U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB



(Mark One)
 [X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For Fiscal Year Ended: December 31, 1998

                                       or

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

                        For the transition period from To


                         Commission file number 0-23825 

                       Optimum Source International, Ltd. 
                 (Name of small business issuer in its charter)

          Nevada                                                86-0674322     
State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization                                Identification No.)

                        3539 Ocean View Blvd., Glendale,
                     California 91208 (Address of principal
                          executive offices) (Zip code)


Issuer's telephone number                      (818) 957-1414

Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act:


                          Common Stock Par Value $0.001
                                (Title of class)



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<PAGE>



     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

                                                                 Total pages: 18
                                                          Exhibit Index Page: 16

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will 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-KSB
or any amendment to this form 10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year. $45,905

     As of March 31,  1999,  there  were  1,654,051  shares of the  Registrant's
common stock,  par value $0.001,  issued and  outstanding.  The aggregate market
value of the Registrant's  voting stock held by non-affiliates of the Registrant
was approximately $327,026 computed at the estimated average bid and asked price
as of March 31, 1999.


                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference,  briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"): NONE

     Transitional Small Business Disclosure Format (check one): Yes ; NO X

















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                                TABLE OF CONTENTS


Item Number and Caption                                                     Page

PART I

Item 1.     Description of Business............................................4

Item 2.     Description of Property............................................9

Item 3.     Legal Proceedings..................................................9

Item 4.     Submission of Matters to a Vote of Security Holders................9


PART II

Item 5.     Market for Common Equity and Related Stockholder Matters...........9

Item 6.     Management's Discussion and Analysis or Plan of Operations........10

Item 7.     Financial Statements..............................................13

Item 8.     Changes in and Disagreements With Accountants on Accounting and
            Financial Disclosure..............................................13

PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;
            Compliance with Section 16(a) of the Exchange Act.................13

Item 10.    Executive Compensation............................................14

Item 11.    Security Ownership of Certain Beneficial Owners and Management....15

Item 12.    Certain Relationships and Related Transactions....................15

Item 13.    Exhibits and Reports on Form 8-K..................................16







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                                     PART I


                         ITEM 1 DESCRIPTION OF BUSINESS



General

     The Company was first incorporated in the State of Utah on October 24, 1984
as  A.R.M.  Chemical  Company,  Inc.  On  November  13,  1984,  the  name of the
Corporation was changed to E.R.M.  Chemical Company, Inc. From 1984 to 1986, the
Company attempted to manufacture,  distribute and sell chemical products for the
purification  of water.  This business  activity was abandoned.  On September 1,
1988 the Company  changed its name to M.P.V.  On September 7, 1989,  the name of
the Company was changed to Optimum Source International. The Company completed a
plan of  reorganization  on October  20,  1989  pursuant to which the assets and
corresponding  liabilities  of  LomaCycle,  Inc.  were  spun  off to the  former
shareholders of that corporation  before it became a wholly-owned  subsidiary of
M.P.V.,  Inc. From 1986 to 1990, the Company  attempted to acquire  interests in
various business  opportunities,  all attempts were abandoned. On June 29, 1990,
the  domicile  of the  Company was changed to Nevada and the name of the Company
was changed to Optimum Source International,  Ltd. The Company was inactive from
1990 to 1992.  The Company was in the  development  stage from December 31, 1992
through December 31, 1997.

Principal products or services and their markets

     The Company's primary mission is  Barter/Counter-trade  and its proprietary
interactive  services  both  Domestic and  International  and  encompassing  the
liquidation & auction industries globally.

     Optimum  Source  International  Ltd.,  (OSI) is poised  with  products  and
services for  individuals,  entrepreneurs,  and  companies of all sizes that are
desirous of learning or enhancing their  bartering,  trading and  countertrading
skills. Products are developed to fully integrate with each other or may be used
as stand alone products.  All products and services are currently offered on the
internet, and through selected channels of distribution.

