  to
create strategic  relationships  with online and offline companies with numerous
business clients to which  Ubarter.com will obtain access.  Since these types of
alliances  are  critical  to the  growth of our  client  base,  we are  spending
significant  time and resources  developing these  opportunities  and working to
build our brand recognition.

     Establish North American field sales presence.  To grow our client base and
build  brand  recognition,  we have  initiated  a plan to place two field  sales
people  in each of the  largest  25 cities in North  America,  based on  current
clients and clients we may obtain from strategic alliances and acquisitions.  We
would  like to  complete  this plan by the end of  fiscal  2001.  These  account
executives would be responsible for registering new clients in their area.

Internet Site

     We  are  in  the  process  of   developing   and   preparing  to  launch  a
business-to-business  e-commerce site for our barter business. In December 1998,
we retained  MindCorps Inc., a website developer based in Seattle,  to develop a
new Ubarter.com site. Founded in 1996 to develop web technologies,  MindCorps is
a leader in delivering high-performance web-based business solutions,  including
highly   functional   Internet  stores  and  auctions  and  online   interactive
communities.

     We intend to launch the new  Ubarter.com  site in several  phases  over the
remainder of fiscal year 2000.  We expect to launch the first phase in September
1999,  subject to completion  of beta testing and depending on certain  business
considerations.  We intend for the first  phase to allow new clients to register
for membership,  all clients to post and update product or service offerings and
anyone with access to the Internet to browse through our directory of items,  24
hours  a day,  7 days a  week.  The  initial  release  will  also  have  limited
e-commerce    functionality.    The    location    of   the   site    will   be:
http://www.ubarter.com.

     In July 1998, we launched an Internet  website to the general  public.  The
website  did  not  provide  adequate   functionality  required  by  us  and  was
unsuccessful. We terminated the site later in 1998.




                                       6
<PAGE>


Clients

     Ubarter.com  currently  has  approximately  3,200  active  clients in North
America.  These clients are in businesses such as media and advertising,  travel
and entertainment,  printing,  hospitality,  professional services, construction
and trade services, healthcare and dining.

     Our clients may engage in barter activity for a number of reasons including
their desire to accomplish the following goals:

          o    generate new sales, add new channels of distribution and increase
               market share,

          o    decrease cash expenditures and thereby increase cash flow,

          o    reduce slow moving inventory,

          o    exchange  unproductive  assets  and  excess  capacity  for useful
               products or services,

          o    reduce need for financing and

          o    maximize efficiencies

     The key to a trade exchange over  traditional  barter  transactions is that
members do not have to accept  each  others'  products  and  services  directly.
Historically,  this has been one of the biggest  drawbacks  to one on one barter
transactions.  Our clients earn Ubarter  Dollars which they are free to spend on
any  products  or  services  offered  by our  members in any  denomination.  The
following is a representative  example of a barter transaction:  A dentist needs
to  have  her  office  remodeled.  Through  our  barter  exchange,  she  hires a
contractor  who  agrees  to  perform  the  remodeling  work for $500 in  Ubarter
Dollars.  The dentist has these Ubarter  Dollars in her account to spend because
she had previously  provided  dental work to the owner of a vacation  resort,  a
restaurant  and a lawyer,  all clients of  Ubarter.com,  in exchange for Ubarter
Dollars.  The  other  clients  originally  acquired  these  Ubarter  Dollars  by
providing services for other Ubarter.com clients.

     Barter is especially useful to those businesses where the variable costs of
products  or  services  are low such as hotels,  media and other  travel-related
businesses. For example, a hotel that has not filled its rooms by the end of the
day has lost potential  revenue but still has the same overhead  associated with
owning and maintaining  its facility.  A radio station or newspaper that has not
filled available  advertising space has lost the opportunity to generate revenue
but still has  incurred  virtually  the same  costs.  In short,  businesses  can
leverage  their low variable  cost  products and services  into more  purchasing
dollars. For example,  America Online Canada, one of our clients, sells Internet
services to new accounts for Ubarter  Dollars.  Their marginal cost of providing
these services is minimal, however they are able to use the Ubarter Dollars they
receive  from the sale of  Internet  service  to  purchase  printing  and  other
promotional materials.

     In order to  facilitate  trading,  we often grant  Ubarter  Dollar lines of
credit  to  creditworthy  clients.  We issue  the  credit  lines  under  our own
guidelines.  These guidelines include the financial  stability of the client and
the demand for the client's product or service by other clients.  Eventually, we
intend to process online credit applications and offer immediate lines of credit
based on past credit records of the client applying.




                                       7
<PAGE>


Sales, Marketing and Trading

Sales

     The primary function of our sales department is to grow our client base. We
use standardized marketing and support materials, advertising, ongoing training,
promotion and support to expand our client base.  The sales effort is led by our
Account  Executives  (AE).  Currently  we  have  11 AEs.  We  anticipate  hiring
approximately  another eight in the next several months. These AEs are all based
in one of our four regional offices.  AEs contact  prospective clients to market
the benefits of barter and joining Ubarter.com.  In addition, AEs attend various
meetings and networking events in their areas.

Marketing

     Our  marketing  strategy  is to promote  our brand and  attract  buyers and
sellers to our barter  system.  Among other things,  we issue press releases and
use an outside  marketing firm to assist us in appearing in featured articles in
national  publications  as well as with radio and other  print  advertising.  To
promote our  services,  we market  products  and  services  of existing  clients
through directories,  newsletters, e-mail, faxes, trade brokers and other means.
In addition,  we have pursued strategic  affiliations with companies with access
to large numbers of potential clients. We also have exclusive  agreements with a
number of search engines on the web, such as Yahoo,  Excite,  America Online and
Lycos, for keyword searches using the word "barter." We believe these agreements
will ultimately generate significant traffic to our website when it is launched.

Trading

     The trading  department is  responsible  for  facilitating  and  maximizing
barter  transactions  between  clients.  Trading and ongoing customer service is
handled by Trade Brokers (TB) and Customer  Service  Representatives  (CSR).  We
currently  have 18  people in the  trading  department  including  TBs and CSRs.
Certain TBs are assigned to specific industries such as travel or media.

     The trading department  facilitates trading between clients by searching to
fill client needs or making clients aware of products that have become available
within the system.  Our trading  staff takes a proactive  approach to  marketing
products  and  services.  Staff in the  trading  department  have  goals  set by
management relating to trading volume as well as cash collection.

     Once e-commerce can be conducted through our website, the duties of the TBs
and CSRs will  change  significantly.  TBs and CSRs will focus more on  customer
service and support and managing key accounts. Clients on the Internet will have
access to an online  directory of products and services and, as needed,  will be
able to get support from TBs and CSRs.


Systems and Technologies

     We currently rely on one software  vendor to supply the software  necessary
for the centralized  processing of our trade transactions.  We use TradeWorks(R)
and  TradeWorks  Online(R),  products and services of DWW Software.  This vendor
also supplies its software as a stand-alone  product to other barter  exchanges.
We believe that software and other  materials  are  generally  available for our
systems and services and that we could locate replacement software and materials
in the event we had to replace products of our vendors.

     To execute our  e-commerce  strategy,  we are  working  with  Mindcorps  to
develop a comprehensive and scalable  proprietary system for our e-commerce site
and back-end systems.




                                       8
<PAGE>


Industry Overview and Competition

General

     The modern commercial barter industry  developed along with the development
of an accepted  index of valuation for  establishing  barter credits and debits.
The accepted index of valuation in the industry is the "trade dollar." There are
two basic types of commercial barter  businesses:  corporate trade companies and
retail  barter  exchanges,  such  as  Ubarter.com.   Corporate  trade  companies
typically take ownership of products and services and  redistribute  to channels
outside the selling vendor's normal distribution channel.  Barter exchanges,  on
the other hand,  act as third party record  keepers for the exchange of products
and services among their members. For every transaction,  barter exchanges debit
and credit trade dollars to the buyer's and seller's trade account.  Members can
transact  business  directly  between  themselves or use the services of a trade
broker who matches buyers and sellers.

Barter Statistics

     The   International   Reciprocal  Trade  Association   ("IRTA"),   a  trade
association that prepares annual estimates of commercial bartering in the United
States and Canada,  estimates  that $600  billion of products  and  services are
bartered or traded  annually  worldwide,  $200  billion of which occurs in North
America.  These figures  include  products and services that are traded directly
between  companies or countries as well as those traded through  organized trade
companies.   In  1996,  the  last  year  for  which  IRTA  provides  statistical
information,  IRTA  estimated  that $9  billion of sales in North  America  were
transacted through organized  business-to-business trading companies,  including
corporate trade  companies,  which accounted for  approximately  $7.6 billion of
sales,  and retail trade  exchanges  such as  Ubarter.com,  which  accounted for
approximately $1.4 billion.

     IRTA estimates that trade volume conducted by corporate trade companies and
barter  exchanges  in North  America  grew  steadily for the period from 1984 to
1995.  According to the IRTA, the annual value of products and services bartered
by corporate trade companies and barter exchanges during the period from 1994 to
1996 was,  on  average,  approximately  $8.4  billion.  Of this  amount,  barter
exchanges accounted for barter sales of $1.4 billion in 1996, compared with $1.2
billion in 1995 and $1.1 billion in 1994.

     IRTA  also  estimates  that in 1996  approximately  400,000  firms in North
America were members of retail trade exchanges and that there were approximately
450 retail trade  exchanges in North America and another 200 worldwide.  Most of
these trade  exchanges are smaller  companies with several  hundred  members and
several hundred thousand dollars of annual revenues.  We estimate penetration of
less than 2% of  businesses  worldwide  and believe less than 5% of companies in
North America have engaged in organized barter at any time.

     We believe the commercial barter industry has significant  growth potential
and that barter exchanges can capitalize on this growth potential.  Because only
a relatively  small  percentage  of  businesses  in the United States and Canada
currently  use  the  services  of  a  barter  exchange,  we  believe  there  are
significant growth  opportunities for well-positioned  barter exchange companies
in the commercial barter market.




                                       9
<PAGE>


The Internet

     The  Internet  has emerged as a mass  communications  and  commerce  medium
enabling  millions of people  worldwide to share  information,  create community
among  individuals with similar  interests and conduct business  electronically.
The Internet  Industry  Almanac  projects that the number of Internet users will
grow from  approximately  100  million  in 1997 to over 300  million by year end
2000. In addition to its emergence as a mass communications medium, the Internet
has features and functions  that are  unavailable in  traditional  media,  which
enable  online   merchants  to  communicate   effectively   with  customers  and
advertisers to target users with specific needs and interests.  As a result, the
Internet has emerged as an attractive medium for electronic  commerce as well as
for barter.

     Along with the overall growth of the Internet,  business-to-business  usage
is  also  growing  rapidly,  as  businesses  are  increasingly   leveraging  the
Internet's ability to reach customers globally, deliver personalized content and
open   new   distribution    channels.    According   to   Forrester   Research,
business-to-business  electronic  commerce is projected to grow from $43 billion
in 1998 to $1.3 trillion by 2003.

Competition

     The barter  industry is fragmented  with over 450 retail trade exchanges in
North America.  We believe ITEX  Corporation  (ITEX) of Portland,  Oregon is the
largest  retail trade  exchange in North  America  with over 30,000  clients and
approximately  120 affiliated  broker offices in North America.  ITEX's strategy
has been to use  license  or similar  arrangements  in  opening  their  regional
offices as opposed to our strategy of owning and  operating  all of our regional
offices.  Other competing barter companies in North America include  BarterCard,
BarterCorp,  Barter  Network Inc.,  Illinois Trade  Association,  Trade Exchange
America and  ValueCard.  For the most part,  these  companies are regional trade
exchanges which have not experienced  significant growth in recent years. We are
aware of two exchanges that have  attempted  international  expansion,  ITEX and
Business Exchange International Corp. (BXI). In July 1998, ITEX acquired BXI.

     We believe we compete  primarily  on the basis of  service,  including  the
number of available  products and services and the liquidity of Ubarter Dollars.
We also compete on price to a lesser extent. Some of the existing competitors in
the barter industry are larger or have greater  financial  resources than us. We
expect to encounter competition in our efforts to expand our barter business and
to  acquire  desirable  independent  trade  exchanges.  Similarly,  we expect to
encounter  competition  in our  efforts  to develop  Ubarter.com  into a premier
online  e-commerce  barter  website.  We expect  competition  to increase in the
future,  as there are no  substantial  barriers  to initial  entry.  We believe,
though,  that the more market penetration we achieve,  the higher the barrier to
entry will become for anyone contemplating a similar system.

     We believe there are only a few companies  that have attempted to establish
an  online  trade  exchange,   including   companies  such  as  Ebarter.com  and
BarterExpress.com.  Also,  ITEX has a service that it has made available only to
its clients on the Internet called "ITEX Online." We believe a major shortcoming
of these online trade exchanges has been their inability to develop the critical
mass of product or services  offerings  to have  significant  sales or purchases
made on their sites.  We believe  Ubarter.com  may have an advantage  over these
companies,  since  Ubarter.com  will launch its online  exchange with over 3,200
clients offering over 7,000 products and services.

     Certain  Internet-based  companies  with unique  purchasing or sales models
such as  eBay  and  Priceline.com  have  significant  technical,  financial  and
marketing  resources and could be




                                       10
<PAGE>


potential  competition for us. These  companies  would be strong  competitors if
they  decided to enter the  business-to-business  sector and compete with barter
exchange  companies.  However,  so long as  these  companies  do not  create  an
exchange   utilizing  a  private   currency   or  change   their  focus  to  the
business-to-business   sector,  we  do  not  believe  these  companies  will  be
significant  competitors.  In addition, since our clients are able to sell their
products  or  services  without  discounting  their  regular  prices for Ubarter
Dollars,  we  believe  the  Ubarter.com  private  currency  system  may  have an
advantage over online liquidators or auction sites.

     Customer demands for wider availability of products and services,  stronger
customer service,  better computer servicing technology and the emergence of the
Internet as a medium for  communication  and  business  have  resulted in a more
competitive industry. We believe the introduction of a global barter marketplace
on the Internet  will  encourage  new clients to  incorporate  barter into their
business plans. We believe that in order to capture greater market share, barter
companies  will need to expand  beyond  single  office  operations  into  larger
regional or  national  organizations  that  possess the ability to offer a wider
selection  of  products  and  services,  service a more  diverse  and  dispersed
clientele and have greater access to growth capital.

Acquisition of Barter Business Exchange in March 1999

     As a part of our acquisition  strategy, we purchased BBE effective March 1,
1999. BBE, founded in 1992, was the largest retail trade exchange in Canada with
over 2,500 clients  serviced by three offices and 40 employees.  We acquired BBE
primarily for its  management,  technological  expertise,  regional  offices and
client base.  The  acquisition  allowed us to enter the Canadian  market without
having  to  go  through  a  slower  start-up   period   associated  with  simply
establishing our own presence in Canada.

