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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2000

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

For the transition period from to
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Commission File No.: 000-26031

EURO TRADE & FORFAITING, INC.

Exact name of Registrant as specified in its charter

Utah 87-0571580
State or other jurisdiction IRS Employer Identification No.
of incorporation or organization

42 Brook Street, London, England W1Y 1YB
Address of principal executive office Zip Code

Registrant's telephone number including area code: (0207) 958-9026

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

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

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Common Shares
Title of Class
----------------

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

Indicate by check mark if disclosure of delinquent filers pursuant to
Rule 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K/A or any amendment to this Form 10-K/A. [X]

The aggregate market value of the Registrant's voting stock held by non-
affiliates of the Registrant as of September 25, 2000 was approximately
$2,354,450. The last reported sale price of the common shares of
beneficial interest on the OTC Bulletin Board on September 22, 2000 was
$0.41 per share.

As of September 25, 2000, the Registrant had 16,945,224 common shares of
beneficial interest, $0.001 par value, outstanding.

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TABLE OF CONTENTS

PART I
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . 4
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Description of Business. . . . . . . . . . . . . . . . . . . . 4
Portfolio Management . . . . . . . . . . . . . . . . . . . . . 7
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . 8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . . 9
ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION . . . . . . . . . . . . . . . . . . . 10
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT . . . . . . . . 15
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 33

FORWARD-LOOKING STATEMENTS

Statements in this report, to the extent they are not based on
historical events, constitute forward-looking statements. Forward-looking
statements include, without limitation, statements regarding the outlook
for future operations, forecasts of future costs and expenditures,
evaluation of market conditions, the outcome of legal proceedings, the
adequacy of reserves, or other business plans. Investors are cautioned
that forward-looking statements are subject to an inherent risk that
actual results may vary materially from those described herein. Factors
that may result in such variance, in addition to those accompanying the
forward-looking statements, include changes in general economic and
business conditions; governmental regulations; the ability of management
to execute its business plan; interest rates, and other economic
conditions; actions by competitors; natural phenomena; actions by
government authorities; uncertainties associated with legal proceedings;
technological development; future decisions by management in response to
changing conditions; and misjudgments in the course of preparing forward-
looking statements.

PART I

ITEM 1. BUSINESS

In this document, unless the context otherwise requires, the "Company"
refers to Euro Trade & Forfaiting, Inc. and its wholly-owned subsidiary,
Euro Trade & Forfaiting Company Limited ("Euro Trade Limited"), and all
references to monetary amounts are in U.S. dollars unless otherwise
indicated.

The Company

The Company was originally incorporated as Rotunda Oil and Mining, Inc.
on November 19, 1980 under the laws of the State of Utah. On November 20,
1998 the Company entered into an Acquisition Agreement and Plan of
Reorganization with Euro Trade Limited, pursuant to which the Company
acquired all of the issued and outstanding common stock of Euro Trade
Limited and changed its name to Euro Trade & Forfaiting, Inc.

General

The Company's core business is financing trade receivables (forfaiting)
and the pre-export and specialized financing of commodities to well
established small and medium size trading companies. The Company also
refinances distressed trade debt held by international banks and financial
institutions. The Company is principally based in London, England and its
operations are primarily conducted in England. The Company currently has
three employees.

Description of Business

Forfaiting

Forfaiting involves the refinancing of trade receivables on a discount
basis without recourse to the previous holder. The forfaiter purchases
from an exporter the debt due by an importer when credit is required. The
debt is usually evidenced by a series of negotiable financial instruments
such as promissory notes or bills of exchange. This financial service is
available in all major currencies for export contracts in excess of
$250,000. Depending on transaction parameters, such as country and bank
risk, the financing periods range between a few months and several years.

Forfaiting transactions are normally comprised of bills of exchange
drawn and accepted under a letter of credit or promissory notes issued by
an importer. Typically, the bills of exchange or promissory notes are
"avaled" by the importer's bank. An aval is a guarantee, usually a bank
guarantee, that is separate from the underlying trade contract. In a
typical transaction, the bank avals, or makes an unconditional guarantee
of repayment, if the debtor fails to repay. An aval is the preferred form
of guarantee as it is self-evident, irrevocable and unconditional so long
as the law of the country of the buyer does not impose specific
restrictions. Bills of exchange are usually issued in hard currencies
such as U.S. dollars, deutschmarks and other recognized currencies and are
priced

relative to the average life London Interbank Offering Rate (LIBOR), plus
a margin to reflect the credit risk, and are discounted through maturity.

The Company's forfaiting transactions are financed through a mixture of
capital and borrowings from banks which are asset backed (secured)
facilities. At present, the level of gearing (leverage) that the Company
undertakes is limited by the Board of Directors to two to one, borrowings
to capital. The level of gearing within this limit depends on market
conditions and the desire of the Company to expand or constrict the size
of its trading portfolio.

Income from forfaiting comes from fees relating to the negotiation of
the transaction and capital gains on the sale of the assets. Capital gains
are the result of an improvement in the perceived credit risk or because
of a downward movement in interest rates during the period the assets are
held in the portfolio. The Company also earns a yield over and above the
carrying costs of the assets to maturity.

Non-recourse trade finance purchases are frequently made "subject to
receipt of satisfactory documentation" and sometimes pay under reserve
before the documentation is finally approved. If the Company commits to a
purchase, it is commonly communicated to the seller before the Company has
had an opportunity to review the underlying documentation in detail. The
Company may specify certain detailed aspects of the documentation, which
it expects the seller to be able to satisfy. If the detailed
documentation supporting the transaction is materially incomplete, the
Company is not required to proceed with the purchase.

The Company will commonly commit to purchase a transaction from an
exporter at a pre-determined rate of interest and to hold the commitment
open for a period to time to allow the exporter to negotiate its contract
with the importer. These commitments are fee earning and require the
Company to take an informed view of the interest rate outlook in the
particular currency concerned. In the event of fraud, the "non-recourse"
element of the transaction is nullified and each party may proceed against
the person from whom they purchased the commitment.

In any forfaiting transaction, the Company makes a full assessment of
the counterparty, country, hard currency availability and bank credit
risks. If the transaction is a primary market deal involving an exporter
unknown to the Company, the Company will make a full credit assessment of
the exporter as well as check on its previous experience and performance
as an exporter. In the case of a secondary market transaction, the
Company primarily deals only with banks or financial institutions with
which it has dealt before. If the transaction comes through an
intermediary, the Company will make a complete check of the exporter and
the intermediary. The creditworthiness of all counterparties with whom
the Company conducts business is reviewed at least annually.

