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, 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 2,400,024
- --------------------------------------------------------------------------------
Class Number of shares outstanding at
February 24, 2000
This document is comprised of 10 pages.
<PAGE>
FORM 10-QSB
2ND QUARTER
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet December 31, 1999 (Unaudited) ..................... 3
Condensed statements of operations - Three and six months ended
December 31, 1999 and 1998, and July 1, 1997 (inception)
through December 31, 1999 (Unaudited) .................................... 4
Condensed statements of cash flows Six months ended December 31, 1999 and 1998,
and July 1, 1997 (inception)
through December 31, 1999 (Unaudited) ................................... 5
Notes to condensed financial statements (Unaudited) ........................ 6
Item 2. Plan of operation ................................................. 7
PART II - OTHER INFORMATION ................................................ 8
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 ................................................................. 9
* The accompanying financial statements are not covered by an Independent
Certified Public Accountant's report.
2
<PAGE>
Part I. Item 1. Financial Information
OTC AMERICA, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
December 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................. $ 565,471
Advances to acquisition candidate (Note C) ................ 1,540,947
Preferred stock issuance costs, net ....................... 39,026
Prepaid interest .......................................... 18,750
-----------
TOTAL CURRENT ASSETS 2,164,194
DEPOSITS..................................................... 1,444
$ 2,165,638
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable........................................... $ 6,731
Due to related party (Note B).............................. 16,846
-----------
TOTAL CURRENT LIABILITIES 23,577
REDEEMABLE PREFERRED STOCK Series A preferred stock, no par value, 2,500,000
shares authorized; 2,500,000 ($1.00 stated value), shares issued and
outstanding recorded at fair value, includes
$1,574,062 accrued accretion............................... 4,074,062
SHAREHOLDERS' DEFICIT
Preferred stock, no par value, 17,500,000 shares
authorized; -0- shares issued and outstanding.............. -
Common stock, $.0001 par value; 150,000,000 shares
authorized; 2,400,024 shares issued and outstanding........ 240
Additional paid in capital................................. 600,218
Accumulated deficit, ($2,040,146 accumulated during
development stage)......................................... (2,532,459)
TOTAL SHAREHOLDERS' DEFICIT (1,932,001)
-----------
$ 2,165,638
===========
See accompanying notes to condensed financial statements
3
<PAGE>
<TABLE>
<CAPTION>
OTC AMERICA, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
July 1, 1997
(inception)
Three Months Ended Six Months Ended through
December 31, December 31, December 31,
1999 1998 1999 1998 1999
----------- ----------- ----------- ----------- ------------
COSTS AND EXPENSES
<S> <C> <C> <C> <C> <C>
General and administrative........... $ 80,636 $ 15,460 $ 106,716 $ 26,661 $ 179,464
Related party (Note B)............... -- 1,800 -- 7,100 16,468
Amortization ........................ 21,286 -- 42,572 -- 53,215
----------- ----------- ----------- ----------- ------------
TOTAL COSTS AND EXPENSES 101,922 17,260 149,288 33,761 249,147
NON-OPERATING INCOME (EXPENSE)
Interest expense..................... (617,557) -- (1,510,600) -- $ (1,855,312)
Interest income...................... 16,212 -- 37,026 -- 56,879
Realized gain on investments......... -- -- 3,062 -- 7,434
----------- ----------- ----------- ----------- ------------
NET LOSS BEFORE TAXES (703,267) (17,260 (1,619,800) (33,761) (2,040,146)
INCOME TAXES (NOTE D).................. -- -- -- --
----------- ----------- ----------- ----------- ------------
NET LOSS $ (703,267) $ (17,260) $(1,619,800) $ (33,761) $ (2,040,146)
=========== =========== =========== ============ ============
NET LOSS PER COMMON SHARE:
Basic and diluted.................... $ (0.29) $ (0.83)
=========== ===========
SHARES USED FOR COMPUTING NET LOSS PER
COMMON SHARE:
Basic and diluted.................... 2,400,024 1,950,024
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
<TABLE>
<CAPTION>
OTC AMERICA, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
July 1, 1997
(inception)
Six Months Ended through
December 31, December 31,
1999 1998 1999
---------- --------- ----------
<S> <C> <C> <C>
NET CASH (USED IN)
OPERATING ACTIVITIES $ (120,366) $ (26,661) $ (370,713)
---------- --------- ----------
(120,366) (26,661) (370,713)
INVESTING ACTIVITIES
Cash paid in acquisition of subsidiary............. (1,525,947 - (1,525,947)
NET CASH (USED IN) ---------- --------- ----------
INVESTING ACTIVITIES (1,525,947 - (1,525,947)
FINANCING ACTIVITIES
Third party expenses paid by shareholder on behalf
of the company, recorded as
additional-paid-in-capital........................ - 26,661 54,372
Proceeds from issuance of preferred stock........... - - 2,500,000
Costs paid to issue manditorily redeemable
preferred stock................................... - - (92,241)
---------- --------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES - 26,661 2,462,131
---------- --------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,646,313) - 565,471
Cash and cash equivalents, beginning.................. 2,211,784 - -
---------- --------- ----------
Cash and cash equivalents, ending..................... $ 565,471 $ - $ 565,471
========== ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest............................... $ 225,000 $ - $ 300,000
========== ========= ==========
Cash paid for income taxes........................... $ - $ - $ -
========== ========= ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock issued in satisfaction of amounts due to
shareholder........................................ $ 40,000 $ 16,468 $ 56,467
Stock issued related to acquisition of subsidiary.... $ 15,000 $ - $ 15,000
</TABLE>
See accompanying notes to condensed financial statements
5
<PAGE>
OTC AMERICA, INC.