     The  total  amount  of   consideration   paid  for  BBE  was   CD$2,450,000
(US$1,641,500)  (subject to certain adjustments  discussed below). The aggregate
consideration paid included:

          o    cash  payments  of  CD$850,000  (US$563,300)  and  US$100,000  at
               closing,

          o    issuance  of  a  promissory  note  in  the  principal  amount  of
               CD$850,000  (US$563,300),  which is  subject  to  adjustment,  if
               applicable,   as  discussed   below,

          o    payment of CD$250,000  (US$167,500)  Ubarter  Dollars at closing,
               and

          o    issuance of 150,000 shares of our common stock (having a value of
               US$375,000 as of the closing date)

     The  promissory  note bears no interest and is payable  March 1, 2000.  The
principal amount of the note will be reduced by the amount,  if any, that 10% of
the consolidated  cash revenues of Ubarter.com for the period from March 1, 1999
to March 1, 2000, is less than CD$750,000.  The 10% cash revenues do not include
trade  dollar  revenues  but will  include  any  incremental  cash  revenues  to
Ubarter.com from any acquisitions of a majority  interest in any entities during
the period and cash revenues derived from strategic  alliances or joint ventures
during the period.  Our obligations under the note are secured by a share pledge
agreement under which we pledged the BBE shares to Mr. Bagga.

     If the cash revenues of Ubarter.com during the period from March 1, 1999 to
March 1, 2000, exceed CD$750,000 (US$500,000),  we must pay Mr. Bagga the amount
over  CD$750,000  (US$500,000)  in equivalent  value of our common stock.  These
shares are to be registered and




                                       11
<PAGE>


freely  tradeable,  with a value per share equal to the closing trading price on
the business day immediately proceeding March 1, 2000.

     We agreed to register the resale of the 150,000  shares issued to Mr. Bagga
after the closing of the  acquisition.  Upon  registration,  those shares are to
have a minimum  aggregate value of $350,000.  If the minimum  aggregate value is
below this amount, then we must make up the difference by making, at our option,
a cash payment or through  issuing  additional  shares of our common stock.  Mr.
Bagga has agreed not to sell any of those  shares  prior to  September  1, 1999,
and, thereafter,  not to sell more than 25,000 of those shares per month without
prior notice to Ubarter.com.

     As a part  of the  acquisition,  we  entered  into  a two  year  employment
agreement with Mr. Bagga and named him as our Chief Operating Officer.

     As part of our  acquisition  of BBE,  we  acquired  a 50%  interest  in BBE
Windsor,  which  operated  BBE's Windsor,  Ontario  office.  On May 12, 1999, we
purchased  the  remaining  50% of the  outstanding  shares  of BBE  Windsor  for
consideration  consisting of:  CD$16,400  (US$10,988),  $65,000 Canadian Ubarter
Dollars and 20,000 shares of our common stock.

Regulatory

     The barter  industry is not currently  subject to direct  regulation by any
U.S. or Canadian government agency, other than regulations  generally applicable
to businesses.  Certain tax regulations  require U.S. barter exchanges to report
to the Internal  Revenue Service the totals of the barter sales of their clients
on an annual  basis,  since  trade  dollars  received  are  taxable  in the year
received.  Similarly,  there are currently few laws or regulations that directly
apply to access to, or commerce on, the Internet.  It is possible that governing
bodies may adopt a number of laws and regulations  governing such issues as user
privacy on the Internet and the pricing, characteristics and quality of products
and services  offered over the Internet.  It is also  possible  that  government
authorities will adopt sales or other taxes involving Internet business.

Proprietary Rights

     We rely on a combination  of copyright and trademark  laws,  trade secrets,
software   security   measures,   license   agreements  and   nondisclosure  and
confidentiality  agreements  to protect  our  proprietary  rights  and  software
products. Much of our proprietary  information may not be patentable.  We do not
have any patents.  We also rely on certain technology that we license from third
parties,  including  software we use to perform key functions in delivering  our
services.

     We have registered the Internet domain name "ubarter.com" and other related
domain names and have filed  trademark  applications  for the word  "a-commerce"
(alternative  commerce),  "Quick Sale", "Ubarter Dollars" and "Udollars" and the
tag line  "Where the whole  world  trades." We also have  federal  service  mark
applications pending for "Ubarter.com."

Research and Development

     During the year ended  March 31,  1999,  we  incurred  product  development
expenses of $216,300,  primarily related to compensation for product development
staff and payments to outside  contractors  related to our website  development.
During the year ended March 31, 1998, we incurred product  development  expenses
of  $29,900,  primarily  related  to  website




                                       12
<PAGE>


development.  We expect to spend approximately $2 million in product development
costs in fiscal  2000 as our  website is  further  developed,  launched  and our
e-commerce barter site is expanded. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Employees

     At March 31, 1999, we had 54 full-time employees. From time to time, we may
employ  independent  consultants  or  contractors  to support our  research  and
development,  marketing, sales and support and administrative organizations.  No
collective  bargaining  units represent our employees.  We believe our relations
with our employees are good. We anticipate that  implementation  of our business
strategy will require approximately 50 additional employees by the end of fiscal
year 2000.

Item 2.  Description of Property

     Our  executive  offices  are  located  in  Seattle,  Washington,  under  an
operating  lease  that  expires  in  September  1999.  We are in the  process of
reviewing  our lease  options in Seattle as our current  space is  insufficient.
Ubarter.com's  offices in Toronto,  Ontario,  Vancouver,  British  Columbia  and
Windsor,  Ontario are under  leases  expiring in May 2003.  We believe  that our
current  regional  offices are adequate  and suitable for their  current use and
that  suitable  additional  facilities  will be  available,  when  needed,  upon
commercially reasonable terms.

Item 3.  Legal Proceedings

     There are no legal actions  pending,  or, to our  knowledge,  threatened or
contemplated  against  Ubarter.com  as of the date of this report.  From time to
time,  various  claims and lawsuits  which are incidental to our business may be
brought against us or by us in the future.

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

     No meetings of security  holders were held during the fourth quarter of our
fiscal year ended March 31, 1999.

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

     Our common stock trades on the OTC Bulletin  Board under the symbol "UBTR."
The OTC Bulletin  Board  constitutes a limited and sporadic  trading  market and
does not  constitute an  "established  trading  market." See "Risk Factors -- An
established  public trading market for our securities does not exist." The range
of high and low bid  prices  per share  for our  common  stock for each  quarter
during  the  period  from  February  12,  1998  (the date of our  direct  public
offering)  through March 31, 1999, as published by the OTC Bulletin Board is set
forth below. The quotations merely reflect the prices at which transactions were
proposed,  and do not necessarily  represent actual transactions.  Prices do not
include retail  markup,  markdown or  commissions  and may not represent  actual
transactions.  The trading prices have been adjusted to give effect to the 2 for
1 stock split effective July 24, 1998.



                                       13
<PAGE>


                      Quarterly Common Stock Price Ranges
                      -----------------------------------
             Quarter Ended                          1998
             -------------                          ----
                                              High          Low
                                              ----          ---
             March 31                        $0.875       $0.688
             June 30                          4.00         0.688
             September 30                     6.75         0.875
             December 31                      3.56         0.875


             Quarter Ended                          1999
             -------------                          ----
                                              High          Low
                                              ----          ---
             March 31                         $3.25      $ 1.4375



     There were 66 record  holders of our common stock as of March 31, 1999.  We
estimate there were  approximately  875 beneficial owners of our common stock at
that date.

     We have not  paid  dividends  on our  common  stock  since  our  inception.
Dividends  on common stock are within the  discretion  of the board of directors
and are payable from profits or capital legally  available for that purpose.  It
is our current  policy to retain any future  earnings to finance the  operations
and  growth  of our  business.  Accordingly,  we do not  anticipate  paying  any
dividends on common stock in the foreseeable future.

Recent Sales of Unregistered Securities

     Since  April 1,  1996,  Ubarter.com  has  issued  and  sold  the  following
securities.  All  information  has been  adjusted  to give effect to the 2 for 1
stock split effective July 24, 1998.

     1.   In November 1996,  Ubarter.com  merged with Cascade Trade Association.
          In  connection  with the merger,  Ubarter.com  issued an  aggregate of
          2,000,000  shares of common stock to the two  shareholders  of Cascade
          Trade  Association.  The  issuance  of  the  shares  was  exempt  from
          registration  under the  provisions of Section 4(2) of the  Securities
          Act of 1933.  The  shares  were  issued  in a  private  placement  not
          involving a public offering.

     2.   During the period from January 1997 to March 1998, Ubarter.com sold an
          aggregate  of  500,000  shares of common  stock to three  persons  for
          consulting services rendered  Ubarter.com.  The issuance of the shares
          was exempt from  registration  under the provisions of Section 4(2) of
          the Securities Act. The shares were issued in a private  placement not
          involving a public offering.


     3.   During March 1997,  Ubarter.com  sold an  aggregate of 600,000  units,
          consisting of one share of common  stock,  one $.375 A Warrant and one
          $.50 B Warrant,  at a purchase  price of $.25 per unit to 58  persons.
          The aggregate  purchase  price of the units was  $150,000.  During the
          period from February 1998 to March 1998,  Ubarter.com  issued  576,000
          shares of common stock to certain existing



                                       14
<PAGE>

          shareholders for an aggregate purchase price of $216,000 in connection
          with the exercise of the A Warrants.  During the period from  February
          1998 to March 1998,  Ubarter.com  issued 23,400 shares of common stock
          to certain existing  shareholders  for an aggregate  purchase price of
          $11,700  in  connection  with the  exercise  of the B  Warrants.  This
          offering of units,  together with issuances of common stock underlying
          the warrants,  were exempt from registration under Section 3(b) of the
          Securities  Act  pursuant  to Rule  504  promulgated  thereunder.  The
          aggregate offering price did not exceed  $1,000,000,  and the offering
          was conducted in accordance with Rules 501 and 502  promulgated  under
          the Securities Act.

     4.   During February 1998,  Ubarter.com sold an aggregate of 240,000 units,
          consisting  of one share of common  stock,  one $.40 C Warrant and one
          $.55 D Warrant,  at a purchase price of $.30 per unit to five persons.
          The aggregate  purchase price of the units was $72,000.  This offering
          of units  was  exempt  from  registration  under  Section  3(b) of the
          Securities  Act  pursuant  to Rule  504  promulgated  thereunder.  The
          aggregate offering price did not exceed  $1,000,000,  and the offering
          was conducted in accordance with Rules 501 and 502  promulgated  under
          the Securities Act.

     5.   During the period from June 1998 to September 1998, Ubarter.com issued
          an  aggregate  of  557,000  shares  of  common  stock  to 32  existing
          shareholders for an aggregate purchase price of $278,500 in connection
          with the exercise of outstanding B Warrants. These issuances of common
          stock underlying the warrants were exempt from registration  under the
          provisions  of  Section  4(2) of the  Securities  Act and or Rule  506
          promulgated  under the  Securities  Act. As  shareholders  and warrant
          holders, these individuals and entities had pre-existing relationships
          with Ubarter.com,  had knowledge and information about the business of
          Ubarter.com and had access to publicly available and other information
          about Ubarter.com. These exercises of warrants did not involve the use
          of general solicitation or advertising.

     6.   During the period from July 1998 to September 1998, Ubarter.com issued
          240,000  shares of common  stock for an  aggregate  purchase  price of
          $96,000 to five existing  shareholders in connection with the exercise
          of outstanding C Warrants. During the same period,  Ubarter.com issued
          240,000  shares of common  stock for an  aggregate  purchase  price of
          $132,000  to the same five  persons  upon  exercise of  outstanding  D
          Warrants. These issuances of common stock underlying the warrants were
          exempt from  registration  under the provisions of Section 4(2) of the
          Securities Act and or Rule 506  promulgated  under the Securities Act.
          As shareholders  and warrant holders,  these  individuals and entities
          had pre-existing  relationships  with  Ubarter.com,  had knowledge and
          information  about  the  business  of  Ubarter.com  and had  access to
          publicly  available and other  information  about  Ubarter.com.  These
          exercises of warrants did not involve the use of general  solicitation
          or advertising.

     7.   During July 1998,  Ubarter.com  sold an  aggregate  of 800,000  units,
          consisting of one share of common stock and one $1.50 E Warrant,  at a
          purchase  price of $1.25  per unit to  three  persons.  The  aggregate
          purchase price of the units was $1,000,000. The issuance of the shares
          was exempt from  registration  under the





                                       15
<PAGE>


          provisions  of Section  4(2) of the  Securities  Act.  The shares were
          issued in a private placement not involving a public offering.

     8.   In March 1999,  Ubarter.com  issued  150,000 shares of common stock to
          Bob Bagga as  consideration,  in part,  for the  acquisition of Barter
          Business  Exchange,  Inc. These shares are to have a minimum aggregate
          value of CD$350,000  (US$234,500)  at the time they are registered for
          secondary   sale.   The   issuance  of  the  shares  was  exempt  from
          registration  under the  provisions of Section 4(2) of the  Securities
          Act.  The shares were issued in a private  placement  not  involving a
          public offering.

     9.   In May 1999,  Ubarter.com  issued 20,000 shares of common stock to two
          individuals  as  consideration,  in part,  for the  acquisition of BBE
          Windsor,  Inc. The issuance of the shares was exempt from registration
          under the provisions of Section 4(2) of the Securities Act. The shares
          were issued in a private placement not involving a public offering.

Item 6. Management's  Discussion and Analysis of Financial Condition And Results
of Operations

Overview

     Ubarter.com  provides  business to  business  barter  services  for retail,
professional,  media and other corporate clients through our offices in Seattle,
Washington,  Toronto, Ontario, Vancouver, British Columbia and Windsor, Ontario.
We manage a private barter currency,  Ubarter Dollars,  to enable our clients to
sell their products or services to our other clients for Ubarter  Dollars.  As a
result of our acquisition of Barter Business Exchange in March 1999, we now have
approximately  3,200 clients who offer over 7,000 products and services.  In the
near  future,  we  expect to offer an  e-commerce  solution  to barter  over the
Internet.

     Ubarter.com  was  incorporated  in Nevada in September  1996 under the name
International  Barter  Corp.  for the  purpose of  merging  with  Cascade  Trade
Association,  a Seattle based trade exchange.  Cascade Trade, founded in 1983 by
Steven  White,   Ubarter.com's   President  and  Chief  Executive  Officer,  had
approximately  500  clients  in the  Seattle  area at the  time  of the  merger.
Ubarter.com  began a direct public offering of common stock after the merger and
became  publicly  traded in February 1998. In March 1999, we acquired all of the
outstanding  stock of BBE, the largest trade exchange in Canada.  In April 1999,
International Barter Corp.'s name was changed to Ubarter.com Inc. to reflect our
change to an Internet-based business model.

     Substantially all of our revenues are derived from transaction fees paid in
cash by buyers and sellers in a barter  transaction.  We  currently  charge a 5%
cash fee on both sides  (i.e.,  to both the  seller  and  buyer) of most  barter
transactions.  Historically,  we have also  derived  revenues  from  monthly and
set-up fees  charged to clients.  As we launch our  e-commerce  site,  we do not
anticipate  charging  set-up or monthly fees for clients doing business over the
Internet.  Revenue  from  transaction  fees are  billed on a monthly  basis.  We
recognize  revenue equal to the cash to be received from our  commission  earned
when the  buyer has made an  unconditional  commitment  to pay and the  earnings
process has been completed by the finalization of a trade commission. Revenue is
recognized for monthly fees after the fees have been earned and collected.




                                       16
<PAGE>


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

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

Acquisition of Barter Business Exchange, Inc.