     Barter,  Exchange,  Swap,  Trade and  Countertrade are rapidly becoming the
method of choice for  individuals,  companies and governments for acquiring what
they  want or need as it  eliminates  the  constant  monetary  change.  It is an
industry  that has reached sales of $100 billion  dollars plus  worldwide and is
growing at an incredible annual rate of 20%. The industry though,  has lagged in
automating.  OSI has focused its efforts on  providing  solutions  for  bringing
traders together worldwide.  OSI is a provider of surplus consumer goods through
its international suppliers inventories that are owned by OSI and associates are
accessible 24 hours a day via OSI's private network. OSI has developed the forum
for buyers and  sellers to locate one another  and  conduct  business  using the
latest networking technologies.

                                        4

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     Current products including:

CABLE VIEW

     A membership network for companies dealing with premiums,  auctions,  small
retail  dealers,  overseas  buyers,  and  corporate  users.  Members  may obtain
additional  inventories for non- dealer/members in their areas (with their prior
approval), enter their inventories, and charge a small exchange fee. As a member
in  CABLE  VIEW,  a  company  has  many  different   close-out  and  liquidation
inventories at their finger-tips,  24 hours a day. The services offered by CABLE
VIEW are listed below:

E-MAIL - SEARCH - FORUMS - CLASSIFIED ADS

CABLE  VIEW is  available  and is being  introduced  to the  Close-Out  industry
throughout  the world.  This  private  communication  network  which the Company
created has the capability of handling  thousands of calls,  24 hours a day, and
allows members to display, manipulate, extract and exchange information.

WHAT 'CHA GOT AUCTION SERVICES

     What "Cha Got is a network of auctioning services  implemented to provide a
distribution  system for selling  consumer  goods to end users and dealers.  OSI
provides  complete  federally  bonded  auctioning  services.   All  segments  of
operations  are controlled by OSI from its corporate  headquarters  in Glendale,
California.  Constant  communication  between all  entities are  maintained  via
computer.  Satellite auction sites provide  additional sales outlets of consumer
goods flowing to cash buyers nationwide.

COUNTERTRADE/BARTER

     Countertrade  associations  are  forming in ever  increasing  numbers.  The
recent  world  trade  agreements  open  up  more  opportunities  for an  already
expanding  countertrade  industry. A Barter,  Exchange,  Swap, Trade arrangement
enables a company to exchange  finished  goods for raw material at a fair price,
in lieu of  liquidating  inventories  at a  drastic  loss.  OSI  provides  these
services,  greatly  enhancing the Barter,  Exchange,  Swap, Trade industry,  and
establishing OSI as a world-wide countertrade resource leader.

     Potential negative impact of a participant in a countertrade/barter  action
can negatively impact the Company and its services.  For example,  the publicity
resulting from a participant activities such as inappropriate claims and product
representations  by  participants  can  make the  sponsoring  and  retaining  of
participants more difficult,  thereby negatively  impacting sales.  Furthermore,
the Company's  business and results of operations could be adversely affected if
the  Company   terminates  a  significant  number  of  participants  or  certain
participants who play a key role in the Company's distribution system. There can
be no assurance that these or other participant actions will not have a material
adverse effect on the Company or results of operations.


                                        5

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Distribution

     The  infrastructure  for all of  OSI's  operations  is its own  Interactive
Communications  Information  Exchange  Network.  This  network  allows  for  the
streamlining of OSI's corporate operations by minimizing paper work. It provides
both  buyers and  sellers of surplus  goods the arena in which to  identify  and
negotiate  transactions.  It also provides the interface to wide area  networks,
i.e.,  Internet,  Microsoft's  "MSN"  Network,  and  various  public and private
databases, i.e., real estate, import/export, associations, and corporations. The
Company has  developed  the first  application  software for traders  worldwide,
"Traders     ToolTM".     This    software     automates    all    aspects    of
trade/barter/countertrade,   including   currency   conversions   and  inventory
tracking.  Displays also indicate  reminders  for  expiration  dates of scrip or
services.  Traders ToolTM interfaces with Excel for tracking trade transactions,
as well as providing statistics,  reports and spreadsheets.  Traders ToolTM also
has  specialty  modules,  i.e.,  real estate,  gems,  and consumer  items.  Upon
request,  Traders ToolTM  automatically  dials and connects to outside databases
for specific goods  information.  Traders ToolTM is the only product of its kind
available to the Barter,  Exchange,  Swap,  Trade  industry at all levels,  from
novice to expert.  The Company's  focus is automating the liquidation and barter
industry. A network of independent  representatives develop sales and marketing,
introduce new services and products,  and expand  distribution of products while
pursuing strategic alliance worldwide.