A Development Stage Company
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
December 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, 1999 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
1998:
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.
The Company incurred certain legal, accounting, transfer agent fees and general
and administrative costs during the six months ended December 31, 1998 totaling
$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.
1999:
At June 30, 1999 the Company owed the officer of the Company $21,823 for certain
expenses paid by the officer on behalf of the Company. During the three months
ended December 31, 1999 the Company satisfied this obligation by issuing 650,000
shares of the Company's restricted common stock to the officer. The issuance of
the stock was valued at the amount of the liability and for previous expenses
that had been credited to paid in capital, for a total of $40,000. On the date
of the issuance, the Company's common stock had a market value of $.02 per
share.
During the six months ended December 31, 1999 the officer paid an additional
$16,846 in expenses on behalf of the Company, which the officer anticipates
reimbursement. Therefore, the Company has recorded a payable due to the officer
at December 31, 1999 for $16,846.
Note C: Advances to acquisition candidate
During the six months ended December 31, 1999, the Company advanced $1,525,947
to an acquisition candidate. The cash advances were used to pay certain expenses
and liabilities of the proposed acquired company. The Company also issued
150,000 shares of its restricted common stock to an individual for purchase of
equipment that will be used by the acquisition candidate. The transaction was
valued at $15,000. If the acquisition is closed, the Company will record the
$1,540,947 as part of the purchase price. In the event the acquisition does not
close, the Company will charge any amounts that are not recovered to operations.
See Plan of Operations.
Note D: 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, 1999
resulting in a deferred tax asset, which was fully allowed for, therefore the
net benefit and expense result in $0 income taxes.
6
<PAGE>
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. The Registrant has identified one potential acquisition to whom
$1,540,947 has been advanced as partial consideration for the purchase. At
December 31, 1999 the Registrant had $585,471 with which to acquire or complete
the acquisition of an operating entity, however no acquisitions have been
consummated.
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
advanced $1,540,947 to an operating company that the Registrant is contemplating
acquiring.
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.
<PAGE>
7
<PAGE>
FINANCIAL CONDITION
On May 11, 1999 the Company issued 2,500,000 shares of its Series A Preferred
Stock for $2,500,000. The p[referred stock is mandatorily redeemable, at the
option of the holder, thirteen months after the date the stock was issued. The
stock has a stated value of $1.00 per share and is redeemable at $2.00 per share
or $5,000,000. Dividends, at the rate of eighteen percent per year of the stated
value of the stock, are payable monthly from the date of issuance commencing
thirty days after issuance. The holder of the preferred stock is entitled to
dividends at the rate of nine percent per year of the stated value of the
preferred stock for a period of two years after the mandatory redemption date,
regardless of whether the Company redeems the stock in accordance with the
mandatory redemption provisions. In the event of any liquidation, the holder of
the preferred stock is entitled to receive, prior and in preference to, any
distribution of any of the assets or surplus funds of the Company to the holders
of the Company's common stock, two times the stated value of the preferred stock
plus all unpaid dividends.