The advantages for the Company in trading in finance receivables
include: (i) trade finance is unregulated in the United Kingdom; (ii)
trade finance is less likely to be subject to rescheduling when a creditor
country has external payment problems; (iii) trade related assets are
usually priced at a premium, compared to other financial assets with a
similar risk profile; (iv) historically, trade related transactions are
treated more favourably than other working capital, non-trade obligations

when a country is forced to renegotiate its external debt; and (v) the
documentation required to support a trade transaction, including proof of
delivery, make such transactions less subject to fraud.

The three main areas of risk for the Company in trading in finance
receivables are: (i) counterparty risk; (ii) documentary risk; and (iii)
payment risk. Counterparty risks involve the assessment of the
professional competence and financial stability of those organizations
from whom the Company is purchasing and to whom it is selling.
Documentary risks are those normally associated in dealing with trade
finance and include checks to avoid fraudulent transactions. Payment risk
involves an assessment of the ability of the obligor to meet payment
obligations when due.

Structured Trade and Commodity Finance

The Company's other core business is the pre-export and specialized
financing of commodities to well established small and medium size trading
companies. The Company may arrange financing for trade from and to
countries where traditional trade financing arrangements are not
available. These activities are primarily fee based and are therefore less
reliant on using the Company's balance sheet.

The Company works with traders and manufacturers world-wide to provide
"pre" and "post" shipment financing in emerging markets. The Company also
participates in structured trade and commodity finance transactions with
banks and financial institutions. Many of these transactions are secured
by cash deposits, liens over the assets being financed or a third party
letter of credit.

The Company's exposure to risk in structured trade and commodity finance
primarily arises from the ability of the Company's counterparty to
undertake and fulfil its contractual obligations under the underlying
trade contract. All of the Company's structured trade and commodity
finance transactions are secured. The Company presently does not have any
pre-set limits as to the optimum size of its structured trade portfolio,
which typically depends on the acceptability of the Company's counterparty
to those banks which are managing the facilities on behalf of the client.

Distressed Debt Refinancing

The Company is developing a program of debt "swaps" involving distressed
debt refinancing whereby the Company identifies distressed debt
obligations of banks and other corporate entities in emerging markets.
These obligations are then purchased by the Company and offered to
organizations seeking to purchase at a discount the equities in the same
emerging market. Such purchasers then seek to negotiate with the banks and
corporate entities concerned to retire the distressed debt in exchange for
equity or some other form of more valuable security. The Company's profit
is made between the purchase of the bank or corporate debt in the open
market and the sale to buyers. The primary risk associated with debt
swaps is the potential diminution in value between the time that the
Company agrees to purchase an asset and the time that it arranges to sell
it. To reduce this risk, the Company arranges most transactions on a
simultaneous basis, whereby a buyer and seller are identified and funds
are exchanged on the same value date.

The distribution of the Company's income by business activity and
geographic region is set out in the following table for the period's
indicated:

Years Ended June 30,
------------------------
2000 1999 1998
------ ------ ------
(in thousands)

Income Source
Sale of forfaiting assets. . . . . . . . . . $ 706 $4,907 $1,687
Interest income. . . . . . . . . . . . . . . 1,215 2,218 1,936
Fees and charges . . . . . . . . . . . . . . 316 514 1,593
Structured trades. . . . . . . . . . . . . . - 105 -
Other. . . . . . . . . . . . . . . . . . . . 98 - -
------ ------ ------
Total $2,335 $7,744 $5,216
====== ====== ======

The composition of the notes by country of the issuing financial
institution is as follows:

As at June 30,
----------------------
2000 1999 1998
---- ---- ----

Turkey . . . . . . . . . . . . . . . . . . . 70% 23% 6%
Russia . . . . . . . . . . . . . . . . . . . 22 26 9
Ukraine. . . . . . . . . . . . . . . . . . . 8 5 5
Czech Republic . . . . . . . . . . . . . . . - 4 12
Indonesia. . . . . . . . . . . . . . . . . . - 35 58
Nigeria. . . . . . . . . . . . . . . . . . . - 2 10
Germany. . . . . . . . . . . . . . . . . . . - 5 -
--- --- ---

Total 100% 100% 100%
=== === ===

Portfolio Management

The Company's portfolio of trading assets is made up of bills of
exchange, promissory notes and other negotiable trade finance instruments
denominated in "hard" currencies, the majority of which were purchased on
the basis of discounting through to maturity for periods of six months to
five years. The Company assesses credit risks on a daily basis to ensure
that it buys into improving risk categories and sells assets in
potentially deteriorating categories to avoid potential illiquidity. The
Company continually investigates bank and country risks by reviewing
economic and financial data related to each risk and by communicating with
other experienced professionals outside the Company. Results are assessed
daily to determine what assets to buy and sell.

The size of the Company's portfolio varies considerably depending on
both deal flow and the Company's view on interest rates and macro economic
outlooks. In the primary market, the holding period for an asset is often
two to three months before it can be safely and profitably sold. This
reality determines the minimum level of the Company's portfolio. The size
of the portfolio is also constrained by the need to act within prudent
leverage limits.

ITEM 2. PROPERTIES

The Company leases property in London, England at 42 Brook Street, London,
England, W1Y 1YB.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to routine litigation incidental to its business
but does not anticipate that the outcome of such litigation will have a
material adverse effect on the Company's business or financial condition.

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

The Company's 1999 Annual General Meeting was held on May 16, 2000 to
re-elect Michael J. Smith, James Carter and Naren Desai as directors of
the Company.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

(a) Market Information. The Company's common stock has been trading on
the OTC Bulletin Board under the symbol "ETFC" since December, 1998. The
following table sets forth the high and low closing prices of the
Company's common stock for the periods indicated.