     Effective March 1, 1999, Ubarter.com acquired all of the outstanding shares
of BBE. See "Business - Acquisition of Barter Business  Exchange in March 1999."
For  the  year  ended   February  28,  1999,  BBE  reported  gross  revenues  of
approximately $2,732,000 and a net loss of $547,000. For the year ended February
28, 1998, BBE reported gross revenues of approximately $2,536,000 and a net loss
of $502,000.  The audited consolidated  statement of operations included in this
report  presents  the results of  operations  of  Ubarter.com  and  excludes the
results of  operations  of BBE which has been  accounted  for under the purchase
method of accounting.  The audited  consolidated  financial  statements included
with this report combine  Ubarter.com's  balance sheet as of March 31, 1999 with
the balance sheet of BBE as of February 28, 1999 (its last fiscal year end). See
Note 3 of Notes to Consolidated  Financial Statements.  Results of operations of
BBE will be  consolidated  with  Ubarter.com's  from the  effective  date of the
purchase, March 1, 1999, however, because of the differing fiscal year-ends, the
results  of  operations  of BBE for the fiscal  year from March 1, 1999  through
February 28, 2000 will be consolidated with Ubarter.com's  results of operations
for the fiscal year ended March 31, 2000. We estimated  goodwill  resulting from
the acquisition of BBE to be primarily  associated with the acquired  employees,
infrastructure  and  technological  expertise  of  BBE.  We are  amortizing  the
goodwill on a  straight-line  basis over the estimated life of the benefit of 24
months. See Note 2 of Notes to Consolidated Financial Statements.

     The following  unaudited pro forma consolidated  results of operations give
effect to the  acquisition  of BBE as if it had occurred as of the  beginning of
the period.  The pro forma results are not necessarily  indicative of the actual
results  of  operations  that  would  have  occurred  had the  transaction  been
consummated  as  indicated  nor are they  intended to indicate  results that may
occur in future periods.



<TABLE>
                                                                          Year Ended March 31,
                                                                          --------------------
                                                                       1999                  1998
                                                                       ----                  ----
<S>                                                                 <C>                   <C>
Revenue                                                             $3,289,900            3,219,900
Net loss                                                            (2,682,100)          (1,739,800)
Net loss per share -- basic                                              (0.49)               (0.66)
Net loss per share-- diluted                                             (0.49)               (0.66)
Shares used in per share calculation--basic and diluted              5,521,583            2,632,424

</TABLE>



                                       17
<PAGE>


Results of Operations

     The  following  table  sets  forth  for  the  periods  presented,   certain
historical summary financial information of Ubarter.com. This information should
be read in  conjunction  with the  Consolidated  Financial  Statements and Notes
thereto included elsewhere in this report.

<TABLE>

                                                        Year Ended March 31,
                                                        --------------------
                                                       1999               1998
                                                       ----               ----
<S>                                                    <C>                 <C>
Revenue ...................................       $   504,500        $   586,100

Operating Expenses
     Costs of corporate trade revenue .....            43,900             45,500
     Sales and marketing ..................            94,700             73,900
     Product development ..................           216,300             29,900
     General and administrative ...........           990,600            407,000
                                                  -----------        -----------
                                                    1,345,500            556,300

Income (Loss) from Operations .............          (841,000)            29,800
Net Income (Loss) .........................          (798,000)            32,500
Net Income (Loss) per share ...............             (0.14)              0.01
Weighted average common share .............         5,521,583          2,632,424
 outstanding(1)

</TABLE>


(1)  Adjusted to give effect to the 2 for 1 stock  split on July 24,  1998.  See
     Note 2 of Notes to Consolidated Financial Statements.


Comparison  of Fiscal  Year Ended  March 31, 1999 to Fiscal Year Ended March 31,
1998

Revenue

     Our total  revenue in fiscal 1999 was $504,500  compared with total revenue
of $586,100 in fiscal  1998.  This was a 16% decrease in fiscal 1999 from fiscal
1998.  Revenue  decreased  primarily as a result of Ubarter.com  concentrating a
large  portion of its financial and labor  resources on the  development  of its
business-to-business  e-commerce site for barter.  Much of the effort,  which in
prior years focused on increasing transaction fees from barter transactions, was
shifted to its  website  development  and to  e-commerce  strategic  development
activities in fiscal 1999.

     Corporate  trade  revenue  is  included  as a separate  component  of total
revenue.  Corporate  trade  revenue  consists  primarily  of sales  generated by
selling  consigned  inventories  on behalf of trade exchange  members.  There is
typically   little  or  no  profit  mark-up  on  such  items.  The  revenue  and
corresponding  expense  for  fiscal  1999 and 1998  were  $43,900  and  $45,500,
respectively.





                                       18


<PAGE>

     The  acquisition  of BBE will  significantly  impact our gross  revenues in
fiscal 2000.  For its year ended  February 28, 1999, BBE reported gross revenues
of $2,732,000.

Costs and Operating Expenses

     Costs  and  operating  expenses  (including   depreciation)   increased  to
$1,345,500 in fiscal year 1999 from  $556,300 in fiscal year 1998.  The increase
in operating  expenses  related  primarily to  significant  increases in product
development and general  administrative  expenses and a modest increase in sales
and marketing expense in fiscal 1999.

     Product  development  expense increased to $216,300 in fiscal 1999 compared
with $29,900 in fiscal 1998. Product  development  expenses consist primarily of
payments to outside  contractors  related to our website  development  and, to a
lessor extent,  of  depreciation  on equipment used for development and overhead
costs.  Ubarter.com's policy is to expense product development costs as they are
incurred.  The  increase  in  fiscal  1999  was  primarily  attributable  to our
development   efforts,   including  retaining  outside  consultants  related  to
technologies  necessary to support an e-commerce barter site. We expect to incur
approximately  $2  million in product  development  costs in fiscal  2000 as our
website is launched and e-commerce functionality is enhanced.

     General and  administrative  expenses  increased to $990,600 in fiscal 1999
from $407,000 in fiscal 1998. This increase was primarily due to the addition of
several key  personnel  and staff in fiscal  1999,  including a Chief  Financial
Officer,  Chief Technology  Officer and several new staff members in our trading
department and additional  employees hired to work on developing our website. In
addition,  we incurred  substantially greater legal and other professional fees,
such as  accounting  and  investor/public  relations,  as a result of our public
company  status and to assist us in  executing  our business  strategy.  Another
significant  noncash  expense  in fiscal  1999  related  to the  recognition  of
stock-based   compensation   as  a  result  of  issuance  of  stock  options  to
non-employees and certain issuance costs related to employees.  The value of the
options at the time of issuance (as estimated by Ubarter.com)  totaled $379,000,
of which $173,000 was recognized as an operating expense during fiscal 1999. Our
audited  consolidated  financial statements contain a material adjustment to our
results  of  operation  for the  second  quarter  of  fiscal  1999  relating  to
stock-based  compensation  as a  result  of the  issuance  of stock  options  to
non-employees and certain issuances costs related to employees.

     Sales and marketing  expense  primarily  consists of advertising  and other
promotional costs.  Ubarter.com  expects sales and marketing expense to increase
significantly in fiscal 2000 primarily related to the launch of our website. The
Company  currently  has  $135,000  of  prepaid  advertising  which it expects to
utilize in the future promotion and marketing of its website.

Liquidity and Capital Resources

     Since its  inception  in 1996,  Ubarter.com  has  financed  its  operations
primarily  from the sale of common  stock and  warrants  and  proceeds  from the
exercise of those warrants.  The operations of Cascade Trade  Association  which
was merged into  Ubarter.com  in November 1996 were financed  primarily  through
internal cash flow.

     At March 31, 1999, Ubarter.com had a working capital deficit of $1,507,000.
Our working  capital was  $413,000 at March 31,  1998.  The  decrease in working
capital resulted primarily from a $1,981,000  (deficit) balance of trade dollars
issued in excess of earned that




                                       19
<PAGE>


existed on the books of BBE as of February  28, 1999.  We assumed this  negative
balance in conjunction with the acquisition of BBE on March 1, 1999.

     In  accordance  with  the  guidelines   established  by  the  International
Reciprocal  Trade  Association,  Ubarter.com  has the right to  borrow  from its
exchange and spend within its exchange system.  Such a practice is commonly used
by barter exchanges, worldwide, to cover inventory purchases, capital purchases,
operating  expenses  and to  control  the supply of trade  dollars.  Ubarter.com
engages  in  barter  to pay for  some of our  operating  costs.  Ubarter.com  is
ultimately  obligated to provide  products and services to clients to offset any
amount of Ubarter Dollars issued in excess of earned.  Barter Business  Exchange
also  engaged  in barter to pay for some of its  operating  costs.  At March 31,
1999,  Ubarter.com  had expended  $2,148,000 of Ubarter Dollars in excess of the
amount of Ubarter  Dollars  earned by it compared with $5,000 at March 31, 1998.
We consider the current level manageable. These amounts are shown as a liability
on our balance sheet as of March 31, 1999 and 1998.

     The cash  provided by financing  activities  was  $1,481,000 in fiscal 1999
compared with $282,000 in fiscal 1998. Net cash provided by financing activities
in fiscal 1999 resulted  primarily  from the exercise of warrants.  The net cash
provided by financing activities in fiscal 1998 resulted from the sale of common
stock. We currently have a $67,000  revolving note payable with a bank. The note
payable is subject to annual  renewal.  There were no borrowings  outstanding at
March 31, 1999. New borrowings under the note require security  deposits of cash
and cash  equivalents  with the bank.  We did not have any  credit  facility  in
fiscal 1998.

     The net cash used by operating  activities  was $700,000 in fiscal 1999 and
$48,000 in fiscal 1998. During 1999, Ubarter.com had a net loss of $798,000. The
primary adjusting items were a $135,000 increase in prepaid  advertising and the
recognition of $173,000 in stock-based  compensation  cost.  During fiscal 1999,
there were  increases in accounts  payable and other  liabilities  of $7,000 and
depreciation  expense  of $18,000  was  recorded.  The cash used in fiscal  1998
reflected  a net income of $33,000,  a deficit of $107,000 in net trade  revenue
earned over trade costs, and $11,000 in depreciation.  The increase in cash used
in operations was primarily  attributable to increased personnel and development
costs in 1999 compared with 1998.

     In fiscal 1999, Ubarter.com used net cash of $85,000 for the acquisition of
property and equipment, compared to $14,000 in fiscal 1998.

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

     As  of  March  31,  1999,  we  had  no  material  commitments  for  capital
expenditures.   Ubarter.com  leases  its  U.S.  office  facilities  in  Seattle,
Washington and leases its Canadian office  facilities in Toronto,  Vancouver and
Windsor.  Future  minimum  rental  commitments  as of March 31, 1999 pursuant to
these  leases  are  $384,000.  See  Note 9 of Notes  to  Consolidated  Financial
Statements.

     We believe our existing working capital and cash from financing  activities
will be sufficient to fund our  operating  activities  through the end of fiscal
year 2000. Unless we are successful in raising additional capital, we may not be
able to achieve  our  expansion  goals,  including  further  development  of our
website. There is no assurance we will have or be able access sufficient capital
or other resources. Ubarter.com believes that a portion of its short-term




                                       20
<PAGE>


capital  resources,  up to $1.2 million may be provided  through the exercise of
outstanding E Warrants.  The E Warrants are  exercisable at a price of $1.50 and
expire in June 2000. The perceived  value of these warrants at any given time is
related to the market price of our common  stock,  which trades over the counter
on the OTC  Bulletin  Board.  If we are unable to obtain  financing  through the
exercise  of  warrants  or other  means,  we may be unable  to meet its  working
capital requirements or implement its short-term plans for expansion.

     We anticipate having to raise additional  capital by equity issuance during
the next  several  years,  as we expect to grow at rates that will  require more
funds than will be generated by its  operations.  Ubarter.com  does not have any
commitments  for  additional  financing  at this  time.  Our  ability  to obtain
additional  capital may be  dependent  on market  conditions,  the  national and
international economies and other factors outside our control. If adequate funds
are not  available  or are not  available at  acceptable  terms,  our  long-term
ability to finance  its  expansion,  develop or enhance  services  or respond to
competitive pressures would be significantly limited.

Discussion of the Year 2000 Issue

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

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

     Remediation   plans.   Our   principal   software   vendor  has   completed
reprogramming of its proprietary software.  With respect to software supplied by
third parties, we have determined that such software is already Y2K compliant or
will be  compliant  well before the year 2000 or,  alternatively,  that any such
software  will be  replaced  at a cost which is not  material  to our results of
operations.

     Uncertainties and Contingencies.  Ubarter.com  presently believes that with
modifications  to existing  software and  conversions  to new software,  the Y2K
issue can be mitigated.  Management does not believe that Ubarter.com will incur
significant  operating  expenses or be  required  to invest  heavily in computer
system improvements to be Y2K compliant.  However, even if such modifications or
conversions are not made, or are not completed timely, Ubarter.com would be able
to continue operations  manually.  This would result in more cumbersome and less
efficient  operations but is not currently  expected to have a material  adverse
effect on our business,  operations or financial condition. However, there is no
guarantee that the software of other companies on which our software relies will
be timely  converted,  or that a failure to convert  by  another  company,  or a
conversion that is incompatible with our




                                       21
<PAGE>


systems,  would  not have a  material  adverse  effect  on  Ubarter.com  and its
operations.  Significant  uncertainty  exists concerning the potential costs and
effects associated with any year 2000 compliance.

Risk Factors

     You should carefully consider the following  factors,  among others, as you
evaluate  our  business  and  the  forward-looking  statements  we  make in this
document.  Any of these risk factors could  materially and adversely  affect our
business,  financial condition or operating results.  Forward-looking statements
are  subject  to a number  of risks and  uncertainties.  We urge you to note the
description  of our plans,  objectives  and  strategies  for future  operations,
assumptions  underlying  these  plans,   objectives  and  strategies  and  other
forward-looking  statements included in the "Business" section in this document.
These  descriptions  and statements are based on our current  expectations.  Our
actual  results may differ  significantly  from the results  discussed  in these
forward-looking  statements as a result of certain factors,  including those set
forth  in this  "Risk  Factors"  section  and  elsewhere  in this  document.  We
undertake no obligation to update  publicly any  forward-looking  statements for
any reason,  even if new information  becomes available or other events occur in
the future.

We have had relatively  small  operations to date and may face  difficulties  in
achieving our growth strategy in our markets.

     You should consider the risks and difficulties we expect to encounter as we
attempt to execute our business strategy,  including the rapidly evolving nature
of the  commercial  barter market and the Internet  market.  These risks include
uncertainties about our ability to:


     *    attract a larger number of clients to execute barter  transactions  on
          our offline  trade  exchange  and on our  soon-to-be  launched  barter
          e-commerce website;

     *    increase  awareness  of the  benefits of  bartering in general and the
          specific services we can provide;

     *    strengthen the loyalty of our existing clients;

     *    effectively   execute  our  plan  to  acquire  other  barter  exchange
          companies in North America;

     *    successfully  implement  our plan to introduce  our online  e-commerce
          barter website;

     *    respond effectively to competitive pressures;

     *    continue to develop and upgrade our technology;

     *    attract, integrate, retain and motivate qualified personnel; and

     *    respond effectively to increased business operation demands.

We may be unable to accomplish  one or more of these  things,  which could cause
our business to suffer.  In addition,  accomplishing one or more of these things
could be very costly, which could harm our financial results.

Funds may be insufficient to finance our plans for growth.

