SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 29, 2000
OTC America, Inc.
------------------
(Exact name of registrant as specified in its charter)
Colorado 0-15992 84-1031311
- ---------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 17th Street, Suite 950 South
Denver, Colorado 80202
---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 260-6482
<PAGE>
This amendment to the Current Report on Form 8-K dated February 29,
2000 relates to the acquisition of Xtelegent Web Solutions Inc., doing business
under the trade name of A-Znet.com!, by OTC America, Inc. which was completed
effective February 29, 2000. The sole purpose of this amendment is to file the
financial statements of A-ZNet.com, Inc. from August 3, 1998 (date of
incorporation) through June 30, 1999 and the pro forma financial statements of
OTC America for the six months ended December 31, 1999 and the year ended June
30 ,1999 which give effect to the acquisition of A-ZNet.com, Inc.
Item 7. Financial Statements and Exhibits.
(a) Financial information of business acquired.
The audited financial statements of A-ZNet.com, Inc. from August
3, 1998 (date of inception) through June 30, 1999 are filed herewith and appear
beginning at page F-2.
(b) Pro forma financial information.
The pro forma financials statements of OTC America for the six
months ended December 31, 1999 and the year ended June 30, 1999 which give
effect to the acquisition of Xtelegent are filed herewith and appear beginning
at page F-12.
(c) Exhibits.
The following exhibits are furnished as part of this report:
Exhibit 10.1 Stock Purchase Agreement by and between OTC America
and the Shareholders of Xtelegent Web Solutions Inc. dated February 25, 2000*
Exhibit 99.1 Press Release of OTC America dated March 1, 2000.*
* Previously filed with the original report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 12, 2000 OTC America, Inc.
By: /s/ Randy L. Phillips
--------------------------
Randy L. Phillips, President
<PAGE>
A-Z NET.COM., Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
with
INDEPENDENT AUDITORS' REPORT
FROM AUGUST 3, 1998, (Date of Inception) to JUNE 30, 1999
CONTENTS
INDEPENDENT AUDITOR'S REPORT................................................F-2
BALANCE SHEET...............................................................F-3
STATEMENT OF OPERATIONS.....................................................F-4
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT...............................F-5
STATEMENT OF CASH FLOWS.....................................................F-7
NOTES TO FINANCIAL STATEMENTS...............................................F-7
UNAUDITED PROFORMA FINANCIAL STATEMENTS.....................................F-12
F-1
<PAGE>
Donald W. Prosser, P.C.
DWP
Certified Public Accountants
820 16th Street, Suite 732
Denver, CO 80202
720-904-1394
(fax) 720-904-1396
To the Board of Directors
A-Z NET.COM, Inc.
Syracuse, New York
We have audited the accompanying balance sheets of A-Z NET.COM, Inc. (A
Development Stage Company) as of June 30, 1999 and the related statements of
operations, changes in shareholder's deficit and cash flows for the period
August 3, 1998 (Date of Inception) to June 30, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. 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, these financial statements referred to above present, in all
material respects, the financial position of A-Z NET.COM, Inc. (A Development
Stage Company) at June 30 1999 and the results of their operations and their
cash flows for the period beginning August 4, 1998 (Date of Inception) to June
30, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company is attempting to establish itself as a player
in a very competitive market. It also has a substantial need for cash to finance
its development stage and on going activities. These and other factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 6. The
accompanying financial statements do not include any adjustments relating to the
recover ability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
/s/ Donald W. Prosser, P.C.
-----------------------------
Donald W. Prosser, P.C.
Denver, Colorado
April 16, 2000
F-2
<PAGE>
A-Z NET.COM., Inc.