The Company incurred approximately $92,241 in various transaction fees and costs
in connection with the issuance of the preferred stock. The $92,241 has been
recorded in the accompanying condensed financial statements as a deferred charge
titled preferred stock issuance costs, net of $53,215 of accumulated
amortization. The costs are amortized over thirteen months which approximates
the period prior to mandatory redemption. For the six months ended December 31,
1999, the Company recorded $42,572 in amortization expense.
Due to the mandatory redemption provisions of the preferred stock, the Company
has recorded the preferred stock outside of the equity section. Accumulated
accretion of $1,574,062 was recorded at December 31, 1999. Accretion expense of
$1,285,600 was charged to interest expense during the six months ended December
31, 1999. Dividend payments, totaling $225,000 have accordingly been charged to
interest expense during the six months ended December 31, 1999.
At December 31, 1999, the Company has no operations or positive cash flows from
operations. The Company's business plan for fiscal year 2000 is to acquire an
operating company with sufficient cash flow to support the service of the
preferred stock and to redeem the preferred stock. There is no assurance that a
merger candidate will be found or if found, would generate sufficient cash
flows. In addition, the Company plans to issue equity capital to meet the
mandatory redemption requirements of the preferred stock. The Company's ability
to achieve the foregoing elements of its business plan, which may (or will) be
necessary to service the dividend requirements and to permit the redemption of
the preferred stock is uncertain. Those conditions raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
PART II - OTHER INFORMATION
Items 1 Through 4 - No response required.
Item 5 - Other Information. On February 17, 2000, the Company announced the
execution of a letter of intent to acquire Xtelegent Web Solutions, Inc.
(formerly known as NGT Holdings Ltd and d/b/a A -Z net.com). The letter of
intent provides for the issuance of 325,000 shares of the authorized, but
unissued shares of the Company (on a post-forward split basis) to acquire all of
the issued and outstanding shares of Xtelegent whereby Xtelegent will become a
wholly owned subsidiary of the Company. Xtelegent is owned by Robert and David
Dixon and a not for profit organization owned by these individuals. Robert W.
Dixon and David J. Dixon are members of the Dixon family, who are the sole
owners of the Series A Preferred stock issued by the Company and therefore the
transaction must be deemed a related party transaction. During the due diligence
and investigative stage of the acquisition process, the Company loaned a total
of $1,540,947 to Xtelegent which will also be recorded as part of the purchase
price if the transaction closes (see footnote C to the financial statements).
The transaction is expected to close during March 2000.
Also on February 17, the Company's chief executive officer announced a four
share for one share (4 for 1) forward split to be effected February 29, 2000.
Trading will commence on the four-for-one split basis effective March 1, 2000.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits
10.1 Letter of Intent
27* Financial Data Schedule.
(b) Reports on Form 8-K were filed on:
None
8
<PAGE>
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,
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: February 24, 1999 BY:/s/Randy Phillips
---------------------------- --------------------
Randy Phillips
President
OTC AMERICA, INC.
600 17th Street
Suite 950 South
Denver, CO 80202-5402
Tel: 303.260.6482
Fax: 303.260.6486
01-February-2000
NGP HOLDINGS LTD.
600 17th Street
Suite 950 South
Denver, CO 80202
Attn.: Officers, Directors and Shareholders
Re: Purchase of Outstanding Capital Stock
Gentlemen:
This "Letter of Intent" constitutes our formal offer to purchase all of
the outstanding capital stock of NGP HOLDINGS LTD. For purposes of this letter,
I will refer to NGP HOLDINGS LTD. as the "Company;" and to the holders of the
outstanding shares of the Company's capital stock as the "Selling Shareholders."
I will refer to OTC AMERICA, INC. as the "Buyer."
1 Purchase and Sale
Upon "Closing" as defined below, the Selling Shareholders
shall sell and the Buyer shall purchase, free and clear of all liens and
encumbrances, all (i.e., 100%) of the outstanding capital stock of the Company
(collectively, the "Acquired Shares").
2 Consideration (Purchase Price)
In consideration of the sale of the Acquired Shares, upon
Closing, the Buyer shall issue to the Selling Shareholders, free and clear of
all liens and encumbrances, in accordance with their pro rata interests in the
Acquired Shares, 350,000 shares of the authorized (but previously un-issued)
Common Stock of the Buyer the value of which shall be determined by reference to
the "Bid Price" of the publicly traded Common Stock of the Buyer at the close of
the NASDAQ market on 17 February 2000 (collectively, the "Registered Shares").