Fiscal Quarter Ended High Low
- -------------------- ------ -----

1998
Period ended December, 1998(1). . . . . . . . . . . $25.00 $8.00
1999
March 31. . . . . . . . . . . . . . . . . . . . . . $27.00 $4.00
June 30 . . . . . . . . . . . . . . . . . . . . . . $22.00 $5.00
September 30. . . . . . . . . . . . . . . . . . . . $ 7.63 $3.56
December 31 . . . . . . . . . . . . . . . . . . . . $ 6.63 $3.13
2000
March 31. . . . . . . . . . . . . . . . . . . . . . $ 4.75 $2.13
June 30 . . . . . . . . . . . . . . . . . . . . . . $ 2.94 $0.51
Period ended September 25, 2000 . . . . . . . . . . $ 0.60 $0.41

- ------------
(1) The Company's shares commenced trading on the OTC Bulletin Board on
or about December 3, 1998.

(b) Shareholder Information. As of September 25, 2000, there were
approximately 548 holders of record of the Company's common shares and a
total of 16,945,224 common shares were issued and outstanding.

(c) Dividend Information. The Company has not declared or paid cash
dividends or made distributions in the past and does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future. The Company intends to retain and invest future earnings to
finance its operations.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial information for the
Company for each of the last four years. The information has been
reclassified to conform with the current year's presentation and is
qualified in its entirety by, and should be read in conjunction with, the
more detailed financial statements and related notes contained elsewhere
herein.

Years Ended June 30,
--------------------
2000 1999 1998(1) 1997(1)
-------- -------- --------- --------
(in thousands, other than per share amounts)

Revenues . . . . . . . . . . $ 2,335 $ 7,744 $ 5,216 $ 460
Net income (loss). . . . . . $ (1,659) $ 4,114 $ (4,992) $ 304
Net income (loss) per
common share,
Basic. . . . . . . . . . $ (0.10) $ 0.28 $ (0.42) $ 0.03
Diluted. . . . . . . . . $ (0.10) $ 0.28 $ (0.42) $ 0.03
Weighted average common
shares outstanding,
Basic. . . . . . . . . . 16,945 14,468 11,945 11,945
Diluted. . . . . . . . . 16,945 14,468 11,945 11,945
Current assets . . . . . . . $ 26,759 $ 42,950 $ 35,423 $ 9,453
Current liabilities. . . . . $ 3,767 $ 18,524 $ 15,204 $ 9,152
Working capital. . . . . . . $ 22,992 $ 24,426 $ 20,222 $ 301
Total assets . . . . . . . . $ 26,759 $ 42,950 $ 35,516 $ 9,456
Long-term liabilities. . . . $ - $ - $ - $ -
Shareholders' equity . . . . $ 22,992 $ 24,426 $ 20,312 $ 304
Cash dividends . . . . . . . $ - $ - $ - $ -

- ------------
(1) Euro Trade Limited commenced operations in February 1997 and became a
wholly-owned subsidiary of the Company on November 20, 1998.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

The following discussion of the financial condition and results of
operations of the Company for the three years ended June 30, 2000 should
be read in conjunction with the consolidated financial statements and
related notes included elsewhere in this annual report. Certain amounts in
the Company's financial statements and related notes have been restated to
conform to the current presentation. The following management discussion
and analysis of financial condition and results of operations are based
upon the restated financial statements for all prior years as aforesaid.

Results of Operations

Acquisitions

The Company continues to pursue strategic alternatives to maximize the
value of its portfolio. Some of these alternatives have included, and will
continue to include, selective acquisitions, divestitures and sales of
certain assets. The Company has provided, and may from time to time in
the future provide, information regarding portions of its business to
interested parties for such purposes.

The following table sets forth the approximate percentage relationship
to total revenues of principal items contained in the Company's
Consolidated Statements of Operations for the fiscal years ended June 30,
2000, 1999 and 1998.

June 30,
-------------------------------
2000 1999 1998
------ ------ -------

Total revenue. . . . . . . . . . . . . . 100% 100% 100%
Costs of revenue interest. . . . . . . . 23 10 21
Provisions for losses. . . . . . . . . 23 - 133
------ ------ ------
Gross profit (loss). . . . . . . . . . . 54 90 (54)
------ ------ ------
General and administrative expenses. . . 125 37 42
------ ------ ------
Net income (loss). . . . . . . . . . . . (71) 53 (96)
====== ====== ======

For the year ended June 30, 2000 compared to the year ended June 30, 1999

Revenues for 2000 decreased 70% to $2.3 million from $7.7 million in
1999, primarily due to the Company's decreased activity in the market.
Cost of revenues, comprising interest expense and provision for losses on
forfaiting assets, increased to $1.1 million in 2000 from $0.7 million in
1999 as a result of an increase of $0.5 million in loan loss reserves
charged to income in 2000. Interest expense decreased 26% to $0.5 million
in 2000 from $0.7 million in 1999, reflecting the Company's decreased
activity in the market.

Interest income decreased 45% to $1.2 million in 2000 from $2.2 million
in 1999, primarily as a result of a reduction in forfaiting assets.

General and administrative expenses were $2.9 million for the years
ended 2000 and 1999. These expenses are primarily personnel and occupancy
costs.

Net loss in 2000 totalled $1.7 million, or $0.10 per share of common
stock, compared to net income of $4.1 million, or $0.28 per share of
common stock, in 1999.

For the year ended June 30, 1999 compared to the year ended June 30, 1998

Revenues for 1999 increased 48% to $7.7 million from $5.2 million in
1998, primarily due to the Company's increased activity in the market.
Cost of revenues, comprising interest expense and provision for losses on
forfaiting assets, decreased to $0.7 million in 1999 from $8.0 million in
1998, primarily as a result of a decrease of $7.0 million for loan loss
reserves charged to income in 1998. Interest expense decreased 33% to $0.7
million in 1999 from $1.1 million in 1998, reflecting the financing of a
greater number of transactions and collection on the first round of
purchases.

Interest income increased 15% to $2.2 million in 1999 from $2.0 million
in 1998, primarily as a result of an increase in forfaiting assets.

General and administrative expenses for 1999 increased 34% to $2.9
million from $2.2 million in 1998, also due to increased operating
activity in 1999. These expenses are primarily personnel and occupancy
costs.

Net income in 1999 totalled $4.1 million, or $0.28 per share of common
stock. Net loss in 1998 totalled $5.0 million, or $0.42 per share of
common stock.

Provision for Losses

The Company's investment portfolio at June 30, 1998 was $20.6 million,
which included $7.5 million invested in trade paper of Russia and Ukraine.
In reliance upon an independent appraisal, a $6.5 million provision was
made against the Company's assets. As economic conditions changed in
fiscal 1999, both Russian and Ukraine debtors made payments totalling $0.7
million. Although economic reform in Russia and Ukraine continues, these
investments are provided for at 90% of face value. No additional
provision for losses was made for year 1999.