(A Development Stage Company)
BALANCE SHEET
June 30, 1999
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
Current Assets:
Cash $ 11,275
Accounts Receivable 115,703
Prepaid Expenses 5,523
-------------------
Total Current Assets $ 132,501
Property and Equipment, at cost:
Leasehold improvements -
Equipment 692,249
Furniture and fixtures 27,970
Security systems 5,366
-------------------
725,585
Less Accumulated Depreciation (81,110)
-------------------
Property and Equipment, net 644,475
Other Assets:
Securtity lease deposits 27,433
Organizational costs, net 1,713
-------------------
Total Other Assets 29,146
------------------
Total Assets $ 806,122
==================
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Account payable $ 373,559
Accrued expenses 50
Current portion of capital leases 131,936
-------------------
Total current liablilties $ 505,545
Long-term Liabilities:
Long-term portion of capital leases 450,457
Due to affiliate 176,180
Deferred revenue 50,561
-------------------
Total Long-term Liabilities 677,198
Stockholders' Deficit
Common stock, no par value, 200 shares authorized,
10 shares issued and outstanding 10
Accumulated Deficit (376,631)
-------------------
Total Stockholders Deficit (376,621)
------------------
Liabilities and Stockholders' Deficit $ 806,122
==================
</TABLE>
The accompanying notes are an integral part of this financial statement
F-3
<PAGE>
A-Z NET.COM., Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period August 3, 1998 (Date of Inception) to June 30, 1999
<TABLE>
<CAPTION>
Revenue
<S> <C> <C>
Service and telephone revenue $ 977,083
Less returns and allowances (26,679)
------------
Net Revenue $ 950,404
Operating Expenes
Telephone, bandwidth and tech support 369,791
Payroll and related expenses 313,018
Legal and accounting 254,136
Telephone 100,051
Advertising 44,030
Marketing 27,272
Depreciation 73,094
Rent expense 39,217
Bank charges and credit card fees 12,675
Insurance 15,536
Services 5,098
Office expense 11,806
Software 1,408
Entertainment 543
Utilities 971
Amortization 273
Auto Expenses 1,631
------------
Total Operating Expenses 1,270,550
------------
Loss from opertations (320,146)
Other Income and (Expenses)
Abandonment of leaseholds (20,942)
Interest expense (35,168)
------------
Total other income and expense (56,110)
------------
Loss before income taxes (376,256)
Income taxes (375)
------------
Net loss $ (376,631)
</TABLE>
The accompanying notes are an integral part of this financial statement
F-4
<PAGE>
A-Z NET.COM., Inc.
(A Development Stage Company)
STATEMENT OF CHANGES OF STOCKHOLDERS' DEFICIT
For the Period August 3, 1998 (Date of Inception) to June 30, 1999
<TABLE>
<CAPTION>
Common Stock
-------------------- Accumulated
Shares Amount Deficit Total
-------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Stockholders' (deficit), August 3, 1998 (Inception) 10 $ 10 $ $ 10
Net (loss) - - (376,631) (376,631)
Distributions - - - -
--------------------------------------------------
Stockholders' (deficit), June 30, 1999 10 $ 10 $ (376,631) $ (376,621)
==================================================
</TABLE>
The accompanying notes are an integral part of this financial statement
F-5
<PAGE>
A-Z NET.COM., Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period August 3, 1998 (Date of Inception) to June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Cash flows from operating activities
Net loss $ (376,631)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization $ 73,367
(Increase) decrease in accounts recievable (115,703)
(Increase) decrease in prepaid expenses (5,523)
Increase (decrease) in accounts payable 373,559
Increase (decrease) in deferred revenue 50,561
Increase (decrease) in accrued expenses 50
--------------
376,311
-------------
Net cash used by operating activities (320)
Cash flows from investing activities:
Purchase of equipment & fixtures (469,585)
Organizational costs (2,165)
Security lease deposit (27,433)
--------------
Net cash (used) in investing activities (499,183)
Cash flows from financing activities
Proceeds from capital leases 377,608
Payments on capital leases (43,010)
Advances from affiliates 176,180
--------------
Net cash (used) in financing activities 510,778
-------------
Net increase (decrease) in cash and cash equivalents 11,275
Cash and cash equivalents - beginning of the year -
-------------
Cash and cash equivalents - end of the year $ 11,275
=============
</TABLE>
The accompanying notes are an integral part of this financial statement
F-6
<PAGE>
A-Z NET.COM, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
Note 1 - Summary of Significant Accounting Policies
Business organization
A-Z NET.COM, INC. (the Company) is an Internet service provider with offices in
Syracuse, New York. The company's revenue is generated from Internet access
services provided to the general public and small to medium size businesses in
central New York. Credit is granted predominantly to medium size business
customers located in and around central New York.
