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 March 31, 1999 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)
(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 May 14, 1999
This document is comprised of 10 pages.
FORM 10-QSB
3RD QUARTER
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet as of
March 31, 1999 (Unaudited) 3
Condensed statements of operations - Three and
nine months ended March 31, 1999 and 1998
(Unaudited) 4
Condensed statements of cash flows - Nine months
ended March 31, 1999 and 1998 (Unaudited) 5
Notes to condensed financial statements (Unaudited) 6
Item 2. Plan of operation 8
PART II - OTHER INFORMATION 9
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 10
* 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
<TABLE>
<CAPTION>
Condensed Balance Sheet
March 31, 1999
ASSETS
<S> <C>
Lease deposit $ 1,444
______________
TOTAL ASSETS $ 1,444
==============
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
Accounts payable, related party $ 3,244
______________
TOTAL LIABILITIES 3,244
______________
SHAREHOLDERS' EQUITY
Common stock 150
Additional paid-in capital 557,485
Retained deficit (559,435)
_______________
TOTAL SHAREHOLDERS' DEFICIT $ (1,800)
_______________
$ 1,444
===============
</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)
Three months ended Nine months ended through
March 31, March 31, March 31,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
Costs and
expenses, related
party (Note B) $ - $1,800 $7,100 $1,800 $18,268
Costs and expenses 7,563 5,135 34,224 6,459 48,854
Net loss before
taxes (7,563) (6,935) (41,324) (8,259) (67,122)
Income Taxes - - - - -
_______ ______ _______ _______ ________
Net Loss $(7,563) $(6,935) $(41,324) $(8,259) $(67,122)
======= ======= ======== ======== =========
Basic weighted
shares
outstanding 1,498,000 484,893 1,160,298 484,893 1,160,298
========= ========= =========== ========= ===========
Basic loss
per share $ (.01) $ (.01) $ (.04) $ (.02) $ (.04)
========= ========= =========== ========== ============
</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
Nine Months Ended (Inception)
March 31, Through
1999 1998 March 31, 1999
<S> <C> <C> <C>
NET CASH (USED IN)
OPERATING ACTIVITIES $(34,224) $(6,459) $(54,372)
NET CASH PROVIDED BY
INVESTING ACTIVITIES - - -
FINANCING ACTIVITIES
Third part expenses
paid by shareholder
on behalf of Company
recorded as additional
paid-in capital
(Note B) 34,224 6,459 54,372
_________ ___________ _____________
NET CASH PROVIDED BY
FINANCING ACTIVITIES 34,224 6,459 54,372
__________ ____________ ______________
NET CHANGE IN CASH AND
CASH EQUIVALENTS - - -
Cash and cash equivalents,
beginning of period - - -
_________ ______________ _____________
CASH AND CASH EQUIVALENTS
END OF PERIOD $ - $ - $ -
========= ============== =============
Non-cash financing
activities:
Liability due to officer
satisfied with issuance
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)
March 31, 1999
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.
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 nine months ended March 31, 1999, an individual who is
the sole officer and director of the Company, provided consulting, office
space and administrative services to the Company valued at $-0- and $7,100,
respectively. This amount is included in the financial statements as costs and
expenses, related party.
The Company incurred certain legal, accounting, transfer agent fees and
general and administrative costs during the three and nine months ended March
31, 1999 totaling $7,563 and $34,224, respectively which were paid on behalf
of the Company by the same individual mentioned above. The $34,224 has been
reported in the financial statements as additional-paid-in capital.
During the nine months ended March 31, 1998, the president of the Company paid
on behalf of the Company certain legal, accounting and transfer agent fees.
The total incurred and paid by the officer was $6,459. Additionally, the
president provided office space and general and administrative services to the
Company beginning January 1, 1998 for $600 per month for a total of $1,800.
From July 1, 1997 (inception) through March 31, 1999, a total of $48,854 of
third party expenses were paid on behalf of the Company by the president.
Prior to July 1, 1997, the president paid $5,518 of third party expenses on
behalf of the Company, resulting in a total of $54,372 recorded in additional
paid-in capital.
The President provided rent, consulting and general and administrative support
for the Company totaling $18,268 during the period July 1, 1997 (inception)
through March 31, 1999. $16,468 of the related party expenses due to the
president were satisfied with the issuance of common stock. The remaining
$1,800 is recorded as accounts payable, related party along with a $1,444
lease deposit, paid by the president, resulting in a total due to the presided
at March 31, 1999 of $3,244.
OTC AMERICA, INC.
A Development Stage Company
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
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 benefit from
the net operating losses for the periods ended March 31, 1999 and 1998 has
been offset by the establishing of a valuation allowance equal to the deferred
tax asset derived from net operation losses. The valuation allowance offsets
the net deferred tax asset for which there is no assurance of recovery.
Note D: Event subsequent to June 30,1998
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.
On September 22, 1998, with consent of the sole director, the Company was
authorized to issue 1,013,107 (after effect of the 100 for 1 reverse stock
split) of its restricted common shares to an individual who is the sole
officer and director of the Company. The shares were to be issued as
compensation for third party administrative expenses paid on behalf of the
Company by the officer and for consulting services. Total increase to equity
in exchange for the 1,013,107 shares, issued in October 1998, was $47,817. The
transaction gives 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
March 31, 1999.
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 primarily 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 March 31, 1999 the Company had $3,244 of current liabilities related to
amounts due to the president of the Registrant, which includes $1,444 for a
office lease deposit paid by the president of the Registrant. The $1,444 is
recorded as an asset at March 31, 1999.
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 during the period - 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 nine months ended March 31,
1999 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: May 14, 1999 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 MARCH 31, 1999 AND THE RELATED STATEMENT OF
INCOME FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,444
<CURRENT-LIABILITIES> 3,244
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> (1,950)
<TOTAL-LIABILITY-AND-EQUITY> 1,444
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 41,324
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,324)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,324)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
