UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1998 Commission File Number
0-15992
OTC AMERICA, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1031311
(State or other jurisdiction of (I.R.S. Employer Identification
No.)
incorporation or organization)
600 17th Street, Suite 950 South Denver, Colorado 80202
(Address of principal executive offices) (Zip code)
(303) 260-6482
(Registrant's telephone number, including area code)
1582 South Parker Road, Suite 203 Denver, Colorado 80231
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.0001 par value
1,498,000
Class Number of shares outstanding at
February 1, 1999
This document is comprised of 9 pages.
FORM 10-QSB
2ND QUARTER
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet December 31, 1998 (Unaudited) 3
Condensed statements of operations - Three and six months ended
December 31, 1998 and 1997, and July 1, 1997 (inception)
through December 31, 1998 (Unaudited) 4
Condensed statements of cash flows Six months ended
December 31, 1998 and 1997, and July 1, 1997 (inception)
through December 31, 1998 (Unaudited) 5
Notes to condensed financial statements (Unaudited) 6
Item 2. Plan of operation 7
PART II - OTHER INFORMATION 7
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To A Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 8
* The accompanying financial statements are not covered by an Independent
Certified
Public Accountant's report.
Part I. Item 1. Financial information
OTC AMERICA, INC.
A Development Stage Company
Condensed Balance Sheet
December 31, 1998
<TABLE>
ASSETS
<S> <C>
CURRENT ASSETS
Prepaid rent $ 2,500
------------------
TOTAL CURRENT ASSETS 2,500
OFFICE LEASE DEPOSIT 2,500
-------------------
TOTAL ASSETS $ 5,000
===================
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
Accounts payable and accrued liabilities,
related party (Note B) $ 6,800
-----------------
TOTAL LIABILITIES 6,800
SHAREHOLDERS' DEFICIT
Common stock 150
Additional paid-in capital 549,922
Accumulated deficit ($59,559 accumulated during
development stage) (551,872)
------------------
TOTAL SHAREHOLDERS' DEFICIT $(1,800)
------------------
$ 5,000
==================
</TABLE>
See accompanying notes to condensed financial statements
OTC AMERICA, INC.
A Development Stage Company
<TABLE>
<CAPTION>
Condensed Statements of Operations
July 1, 1997
(inception)
through
Three Months Ended Six Months Ended December 31,
December 31, December 31,
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Revenue $ - $ - $ - $ - $ -
Cost and
expenses 15,460 1,324 26,661 1,324 41,291
Cost and expenses,
related party
(Note B) 1,800 - 7,100 - 18,268
------ -------- -------- ------ --------
Net Loss Before
Taxes (17,260) - (33,781) - (59,559)
------ --------- ---------- ------- ---------
Income taxes - - - - -
------- --------- ----------- ------ ----------
Net Income
(Loss) $(17,260) $1,324 $(33,781) $1,324 $(59,559)
-------- -------- ----------- ------- ---------
</TABLE>
See accompanying notes to condensed financial statements
OTC AMERICA, INC.
A Development Stage Company
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
July 1,
1997 (inception)
Six Months Ended through
December 31, December 31,
1998 1997 1998
<S> <C> <C> <C>
NET CASH (USED IN)
OPERATING ACTIVITIES $(26,661) $ - $(46,809)
NET CASH PROVIDED BY
INVESTING ACTIVITIES - - -
FINANCING ACTIVITIES
Third party expenses paid by
shareholder on behalf of
Company recorded as additional-
paid-in capital (Note B) 26,661 - 46,809
------------ -------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 26,661 - 46,809
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS - - -
Cash and cash equivalents,
beginning of year - - -
------------ ---------- --------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ - $ - $ -
============ =========== =========
Non-cash financing activities:
Liability due to officer
satisfied with payment of stock $16,468 $ - $16,468
============ =========== =========
</TABLE>
See accompanying notes to condensed financial statements
OTC AMERICA, INC.
A Development Stage Company
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
December 31, 1998
Note A: Basis of presentation
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its annual 10-KSB report dated June
30, 1998 and should be read in conjunction with the notes thereto. The
Company entered the development stage in accordance with Statement of
Financial Accounting Standard ("SFAS") No. 7 on July 1, 1997 and its purpose
is to evaluate, structure and complete a merger with, or acquisition of, a
privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The
results of operations for the periods presented are not necessarily indicative
of the results to be expected for the year.
Interim financial data presented herein are unaudited.
Note B: Related party transactions
During the three and six months ended December 31, 1998, an individual who is
the sole officer and director of the Company, provided consulting, office
space and administrative services to the Company valued at $1,800 and $7,100,
respectively. This amount is included in the financial statements as costs and
expenses, related party. Further, the individual paid on behalf of the
Company $5,000 for a deposit and first month's rent on new office space.
Amounts due to the individual accumulated at September 30, 1998 of $16,468
were satisfied by the issuance of the Company's common stock, therefore
leaving a remaining balance due to the individual at December 31, 1998 of
$6,800.