Accounting Methods
The accrual basis of accounting is used for both financial and tax reporting.
Revenue Recognition
The Company's source of income is from providing Internet access. Customers are
billed monthly, quarterly or annually in advance for services. Based on this
billing practice, an account for "deferred revenue" will represent revenue not
yet earned.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using straight-line and accelerated methods at rates
based on the following estimated useful lives:
Computer equipment 5 to 6 years
Furniture and fixtures 5 to 7 years
Leasehold improvements 10 to 31 years
Depreciation expense totaled $ 73,094 from August 3, 1998 (date of inception) to
December 31, 1999.
F-7
<PAGE>
A-Z NET.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
Note 1 - Summary of Significant Accounting Policies (continued)
Income Taxes
Income taxes are provided for the tax effects of transactions reported to the
financial statements consist of taxes currently due plus deferred taxes related
primarily to differences between the treatment of start up costs for financial
and income tax reporting. Deferred taxes also are recognized for operating
losses that are available to offset future federal and state income taxes.
Use of Estimates
The preparation of financial statements in conformity with general accounting
principles requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could
differ from these estimates.
Note 2 - Transactions with Related Party
Amounts Due Overture Consulting
These amounts represent short-term advances for expenses during the ordinary
course of business, from an affiliate, Overture Consulting, Inc. (a New York
Corporation). Overture Consulting, Inc. paid all payroll and related expenses
for the period August 3, 1998 (date of inception) to June 30, 1999 and charged a
"Management Fee" for such services. All assets and related liabilities purchased
by Overture Consulting, Inc. for the company are included in the balance sheet
at June 30, 1999. There is no stated interest rate or repayment terms. Amounts
are payable as cash flow from the company allows.
F-8
<PAGE>
A-Z NET.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
Note 3 - Long-term Lease Obligations
Capital Lease Agreements
Capital leases consist of engagements with two leasing companies for the
purchase of equipment with an initial cost of $323,477, for the period August 3,
1998 (date of inception) to June 30, 1999. These leases are guaranteed by an
affiliate, Overture Consulting, Inc. The Company entered into new capital lease
terms for Internet equipment purchased January 9, 1999. The prior terms of
September 9, 1998 were amended to include an additional cost of $256,000. Total
lease payments amounted to $ 84,996, including interest during the period August
3, 1998 (date of inception) to June 30, 1999.
The future minimum lease payments subsequent to June 30, 1999 are as follows:
Year ended Capital Leases
2000 $ 131,936
2001 131,936
2002 131,936
2003 131,936
2004 131,936
----------
Total 659,680
Less: amount representing interest (77,287)
----------
Present value of minimum lease payments 582,393
Less: Current obligations (131,936)
----------
Long-term lease obligations $ 450,457
----------
F-9
<PAGE>
A-Z NET.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
Note 3 - Long-term Lease Obligations (Continued)
Operating Lease Agreements
The Company currently has an operating lease agreement for its office space with
MSM Development Company for a term of five years at $5,000 per month. This is a
"triple net" lease, Whereby the Company is responsible for all taxes,
insurance's and pass through charges. Total rent payments for the period of
August 3, 1998 (date of inception) to June 30, 1999 were $39,217. At June 30,
1999, minimum future lease payments are as follows:
Year Ending
June 30 Amount
----------- ---------
2000 $ 60,000
2001 60,000
2002 60,000
2003 60,000
2004 20,000
---------
$ 260,000
---------
Note 4 - Provision for Income Taxes
Operating Loss Carryforwards
The Company has loss carryforwards totaling $332,200 that my be offset against
future taxable income. If not used, the carryforwards will expire in the year
ending December 31, 2018.