In year 2000, additional provision for losses of $0.5 million was made
for a forfaiting asset originating in the Czech Republic to a nominal
amount.

Future reserves will depend upon the economic conditions in the
countries where the debt occurs.

Liquidity and Capital Resources

The Company had cash and cash equivalents of $16.3 million at June 30,
2000 compared to $9.9 million at June 30, 1999.

Operating activities provided cash of $13.6 million in 2000, compared to
using cash of $1.0 million in 1999. A decrease in forfaiting assets
provided cash of $13.0 million in 2000, compared to an increase in
forfaiting assets using cash of $2.5 million in 1999. A decrease in
accounts payable and other accrued expenses used cash of $0.4 million in
2000, compared to $1.9 million in 1999. A decrease in interest receivable
provided cash of $1.1 million in 2000, compared to using cash of $0.8
million in 1999.

Investing activities used cash of $5.0 million in 2000 as a result of
the purchase of a note receivable.

Financing activities used cash of $2.2 million in 2000, compared to $2.4
million used in 1999, primarily as a result of repayment of amounts due to
banks. In 2000, a change in restricted cash balances provided cash of
$12.0 million, compared to using cash of $7.6 million in 1999. The
Company did not pay any dividends on its common shares in 2000.

Inflation

In the opinion of management, inflation has not had a material effect on
the operations of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

The Company is exposed to market risks from changes in interest rates
and foreign currency exchange rates which may affect its results of
operations and financial condition. The Company manages these risks
through internal risk management policies which are administered by
management committees. The Company does not enter into derivative
contracts for its own account to hedge against these risks.

Interest Rate Risk

The Company is subject to the effects of interest rate fluctuations on
its financial instruments. A sensitivity analysis of the projected
incremental effect of a hypothetical 10% change in 2000 and 1999 year-end
interest rates on the fair value of its financial instruments is provided
in the following table:

As at June 30, 2000 As at June 30, 1999
--------------------------------- ---------------------------------
Hypo- Hypo-
Carrying thetical(1) Potential Carrying thetical(1) Potential
Value Value Loss Value Value Loss
-------- ----------- --------- -------- ----------- ---------
(thousands)

Financial assets:
Forfaiting
assets $ 3,617 $ 3,614 $ (3) $17,157 $16,909 $ (248)
Note receivable 5,000 4,960 (40) - - -
Financial liabilities:
Bank loans
payable $ 3,318 $ 3,337 $ (19) $ 7,477 $ 7,541 $ (64)

- ------------
(all due within one year)
(1) Reflects a 10% increase in interest rate of financial assets and a
10% decrease in interest rates of financial liabilities.

The Company's exposure to increases in interest rates that might result
in a corresponding decrease in the fair value of its forfaiting assets
portfolio could have an unfavourable effect on the Company's results of
operations and cash flows.

Foreign Currency Exchange Rate Risk

The reporting currency of the Company is the U.S. dollar. The Company
holds financial instruments primarily denominated in U.S. dollars,
deutschmarks and sterling pounds. A depreciation of other currencies
against the U.S. dollar will decrease the fair value and an appreciation
of such currencies against the U.S. dollar will increase the fair value of
such financial instruments. The Company's financial instruments which may
be sensitive to foreign currency exchange rate fluctuations are forfaiting
assets, restricted cash and bank loans payable. The following table
provides information about the Company's exposure to foreign currency
exchange rate fluctuations for the carrying amount of financial
instruments that may be sensitive to such fluctuations as at June 30, 2000
and 1999 and expected cash flows from these instruments:

Expected Future Cash Flow
---------------------------------------------------
Carrying Fair
As at June 30, 2000 Value Value 2001 2002 2003 2004 2005 Thereafter
----- ------- ------ ------ ------ ------ ------ ----------
(thousands)

Forfaiting assets . . . $ 3,617 $ 3,617 $ 3,617 $ - $ - $ - $ - $ -
Cash restricted . . . . 1,139 1,139 1,139 - - - - -
Bank loans payable. . . (3,681) (3,681) (3,681) - - - - -

Expected Future Cash Flow
---------------------------------------------------
Carrying Fair
As at June 30, 1999 Value Value 2000 2001 2002 2003 2004 Thereafter
----- ------- ------ ------ ------ ------ ------ ----------
(thousands)

Forfaiting assets . . . $ 8,309 $ 8,309 $ 8,309 $ - $ - $ - $ - $ -
Cash restricted . . . . 13,148 13,148 13,148 - - - - -
Bank loans payable. . . (7,590) (7,590) (7,590) - - - - -

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and supplementary data required
with respect to Item 8 and as listed in Item 14 of this annual report, are
included in this annual report commencing on page 20.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

In January 2000, the Company's Board of Directors changed independent
accountants from Marc Lumer & Company ("MLC") to Peterson Sullivan
P.L.L.C. There were no disagreements between the Company and MLC, and nor
was there any adverse opinion, disclaimer of opinion, modification or
qualification contained in any financial report prepared by MLC for the
past two years. Reference is made to the Company's Form 8-K dated March
7, 2000 and Form 8-K/A dated March 21, 2000 for further information
concerning the Company's change of auditor.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The executive officers and directors of the Company are as follows:

Michael J. Smith, age 53, has been the President, Chief Executive
Officer and a director of the Company since February 4, 2000. Mr. Smith
is the President, Chief Executive Officer and a director of MFC Bancorp
Ltd. and is the Chief Executive Officer, Chief Financial Officer and a
director of TriMaine Holdings, Inc. and Drummond Financial Corporation.
Mr. Smith was the Chief Financial Officer of Mercer International Inc.
from May 1988 until 1996.

James Carter, age 55, has been the Secretary and a director of the
Company since February 4, 2000. Mr. Carter is currently a Vice President
of MFC Bancorp Ltd. He served as President and a director of Pine
Resources Corporation from October 1998 to December 1999, and as President
and a director of Renfield Enterprises Inc. from November 1998 to January
2000. Mr. Carter was the President and Chief Executive Officer of Carlin
Resources Corp. from 1994 to 1998.