     Our existing working capital and cash from financing activities will not be
sufficient to allow us to execute our business plan,  including the  development
of our e-commerce barter website and acquisition of other barter exchanges,  and
meet the demands for our services during fiscal year 2000. We will need to raise
additional capital to finance our expansion goals and




                                       22
<PAGE>


operations.  We believe a portion of our capital resources,  up to $1.2 million,
will come from the exercise of  outstanding  warrants.  These  warrants  have an
exercise  price of $1.50 and expire in June 2000.  The perceived  value of these
warrants at any given time is related to the market  price of our common  stock,
which trades over the counter  through the OTC Bulletin  Board. If we are unable
to obtain the expected portion of our financing through the exercise of warrants
or other financings, we may not be able to successfully implement our short-term
or long-term plans for expansion or to meet our working capital requirements.

     The full  development and  implementation  of the Ubarter.com  website will
require additional  resources.  We may not be able to obtain the working capital
necessary to develop fully our website. Furthermore, our website may not produce
material revenue even if successfully developed.

     Additionally,  we may not be  successful  in our  efforts to acquire  other
regional  trade  exchanges  and expand as intended.  One of our  assumptions  in
making acquisitions is that we will be able to use our common stock, rather than
cash,  as  consideration  for any  purchase.  This  assumption  may  prove to be
incorrect.  If we do use shares of our common  stock to make  acquisitions,  the
issuance  of  additional  shares  could be  dilutive.  Even if we succeed in our
expansion plans, we may experience  rapid growth that requires  additional funds
to expand our operations and organization.  Our working capital  requirements in
the  foreseeable  future will depend on a variety of factors  including  capital
requirements to implement and adjust our business plan.

     We do not have current commitments for additional  financing.  We intend to
explore a number  of  options  to secure  alternative  financing  including  the
issuance  of  additional  equity.  We might not  succeed,  however,  in  raising
additional  equity  capital  or in  negotiating  and  obtaining  additional  and
acceptable  financing when we need it. Our ability to obtain additional  capital
may depend on market  conditions  (including  the market for  Internet  stocks),
national and global economies and others factors beyond our control. If adequate
capital were not available or were not  available on acceptable  terms at a time
when we needed  it,  our  ability to execute  our  expansion  plans,  develop or
enhance our services or respond to competitive  pressures would be significantly
impaired.

We face competition from numerous barter exchanges and other companies.

     There are hundreds of independent barter exchanges in the United States and
Canada, some of which may have similar plans for international  expansion in the
barter  industry.  For  example,  ITEX  Corporation,  a publicly  traded  barter
company, is attempting international expansion. Some of the established entities
in the barter industry may have more operating  experience,  larger client bases
or greater financial,  marketing,  technical and other resources. It is possible
that a group of independent barter exchanges could join forces to create another
international barter company. Consequently, we will encounter competition in our
efforts  to expand  our  business  and to acquire  desirable  independent  trade
exchanges.

     There are no substantial  barriers to initial entry into our business,  and
therefore we expect  competition  from trade  exchanges,  and other companies to
increase in the future. We believe the more market  penetration we achieve,  the
higher  the  barrier to entry will  become  for anyone  contemplating  a similar
system. We face the risk, however,  that existing or new competitors may develop
technologies or services or strategic  alliances and affiliations  that make our
services less marketable or less useful or desirable. Furthermore, we may not be
able to successfully  enhance our services,  develop new services or lower costs
when and as we need them.

     Similarly,  we  expect  to  face  competition  in our  efforts  to  develop
Ubarter.com  into  a  premier   e-commerce   barter  website.   The  market  for
Internet-based  services and products is relatively new, intensely  competitive,
rapidly  evolving  and  subject  to rapid  technological  change.  A  number  of
companies that have expertise in developing  online commerce and in facilitating
person-to-person or business-to-business




                                       23
<PAGE>


interaction,  could be potential competitors if they elected to enter the barter
business.  Certain  Internet-based  companies  with unique  purchasing  or sales
models such as eBay and Priceline.com have significant technical,  financial and
marketing  resources and could be potential  competition for Ubarter.com.  These
companies  would be strong  competitors  if they  decided  to enter  the  barter
business.

A key component of our future  revenue  growth depends on our ability to develop
and successfully implement a quality e-commerce barter website.

     We intend to develop  Ubarter.com into a premier  e-commerce barter website
where  businesses can trade  products and services.  We may not be successful in
our plans to implement,  maintain and develop usage of the website.  Our website
may encounter technical  difficulties in implementation.  Technical problems may
cause delays or require additional expenditures. For our website to be perceived
as a viable  marketplace  and a  replacement  for or supplement to current trade
exchanges,  the  website  must  provide  accurate  and timely  information  on a
consistent,  easy-to-use  and reliable  basis.  Other measures of quality of our
website include:

     *    the level of representative client participation;

     *    a sufficient  range and  availability of products and services offered
          over our website;

     *    our ability to service high response rates from clients; and

     *    timely  posting of  changes  and  modifications  to the  inventory  of
          clients and products and services offered over our website.

     We expect to derive revenues in the near term from the Ubarter.com website.
The success of our  business  will depend on end-user  acceptance  of our online
services.  Our success will also depend on our ability to design,  develop, test
and support new services and  enhancements  on a timely basis that meet changing
customer  needs and our  ability to respond to  technological  developments  and
emerging  industry  standards.  We may be unable to  maintain  adequate  quality
control  procedures,  develop and market new services and enhancements that meet
changing  customer needs, or respond to technological  developments and emerging
industry standards.

In our effort to develop new and enhanced services and features for our website,
we may alienate current users or experience technical difficulties.

     We believe our new website when launched will be more attractive to clients
if we develop  features that will,  among other things,  allow clients to access
products  and  services  online 24 hours a day,  seven days a week,  check trade
dollar  balances  and  execute  trades in real time.  Accordingly,  we intend to
introduce  additional or enhanced  services and features designed to attract new
clients to our website while retaining current clients. If we introduce services
or features  that do not  function  properly or that our current  clients do not
perceive favorably, they may not continue to visit our website. Clients may also
choose a competitor's  site over ours. We may also experience  difficulties that
could  delay  or  prevent  us  from   introducing   new  services  or  features.
Furthermore,  these  services or features may contain errors or problems that we
discover  after  we  have  already  introduced  them.  We  may  need  to  modify
significantly the design of these services or features on our website to correct
these errors.  Errors could lead to significant  dissatisfaction  of clients and
result in adverse publicity.



                                       24
<PAGE>


Our growth and success depend on continued growth in barter industry.

     Industry  sources,  as well as our  experience,  indicate that for the last
several years the commercial  barter  industry has  experienced a steady growth.
These sources have  attributed the growing  appeal of the barter  industry among
business owners to increasing  competitive  pressures,  the existence of surplus
inventory, unproductive assets, excess capacity, and the ability to generate new
sales and reach new customers while  conserving cash.  Nevertheless,  we believe
there  has been low  penetration  by the  barter  industry  into the  market  of
potential business  customers.  Although we are aware of nothing that would lead
us to conclude  that the retail  barter  industry will not continue to grow at a
steady rate, it is possible this growth will not continue.  If the growth of the
barter  industry were to decline,  however,  we would expect to face  heightened
competition  with  weakened  profitability  and a  reduced  share of the  barter
market,  which  could  materially  adversely  affect  our  business,  results of
operations and financial conditions.

We may be unable to effectively manage our growth.

     As we continue to expand our level of operations, we will need an effective
planning and  management  process to implement our business  plan  successfully.
After introduction of our new website, we may experience a period of significant
expansion of our business. Depending on the amount and timing of any increase in
business, this expansion could place a strain on our management, operational and
financial resources. Some areas that could be put under strain by growth include
customer support, customer billing and website support and maintenance.  We have
management,  operating and financial systems in place, and we intend to continue
or efforts to improve these systems. There is a risk, however, that such systems
may be inadequate to support our existing and future  operations or that hiring,
training and managing new employees will be more difficult then we anticipate.

We have historical  losses and anticipate  future losses in the initial stage of
implementing our business strategy.

     We are  incurring  losses from our  operating  activities.  As of March 31,
1999,  we had an  accumulated  deficit of  $909,500.  We expect to increase  our
operating  expenses  in an effort to expand  our  marketing  operations,  and we
expect to increase our level of  expenditures  to further  develop online barter
capability.   These  anticipated  increases  in  operating  expense  levels  and
developmental  costs will adversely affect operating results.  We expect that we
will  continue  to  incur  losses  during  fiscal  year  2000.  Further,  if  we
successfully  accomplish  our plan of acquiring  existing  trade  exchanges,  we
believe  these  acquisitions  could result in  additional  operating  losses and
negative cash flows until the acquisitions are successfully  integrated into our
operations. If we acquire other trade exchanges, period-to-period comparisons of
our financial results may not be meaningful,  and you should not rely on them as
an indication of future performance.

We may not be able to integrate the  operations  from our recent  acquisition of
Barter Business Exchange or from any future acquisitions.

     We may not be successful in integrating  the operations of Barter  Business
Exchange  or from any future  acquisitions.  The BBE  acquisition  was our first
significant  acquisition.  We therefore have limited  experience with completing
and integrating acquisitions.  There is risk that we will be unable to integrate
successfully  the  operations  of Barter  Business  Exchange  with our  existing
business  or that the  anticipated  benefits of the  acquisition,  or any future
acquisitions, may not be realized. Part of our business strategy includes growth
by acquisition,  so we expect to pursue other acquisitions in the future. We may
be unable to identify,  negotiate  or finance




                                       25
<PAGE>


future  acquisitions.  The Barter Business  Exchange  acquisition and any future
acquisitions  present many risks and  uncertainties  generally  associated  with
acquisitions including:


     *    adverse   effects  on  our  reported   results  of   operations   from
          acquisition-related charges and amortization of goodwill and purchased
          technology;

     *    increased fixed costs, which could impact profitability;

     *    increased debt;

     *    inability  to  maintain  the  key  business   relationships   and  the
          reputation of the acquired businesses;

     *    potential  dilution  to  current  shareholders  from the  issuance  of
          additional equity securities;

     *    difficulties integrating operations, personnel, technologies, products
          and information systems of the acquired businesses;

     *    maintenance of our standards, controls, procedures and policies;

     *    becoming  responsible  for  significant  liabilities  of  companies we
          acquire;

     *    diversion of management's attention from other business concerns; and

     *    potential loss of key employees of acquired businesses.

     We are currently  facing all of these challenges in some degree relating to
the BBE acquisition, and we have not yet established our ability to meet them.

     We currently do not have any understandings, commitments or agreements with
respect  to any  other  material  acquisition  and no  material  acquisition  is
currently being pursued.

We are dependent on key personnel.

     The successful  implementation of our business plan and the overall success
of our  business  will  depend  on the  skills  and  efforts  of our  management
personnel and, to a large extent, the active  participation of Steven White, our
Chief  Executive  Officer  and  President  and Bob  Bagga,  our Chief  Operating
Officer,  as well as our other  executive  officers and key  employees.  We have
employment  agreements in place with certain key employees  and  management.  We
also have key-man insurance covering the lives of Mr. White and Mr. Bagga in the
amount of $1 million and approximately  $670,000,  respectively.  We do not have
key man life  insurance on other  executives.  Our future success will depend on
our ability to attract,  train,  retain,  and  motivate  technical,  managerial,
marketing and customer support personnel. Competition for these personnel may be
intense,  particularly  for individuals with e-commerce  experience.  We provide
stock  options,  which  further serve to retain and motivate key  employees.  We
nevertheless face the risk that we will be unable to attract,  integrate, retain
and motivate qualified employees.




                                       26
<PAGE>


An established public trading market for our securities does not exist.

     Our common stock trades on the OTC Bulletin  Board.  The OTC Bulletin Board
is an electronic  quotation medium used by subscribing broker dealers to reflect
dealer  quotations on a real-time  basis. The  over-the-counter  market provides
significantly  less  liquidity  than the Nasdaq Stock Market.  Quotes for stocks
included on the OTC Bulletin  Board are not listed in the financial  sections of
newspapers as are those for the Nasdaq Stock Market. Further,  quotation entries
on the OTC Bulletin Board may reflect an unpriced indicator of interest (such as
"bid wanted" or "offer wanted" indicators) on unsolicited  non-dealer  interest.
Therefore,  prices for securities traded solely on the OTC Bulletin Board may be
difficult  to obtain,  and holders of common stock may be unable to resell their
securities at or near their original offering price or at any price.

     Furthermore,  the National  Association  of Securities  Dealers has enacted
recent changes that limit  quotations on the OTC Bulletin Board to securities of
issuers that are current in their reports filed with the Securities and Exchange
Commission.  The intent of this change is to make reliable and current financial
and other information about issuers available to the investing public.  The NASD
has proposed additional changes to the OTC Bulletin Board. The proposed changes,
if and when implemented, will require broker-dealers and market makers to review
current information about an issuer before making  recommendations to a customer
in the  security  and to provide  certain  disclosure  information  on the trade
confirmation for all customer transactions.  At this time, the impact these rule
changes may have on our securities or the trading of securities generally on the
OTC Bulletin Board cannot be  determined.  If at any time our securities are not
included on the OTC Bulletin Board and do not qualify for Nasdaq, quotes for the
securities may be included in the "pink sheets" for the over-the-counter market.
This trading  market is even less liquid than the OTC Bulletin Board and holders
of common stock may be unable to obtain any quotations for securities.

"Penny stock"  regulations  impose  certain  restrictions  on  marketability  of
securities.

     The SEC has adopted regulations that generally define a "penny stock" to be
any equity  security  that is not traded on a national  securities  exchange  or
Nasdaq and that has a market  price of less than $5.00 per share or an  exercise
price  of less  than  $5.00  per  share,  subject  to  certain  exceptions.  The
definition  would  exclude a security  of an issuer that meets  certain  minimum
financial requirements.  Generally,  these minimum thresholds would be met by an
issuer  with  net  tangible  assets  in  excess  of $2  million  or $5  million,
(depending  on whether the issuer has been  operating  continuously  for less or
more than three  years) or by an issuer  with  "average  revenue" of at least $6
million for the last three years.

     As long as we do not  meet  the  relevant  financial  requirements  and our
common stock is trading at less than $5.00 per share on the OTC Bulletin  Board,
our  securities  are  subject  to the penny  stock  rules.  These  rules  impose
additional sales practice requirements on broker-dealers who sell our securities
to persons other than established customers and accredited investors (generally,
investors  with a net worth in  excess of  $1,000,000  or an  individual  annual
income  exceeding  $200,000,  or, together with the investor's  spouse,  a joint
income of  $300,000).  For  transactions  covered by the penny stock rules,  the
broker-dealer must make a special suitability  determination for the purchase of
such  securities  and have  received  the  purchaser's  written  consent  to the
transaction prior to the purchase.  Additionally, for any non-exempt transaction
involving  a penny  stock,  the rules  require,  among  other  things,  that the
broker-dealer  deliver an SEC mandated risk disclosure  document relating to the
penny stock market and the risks associated  therewith prior to the transaction.
The  broker-dealer  must  also  disclose  the  commission  payable  to both  the
broker-dealer and the registered  representative  as well as current  quotations
for  the  securities.  If  the  broker-dealer  is  the  sole  market-maker,  the
broker-dealer




                                       27
<PAGE>


must  disclose  this  fact and the  broker-dealer's  presumed  control  over the
market.  Finally,  the  broker-dealer  must send monthly  statements  disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.  Consequently,  the penny stock rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of our shareholders to sell their securities in the secondary market.