F-10
<PAGE>
A-Z NET.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1999
Note 5 - Provision for Income Taxes (Continued)
The provision for income taxes consists of the following:
Current taxes (includes New York State Franchise tax) $ (375)
Deferred tax -
--------
Provision for Taxes on Income $ (375)
--------
Deferred tax assets and liabilities consists of the following:
Deferred tax liability $ (300)
Deferred tax asset 50,000
Valuation allowances (49,700)
--------
Total deferred tax $ 0
--------
The valuation allowances is due to the Company's inability to predict future
operating profits to offset carryforward losses against.
Note 6 - Continued Operations
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
company as defined in Financial Accounting Standard No. 7, Accounting and
Reporting by Development Stage Enterprises (FAS-7). It is devoting substantially
all of its effort to raise capital, developing markets and customers and
training personnel in order to generate significant operations. It is not
certain that the Company will be able to obtain the financing required to fund
the planned operations or retain sufficient management expertise to continue its
planned business operations. The accompanying financial statements do not
include any adjustments relating to the recover ability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
F-11
<PAGE>
OTC AMERICA, INC
A Development Stage Company
UAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
FOR THE YEAR ENDED JUNE 30, 1999
The unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1999 and unaudited Pro Forma Consolidated Statements of Operations for the year
ended June 30, 1999 and the six month period ended December 31, 1999
(collectively the Pro Forma Consolidated Financial Statements) give effect to
the acquisition by OTC America, Inc. of all of the outstanding common stock of
NGP Holdings Ltd., n/k/a Xtelegent Web Solutions, Inc., a company incorporated
on October 28, 1999 to purchase an on-going business known as A-Z Net.com. ("A-Z
Net") The transaction was accounted for as a purchase in accordance with the
provisions of Accounting Principles Board Opinion Number 16.
The Pro Forma Consolidated Statements of Operations were prepared
assuming that the acquisition described above was consummated as of the
beginning of each period presented. The Pro Forma Consolidated Balance Sheet
includes the pro forma purchase accounting entries for the acquisition and was
prepared assuming that the transaction was consummated as of December 31, 1999.
The unaudited Pro Forma Consolidated Financial Statements are based
upon historical consolidated and combined financial statements of the Registrant
and A-Z Net.
The pro forma adjustments and the resulting pro forma consolidated
financial statements have been prepared based upon available information and
certain assumptions and estimates deemed appropriate by the Registrant. A final
determination of required purchase accounting adjustments and the allocation of
the purchase price to the assets acquired based upon their respective fair
values has not yet been made for the acquisition.
The Pro Forma Consolidated Balance Sheet and the Pro Forma Consolidated
Statements of Operations are not necessarily indicative of the results of
operations that actually would have been achieved had the acquisition been
consummated as of the dates indicated, or that may be achieved in the future.
Furthermore, the Pro Forma Consolidated Financial Statements do not reflect
changes that may occur as the result of post-combination activities and other
matters.
The Pro Forma Consolidated Financial Statements and notes thereto
should be read in conjunction with the accompanying historical financial
statements and notes thereto of A-Z Net and the audited financial statements of
the Registrant in its Annual Report on Form 10-KSB for the year ended June 30,
1999.
F-12
<PAGE>
OTC AMERICA, INC
A Development Stage Company
Unaudited Pro Form Condensed, Combined Financial Information
December 31, 1999
The following unaudited pro forma condensed, combined balance sheet and
pro forma condensed, combined statement of operations give effect to the
acquisition by OTC America, Inc. of all of the outstanding common stock of NGP
Holdings Ltd., n/k/a Xtelegent Web Solutions, Inc. (A-Z Net).
These unaudited pro forma condensed, combined statements are not
necessarily indicative of results of operations had the acquisitions occurred at
July 1, 1999, nor the results to be expected in the future.
The following footnotes should be read in understanding pro forma
adjustments to the unaudited pro forma condensed, consolidated statements.