The Registered Shares shall be issued in the form of "restricted stock" as that
term is defined in Rule 144 promulgated pursuant to the Securities Act of 1933
(the "Securities Act), which shares the Buyer will register with the U.S.
Securities and Exchange Commission (the "Commission") as set forth below.
<PAGE>
NGP HOLDINGS LTD.
01 February 2000
Page 2
- -----------------
3 Buyer's Registration Obligation
The Buyer shall file with the Commission, no later than ninety
(90) days following Closing, a registration statement under the Securities Act
(the "Registration Statement") registering the Registered Shares for resale. The
Buyer shall use its reasonable best efforts to cause the Registration Statement
to be declared effective as soon as possible after it is filed. The Buyer shall
provide the Selling Shareholders written notice when the Registered Shares may
be sold pursuant to the Registration Statement within ten (10) business days
following the effective date of the Registration Statement. The Buyer shall
maintain the effectiveness of the Registration for a minimum of one (1) year
following the effective date of the Registration Statement. The Selling
Shareholders acknowledge and agree that the Buyer's obligation to register the
Registered Shares for resale pursuant to this paragraph is a "one-time only"
obligation, and thereafter their right to resell the Registered Shares will be
subject to Rule 144 promulgated pursuant to the Securities Act.
4 Conduct of Business before Closing
Upon the Company's and the Selling Shareholders' acceptance of
this Letter of Intent through Closing or the abandonment or cancellation of the
subject transaction, the Company and the Selling Shareholders will operate the
Internet Service Provider ("ISP") business of the Company, which is currently
conducted under the trade name A-Znet.com!, in all respects in the ordinary
course and using their best efforts to retain the subscriber accounts and the
Company's "goodwill" which is essential consideration to the Buyer's desire to
purchase the Acquired Shares.
5 Conditions Precedent/Contingencies
The Buyer's obligation to consummate the subject transaction
will be contingent upon its determination, during "due diligence," that the
Financial Statements of the Company previously or to be subsequently provided by
the Company to the Buyer, are true and correct in all material respects, and
that neither the Company nor the Selling Shareholders have misrepresented in or
omitted from this information any material fact that would make the Financial
Statements misleading or that otherwise could affect the Buyer's decision to
consummate the subject transaction. If the Buyer determines during "due
diligence" that such Financial Statements are not true and correct in all
material respects, or that the Company or the Selling Shareholders have
misrepresented or failed to disclose any such material fact, the Buyer will have
the option to abandon or cancel the subject transaction.
<PAGE>
NGP HOLDINGS LTD.
01 February 2000
Page 3
- -----------------
6 Due Diligence
Upon the Company's and the Selling Shareholders' acceptance of
this Letter of Intent, the Company and the Selling Shareholders will permit the
Buyer and its designated representatives complete and unrestricted access to all
records and physical plant relating to the Company and its ISP business. Subject
to appropriate confidentiality restrictions, the Company will make copies of any
such records for the use and benefit of the Buyer and its representatives.
7 Formal Agreement(s); Closing
7.1 Upon the Company's and the Selling Shareholders' acceptance of this Letter
of Intent, the Buyer will cause its legal counsel to prepare a formal "Stock
Purchase Agreement," and such other documents or agreements as are customary and
appropriate for transactions of the subject nature (collectively, the "Formal
Agreement(s)"). The Formal Agreement(s) will be delivered to the Company and the
Selling Shareholders on before 18 February 2000. The Formal Agreement(s) will
include such representations and warranties of the Company, the Selling
Shareholders and the Buyer, and such covenants with respect to the conduct of
the Company's businesses between the date of acceptance and Closing, as
customary for transactions of the subject nature. A breach of any such
representation, warranty or covenant will give the non-breaching party the
option to abandon or cancel the transactions contemplated by this Letter of
Intent and/or the Formal Agreement(s).
7.2 The parties agree to use their best efforts to negotiate and execute the
Formal Agreement(s) on or before 25 February 2000, and to cause the consummation
(i.e., "Closing") of the transactions contemplated by them and/or this Letter of
Intent to occur, if at all, on or before 29 February 2000. Except as otherwise
subsequently provided by the Formal Agreement(s), each party will bear its own
costs, including attorney's fees. Taxes and other apportionable items, will be
borne or apportioned as is customary, and, as applicable, adjusted as of the
date of Closing.