The Company incurred certain legal, accounting, transfer agent fees and
general and administrative costs during the three and six months ended
September 30, 1998 totaling $15,460 and $26,661 which were paid on behalf of
the Company by the same individual mentioned above. The $26,661 has been
reported in the financial statements as additional-paid-in capital. See Note
D Subsequent event.
Note C: Income taxes
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company
incurred net operating losses during the three and six months ended December
31, 1998 resulting in a deferred tax asset, which was fully allowed for,
therefore the net benefit and expense result in $0 income taxes.
Note D: Subsequent event
On September 22, 1998, with consent of the sole director, the Company was
authorized to issue 101,310,706 of its restricted common shares to an
individual who is the sole officer and director of the Company. The shares
are to be issued as compensation for third party administrative expenses paid
on behalf of the Company by the officer and for consulting services. The
total payment to third parties and the amounts due to the individual for
services was $31,349 and $16,468, respectively as of September 30, 1998. The
Company has recorded the $31,349 as additional paid in capital at September
30, 1998. Further, additional third party expenses were paid by the
individual during the three months ended December 31, 1998 totaling $15,460
which has been recorded as an increase to additional-paid-in capital, for
total of $46,809. Total increase to equity in exchange for the 101,310,706
shares is $47,817.
The shares were issued to the individual in October 1998, thereby giving the
sole officer and director approximately 72% ownership of the outstanding
common stock of the Company.
The Company is authorized to issue an additional 2,000 (after effect of the
100 for 1 reverse stock split) shares of its restricted common stock to an
unrelated party in exchange for $200. Those shares were not issued as of
December 31, 1998.
Part I. Item 2. Plan of operation
OTC AMERICA, INC.
A Development Stage Company
PLAN OF OPERATION
The plan of the Registrant's management, for the next twelve months, is to
focus on acquiring an operating entity. The sole officer and director has
been seeking possible merger candidates and expects to consummate a
transaction in the near future. Management anticipates utilizing additional
equity financing and short-term working capital advances in its acquisition
endeavors. From time to time as necessary, the sole officer and director has
paid certain expenses on behalf of the Registrant.
Management contemplates that the Registrant will seek to merge with or acquire
a target company with either assets or earnings, or both, and that preliminary
evaluations undertaken by an affiliate of the Registrant may assist in
identifying possible target companies. The Registrant has not established a
specific level of earnings or assets below which Registrant would not consider
a merger or acquisition with a target company. Moreover, management may
identify a target company which has in the past, is now, or which may in the
future generate losses or experience balance sheet weakness. A material
adverse effect on the price of the Registrant's Common Stock could result from
a merger transaction between the Registrant and a company that possesses less
than ideal financial characteristics; however, there is no assurance that
Registrant will not consummate a merger with a financially challenged or
troubled company.
RESULTS OF OPERATIONS
No operations were conducted during the most recent quarter. Since February
1989, the Company has been an inactive shell company. Any expenses incurred
since 1989 have been related to legal, accounting and stock transfer agent
fees in order to provide stock transfer services to current shareholders and
to comply with reporting as required by the Securities Exchange Act of 1934,
and costs associated with the search for possible merger candidates.
The Registrant reentered the development stage on July 1, 1997, commensurate
with the change of control which occurred November 11, 1997. There were no
significant activities between July 1, 1997 and November 11, 1997 which would
precipitate the effective date of reentering the development stage as of
November 11, 1997 versus July 1, 1997 the beginning of the Registrant's fiscal
year.
Management and the board of directors received shareholder approval for a one
for one hundred share reverse stock split, on October 27, 1998, resulting in
149,800,000 outstanding shares being converted to 1,498,000 shares.
Management believes that the reverse stock split will make the Company more
attractive as a merger candidate to a private company desiring to go public
through a merger with the Company.
FINANCIAL CONDITION
As of December 31, 1998 the Company had incurred $6,800 of current liabilities
related to consulting services, payment of rent and a lease deposit and
general and administrative expenses provided on behalf of the Company by the
sole officer, director and majority shareholder. Subsequent to September 30,
1998 the Company issued 101,310,706 of its restricted common stock to the sole
officer, director as payment for the debt of $16,468, outstanding at September
30, 1998 and for other costs and expenses, which were paid to third parties
on behalf of the Company by the sole officer and director of $31,349, for
total value of $47,817. Additional third party expenses were paid by the
individual during the three months ended December 31, 1998 totaling $15,460
which has been recorded as an increase to additional-paid-in capital.
PART II - OTHER INFORMATION
Items 1 Through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits
27* Financial Data Schedule.
(b) Reports on Form 8-K were filed on:
None
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair
presentation of the results of operations for the three and six months ended
December 31, 1998 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OTC AMERICA, INC.
(Registrant)
DATE: February 22, 1998 BY: /s/ Randy Phillips
----------------- -----------------
Randy Phillips
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OTC AMERICA,
INC. UNAUDITED BALANCE SHEET AS OF DECEMBER 31, 1998 AND THE RELATED STATEMENT
OF INCOME FOR THE SIX MONTHS ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STAMENETS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,000
<CURRENT-LIABILITIES> 6,800
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> (1,950)
<TOTAL-LIABILITY-AND-EQUITY> 5,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 33,781
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,781)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,781)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,781)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