Volume of shares eligible for sale may depress the market price.

     Of the 5,915,420  shares of common stock  outstanding as of March 31, 1999,
we issued 1,439,400 under an exemption from the  registration  provisions of the
Securities Act of 1933 under Rule 504 of Regulation D. These Rule 504 shares are
eligible  for resale,  without  limitation,  in the open  market.  We issued the
remaining 4,476,020 shares in private  transactions.  These 4,476,020 shares are
restricted securities within the meaning of Rule 144 under the Securities Act of
1933. Of these shares, we expect to register for resale by certain  shareholders
2,753,000  shares of our common stock,  including  800,000 shares  issuable upon
exercise of  outstanding  warrants and 150,000  shares of common stock issued in
the BBE acquisition.  Assuming exercise of all of the warrants and effectiveness
of the registration statement relating to the resale of the shares, shareholders
may sell up to 2,753,000 shares,  which will represent  approximately 40% of our
issued and outstanding  shares of common stock. All of the remaining  restricted
shares, including shares held by affiliates,  became eligible in March 1999, for
resale in the open market,  subject to the volume and other  conditions  of Rule
144.  There are no  contractual  restrictions  on the resale of the  outstanding
common stock, except for some volume limitations on the 150,000 shares issued in
connection with the BBE acquisition. The sale in the public market of the shares
to be registered for resale as well as the restricted  shares, or the perception
that these sales may occur, may depress  prevailing  market prices of the common
stock.  These  factors  may also make it more  difficult  for us to raise  funds
through future offerings of common stock.

We will depend on the continued  utility of the Internet and  technology for our
e-commerce barter site.

     The  performance  of the  Ubarter.com  website  will  be  dependent  on the
successful  operation of the Internet and on certain  third parties and services
(such  as  Internet  service  providers,  Internet  backbone  providers  and Web
browsers).  Users may experience  difficulties  resulting  from system  failures
unrelated to our internal  systems and services.  If the Internet were to become
regularly  unavailable  for many  hours at a time,  or if its  ability to handle
traffic loads were to  deteriorate  enough to cause frequent  unavailability  or
slow response  times,  there would be less traffic to our website.  Furthermore,
the  perception  of the  quality of our  services  could  suffer.  To date,  the
Internet has proven highly  resilient and responsive to rapid growth in its use,
and many of the world's telecommunications,  software and hardware companies are
continually investing in capacity and improvements.

     Our Internet services will be designed around certain standards, including,
for example,  Internet  security  standards.  Current and future  success of our
services  may become  subject  to  additional  industry  standards  as  Internet
commerce rapidly evolves. As a result our business may incur additional costs of
unknown  proportions as we are  confronted  with new  technology  standards.  In
addition,  we may not be successful in our efforts to enhance existing  services
and to develop, introduce and market new services. Furthermore, our enhancements
and new services may not adequately meet the requirements of the marketplace and
achieve  market  acceptance.  As the  Internet  develops,  it is  possible  that
incompatibility or lack of appropriate features could impact our business.



                                       28
<PAGE>


     We expect  sales of our  services  will  depend  in large  part on a robust
industry  and  infrastructure  for  providing  Internet  access and carrying the
rapidly  increasing  Internet  traffic.  Certain critical issues  concerning the
commercial use of the Internet (including capacity to handle projected increases
in traffic,  security,  reliability,  cost,  ease of use,  access and quality of
service)  remain  unresolved  and may  impact the growth of  Internet  use.  The
Internet  may  not  prove  to be a  viable  commercial  marketplace  because  of
inadequate  development  of the  necessary  infrastructure,  such as a  reliable
network backbone or timely development of complementary  products,  such as high
speed modems. Because global commerce and on-line exchange of information on the
Internet and other  similar open wide area  networks  are new and  evolving,  we
cannot predict with any assurance  whether the  infrastructure  or complementary
products  necessary to make the Internet a viable  commercial  marketplace  will
continue to be developed. Even if the necessary infrastructure and complementary
products are  developed,  we cannot  predict  whether the Internet will remain a
viable  commercial  marketplace.  In addition,  the  widespread  adoption of new
Internet or  telecommuting  technologies  or standards  could require us to make
substantial  expenditures to modify or adapt our services. In this case, the new
Internet or telecommuting  services or enhancements  that we offer could contain
design flaws or other defects. Although we expect to be responsive to changes in
the Internet and  technology,  we may not be successful in achieving  widespread
acceptance  of our services  before  competitors  offer  services with speed and
performance equal to or greater than ours.

Security and privacy  concerns could subject us to liability or otherwise  deter
consumers from using our Web site.

     Once we are able to conduct online barter transactions, we could be subject
to litigation  and liability if third parties were able to penetrate our network
security or  otherwise  misappropriate  our users'  personal  information.  This
liability   could  include   claims  for   unauthorized   barter   transactions,
impersonation  or other similar fraud claims.  It could also include  claims for
other  misuses  of  personal  information,  such as for  unauthorized  marketing
purposes. In addition, the Federal Trade Commission and certain states have been
investigating  certain  Internet  companies  regarding  their  use  of  personal
information.  We could incur  additional  expenses and be required to change our
current practices if new regulations  regarding the use of personal  information
are adopted or should  government  agencies  choose to  investigate  our privacy
practices.

     The need to securely  transmit  confidential  information over the Internet
has been a significant  barrier to electronic  commerce and communications  over
the Internet. Any well-publicized compromise of security could deter more people
from using the  Internet or from using it to conduct  transactions  that involve
transmitting confidential  information,  such as barter transaction and personal
information.  Internet security concerns could frustrate our efforts to grow our
client base. We may also incur  significant  costs to protect against the threat
of security breaches or to alleviate problems caused by such breaches.

We face risks from potential government regulation of the barter industry and of
the Internet.

     The barter  industry is not currently  subject to direct  regulation by any
government agency, other than regulations applicable to businesses.  Certain tax
regulations  require U.S.  barter  exchanges  to file with the Internal  Revenue
Service,  on an annual basis,  the totals of the barter sales of their  clients.
Similarly,  there are currently few laws or regulations  governing  usage of the
Internet.  It is possible that a number of laws and  regulations  may be adopted
with  respect to the  Internet,  covering  issues  such as user  privacy and the
pricing,  quality and other  characteristics of products and services and taxes.
The adoption of laws or regulations  applicable to our business could hinder the
growth of the barter industry or the Internet.  As a result,  these  regulations
could  cause a decrease  in the demand for our  services  and an increase in our
cost of doing  business  or  otherwise  have a  material  adverse  effect on our
business, prospects,



                                       29
<PAGE>


financial condition and results of operations. Furthermore, the applicability to
the Internet of existing laws in various jurisdictions  governing issues such as
property  ownership,  sales  and other  taxes,  libel and  personal  privacy  is
uncertain and may take years to resolve.

Our systems may be subject to Year 2000 problems.

     We have  reviewed  our own  information  technology  and  other  technology
systems to assess and  remediate any Year 2000  problems.  We believe all of our
systems and software are Year 2000 compliant.  We cannot,  though,  be sure that
our internal systems will function  properly in the Year 2000. See "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
Discussion of the Year 2000 Issue."

Our quarterly operating results are subject to fluctuations and seasonality.

     Our revenue and operating  results may vary  significantly  from quarter to
quarter  as a result of a number of  factors,  some of which are  outside of our
control. These factors include:

     *    the  commitment of clients to the general  concept of bartering and to
          the concept of bartering online through our website;

     *    the budget cycles of our clients;

     *    the attractiveness to clients of our bartering services;

     *    changes in costs that we incur to attract and retain clients;

     *    changes  in our  fees or the  fees of our  competitors  for  bartering
          services;

     *    the introduction of new services by us or by our competitors;

     *    unexpected   costs  and  delays  relating  to  the  expansion  of  our
          operations;

     *    the occurrence of technical difficulties and system downtime; and

     *    general economic and market conditions.

     We do not believe our revenue will be subject to seasonal fluctuations as a
result of general patterns of retail advertising and direct marketing, which are
typically higher during the fourth calendar quarter. Expenditures by our clients
may though tend to be cyclical,  reflecting overall economic conditions,  client
buying patterns and changing marketing strategies.

     As a result  of the above  factors,  revenues  and  operating  results  are
difficult to forecast,  and you should not rely on period-to-period  comparisons
of results of  operations as an  indication  of our future  performance.  We may
incur a significant  shortfall in revenues in relation to our  expectations.  In
addition,   in  future  periods  our  operating   results  may  fall  below  the
expectations  of public market  analysts and investors.  Should this occur,  the
market price of our common stock would likely decline.

Item 7. Financial Statements

     Reference is made to the financial  statements,  the reports  thereon,  the
notes  thereto  and  supplementary  data  commencing  at pages  F-1 of this Form
10-KSB,  which financial  statements,  reports,  notes and data are incorporated
herein by reference.




                                       30
<PAGE>


Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

     Andersen  Andersen & Strong  L.C.  has  audited  our  financial  statements
annually  since fiscal 1996.  Subsequent to the  completion of the audit for the
fiscal year ended  March 31,  1998,  we hired a partner of  Andersen  Andersen &
Strong L.C. to serve as our Chief Financial Officer.  Because it could no longer
serve us as an independent  accounting  firm for the fiscal year ended March 31,
1999, the former  accounting  firm declined to stand for re-election at the 1998
Annual Meeting of Shareholders. During January 1999, we engaged the firm of Moss
Adams L.L.P. as our independent  accountants for the fiscal year ended March 31,
1999. The reports of Andersen Andersen & Strong L.C. for prior fiscal years have
not  contained  an  adverse  opinion or  disclaimer  of  opinion,  nor were they
modified as to uncertainty,  audit scope or accounting principles. There were no
disagreements with the former accountants on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act

     The  information  set forth  under the  caption  "Election  of  Directors,"
"Executive   Officers"  and  "Section  16(a)  Beneficial   Ownership   Reporting
Compliance"  in  Ubarter.com's  definitive  Proxy  Statement for its 1999 Annual
Meeting of  Shareholders  expected to be filed with the  Securities and Exchange
Commission on or before July 29, 1999 (the "Proxy  Statement")  is  incorporated
herein by reference.

Item 10.  Executive Compensation

     The information  set forth under the caption  "Executive  Compensation  and
Other  Information,"  "Compensation  of  Directors"  in the Proxy  Statement  is
incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The  information  set forth under the  captions  "Securities  Ownership  of
Certain Beneficial Owners" and "Securities Ownership of Management" in the Proxy
Statement is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions

     The  information  set forth under the caption  "Certain  Relationships  and
Related  Transactions between Management and the Company" in the Proxy Statement
is incorporated herein by reference.

Item 13.  Exhibits and Reports on Form 8-K


(a)      Exhibits

2.1      Merger Agreement with Cascade Trade  Association,  dated as of November
         15, 1996 (Incorporated be reference to Exhibit 10.1 of the registrant's
         Registration Statement on Form SB-2 (Registration No. 333-71411).

2.2      Share Purchase Agreement dated February 28, 1999, among the registrant,
         Barter Business Exchange Inc. and Bob Bagga.  Incorporated by reference
         to Exhibit 10.9 of the  registrants'  Current  Report on Form 8-K filed
         March 17, 1999.



                                       31
<PAGE>


2.3      Share  Pledge  Agreement  dated  March 2, 1999,  among the  registrant,
         Barter Business Exchange Inc. and Bob Bagga.  Incorporated by reference
         to Exhibit 10.10 of the  registrants'  Current Report on Form 8-K filed
         March 17, 1999.

2.4      Promissory  Note dated March 2, 1999 by the  registrant in favor of Bob
         Bagga.  Incorporated by reference to Exhibit 10.11 of the  registrants'
         Current Report on Form 8-K filed March 17, 1999.

3.1      Articles of Incorporation, as amended.

3.2      Bylaws  (Incorporated  be reference to Exhibit 3.4 of the registrant's
         Registration Statement on Form SB-2 (Registration No. 333-71411).

4.1      Form  of  E  Warrant  issued  in  private  placement  (Incorporated  be
         reference to Exhibit 4.1 of the registrant's  Registration Statement on
         Form SB-2 (Registration No. 333-71411).

10.1     1998 Stock Option Plan with Form of Option Agreement  (Incorporated be
         reference to Exhibit 10.2 of the registrant's  Registration  Statement
         on Form SB-2 (Registration No. 333-71411).*

10.2     Employment  Agreement with Steven White  (Incorporated be reference to
         Exhibit 10.3 of the registrant's  Registration  Statement on Form SB-2
         (Registration No. 333-71411).*

10.3     Employment Agreement with Alan Zimmelman (Incorporated be reference to
         Exhibit 10.4 of the registrant's  Registration  Statement on Form SB-2
         (Registration No. 333-71411).*

10.4     Employment  Agreement with Richard Mayer (Incorporated be reference to
         Exhibit 10.5 of the registrant's  Registration  Statement on Form SB-2
         (Registration No. 333-71411).*

10.5     Employment Agreement with Kevin Andersen (Incorporated be reference to
         Exhibit 10.6 of the registrant's  Registration  Statement on Form SB-2
         (Registration No. 333-71411).*

10.6     Employment Agreement with Bob Bagga.*

10.7     Amended and Restated Consulting Agreement with Astra Advisors LLC. *

10.8     Premises Lease Agreement  dated as of September 29, 1997  (Incorporated
         be reference to Exhibit 10.8 of the registrant's Registration Statement
         on Form SB-2 (Registration No. 333-71411).

21       Subsidiaries of the registrant.

23.1     Consent of Moss Adams LLP.

23.2     Consent of Andersen, Andersen & Strong L.C.

24       Power of Attorney (included on signature page).

27       Financial Data Schedule.

--------------------------------
*Constitutes a management contract or compensatory plan or arrangement  required
to be filed with this report.

(b)  Reports on Form 8-K

     1. A Current  Report on Form 8-KSB was filed on February 19, 1999 to report
a change in the registrant's certified public accountant.



                                       32
<PAGE>


     2. A Current Report on Form 8-KSB was filed on March 17, 1999 to report the
acquisition of Barter Business Exchange  effective March 1, 1999. The registrant
filed two amendments to that Current Report on Form 8-KSB, one on March 29, 1999
and one on May 14, 1999.  The amended  report  filed on May 14,  1999,  includes
audited  financial  statements  for  Barter  Business  Exchange  and  pro  forma
consolidated financial statements for the acquisition.

     3. A Current  Report on Form 8-KSB was filed on May 14,  1999 to report the
registrant's name change to Ubarter.com Inc.











                                       33
<PAGE>



                                   SIGNATURES

     KNOW ALL  PERSONS  BY THESE  PRESENTS,  that each  person  whose  signature
appears below  constitutes  and appoints Steven M. White, as his true and lawful
attorney-in-fact  and agent with full power of substitution and  resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments to this Registration  Statement on Form 10-KSB and to file the
same, with all exhibits  thereto,  and other documents in connection  therewith,
with the Securities and Exchange  Commission,  grant unto said  attorney-in-fact
and agent,  full power and  authority  to do and perform  each and every act and
thing  requisite and necessary to be done in and about the foregoing as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said  attorney-in-fact  and agent, or his  substitutes,  may
lawfully do or cause to be done by virtue hereof.