Naren Desai, age 46, has been the Treasurer and a director of the
Company since February 4, 2000. Mr. Desai has been employed as an executive
by Euro Trade Limited since October 1999. Prior to that, Mr. Desai was
employed as a Chartered Accountant by Andrew Murray & Company from 1992 to
September 1999. Mr. Desai holds an MBA from City University in London,
England.

Slobodan Andjic, age 56, became a director of the Company on October 10,
2000. Mr. Andjic has served as Vice President and a director of Swiss
Investment Group since 1998. He served as an advisor to the President of
Mercur and a director and coordinator of the Mercur group of companies from
1996 to 1998. Mr. Andjic was the Chairman of Yugoexport Athens Company from
1994 to 1996.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, require the Company's directors and executive
officers and persons who beneficially own more than 10% of the common shares
(collectively, the "Reporting Persons"), to file with the SEC initial reports
of beneficial ownership (Form 3) and reports of changes in beneficial ownership
of common shares and other equity securities of the Company (Form 4). Reporting
Persons are required by SEC regulations to furnish to the Company copies of all
Section 16(a) reports that they file. To the Company's knowledge, based solely
on a review of the copies of such reports furnished to the Company, all Section
16(a) filing requirements applicable to the Reporting Persons were complied
with for the fiscal year ended June 30, 2000.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation
earned or paid during the last three fiscal years to the Company's Chief
Executive Officer and each of the Company's current executive officers who
received in excess of $100,000 in salary and bonus:

Summary Compensation Table
Annual Compensation
All Other
Name and Principal Position Year Salary($) Bonus($) Compensation(3)($)
- --------------------------- ---- --------- -------- ------------------

Michael J. Smith(1)
President, Chief Executive 2000 - - -
Officer and Director

Naren Desai(2)
Treasurer, Vice 2000 108,000 - 11,850
President and Director

John Vowell(1)
Former President, Chief 2000 165,000 - 35,215
Executive Officer and 1999 190,272 285,410 42,825
Director 1998 198,000 297,000 40,362

(1) Michael J. Smith replaced John Vowell as the Company's President and
Chief Executive Officer on February 4, 2000. Mr. Vowell's appointment
as an officer and director of the Company was terminated in fiscal 2000.
(2) Naren Desai has served as a director and officer of the Company since
February 4, 2000 and is employed by the Company as an accountant.
(3) All Other Compensation consists of car allowance, mortgage subsidy,
private health benefits and pension contributions paid to or on behalf
of directors of the Company.

Employment Agreements

John Vowell's compensation in fiscal 2000 was determined by an employment
agreement with Pt. Multikarsa Investama ("Multikarsa") dated April 28, 1997.
Under the terms of the employment agreement, Mr. Vowell received an annual base
salary and an annual bonus of one and a half times base salary in fiscal 1999
and 1998. Mr. Vowell's appointment as an officer and director of the Company
was terminated in fiscal 2000 and he is no longer employed by the Company.

Naren Desai's compensation in fiscal 2000 was determined by an employment
agreement with Euro Trade Limited dated October 1, 1999. Under the terms of the
employment agreement, Mr. Desai receive an annual base salary and an annual
bonus tied to the profitability of the Company.

Stock Options

The Company did not have a stock option plan in place in fiscal 2000 and no
stock options were granted by the Company to any of its executive officers
during that period.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's common shares by: (i) each person known by the
Company to beneficially own more than 5% of the Company's common shares;
(ii) each executive officer and director of the Company; and (iii) all
executive officers and directors of the Company as a group.

Name and Address of Amount and Nature of Percent of
Beneficial Owner(1) Beneficial Ownership Class
- ------------------- -------------------- ----------

Michael J. Smith 202,663(2) 1.2%
17 Dame Street
Dublin 2, Ireland

James Carter
17 Dame Street
Dublin 2, Ireland - -

Naren Desai(3) - -
Merrivale, 65 Balcombe Road, Haywards Heath
West Sussex, England RH16 1PE

Slobodan Andjic(4) - -
UL. II Crnogroskog, Bataljona BB
81000 Podgorica, Montenegro, Yugoslavia

Collingwood Investment Limited(5)(6) 4,400,000 25.9%
19 Peel Road
Douglas, Isle of Man, LM1 41S

North Cascade Limited(6)(7) 6,600,000 38.9%
19 Peel Road
Douglas, Isle of Man, LM1 41S

All executive officers and directors as a group 202,663 1.2%

(1) The information presented in this table is based solely on information
contained in Schedule 13Ds filed by the beneficial owners with the Securities
and Exchange Commission or information furnished to the Company. Except as
set forth in the footnotes to this table, the persons named in the table
above have sole voting and investment power with respect to all common shares
shown as beneficially owned by them.
(2) Michael J. Smith is a director and officer of MFC Bancorp Ltd. ("MFC"),
which owns all of the issued and outstanding common stock of MFC Merchant
Bank S.A. (the "Bank"). The Bank owns 202,663 common shares (the "Shares")
of the Company. Michael J. Smith is not an officer or director of the
Bank and disclaims beneficial ownership of the Shares.
(3) Naren Desai has served as an officer and director of the Company since
February 4, 2000.
(4) Slobodan Andjic was appointed a director of the Company on October 10,
2000.
(5) Based upon a Schedule 13D filed by Collingwood Investments Limited
("Collingwood"), the directors of Collingwood are Colin Pearse and Richard
Baker. The Mayflower Trust is the sole shareholder of Collingwood and
therefore shares voting power with Collingwood and the trustee of The
Mayflower Trust, Aston Corporate Trustees Limited, over the common shares of
the Company beneficially owned by Collingwood.
(6) Pursuant to a Securities Pledge Agreement dated for reference January 31,
2000, Collingwood and North Cascade Limited ("Cascade") pledged their
aggregate 11.0 million common shares of the Company to the Bank as security
for a loan of $12 million made by the Bank to Collingwood and Cascade
pursuant to a Loan Agreement made among them dated for reference January 31,
2000. A copy of the Securities Pledge Agreement is attached as an exhibit to
the Schedule 13D filed jointly by the Bank and MFC on February 17, 2000.

(7) Based upon a Schedule 13D filed by Cascade, the directors of Cascade are
Robert Griffin and Richard Tanner. The Mayflower Trust is the sole
shareholder of Cascade and therefore shares voting power with Cascade, and
the trustee of The Mayflower Trust, Aston Corporate Trustees Limited, over
the common shares of the Company beneficially owned by Cascade.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MFC Merchant Bank S.A. loaned two shareholders of the Company, Collingwood
Investments Limited and North Cascade Limited, which hold in aggregate 11.0
million common shares of the Company (the "Euro Shares") (being approximately
65% of the issued and outstanding shares as at the date of the loan), $12
million on or about January 31, 2000. The loan is secured by the Euro Shares.