A. Adjustment reflects the $3,490,947 purchase price of the outstanding
common stock of A-Z Net. The consideration paid in this transaction was
$1,540,947 in cash (advances made to A-Z Net prior to the acquisition),
and 325,000 shares of OTC America, Inc.'s common stock valued at $6.00
per share, $1,950,000.
B. Adjustment to recognize six months amortization expense ($397,534) on
the customer list. The excess ($2,385,204) of the purchase price over
the fair value of the assets acquired was allocated to the acquired
customer list. The customer list was amortized over three years.
C. Adjustment to reflect the forgiveness of the debt owed to OTC America,
Inc. as a result of the acquisition.
D. Adjustment to reflect the increase of 325,000 shares in weighted
average shares outstanding and the effect on basic and diluted loss per
share. Elimination of 25,000 shares of A-Z Net.
F-13
<PAGE>
OTC AMERICA, INC.
PRO FORMA CONDENSED, COMBINED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
OTC NGP PRO FORMA
AMERICA, HOLDINGS, ADJUSTMENTS TOTAL
INC. LTD.
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 565,471 $ 167,296 $ 732,767
Accounts Receivable - 357,653 357,653
Advances to NGP Holdings, LTD. 1,540,947 - A $ (1,540,947) -
Preferred stock issuance costs, net 39,026 - 39,026
Prepaid Interest 18,750 - 18,750
Prepaid Expenses - 21,997 21,997
--------------------------- ------------
Total Current Assets 2,164,194 546,946 1,170,193
--------------------------- ------------
Property and Equipment, net - 242,346 242,346
--------------------------- ------------
Other Assets:
Customer list A $ 2,362,430 2,362,430
Security lease deposits 1,444 2,434 3,878
Organizational costs, net - 2,166 2,166
Acquisition costs - 255,415 255,415
Goodwill - 1,676,621 1,676,621
Less accumulated amortization - (186,156) (186,156)
---------------------------
Total Other Assets 1,444 1,750,480 4,114,354
-------------------------------------------------------------------
Total Assets $ 2,165,638 $ 2,539,772 $ 821,483 $ 5,526,893
===================================================================
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Account payable $ 6,731 $ 30,864 $ 37,595
Accrued expenses - - -
Advance from OTCA - 1,160,947 C $ (1,160,947) -
Note payable - 1,150,000 1,150,000
Current portion of capital leases - 16,381 16,381
Due to related party 16,846 - 16,846
--------------------------- ------------
Total current liabilities 23,577 2,358,192 1,220,822
--------------------------- ------------
Long-term Liabilities:
Long-term portion of capital leases - 44,514 44,514
Due to affiliate - 149,671 149,671
Deferred revenue - 19,825 19,825
--------------------------- ------------
Total Long-term Liabilities - 214,010 214,010
--------------------------- ------------
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 - 4,074,062
Stockholders' Equity:
Preferred stock, no par value, 17,500,000 shares
authorized; -0- shares issued and outstanding - - -
Common stock, $0.0001 par value; 150,000,000
shares authorized; 2,400,024 shares issued and
outstanding 240 - A $ 33 273
Common stock, $0.001 par value, 25,000 shares
authorized, 25,000 shares issued and outstanding - 25 A $ (25) -
Additional paid in capital 600,218 8,475 A $ 1,941,492 2,550,185
Retained Earnings (Deficit) (2,532,459) (40,930) A $ 40,930 (2,532,459)
--------------------------- ------------
Total Stockholders' Equity 2,142,061 (32,430) 17,999
-------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 2,165,638 $ 2,539,772 $ 821,483 $ 5,526,893
===================================================================
</TABLE>
F-14
<PAGE>
OTC AMERICA, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR SIX MONTHS ENDING DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
OTC NGP PRO FORMA
AMERICA HOLDINGS ADJUSTMENTS TOTAL
INC. LTD.