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

                                       UBARTER.COM INC.
                                       (Registrant)


                                       By: /s/ Steven M. White
                                           ------------------------------------
                                           Steven M. White

                                           President and Chief Executive Officer

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/ Seven M. White               Chairman and Chief Executive      June 30, 1999
------------------------         Officer
Steven M. White



/s/ Kevin R. Andersen            Chief Financial Officer           June 30, 1999
------------------------
Kevin R. Andersen



/s/ Alan Zimmelman               Director                          June 30, 1999
------------------------
Alan Zimmelman



/s/ Richard Mayer                Director                          June 30, 1999
------------------------
Richard Mayer



/s/ Glen T. White                Director                          June 30, 1999
------------------------
Glen T. White





                                       34
<PAGE>


                                  EXHIBIT INDEX

2.1  Merger Agreement with Cascade Trade  Association,  dated as of November 15,
     1996  (Incorporated  be  reference  to  Exhibit  10.1  of the  registrant's
     Registration Statement on Form SB-2 (Registration No. 333-71411).

2.2  Share Purchase  Agreement  dated February 28, 1999,  among the  registrant,
     Barter Business  Exchange Inc. and Bob Bagga.  Incorporated by reference to
     Exhibit 10.9 of the registrants' Current Report on Form 8-K filed March 17,
     1999.

2.3  Share Pledge  Agreement dated March 2, 1999,  among the registrant,  Barter
     Business Exchange Inc. and Bob Bagga.  Incorporated by reference to Exhibit
     10.10 of the registrants' Current Report on Form 8-K filed March 17, 1999.

2.4  Promissory  Note  dated  March 2,  1999 by the  registrant  in favor of Bob
     Bagga.  Incorporated  by  reference  to Exhibit  10.11 of the  registrants'
     Current Report on Form 8-K filed March 17, 1999.

3.1  Articles of Incorporation, as amended.

3.2  Bylaws  (Incorporated  be  reference  to  Exhibit  3.4 of the  registrant's
     Registration Statement on Form SB-2 (Registration No. 333-71411).

4.1  Form of E Warrant issued in private placement (Incorporated be reference to
     Exhibit  4.1  of the  registrant's  Registration  Statement  on  Form  SB-2
     (Registration No. 333-71411).

10.1 1998  Stock  Option  Plan with Form of Option  Agreement  (Incorporated  be
     reference to Exhibit  10.2 of the  registrant's  Registration  Statement on
     Form SB-2 (Registration No. 333-71411).*

10.2 Employment  Agreement  with Steven  White  (Incorporated  be  reference  to
     Exhibit  10.3 of the  registrant's  Registration  Statement  on  Form  SB-2
     (Registration No. 333-71411).*

10.3 Employment  Agreement  with Alan  Zimmelman  (Incorporated  be reference to
     Exhibit  10.4 of the  registrant's  Registration  Statement  on  Form  SB-2
     (Registration No. 333-71411).*

10.4 Employment  Agreement  with  Richard  Mayer  (Incorporated  be reference to
     Exhibit  10.5 of the  registrant's  Registration  Statement  on  Form  SB-2
     (Registration No. 333-71411).*

10.5 Employment  Agreement  with Kevin  Andersen  (Incorporated  be reference to
     Exhibit  10.6 of the  registrant's  Registration  Statement  on  Form  SB-2
     (Registration No. 333-71411).*

10.6 Employment Agreement with Bob Bagga.*

10.7 Amended and Restated Consulting Agreement with Astra Advisors LLC.*

10.8 Premises Lease  Agreement dated as of September 29, 1997  (Incorporated  be
     reference to Exhibit  10.8 of the  registrant's  Registration  Statement on
     Form SB-2 (Registration No. 333-71411).

21   Subsidiaries of the registrant.

23.1 Consent of Moss Adams LLP.

23.2 Consent of Andersen, Andersen & Strong L.C.





                                       35
<PAGE>


24   Power of Attorney (included on signature page).

27   Financial Data Schedule.


-----------------------------
*Constitutes a management contract or compensatory plan or arrangement  required
to be filed as an exhibit with this report.


<PAGE>




                          INDEPENDENT AUDITORS' REPORTS
                                       and
                        CONSOLIDATED FINANCIAL STATEMENTS


                             MARCH 31, 1999 AND 1998






<PAGE>



                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
     of Ubarter.com Inc.

We  have  audited  the  consolidated  balance  sheet  of  Ubarter.com  Inc.  and
subsidiary  as of March 31, 1999,  and the related  consolidated  statements  of
operations,  stockholders'  equity and cash flows for the year then ended. 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 audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Ubarter.com Inc.
and  subsidiary as of March 31, 1999,  and the results of their  operations  and
their cash flows for the year then ended, in accordance with generally  accepted
accounting principles.



/s/ Moss Adams LLP
Seattle, Washington
June 16, 1999





                                       1


<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
     of Ubarter.com Inc. (formerly International Barter Corp.) and Subsidiary
Seattle, Washington

We have audited the consolidated  financial statements of Ubarter.com  (formerly
International  Barter Corp.) and  subsidiary  for the year ended March 31, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  consolidated  financial  position of International
Barter  Corp.  and  subsidiary  as of March 31,  1998 and the  results  of their
operations  and their cash flows for the year then  ended,  in  accordance  with
generally accepted accounting principles.

/s/ Andersen Andersen & Strong L.C.

June 19, 1998
Salt Lake City, Utah







                                       2


<PAGE>


                                                                UBARTER.COM INC.
                                                      CONSOLIDATED BALANCE SHEET
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>

                                     ASSETS
                                                                                   1999          1998
                                                                               -----------    -----------
<S>                                                                            <C>            <C>
CURRENT ASSETS
     Cash and cash equivalents .............................................   $   442,700    $   382,600
     Accounts receivable, net ..............................................       305,700         63,300
     Inventory .............................................................       310,400              -
     Other current assets ..................................................         9,200          2,900
                                                                               -----------    -----------
             Total current assets ..........................................     1,068,000        448,800
                                                                               -----------    -----------

EQUIPMENT AND LEASEHOLDS, net ..............................................       383,600         42,300
                                                                               -----------    -----------

OTHER ASSETS
     Goodwill ..............................................................     2,750,900              -
     Prepaid advertising ...................................................       135,000              -
     Notes receivable ......................................................        23,500         32,800
     Other assets ..........................................................        28,700          1,200
                                                                               -----------    -----------
                                                                                 2,938,100         34,000
                                                                               -----------    -----------
                                                                               $ 4,389,700    $   525,100
                                                                               ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable ......................................................   $   111,400    $     9,300
     Accrued liabilities ...................................................        28,200          7,700
     Unearned revenue ......................................................       186,300              -
     Trade dollars issued in excess of earned ..............................     2,147,900          5,400
     Note payable to shareholder ...........................................        66,200              -
     Current portion of long-term obligations ..............................        35,400         13,100
                                                                               -----------    -----------
             Total current liabilities .....................................     2,575,400         35,500
                                                                               -----------    -----------
LONG-TERM OBLIGATIONS ......................................................        81,600         19,100
                                                                               -----------    -----------

COMMITMENTS (Note 9)

STOCKHOLDERS' EQUITY
     Common stock
                                                                                     5,900          3,800
     Additional paid-in capital ............................................     2,649,300        540,700
     Subscribed stock ......................................................             -         37,500
     Accumulated deficit ...................................................      (909,500)      (111,500)
     Treasury stock ........................................................       (13,000)             -
                                                                               -----------    -----------
                                                                                 1,732,700        470,500
                                                                               -----------    -----------
                                                                               $ 4,389,700    $   525,100
                                                                               ===========    ===========

</TABLE>


See accompanying notes.
                                                                               3
--------------------------------------------------------------------------------


<PAGE>


                                                                UBARTER.COM INC.
                                                      CONSOLIDATED BALANCE SHEET
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>


                                                                                   1999           1998
                                                                               -----------    -----------
 REVENUE
<S>                                                                             <C>           <C>
      Trade exchange revenue .................................................  $ 460,600     $ 540,600
      Corporate trading revenue ..............................................     43,900        45,500
                                                                               -----------    -----------
                                                                                  504,500       586,100
                                                                               -----------    -----------
 COSTS AND OPERATING EXPENSES
      Cost of corporate trading revenue ......................................     43,900        45,500
      Sales and marketing ....................................................     94,700        73,900
      Product development ....................................................    216,300        29,900
      General and administrative .............................................    990,600       407,000
                                                                               -----------    -----------
                                                                                1,345,500       556,300
                                                                               -----------    -----------
 INCOME (LOSS) FROM OPERATIONS ...............................................   (841,000)       29,800
                                                                               -----------    -----------
 OTHER INCOME (EXPENSE)
      Interest income ........................................................     45,700         8,800
      Interest expense .......................................................     (2,700)       (4,900)
                                                                               -----------    -----------
                                                                                   43,000         3,900
                                                                               -----------    -----------
 NET INCOME (LOSS) BEFORE INCOME TAXES .......................................   (798,000)       33,700
 INCOME TAXES ................................................................          -         1,200
                                                                               -----------    -----------
 NET INCOME (LOSS) ...........................................................  $(798,000)    $  32,500
                                                                               ===========    ===========
 AVERAGE COMMON AND EQUIVALENT SHARES
      Basic ..................................................................  5,521,583     2,632,424
                                                                               ===========    ===========
      Diluted ................................................................  5,521,583     2,949,942
                                                                               ===========    ===========
 NET INCOME (LOSS) PER COMMON SHARE
      Basic .................................................................. $    (0.14)    $    0.01
                                                                               ===========    ===========
      Diluted ................................................................ $    (0.14)    $    0.01
                                                                               ===========    ===========

</TABLE>


See accompanying notes.
                                                                               4
--------------------------------------------------------------------------------


<PAGE>


                                                                UBARTER.COM INC.
                                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                             YEARS ENDED MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>

                                                            Additional
                                        Common Stock         Paid-In     Subscribed   Accumulated      Treasury Stock
                                     Shares     Amount       Capital       Stock       Deficit      Shares     Amount      Total
                                     ------     ------       -------       -----       -------      ------     ------      -----
<S>                                <C>        <C>          <C>         <C>           <C>              <C>       <C>        <C>
BALANCE, March 31, 1997 .......    1,250,000  $  1,300     $ 131,900     $ 150,000    $ (144,000)       --        --      $ 139,200
  2-for-1 common stock split
    effective July 24, 1998 ...    1,250,000     1,300        (1,300)         --            --          --        --             --
                                   ---------  ---------   ------------   ---------    -------------  -------  ---------  ----------
BALANCE, March 31, 1997 .......    2,500,000     2,600       130,600       150,000      (144,000)       --        --        139,200
  Issuance of subscribed stock       600,000       600       149,400      (150,000)         --
  Exercise of "A" and "B"            492,900       400       188,900        37,500          --          --        --        226,800
warrants
  Issuance of stock ...........      240,000       200        71,800          --            --          --        --         72,000
  Net income ..................         --        --            --            --          32,500        --        --         32,500
                                   ---------  ---------   ------------   ---------    -------------  -------  ---------  ----------
BALANCE, March 31, 1998 .......    3,832,900     3,800       540,700        37,500      (111,500)       --        --        470,500

  Issuance of subscribed stock       100,000       100        37,400       (37,500)         --          --        --             --
  Exercise of "B" warrants ....      563,500       500       278,000          --            --          --        --        278,500
  Exercise of  "C" and "D"
    warrants ..................      480,000       500       228,300          --            --          --        --        228,800
  Issuance of stock ...........      800,000       800       999,200          --            --          --        --      1,000,000
  Issuance of stock in
    connection with acquisition      150,000       200       374,800          --            --          --        --        375,000
  Stock options granted .......         --        --         190,900          --            --          --        --        190,900
  Treasury stock acquired .....         --        --            --            --            --        10,980   (13,000)     (13,000)
  Net loss ....................         --        --            --            --        (798,000)       --        --       (798,000)
                                   ---------  ---------   ------------   ---------    -------------  -------  ---------  ----------
BALANCE, March 31, 1999 .......    5,926,400  $  5,900    $2,649,300      $   --       $(909,500)     10,980  $(13,000) $ 1,732,700
                                   =========  =========   ============   =========    =============  =======  =========  ==========

</TABLE>



See accompanying notes.                                                        5
--------------------------------------------------------------------------------


<PAGE>


                                                                UBARTER.COM INC.
                                            CONSOLIDATED STATEMENT OF CASH FLOWS
                                             YEARS ENDED MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>


                                                                                          1999               1998
                                                                                     ---------------    ---------------
<S>                                                                                      <C>                  <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
      Net income (loss)                                                                  $(798,000)          $ 32,500
      Adjustments to reconcile net income (loss) to net cash
              provided by operating activities
          Depreciation                                                                      18,400             10,800
          Non-cash charges related to stock option grants                                  172,800                  -
          Net trade dollars earned                                                          (3,700)          (106,600)
          Accrued interest on notes receivable                                              (2,400)                 -
      Change in operating assets and liabilities
          Accounts receivable                                                               38,700             (2,400)
          Prepaid advertising and other assets                                            (133,100)             4,800
          Accounts payable and other liabilities                                             7,300             12,900
                                                                                     ---------------    ---------------
                                                                                          (700,000)           (48,000)
                                                                                     ---------------    ---------------

 CASH FROM INVESTING ACTIVITIES
      Acquisition of equipment and leaseholds                                              (84,800)           (13,900)
      Purchase of Barter Business Exchange Inc. stock                                     (647,300)                 -
      Notes receivable collections                                                          11,700                  -
                                                                                     ---------------    ---------------
                                                                                          (720,400)           (13,900)
                                                                                     ---------------    ---------------

 CASH FROM FINANCING ACTIVITIES
      Proceeds from issuance of common stock                                             1,507,300            298,900
      Treasury stock acquired                                                              (13,000)                 -
      Repayment of notes payable                                                           (13,800)           (16,700)
                                                                                     ---------------    ---------------
                                                                                         1,480,500            282,200
                                                                                     ---------------    ---------------

 NET CHANGE IN CASH AND CASH EQUIVALENTS                                                    60,100            220,300

 CASH AND CASH EQUIVALENTS
      Beginning of period                                                                  382,600            162,300
                                                                                     ---------------    ---------------
      End of period                                                                      $ 442,700           $382,600
                                                                                     ===============    ===============
 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for:
          Interest                                                                       $   2,700           $  5,100
                                                                                     ===============    ===============
          Income taxes                                                                   $       -              $   -
                                                                                     ===============    ===============
 NON-CASH INVESTING AND FINANCING ACTIVITIES
      Furniture purchased with trade dollars                                             $       -           $ 13,700
                                                                                     ===============    ===============
      See Note 3 for additional disclosure of noncash transaction

</TABLE>


See accompanying notes.                                                        6
--------------------------------------------------------------------------------


<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 1 -  Description Of Business And Organization

     Ubarter.com Inc., formerly  International Barter Corp., was incorporated on
     September  18,  1996,  in the  State  of  Nevada.  Ubarter.com  Inc.  ("the
     Company") operates a trade exchange offering bartering services for retail,
     professional,   media  and  corporate  clients.  Operations  are  primarily
     transacted  in  the  State  of  Washington.  Operations  of  the  Company's
     subsidiary,  Barter  Business  Exchange  Inc.  (see Note 3), are  primarily
     transacted in the Canadian  provinces of Ontario and British Columbia.  The
     Company acts as a third-party  record-keeper  of clients'  transactions and
     balances,  which are  denominated  in Trade  Dollars.  A Trade Dollar is an
     accounting  unit used to record  the value of trades as  determined  by the
     buying and selling parties in barter transactions. Trade Dollars denote the
     right to receive  goods or  services  available  from other  clients or the
     obligation to provide goods or services to other clients. Trade Dollars may
     not be redeemed for cash.  Trade Dollars are not legal tender,  securities,
     or  commodities.  Clients pay cash and Trade Dollar fees and commissions to
     the  Company.  The  Company  typically  receives a cash  commission  on all
     transactions  charging  both the buyer and  seller 5% on the  purchase  and
     sale.