8 Lock-Up; Exclusivity
The Company's and the Selling Shareholders' acceptance of this
Letter of Intent will constitute their agreement to conduct unilateral and
exclusive negotiations with the Buyer with respect to the transactions
contemplated by this Letter of Intent and/or the Formal Agreement(s) during the
period beginning upon the date of their acceptance of this Letter of Intent and
ending 29 February 2000, unless the Company, the Selling Shareholders and the
Buyer mutually agree to abandon or cancel the subject transactions. Without in
any way limiting the foregoing, during such period neither the Company nor the
Selling Shareholders will entertain or accept offers from or negotiate with any
other prospective purchaser of the Company, its stock or its assets. The Company
and the Selling Shareholders acknowledge that the Buyer is relying on this
covenant by spending time, effort and energy, including money, to prepare the
Formal Agreement(s), conduct "due diligence" and enter into further
negotiations.
<PAGE>
NGP HOLDINGS LTD.
01 February 2000
Page 4
- -----------------
9 Publicity/Public Announcement
No press release or public announcement of any kind (including
to any customer, supplier/vendor or employee of the Company) will be made
regarding this Letter of Intent or the transactions contemplated by it and/or
the Formal Agreement(s) without the express written consent of the Company, the
Selling Shareholders and the Buyer, except that the Buyer may announce that it
has entered into a Letter of Intent to acquire the Company upon undisclosed
terms and conditions.
10 Broker of Finder's Fees
The Buyer has not engaged or dealt with any broker, finder or
other person who could be entitled to any brokerage fee or commission with
respect to the transactions contemplated by this Letter of Intent and/or the
Formal Agreement(s). If the Company or the Selling Shareholders or any one of
them has engaged or dealt with any broker, finder or other person who could be
entitled to any brokerage fee or commission with respect to the subject
transactions, the Selling Shareholders will be solely responsible for the
payment of any fee or commission earned or otherwise payable.
11 Time Limitation
This Letter of Intent, if not accepted earlier by the Company
and the Selling Shareholders, will expire at 5:01 p.m. MT, Wednesday, 16
February 2000.
<PAGE>
NGP HOLDINGS LTD.
01 February 2000
Page 5
- -----------------
If the foregoing is acceptable, please execute and return one of the
two counterparts of this Letter of Intent that I have provided you. Once
accepted by you, this Letter of Intent will constitute our binding agreement (a)
to prepare and negotiate the terms and conditions of the Formal Agreement(s) in
good faith on or before 25 February 2000; (b) to deal exclusively with each
other in connection with the subject transactions as provided by paragraph 8;
and (c) to adhere to the covenants regarding the conduct of the Business, "due
diligence," publicity and such other obligations as provided by paragraphs 4, 0,
7, 9 and 10. Otherwise, this Letter of Intent will have no legal effect, and if
we are unable to successfully conclude our negotiations and enter into the
Formal Agreement(s) by 29 February 2000, each of us will be forever released and
discharged from our obligations under this Letter of Intent without further
liability.
Very truly yours,
OTC AMERICA, INC.
By:/s/Randy L. Phillips
--------------------
Randy L. Phillips
President
RLP&RTB/r
READ, AGREED AND ACCEPTED
AS OF THE DATE SET FORTH ABOVE:
NGP HOLDINGS LTD.
/s/Robert W. Dixon
- -----------------------------------------
Robert W. Dixon
Individually as a Selling Shareholder and as President of the Company
<PAGE>
NGP HOLDINGS LTD.
01 February 2000
Page 6
- -----------------
COLORADO EMERGENCY MEDICAL SERVICES FOUNDATION
/s/Robert W. Dixon
- ----------------------------------------------
Robert W. Dixon
As Director of the Foundation
/s/David Dixon
- ----------------------------------------------
David Dixon
Individually as a Selling Shareholder
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM OTC AMERICA, INC.
UNAUDITED BALANCE SHEET AS OF DECEMBER 31,
1999 AND THE RELATED STATEMENT OF INCOME FOR
THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000803265
<NAME> OTC AMERICA, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 565,471
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,164,194
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,165,638
<CURRENT-LIABILITIES> 23,577
<BONDS> 0
4,074,062
0
<COMMON> 240
<OTHER-SE> (1,932,241)
<TOTAL-LIABILITY-AND-EQUITY> 2,165,638
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 149,288
<OTHER-EXPENSES> (40,088)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,510,600
<INCOME-PRETAX> (1,619,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,619,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,619,800)
<EPS-BASIC> (.83)
<EPS-DILUTED> (.83)
</TABLE>