The Company has a note receivable from MFC Bancorp Ltd. in the amount of $5
million at June 30, 2000. This note is due in full on January 31, 2001, bears
interest at 8% and is unsecured.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

Index

(a)(1) Financial Statements
Page
----
Independent Auditors' Report. . . . . . . . . . . . . . . . . 20
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Operations . . . . . . . . . . . . 22
Consolidated Statements of Changes in Shareholders' Equity. . 23
Consolidated Statements of Cash Flows . . . . . . . . . . . . 24
Notes to the Consolidated Financial Statements. . . . . . . . 25

All other schedules have been omitted because they are not applicable or
the required information is shown in the financial statements or notes
thereto.

(3) List of Exhibits

21 List of Subsidiaries of Registrant.

27 Article 5 - Financial Data Schedule for the Year Ended June
30, 2000.

(b) The Registrant did not file any reports on Form 8-K during the
fourth quarter of the fiscal year.

INDEPENDENT AUDITORS' REPORT
----------------------------

To the Board of Directors and Shareholders
Euro Trade & Forfaiting, Inc.

We have audited the accompanying consolidated balance sheet of Euro Trade
& Forfaiting, Inc. and Subsidiary as of June 30, 2000, and the related
consolidated statements of operations, changes in shareholders' 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. The
consolidated balance sheet as of June 30, 1999, and the related
consolidated statements of operations, changes in shareholders' equity,
and cash flows for the years ended June 30, 1999 and 1998, were audited by
another accountant. His report, dated September 13, 1999, expressed an
unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Euro
Trade & Forfaiting, Inc. and Subsidiary as of June 30, 2000, and the
results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United
States.

/s/ Peterson Sullivan P.L.L.C.

Peterson Sullivan P.L.L.C.
Seattle, Washington
August 30, 2000

EURO TRADE & FORFAITING, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and 1999
(In Thousands of Dollars)

2000 1999
---------- ----------

ASSETS

Current Assets
Cash and cash equivalents $ 16,338 $ 9,927
Restricted cash balances 1,139 13,148
Forfaiting assets 3,617 17,157
Note receivable 5,000 -
Interest receivable 211 1,337
Amount due from shareholder - 120
Other 454 1,261
---------- ----------

$ 26,759 $ 42,950
========== ==========

LIABILITIES

Current Liabilities
Accounts payable and other accrued expenses $ 86 $ 454
Bank loans payable 3,681 8,755
Other amounts due to bank - 9,315
---------- ----------

Total liabilities 3,767 18,524

SHAREHOLDERS' EQUITY

Shareholders' Equity
Common stock, par value $0.001; 50,000,000
shares authorized; 16,945,224 shares issued
and outstanding at June 30, 2000 and 1999 17 12
Additional paid-in capital 25,264 25,044
Retained deficit (2,289) (630)
---------- ----------

22,992 24,426
---------- ----------

$ 26,759 $ 42,950
========== ==========

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

EURO TRADE & FORFAITING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended June 30, 2000, 1999, and 1998
(In Thousands of Dollars, except for per share amounts)

2000 1999 1998
-------- -------- --------

Revenue $ 2,335 $ 7,744 $ 5,216

Expenses
Interest 546 733 1,088
Provision for losses on
forfaiting assets 537 - 6,950
General and administrative 2,911 2,897 2,170
-------- -------- --------

3,994 3,630 10,208
-------- -------- --------

Net income (loss) $ (1,659) $ 4,114 $ (4,992)
======== ======== ========

Basic and diluted earnings
(loss) per share $ (0.10) $ 0.28 $ (0.42)
======== ======== ========

Weighted average number of
common shares outstanding
(in thousands) 16,945 14,468 11,945
======== ======== ========

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

EURO TRADE & FORFAITING, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended June 30, 2000, 1999, and 1998
(In Thousands of Dollars)

Common Stock
----------------------

Additional Retained
Number Paid-in Earnings
of Shares Amount Capital (Deficit) Total
----------- -------- ------------ ----------- ---------

Balance at June 30, 1997 11,945,224 $ 12 $ 44 $ 248 $ 304

Capital contribution - - 25,000 - 25,000

Net loss - - - (4,992) (4,992)
---------- -------- ---------- --------- ---------

Balance at June 30, 1998 11,945,224 12 25,044 (4,744) 20,312

Shares issued in 1999;
paid for in the
next year 5,000,000 - - - -

Net income - - - 4,114 4,114
---------- -------- ---------- --------- ---------

Balance at June 30, 1999 16,945,224 12 25,044 (630) 24,426

Payment for shares issued
in prior year - 5 220 - 225

Net loss - - - (1,659) (1,659)
---------- -------- ---------- --------- ---------

Balance at June 30, 2000 16,945,224 $ 17 $ 25,264 $ (2,289) $ 22,992
========== ======== ========== ========= ========

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

EURO TRADE & FORFAITING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2000, 1999 and 1998
(In Thousands of Dollars)

2000 1999 1998
------- ------- -------

Cash Flows from Operating Activities
Net income (loss) $ (1,659) $ 4,114 $ (4,992)
Adjustments to reconcile net income
(loss) to cash flows from operating
activities
Provision for losses on forfaiting
assets 537 - 6,950
Changes in current assets and
liabilities
Interest receivable 1,126 (814) (437)
Forfaiting assets 13,003 (2,514) (13,593)
Accounts payable and other
accrued expenses (368) (1,892) (246)
Other 927 94 (1,474)
-------- -------- --------

Net cash flows from
operating activities 13,566 (1,012) (13,792)

Cash Flows from Investing Activities
Purchase of note receivable (5,000) - -

Cash Flows from Financing Activities
Loans from (repayments to) banks (5,074) (4,101) 6,298
Payment of other amounts due to bank (9,315) 9,315 -
Change in restricted cash balances 12,009 (7,600) (5,548)
Capital contribution - - 25,000
Payment received for shares issued
in prior year 225 - -
-------- -------- --------

Net cash flows from
financing activities (2,155) (2,386) 25,750
-------- -------- --------

Net increase (decrease)
in cash and cash
equivalents 6,411 (3,398) 11,958

Cash and cash equivalents,
beginning of year 9,927 13,325 1,367
-------- -------- --------

Cash and cash equivalents,
end of year $ 16,338 $ 9,927 $ 13,325
======== ======== ========

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

EURO TRADE & FORFAITING, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. The Company and Summary of Significant Accounting Policies

Euro Trade & Forfaiting, Inc. ("the Company") is a trade financing company
primarily dealing with importers and exporters. The Company generally
purchases short-term debt due to an exporter from an importer at a
discount, then either resells the debt or holds it until maturity. Debts
acquired are referred to as forfaiting assets and are generally supported
by negotiable financial instruments (such as promissory notes or letters
of credit). Debts acquired are usually guaranteed by a bank in the
importer's country and, subject to the quality of the guarantor, are
marketable to financial institutions.