Note 2 -  Summary of Significant Accounting Policies

     Principles of Consolidation - The consolidated financial statements include
     the accounts of the Company  and,  effective  March 31,  1999,  the balance
     sheet of its wholly-owned subsidiary,  Barter Business Exchange Inc. (BBE).
     The  Company's  fiscal  year  end is March  31.  BBE's  fiscal  year end is
     February  28.  For  purposes  of  consolidation  the  difference  in fiscal
     year-ends is not  significant.  All significant  intercompany  accounts and
     transactions have been eliminated.

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

     Foreign  Currency  Translation  -  Financial  statements  of the  Company's
     Canadian  subsidiary,  BBE,  are  translated  into U.S.  dollars  using the
     exchange  rate at the balance  sheet date for assets and  liabilities.  The
     functional  currency of BBE is the local  currency,  the  Canadian  dollar.
     Translation adjustments, if necessary, are recorded as a separate component
     of Stockholders' Equity. There were no translation  adjustments required as
     of March 31, 1999 and 1998.

     Comprehensive  Income - In 1999, the Company adopted Statement of Financial
     Accounting  Standards ("SFAS") No. 130, "Reporting  Comprehensive  Income".
     This statement  establishes rules for the reporting of comprehensive income
     and its  components.  The  adoption  of SFAS No. 130 had no impact on total
     stockholders' equity as of March 31, 1999.



                                                                               7
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 2 -  Summary of Significant Accounting Policies  (Continued)

     Revenue  Recognition - The Company  recognizes revenue equal to the cash to
     be  received  from  the  commission  earned  when  the  buyer  has  made an
     unconditional commitment to pay and the earnings process has been completed
     by the  finalization  of a trade  transaction.  Revenue is  recognized  for
     monthly dues after the fees have been earned. Initiation and annual renewal
     fees are  nonrefundable,  and are  deferred  and  included in income over a
     twelve month period.

     Product  Development  Costs - Product  development  costs include  expenses
     incurred  by the  Company to  develop,  enhance,  monitor  and  operate the
     Company's website. Product development costs are expensed as incurred.

     Trade Dollar  Transactions - The Company uses the ratio of one Trade Dollar
     to one local  currency  dollar (United States or Canadian) in measuring and
     accounting for purchases and sales. This one-for-one ratio is the pervasive
     standard with the Company and throughout the barter  industry.  The Company
     does not recognize any accounting  implications if differences are observed
     between trade dollar and the applicable  local currency  dollar prices that
     are within  reasonable  ranges that might exist  between  prices of similar
     U.S. dollar or Canadian dollar transactions.

     The negative Trade Dollar balance of the Company is shown as a liability in
     the balance sheet. This occurs as a result of the Company "borrowing" trade
     dollars  through  the  issuance  of Trade  Dollars in excess of the amounts
     earned by the Company.

     Cash and  Cash  Equivalents  - The  Company  considers  all  highly  liquid
     investments  purchased  with a maturity of three  months or less to be cash
     equivalents.

     Inventory  - At times,  the  Company  acquires  inventory  for resale  from
     clients  of the  barter  exchange.  Inventory  is  stated  at lower of cost
     (first-in, first-out basis) or market.

     Allowance for  Uncollectible  Accounts - The Company  provides an allowance
     for accounts receivable which are doubtful of collection.  The allowance is
     based upon  management's  periodic  analysis of receivables,  evaluation of
     current economic conditions,  and other pertinent factors.  Ultimate losses
     may vary from the current  estimates  and, as  additions  to the  allowance
     become necessary,  are charged against earnings in the period in which they
     become  known.  Losses are  charged  and  recoveries  are  credited  to the
     allowance.  At March 31, 1999 and 1998, the allowance for doubtful accounts
     was $129,400 and $2,000, respectively.

     Depreciation  and  Amortization  - Equipment and  leaseholds  are stated at
     cost.  Depreciation  is  computed  on the  straight-line  method  over  the
     estimated  useful  lives of the  assets,  generally  five to  seven  years.
     Leasehold  improvements  are  amortized on a  straight-line  basis over the
     shorter of the estimated useful lives or the term of the lease.


                                                                               8
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 2 -  Summary of Significant Accounting Policies  (Continued)

     Goodwill - Goodwill  resulting from the acquisition of BBE was estimated by
     management  to  be  primarily   associated  with  the  acquired  workforce,
     infrastructure  and  technological  expertise.  As a  result  of the  rapid
     technological  changes  occurring in the Internet  industry and the intense
     competition  for  qualified  professionals,  goodwill  is  amortized  on  a
     straight-line  basis over the  estimated  life of the  benefit of 24 months
     (see Note 3).

     Income  Taxes - Income  taxes are  computed  using the asset and  liability
     method.  Under this method,  deferred income tax assets and liabilities are
     determined based on the differences between the financial reporting and tax
     bases of assets  and  liabilities  and are  measured  using  the  currently
     enacted tax rates and laws. Statement of Financial Accounting Standards No.
     109,  Accounting for Income Taxes,  requires a valuation  allowance against
     deferred tax assets if, based on the weight of  available  evidence,  it is
     more likely than not that some or all of its  deferred  tax assets will not
     be realized.

     Basic and Diluted Net Income (Loss) per Share - Basic net income (loss) per
     share is computed using the weighted  average number of shares  outstanding
     during the period.  Diluted net income  (loss) per share is computed  using
     the weighted average number of common shares and common  equivalent  shares
     outstanding  during the period.  Common equivalent shares consist of shares
     issuable upon the exercise of stock options and stock warrants.

     Use of Estimates - The  preparation  of financial  statements in conformity
     with generally accepted  accounting  principles requires management to make
     estimates and assumptions  that affect the reported  amounts of revenue and
     expenses during the reported period. Actual results could differ from those
     estimates.

     Concentration  of Credit  Risk -  Financial  instruments  that  potentially
     subject the Company to  significant  concentration  of credit risk consists
     primarily of cash and  accounts  receivable.  Cash is  deposited  with high
     credit, quality financial  institutions.  Accounts receivable are typically
     unsecured and are derived from  revenues  earned from  customers  primarily
     located in the Pacific Northwest and the Canadian  provinces of Ontario and
     British  Columbia.  The Company performs ongoing credit  evaluations of its
     customers and maintains reserves for potential credit losses; historically,
     such losses have been within management's  expectations.  At March 31, 1999
     and  1998,  no one  customer  accounted  for 10% or  more  of the  accounts
     receivable balance.



                                                                               9
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 2 -  Summary of Significant Accounting Policies  (Continued)

     Fair Value of Financial Instruments - The Company's financial  instruments,
     including cash, accounts  receivable,  accounts payable,  notes payable and
     long-term  obligations are carried at cost, which  approximates  their fair
     value because of the short-term maturity of these instruments.

     Advertising  - The Company  recognizes  advertising  expenses in accordance
     with Statement of Position 93-7, "Reporting on Advertising Costs". As such,
     the Company expenses the cost of communicating advertising in the period in
     which  the  advertising  space or  airtime  is used.  Advertising  expenses
     amounted  to $51,700  and  $22,800  for the years  ended March 31, 1999 and
     1998, respectively.

     Stock-based  Employee  Compensation - The Company  accounts for stock-based
     employee  compensation  arrangements  in accordance  with the provisions of
     Accounting  Principles  Board Opinion (APB) No. 25,  "Accounting  for Stock
     Issued to Employees",  and complies with the disclosure  provisions of SFAS
     No.  123,  "Accounting  for  Stock-Based   Compensation".   Under  APB  25,
     compensation  cost is  recognized  over  the  vesting  period  based on the
     difference,  if any,  on the date of grant  between  the fair  value of the
     Company's stock and the amount an employee must pay to acquire the stock.

     Impairment of Long-Lived Assets - The Company evaluates the  recoverability
     of long-lived assets in accordance with "SFAS" No. 121, "Accounting for the
     Impairment of  Long-Lived  Assets to be Disposed of". SFAS No. 121 requires
     recognition  of impairment  of long-lived  assets in the event the net book
     value  of  such  assets   exceeds  the  future   undiscounted   cash  flows
     attributable to such assets.

     Recent Accounting Pronouncements - In March 1998, the American Institute of
     Certified Public  Accountants issued Statement of Position 98-1 (SOP 98-1),
     "Accounting  for the Costs of Computer  Software  Developed or Obtained for
     Internal Use". This standard  requires  companies to capitalize  qualifying
     computer   software  costs  which  are  incurred   during  the  application
     development  stage and amortize them over the software's  estimated  useful
     life. SOP 98-1 is effective for fiscal years  beginning  after December 15,
     1998. The Company does not expect that the adoption of SOP 98-1 will have a
     material impact on its consolidated financial statements.

     In April 1998,  the  American  Institute of  Certified  Public  Accountants
     issued SOP 98-5,  "Reporting on the Costs of Start-Up Activities." SOP 98-5
     is effective for the Company's  fiscal year ending March 31, 2000. SOP 98-5
     requires costs of start-up activities and organization costs to be expensed
     as  incurred.  Adoption is not  expected  to have a material  effect on the
     Company's consolidated financial statements.


                                                                              10
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 2 -  Summary of Significant Accounting Policies  (Continued)

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
     Instruments and Hedging  Activities."  SFAS No. 133 is effective for fiscal
     years  beginning  after  June 15,  1999.  SFAS No.  133  requires  that all
     derivative  instruments  be  recorded  on the  balance  sheet at their fair
     value. Changes in the fair value of derivatives are recorded each period in
     current  earnings or other  comprehensive  income,  depending  on whether a
     derivative  is designed as part of a hedge  transaction  and, if it is, the
     type of hedge transaction. The Company does not expect that the adoption of
     SFAS No.  133 will have a  material  impact on its  consolidated  financial
     statements  because  the Company  does not  currently  hold any  derivative
     instruments.

     Reclassifications  - Certain prior year balances have been  reclassified to
     conform to the current year presentation.


Note 3 -  Acquisition

     Acquisition  of Barter  Business  Exchange,  Inc. - On March 2,  1999,  the
     Company  entered  into a stock  purchase  agreement  to acquire  all of the
     outstanding  capital  stock of  Barter  Business  Exchange  Inc.  (BBE),  a
     privately-held  Canadian  corporation  which  presently  operates  a  trade
     exchange in the  Canadian  Provinces of Ontario and British  Columbia.  The
     total  purchase price of  approximately  $1,270,200 is comprised of cash in
     the  amount of  $663,300;  a  promissory  note in the  principal  amount of
     $66,200 (Note 7); Ubarter.com Trade dollars in the amount of $165,700;  the
     issuance of 150,000 shares of Ubarter.com common stock which had a value of
     $375,000 at the  acquisition  date.  In addition,  the  purchase  agreement
     provides  for  contingent  consideration.  The  terms of the  note  payable
     provide for additional payments of up to $500,000 dependent upon attainment
     of certain operating results. Additionally, if 10% of the cash revenues, as
     defined in the agreement,  exceed $500,000, the Company will be required to
     pay the amount exceeding $500,000 in common shares of the Company.

     The  purchase  has  been  accounted  for  under  the  purchase   method  of
     accounting.  Under the purchase method of accounting, the purchase price is
     allocated to the assets  acquired and  liabilities  assumed  based on their
     estimated fair values at the date of the  acquisition.  The excess purchase
     price over the estimated fair value of the assets  acquired and liabilities
     assumed has been allocated to goodwill.  The Company estimated the economic
     useful life of the goodwill to be two years.



                                                                              11
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 3 -  Acquisition  (Continued)

     The consolidated  financial  statement combines the Company's balance sheet
     as of March 31, 1999 with the balance sheet of BBE as of February 28, 1999.
     The consolidated statement of operations presents the results of operations
     of the Company and excludes the results of  operations  of BBE.  Results of
     operations  of BBE will be  consolidated  with the Company from the date of
     purchase,  March 1, 1999.  However,  due to the  differing  year-ends,  the
     results of operations of BBE for the fiscal year from March 1, 1999 through
     February  28,  2000 will be  consolidated  with the  Company's  results  of
     operations for the fiscal year ended March 31, 2000.

     Statement  of Cash Flows - The  acquisition  of BBE  resulted in a non-cash
     transactions  which  increased  assets  in the  amount  of  $3,069,700  and
     liabilities in the amount of $2,610,400.  Non-cash  consideration  included
     150,000 shares of the Company's  common stock,  trade  dollars,  and a note
     payable (Note 7).

     Unaudited Pro Forma Disclosures of Significant  Acquisition - The following
     unaudited pro forma  consolidated  results of operations give effect to the
     acquisition of BBE as if it had occurred as of the beginning of the period.

<TABLE>

                                                                                      Year Ended
                                                                                       March 31,
                                                                        ---------------------------------------
                                                                        -------------------  ------------------
                                                                               1999                1998
                                                                        -------------------  ------------------
<S>                                                                         <C>                 <C>
 Revenue                                                                    $ 3,289,900         $ 3,219,900
 Net loss                                                                   $(2,682,100)        $(1,739,800)
 Net loss per share - basic                                                 $     (0.49)        $     (0.66)
 Net loss per share - diluted                                               $     (0.49)        $     (0.66)
 Shares used in per share calculation - basic and diluted                     5,521,583           2,632,424

</TABLE>


Note 4 -  Notes Receivable

     At March 31, 1999 and 1998, the Company had notes  receivable  amounting to
     $23,500  and  $32,800  which  bear  interest  ranging  from 10% to  10.75%.
     Although  the  Company  periodically  receives  payments,   the  notes  are
     currently in default. The notes are collateralized by real estate.




                                                                              12
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 5 -  Equipment and Leaseholds

     At March 31,  1999 and 1998,  equipment  and  leaseholds  consisted  of the
     following:

<TABLE>

                                                                1999                1998
                                                          ----------------    ----------------

<S>                                                       <C>                  <C>
     Computer equipment                                   $    183,100         $    13,900
     Equipment                                                 121,800              81,200
     Furniture and fixtures                                    141,500              29,000
     Leasehold improvements                                     57,100              19,700
     Automobile                                                 25,600              25,600
                                                          ----------------    ----------------
                                                               529,100             169,400
     Less:  accumulated depreciation                          (145,500)           (127,100)
                                                          ----------------    ----------------
                                                          $    383,600         $    42,300
                                                          ================    ================

</TABLE>


Note 6 -  Excess of Trade Dollars Issued Over Trade Dollars Earned

     In  accordance  with  the  guidelines   established  by  the  International
     Reciprocal Trade Association,  the Company has the right to borrow from the
     exchange and spend within the exchange systems.  Such a practice is used by
     barter  exchanges,   worldwide,  to  cover  inventory  purchases,   capital
     purchases, operating expenses and to control the supply of trade dollars in
     the  exchange  economy.  The  Company is  obligated  to  provide  goods and
     services to clients to offset any amounts of Trade Dollars issued in excess
     of earned. At March 31, 1999 and 1998, the Company had expended  $2,147,900
     and $5,400  Trade  Dollars  respectively,  in excess of the amount of Trade
     Dollars earned by the Company.