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
Service and telephone revenue $ - $ 513,917 $ 513,917
Less returns and allowances - (8,457) (8,457)
---------------------------- ------------
Net Revenue - 505,460 505,460
---------------------------- ------------
Operating Expenses 149,288 599,037 B 397,534 1,145,859
Income (loss) from operations (149,288) (93,577) B (397,534) (640,399)
---------------------------- ------------
Other Income and (Expenses)
Abandonment of leaseholds - - -
Interest expense (1,510,600) (7,447) (1,518,047)
Interest income 37,026 - 37,026
Gain on sale of assets - 60,419 60,419
Realized gain on investments 3,062 - 3,062
---------------------------- ------------
Total other income and (expense) (1,470,512) 52,972 (1,417,540)
---------------------------- ------------
Net Income (Loss) before income taxes (1,619,800) (40,605) (2,057,939)
Income taxes - (325) (325)
---------------------------- ------------
Net loss $ (1,619,800) $ (40,930) B $ (397,534) $ (2,058,264)
===================================================================
NET INCOME (LOSS) PER COMMON SHARE
Basic and diluted $ (0.83) $ (1.64) $ (0.90)
============================ =============
SHARES USED FOR COMPUTING NET LOSS PER COMMON SHARE
Basic and diluted 1,950,024 25,000 D 300,000 2,275,024
============================ =============
</TABLE>
F-15
<PAGE>
OTC AMERICA, INC
A Development Stage Company
Unaudited Pro Form Condensed, Combined Financial Information
June 30, 1999
The following unaudited pro forma condensed, combined statement of
operations gives effect to the acquisition by OTC America, Inc. of all of the
outstanding common stock of NGP Holdings Ltd., n/k/a Xtelegent Web Solutions,
Inc. (A-Z Net).
This unaudited pro forma condensed, combined statement of operations is
not necessarily indicative of results of operations had the acquisitions
occurred at July 1, 1998, nor the results to be expected in the future.
The following footnote should be read in understanding pro forma
adjustments to the unaudited pro forma condensed, consolidated statement.
A. Adjustment to recognize twelve months amortization expense ($795,068)
on the customer list. The excess ($2,385,204) of the purchase price
over the fair value of the assets acquired was allocated to the
acquired customer list. The customer list was amortized over three
years.
B. Adjustment to reflect the increase of 325,000 shares in weighted
average shares outstanding and the effect on basic and diluted loss per
share. Elimination of 25,000 shares of A-Z Net.
F-16
<PAGE>
OTC AMERICA, INC.
PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
FOR ONE YEAR ENDING JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
OTC A-Z PRO FORMA
AMERICA, NET.COM, ADJUSTMENTS TOTAL
INC. Inc.
---------------------------------------------------------------------
Revenue
<S> <C> <C> <C> <C> <C>
Service and telephone revenue $ - $ 977,083 $ 977,083
Less returns and allowances - (26,679) (26,679)
----------------------------- ------------
Net Revenue - 950,404 950,404
----------------------------- ------------
Operating Expenses 74,061 $ 1,270,550 A $ 795,068 2,139,679
Income (loss) from operations (74,061) (320,146) A 795,068 (1,189,275)
---------------------------------------------------------------------
Other Income and (Expenses)
Abandonment of leaseholds - (20,942) (20,942)
Interest expense (344,712) (35,168) (379,880)
Interest income 19,853 - 19,853
Unrealized gain on investments 4,372 - 4,372
---------------------------------------------------------------------
Total other income and (expense) (320,487) (56,110) - (376,597)
---------------------------------------------------------------------
Income (loss) before income taxes (394,548) (376,256) A 795,068 (1,565,872)
Income taxes - (375) $ - (375)
---------------------------------------------------------------------
Net income (loss) $ (394,548) $ (376,631) A $ 795,068 $ (1,566,247)
=====================================================================
NET LOSS PER COMMON SHARE
Basic and diluted $ (0.32) $ (15.07) $ (1.00)
=====================================================================
SHARES USED FOR COMPUTING NET LOSS PER COMMON SHARE
Basic and diluted 1,244,723 25,000 B 300,000 1,569,723
=====================================================================
</TABLE>
F-17