In November 1998, the stockholders of the Company exchanged their stock
for the common stock of another company in a transaction accounted for as
a reverse purchase whereby the Company is the continuing entity.

The notes to the financial statements are stated in United States dollars
as rounded to the nearest thousand.

Basis of Presentation
- ---------------------

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. Significant intercompany balances and
transactions have been eliminated.

Cash and Cash Equivalents
- -------------------------

Cash and cash equivalents include highly liquid debt instruments purchased
with original maturities of three months or less. The Company usually has
cash or cash equivalents at financial institutions in excess of insured
limits.

On a cash basis, interest payments were $540, $700, and $1,100 in 2000,
1999, and 1998, respectively. No cash payments were made for income taxes
in 2000, 1999 and 1998.

Restricted Cash Balances
- ------------------------

Occasionally, the Company borrows the funds necessary to purchase
forfaiting assets. The lender may require a portion of collections on
forfaiting assets be deposited into restricted cash accounts until the
lender is repaid. Upon repayment, the cash is released to the Company.

Note 1. (Continued)

Forfaiting Assets and Notes Receivable
- --------------------------------------

Forfaiting assets and notes receivable are stated net of allowances for
credit losses, accrued interest, reimbursable expenses and unamortized
loan fees.

Forfaiting assets and notes receivable are classified as impaired when
there is no longer reasonable assurance of the timely collection of
principal and interest. Whenever a contractual payment is 90 days past
due, forfaiting assets and notes receivable are automatically classified
as impaired unless they are fully secured and in the process of
collection. When a forfaiting asset or a note receivable is deemed
impaired, its carrying amount is reduced to its estimated realizable
amount, which is measured by discounting the expected future cash flows at
the effective interest rate. As a practical expedient, it may also be
based on a loan's observable market price or the fair value of collateral,
if it is collateral dependent. In subsequent periods, any increase in the
carrying value of an impaired forfaiting asset or a note receivable is
credited to the provision for credit losses. Impaired forfaiting assets
and notes receivable are returned to performing status when there is no
longer any reasonable doubt regarding timely collection of principal and
interest, all amounts in arrears including interest have been collected
and all charges for loan impairment have been reversed. Where a portion
of a forfaiting asset or a note receivable is written off and the
remaining balance is restructured, the new forfaiting asset or note
receivable is carried on the accrual basis when there is no longer any
reasonable doubt regarding collectibility of principal and interest, and
payments are not 90 days past due. Collateral is obtained if, based on an
evaluation of credit-worthiness, it is considered necessary for the
overall borrowing facility.

Assets acquired in satisfaction of forfaiting assets are recorded at the
lesser of their fair value at the date of transfer or the carrying value
of the asset. Any excess of the carrying value of the forfaiting asset
over the fair value of the assets acquired is written off. Operating
results and gains and losses on disposal of such assets are treated as
write-offs and recoveries.

Interest income from forfaiting assets or notes receivable is recognized
when earned using the interest accrual method, unless the forfaiting asset
or note receivable is classified as impaired at which time recognition of
interest income ceases. Interest on impaired loans is credited to the
carrying value of the loan when received.

Due to the relatively short term of the Company's receivable amounts,
exposure to interest rate sensitivity is not significant.

Note 1. (Continued)

Taxes on Income
- ---------------

The Company accounts for income taxes under an asset and liability
approach that requires the recognition of deferred tax assets and
liabilities for expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, the Company generally considers all
expected future events other than enactments of changes in the tax laws or
rates.

Earnings per Share
- ------------------

Basic earnings per share is computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares. There were no potentially
dilutive common shares at June 30, 2000, 1999, or 1998.

Foreign Currency Transactions
- -----------------------------

The Company's functional currency is the United States dollar. Gains and
losses resulting from foreign currency transactions are included in the
determination of net income or loss.

Stock-Based Compensation
- ------------------------

Although there has been no stock-based compensation, the Company accounts
for stock-based compensation using Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees." Accordingly, the
compensation cost for stock options granted to employees is measured as
the excess, if any, of the quoted market price of the Company's stock at
the date of the grant over the amount an employee is required to pay for
the stock.

Comprehensive Income
- --------------------

There are no reconciling items between the net loss presented in the
Statements of Operations and comprehensive loss as defined by SFAS No.
130, "Reporting Comprehensive Income."

Segment Reporting
- -----------------

Management considers the Company to operate in only one business segment.
Accordingly, any disclosures required by SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," are already
incorporated in other financial statement disclosures.

Note 1. (Continued)

New Accounting Standards
- ------------------------

Management has determined that any new accounting standards issued through
the date of the independent auditors' report do not have an effect on
these financial statements.

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 assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Accordingly, actual results could differ from
the estimates that were used.

The Company is involved in various matters of litigation arising in the
normal course of business. In the opinion of management, the estimated
outcome of such issues will not have a material effect on the Company's
financial statements.

Reclassifications
- -----------------

Certain items from 1999 and 1998 have been reclassified to conform to the
current presentation.