Note 7 -  Notes Payable

     The Company has a $67,000  revolving note payable with a Canadian bank. The
     note  payable  is  subject  to annual  renewal.  There  were no  borrowings
     outstanding  as of March 31,  1999.  Borrowings  on the line of credit  are
     secured by cash and cash equivalents on deposit with the bank.

     In  connection  with the  acquisition  of BBE (Note 3), the  Company  has a
     $66,200 note payable to a shareholder. The non-interest bearing note is due
     on March 1, 2000.



                                                                              13
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 8 -  Long-Term Obligations

     At  March  31,  1999  and  1998,  long-term  obligations  consisted  of the
     following:

<TABLE>

                                                                                   1999                1998
                                                                             ----------------    ----------------
<S>                                                                          <C>                 <C>
     Note payable to Financial Services, Inc. at $800 per
     month, including interest at 10% per annum
     (collateralized by real estate), due 2002                               $     18,400        $     26,300

     Note payable to bank, interest at prime plus 2 1/2%,
     payable in monthly installments of $1,400 plus
     interest, maturing July 2004, partially guaranteed
     by a stockholder and collateralized by equipment                              73,800                   -

     Capital lease for leasehold improvements, due in
     monthly installments of $900, including imputed
     interest of 19%, due December 2001                                            21,800                   -

     Note payable to bank, paid in full in 1999                                         -               5,900

     Other                                                                          3,000                   -
                                                                             ----------------    ----------------
                                                                                  117,000              32,200
     Less current portion                                                         (35,400)            (13,100)
                                                                             ----------------    ----------------
                                                                             $     81,600         $    19,100
                                                                             ================    ================
</TABLE>


     Maturities of long-term obligations for future years ending March 31 are as
     follows:

<TABLE>

                                                                      Capital
                                                  Principal            Lease
                                                  Payments           Obligation             Total
                                             ---------------    ----------------    ----------------
<S>                                             <C>                <C>                 <C>
     2000                                       $     28,400       $      10,800       $      39,200
     2001                                             25,400              10,800              36,200
     2002                                             17,800               7,600              25,400
     2003                                             16,700              -                   16,700
     2004                                              6,900              -                    6,900
                                             ---------------    ----------------    ----------------
                                                      95,200              29,200             124,400
     Amount representing interest                     -                   (7,400)             (7,400)
                                             ---------------    ----------------    ----------------

                                                $     95,200       $      21,800       $     117,000
                                             ===============    ================    ================

</TABLE>

                                                                              14
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 9 -  Commitments

     The Company  leases  office  space under  non-cancelable  operating  leases
     expiring in May 2003. Future minimum lease payments under the leases are as
     follows for the years ending March 31:


          2000                                           $     119,100
          2001                                                  91,400
          2002                                                  79,300
          2003                                                  75,500
          2004                                                  18,900
                                                         -------------

                                                         $     384,200

     Rent expense  amounted to $23,500 and $20,900 for the years ended March 31,
     1999 and 1998, respectively.


Note 10 - Stockholders' Equity

     The Company is  authorized  to issue  25,000,000  shares of $.001 par value
     common stock.  As of March 31, 1999 and 1998, the Company has 5,915,420 and
     3,832,900 shares of common stock outstanding, respectively.

     During fiscal 1997, the Company completed a private placement (Offering) of
     its common  stock  pursuant to which  600,000  shares were  subscribed  for
     $150,000.  Under the terms of the  Offering,  one "A"  warrant  and one "B"
     warrant were issued with each issued share of common stock  issued.  During
     fiscal 1998,  "A" and "B" warrants  were  exercised  for 492,900  shares of
     common  stock for  $226,800.  During the fiscal  year 1999,  the  remaining
     outstanding  "B" warrants were exercised for 563,500 shares of common stock
     with proceeds totaling $278,500.

     During fiscal 1998, the Company completed a private  placement  (Placement)
     of its common stock  pursuant to which 240,000  shares of common stock were
     issued for $72,000.  Under the terms of the Placement,  one "C" warrant and
     one "D"  warrant  was issued  with each one share of common  stock  issued.
     During fiscal 1999, all outstanding "C" and "D" warrants were exercised for
     480,000 shares of common stock with proceeds totaling $228,800.



                                                                              15
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 10 - Stockholders' Equity  (Continued)

     During fiscal 1999, the Company received cash for common stock and warrants
     through a private placement  whereby,  800,000 units were sold at $1.25 per
     unit.  Each unit  consists of one share of common stock and one "E" warrant
     exercisable at $1.50 per share. The warrants expire June 20, 2000. At March
     31, 1999, there were 800,000 "E" warrants issued and outstanding.

     During fiscal 1999, a brokerage  account was opened and funded for the sole
     purpose of repurchasing up to 250,000 shares of the Company's  common stock
     in the open market.  In October of 1998, 10,980 shares were repurchased for
     approximately $13,000 and classified as treasury stock.


Note 11 - Stock Options

     The Company adopted a Stock Option Plan ("the Plan") effective June 1, 1998
     whereby,  non-qualified  and  incentive  stock options for up to 20% of the
     shares of common stock  outstanding may be granted to Directors,  Officers,
     Employees and Consultants. Options granted under the Plan are not to have a
     life in excess of five  years from the date of grant and  generally  are to
     vest  ratably  over  two  years.  The  provisions  of the  Plan  allow  the
     administrators  to  determine  the  vesting  period and  exercise  price of
     options   granted.   All  options   outstanding   at  March  31,  1999  are
     non-qualified stock options.

     In June 1998, the Company granted options under the Plan to purchase 55,000
     shares of common  stock at an exercise  price of $0.82 per share to certain
     non-employee Directors.  The options are fully vested and expire five years
     from the date of grant.  The  options  were  valued at  $11,400,  which was
     recognized as director compensation expense in 1999.

     In October  1998,  the Company  granted  options under the Plan to purchase
     630,000  shares of common  stock to a  consultant.  The  options  are fully
     vested and expire five years from the date of grant. The exercise prices of
     the  options  range  from  $4.00 to $14.00  per  share and have a  weighted
     average  exercise  price of $11.11 per share.  The  options  were valued at
     $243,800.  The Company is recognizing  consulting  expense related to these
     options granted over the consultant's  contractual  period of 39 months. In
     1999, the Company  recognized  consulting expense of $37,500 related to the
     stock  options.  The consulting  agreement  also contains an  anti-dilutive
     provision  whereby the consultant will be granted  additional  options from
     time to time so that the options will equal  approximately  10.4% of common
     stock outstanding on a fully diluted basis.


                                                                              16
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 11 - Stock Options  (Continued)

     In November  1998, the Company  granted  options under the Plan to purchase
     25,000  shares  of  common  stock at  $2.00  per  share  to  other  service
     providers.  The  options  vest over one year and expire five years from the
     date of grant. The options were valued at $11,400,  which was recognized as
     consulting expense during 1999.

     The following table summarizes the Company's stock option activity:

<TABLE>

                                                                               Weighted-
                                                            Number             Average
                                                              of               Exercise
                                                            Shares               Price
                                                       ----------------    ----------------
<S>                                                       <C>                     <C>
     Balance, April 1, 1998                                       -           $      -
         Options granted                                  1,069,000               7.80
         Options forfeited                                   (1,000)              2.75
         Options exercised                                        -                  -
                                                       ----------------    ----------------
     Balance, March 31, 1999                              1,068,000           $   7.17
                                                       ================    ===============
</TABLE>


     The following table summarizes  information  about options  outstanding and
     exercisable at March 31, 1999:

<TABLE>

                                              Options Outstanding                        Options Exercisable
                               -------------------------------------------------   -------------------------------
                                                    Weighted-
                                                     Average         Weighted-                         Weighted-
                                                    Remaining         Average                           Average
          Range of                 Number          Contractual       Exercise          Number          Exercise
      Exercise Prices            Outstanding          Life             Price         Exercisable         Price
----------------------------   ---------------   ---------------   -------------   ---------------   -------------

<S>                                   <C>             <C>              <C>               <C>             <C>
    $ 0.8125   -     $ 2.75           438,000         4.5 years        $   1.49          277,000         $   0.83
    $ 4.00     -     $ 6.00            90,000         4.5 years            4.89           90,000             4.89
    $ 8.00     -     $10.00           140,000         4.5 years            9.14          140,000             9.14
    $12.00     -     $14.00           400,000         4.5 years           13.20          400,000            13.20
                               ---------------   ---------------   -------------   ---------------   -------------
                                    1,068,000         4.5 years        $   7.17           907,000        $   7.97
                               ===============                                     ===============

</TABLE>



                                                                              17
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 11 - Stock Options (Continued)

     The Company applies Accounting Principles Board Opinion No. 25 (APB No. 25)
     in accounting  for stock  options.  Accordingly,  no  compensation  cost is
     recognized  from options  issued under the Company stock option plan if the
     exercise  price  equals the fair value at the date of grant.  During  1999,
     40,000  options were granted to one employee that were fully vested and had
     an exercise  price less than the fair value of the common stock on the date
     of grant.  Using the  intrinsic  value  method  required  by APB No. 25 the
     Company  has  recorded  compensation  expense in the amount of  $112,500 in
     1999.

     An alternative method of accounting for stock options is SFAS No. 123 (Note
     2).  Under SFAS No. 123,  employee  stock  options are valued at grant date
     using  the  Black-Scholes  option-pricing  model and  compensation  cost is
     recognized  ratably over the vesting period.  Had compensation cost for the
     Company's  stock  option plan been  determined  based on the  Black-Scholes
     value at the grant  dates for awards as  prescribed  by SFAS No.  123,  pro
     forma statement of operations for fiscal 1999 would have been as follows:

          Year Ended March 31, 1999
          ----------------------------------------------------------------------
          Net loss
             As Reported                                            $ (798,000)
             Pro forma                                              $ (836,800)
          Net loss per common share
             As Reported                                            $    (0.14)
             Pro forma                                              $    (0.15)
          ----------------------------------------------------------------------

     The effects of applying SFAS No. 123 for the pro forma  disclosures are not
     representative  of the  effects  expected  on  reported  net  earnings  and
     earnings per share in future years.  In addition,  valuations  are based on
     highly  subjective  assumptions  about the  future,  including  stock price
     volatility and exercise patterns.

     The weighted average fair market value of an option granted during 1999 was
     $1.69  using  the   Black-Scholes   option-pricing   model.  The  following
     assumptions were applied in determining the pro forma compensation cost:

          Year Ended March 31, 1999
          ----------------------------------------------------------------------
          Interest rate                                                   6.0%
          Dividend yield                                                  0.0%
          Expected volatility                                           122.8%
          Expected useful life in years                                   5
          ----------------------------------------------------------------------




                                                                              18
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 12 - Income Taxes

     The components of the provision for income taxes at March 31, 1999 and 1998
     are as follows:

<TABLE>

                                                                    1999                1998
                                                              ----------------    ----------------
     <S>                                                       <C>                  <C>
     Current - Federal                                         $      -             $         -
     Deferred - Federal                                               -                   1,200
                                                              ----------------    ----------------
     Income tax provision                                      $      -             $     1,200
                                                              ================    ================
</TABLE>


     A  reconciliation  of the  consolidated  income tax provision to the amount
     expected using the U.S. Federal statutory rate follows:


<TABLE>

                                                                     1999                1998
                                                              ----------------    ----------------
     <S>                                                       <C>                  <C>
         Expected amount using
             U.S. Federal statutory rate                       $      -             $         -
         Non-deductible expenses                                      -                       -
         Depreciation and bad debts allowance                         -                    1,200
                                                              ----------------    ----------------
         Effective tax                                         $      -             $      1,200
                                                              ================    ================
</TABLE>


     Deferred tax assets  (liabilities)  consisted of the following at March 31,
     1999 and 1998:

<TABLE>

                                                                     1999                1998
                                                              ----------------    ----------------
<S>                                                            <C>                        <C>
     Deferred tax assets
        Bad debt allowance                                     $    11,900                700
        Stock options                                               58,800                  -
        Net operating loss carryforwards                           746,100             10,100
                                                              ----------------    ----------------
                                                                   816,800             10,800
     Deferred tax liability
        Property and equipment                                        (500)              (300)
                                                              ----------------    ----------------
                                                                   816,300             10,500
     Valuation allowance                                          (816,300)           (10,500)
                                                              ----------------    ----------------
                                                               $         -         $        -
                                                              ================    ================

</TABLE>

        As of March 31,  1999,  the  Company has  domestic  net  operating  loss
        carryforwards of approximately  $646,000 and Canadian net operating loss
        carryforwards of approximately  $1,212,200.  The domestic  carryforwards
        begin to expire in fiscal year 2012. The Canadian carryforwards begin to
        expire in fiscal year 2000.  Deferred  tax assets have been reduced by a
        valuation allowance because of uncertainties as to future recognition of
        taxable income to assure realization.


                                                                              19
--------------------------------------------------------------------------------

<PAGE>


                                                                UBARTER.COM INC.
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                         MARCH 31, 1999 AND 1998
--------------------------------------------------------------------------------


Note 13 - Income (Loss) Per Share

     Following is a  reconciliation  of the  numerators of the basic and diluted
     income (loss) per share for the years ended March 31, 1999 and 1998:

<TABLE>

                                                                              1999                1998
                                                                        ----------------    ----------------
<S>                                                                     <C>                  <C>
      Net income (loss) available to common stockholders                $    (798,000)       $       32,500
                                                                        ================    ================
      Weighted average shares                                               5,521,583             2,632,424
      Effect of dilutive securities:
          Options                                                                   -                     -
          Warrants                                                                  -               317,518
                                                                        ----------------    ----------------
                                                                            5,521,583             2,949,942
                                                                        ================    ================
      Basic income (loss) per share (based on weighted
          average shares)                                               $        (.14)                  .01
                                                                        ================    ================
</TABLE>


     1,028,000  options and 800,000  warrants to purchase shares of common stock
     were  excluded from the  computation  in 1999 because their effect would be
     anti-dilutive.


Note 14 - Geographic Segment Information


<TABLE>
                                                                              1999                1998
                                                                        ----------------    ----------------
<S>                                                                     <C>                  <C>
    Assets
        U.S. operations                                                 $      700,700       $     525,100
        Canadian subsidiary                                                  3,689,000                   -
                                                                        ----------------    ----------------
                                                                        $    4,389,700       $     525,100
                                                                        ================    ================
</TABLE>


Note 15 - Revenue

     The following  table  summarizes  the cash and trade dollars  components of
     revenue for the years ended March 31, 1999 and 1998:

<TABLE>

                                                                              1999                1998
                                                                        ----------------    ----------------
<S>                                                                            <C>                 <C>
    Trade                                                               $      263,900             279,100
    Cash                                                                       240,600             307,000
                                                                        ----------------    ----------------
                                                                        $      504,500         $   586,100
                                                                        ================    ================
</TABLE>


                                                                              20
--------------------------------------------------------------------------------