Note 2. Forfaiting Assets

At June 30, 2000, most forfaiting assets bear interest at about 8%. The
following table represents the number of debts outstanding and the country
where the debts originated:

June 30, 2000 June 30, 1999
---------------------------------- ----------------------------------
Percentage Percentage
Country Number Balance of Balance Number Balance of Balance
- ---------------- --------- --------- ------------ -------- --------- ------------

Turkey 1 $ 3,253 70% 1 $ 5,599 23%
Czech Republic 1 1,000 22 1 924 4
Nigeria 1 363 8 1 585 2
Indonesia - - - 3 8,385 35
Russia - - - 3 6,304 26
Germany - - - 1 1,107 5
Ukraine - - - 1 993 5
----- -------- ------- ------ -------- ---------
Totals 3 4,616 100% 11 23,897 100%
===== ======= ====== =========

Loss reserve (999) (6,740)
-------- --------

$ 3,617 $ 17,157
======== ========

Note 2. (Continued)

According to an agency agreement associated with the forfaiting asset
originating in Nigeria which will expire in October 2000, the Company is
required to repay to the agent an additional portion of the total loan up
to a maximum amount of $2,587 in the event the borrower defaults on the
loan. The Company's exposure under this agreement is $363 at June 30,
2000. Management does not believe any reserve is required for this
contingency.

The Company received full payment on the forfaiting asset originating in
Turkey subsequent to June 30, 2000.

Management has determined that certain debts are impaired. Impaired and
non-impaired debts are summarized as follows:

June 30, 2000 June 30, 1999
--------------- ---------------

Non-impaired debt $ 3,616 $ 15,676
Impaired debt at face value 1,000 8,221
---------- ----------

Totals $ 4,616 $ 23,897
========== ==========

The fair value of non-impaired debts approximate carrying value due to the
short-term nature of the debt. The carrying value of impaired debt has
been adjusted to fair value with a loss reserve as follows:

June 30, 2000 June 30, 1999
--------------- ---------------

Face value of impaired debts $ 1,000 $ 8,221
Loss reserve (999) (6,740)
---------- ----------

Fair value of impaired debt $ 1 $ 1,481
========== ==========

The loss reserve has been established only for impaired debt. A reserve
for non-impaired debt is not considered necessary by management. Activity
on the loss reserve is summarized as follows:

June 30, 2000 June 30, 1999
--------------- ---------------

Balance, beginning of year $ 6,740 $ 7,018
Loss expense 537 -
Reductions due to sale of
assets or write-offs (6,278) (278)
---------- ----------

Balance, end of year $ 999 $ 6,740
========== ==========

Interest income recognized on impaired debt is insignificant.

Note 2. (Continued)

Management believes the reserve for losses is adequate to offset future
losses in the Company's current loan portfolio. A specific loss reserve
of $999 was established during the year ended June 30, 2000, using a loan-
by-loan analysis and relates to the forfaiting asset originated in the
Czech Republic. When determining the reserve for losses, management
considers many factors including the country risk (exposures in less
developed countries and management's overall assessment of the underlying
economic conditions in those countries). Also considered are items that
mitigate losses including collateral associated with debts. All
outstanding debts are due within the current fiscal year.

Note 3. Transactions with Affiliates

An individual that is an officer and a director of the Company is also an
officer and a director of another related company ("the Affiliate"). The
Affiliate is a shareholder in the Company and has a management agreement
with the Company expiring in January 2003. Fees under the management
agreement may be earned by the Affiliate based on the Company's future
performance. The Affiliate has also loaned $12,000 to other shareholders
of the Company and this loan is secured by 11 million of the Company's
outstanding shares.

The Company has a note receivable from this Affiliate in the amount of
$5,000 at June 30, 2000. The note is due in full on January 31, 2001,
bears interest at 8% and is unsecured. Interest income on the note was
$155 for the year ended June 30, 2000. Based on the short-term nature of
this note receivable, fair value approximates carrying value.

The Company has $10,695 on deposit with a bank subsidiary of the Affiliate
at June 30, 2000. Interest income from this deposit amounted to $86 for
the year ended June 30, 2000.

The Company also paid management fees of $17, $280, and $251 during the
years ended June 30, 2000, 1999, and 1998, respectively, to companies
controlled by another shareholder.

Note 4. Bank Loans Payable

June 30, 2000 June 30, 1999
--------------- --------------

Loans payable to banks bearing
interest at 5.75% at June 30, 2000.
The loans are payable as certain
related forfaiting assets are
collected. The related forfaiting
assets and restricted cash balances
are security for the loans. $ 3,318 $ 7,477

Other short-term bank borrowings,
interest-bearing
363 1,278
---------- ----------
$ 3,681 $ 8,755
========== ==========

The weighted average interest rate on bank loans payable was 6.5%, 6.2%
and 6.6% for the years ended June 30, 2000, 1999, and 1998, respectively.
The fair value of bank loans payable approximates carrying value based on
the interest rates and short-term nature of the loans.

At June 30, 1999, other amounts due to bank represent forfaiting assets
that have been funded by a bank that the Company was in the process of
repaying. Amounts were settled early in the year ended June 30, 2000.

Note 5. Income Taxes

There is no current or deferred tax provision for the years ended June 30,
2000, 1999, or 1998. Differences between the U.S. statutory tax rate and
the Company's effective tax rate is as follows:

June 30, June 30, June 30,
2000 1999 1998
--------- --------- ----------

Tax at U.S. statutory
rate $ (564) $ 1,399 $ (1,698)
Change in valuation
allowance for deferred
tax asset 564 (1,399) 1,698
-------- -------- ---------

Income tax expense $ - $ - $ -
======== ======== =========

Note 5. (Continued)

At June 30, 2000, the Company's deferred tax asset is composed of $439 for
net operating loss carryforwards and $340 for a loss reserve. A valuation
allowance of $779 results in a net asset of zero.

The Company has net operating tax loss carryforwards of $1,113 for United
States income tax purposes. Most of these losses expire in 2019. The
Company has net operating tax loss carryforwards of $177 for United
Kingdom income tax purposes. These losses do not expire.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

EURO TRADE & FORFAITING, INC.
Dated: October 26, 2000
By: /s/ Michael J. Smith
-------------------------
Michael J. Smith
President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.

/s/ Michael J. Smith Date: October 26, 2000
- -------------------------
Michael J. Smith
President, Chief Executive Officer
Director

/s/ James Carter Date: October 26, 2000
- -------------------------
James Carter
Director

Date: October 26, 2000
- -------------------------
Naren Desai
Director

/s/ Slobodan Andjic
- ------------------------- Date: October 26, 2000
Slobodan Andjic
Director

EXHIBIT INDEX

Exhibit No. Description of Exhibit
- ------------------- -----------------------------------------

21 List of Subsidiaries of Registrant.

27 Article 5 - Financial Data Schedule for
the Year Ended June 30, 2000.