Competition

     Competition  in  the  barter,  trading  and  counter  trading  industry  is
vigorous,  characterized by a relatively large number of companies (estimated at
approximately  1,500),  most of which  have  relatively  small  sales.  Industry
sources  estimate  that there are less than 100  companies in the industry  that
have annual  sales of $2 million or more.  Since only one of these  companies in
this  industry  is  public  and the rest are  privately  held,  little  reliable
financial data is available.  Many of the companies have established reputations
for successfully  developing and marketing  barter,  trading and  countertrading
services,  with a variety of  well-established  marketing outlets.  Many of such
companies have greater financial,  managerial, and technical resources than OSI.
Principal  competitors  include members of the  International  Reciprocal  Trade
Association, and members of the National Association of Trade Exchanges.

     The Company  competes by emphasizing  the value and premium  quality of the
Company's  products and the  convenience of the Company's  distribution  system.
There can be no assurance that the Company's  business and results of operations
will not be affected  materially by market  conditions  and  competition  in the
future.

Sources and availability of raw material and the names of principal suppliers

     All  the  Company's   products  are  currently   produced  by  manufactures
unaffiliated  with the Company.  The Company's profit margins and its ability to
deliver  products  on a timely  basis  are  dependent  upon the  ability  of the
Company's  outside  suppliers to supply  products in a timely and cost efficient
manner.


                                        6

<PAGE>



     The Company currently  acquires products from suppliers that are considered
by the Company to be the superior suppliers of such products.  Due to the nature
of the close out market the  availability  of  products  varies from day to day.
There can be no assurance  that the loss of a supplier would not have a material
adverse effect on the Company's business and results of operations.

Dependence on one or a few major customers

     No customer accounts for more than 10% of sales.

Trademark and Patent Protection

     As a company selling products nationwide and internationally,  OSI believes
that  establishing  trade and service marks and  copyrights  for brand names and
associated  advertising  and labeling  materials  is  important  in  maintaining
company and product identification and integrity. Accordingly, OSI is engaged on
a continuing basis in developing  brand names and such associated  materials for
its products,  securing  trade and service mark  protection for such brand names
and copyright  protection for such  associated  material,  policing its existing
marks,  and  enforcing  its legal rights in cases of potential  infringement  by
third parties of its legally  protected  marks and  copyrights.  Notwithstanding
these  safeguards,  it is possible for competitors of the Company to imitate its
products.  Furthermore,  others may  independently  develop  products similar or
superior to those  developed  or planned by the  Company.  While the Company may
obtain  patents or  trademarks  with  respect to  certain of its  products,  the
Company may not have sufficient  resources to defend such patents;  such patents
may not afford all necessary  protection and competitors may develop  equivalent
or superior products which may not infringe such patents.

Operating Losses.

     The  Company has  incurred  net losses of $77,651 and $8,261 for the fiscal
years ended  December 31, 1998 and 1997,  respectively.  Such  operating  losses
reflect  developmental  and other start-up  activities.  The Company  expects to
incur losses in the near future until  profitability is achieved.  The Company's
operations are subject to numerous risks  associated with  establishing  any new
business, including unforeseen expenses, delays and complications.  There can be
no assurance that the Company will achieve or sustain  profitable  operations or
that it will be able to remain in business.

Future Capital Needs and Uncertainty of Additional Funding

     The Company was not in full  operation  during 1998 and thus,  the revenues
generated are not  representative of those that are expected once full operating
status  has been  achieved.  Revenues  are not yet  sufficient  to  support  the
Company's operating expenses. However, the Company is cautiously optimistic that
operating  revenues will be adequate to meet operating  expenses during the next
year.  Since the Company's  formation,  it has funded its operations and capital
expenditures primarily through private placements of debt and equity securities.
The Company will be required to seek additional  financing in the future.  There
can be no assurance that such financing will be available at all or available on
terms acceptable to the Company.

                                        7

<PAGE>



Government Regulation

     The Company's products currently do not require  government  approval.  The
Company is not aware of any existing or probable governmental regulations on the
business.

Research and Development Activities

     For the years ended December 31, 1998 and 1997 there was no money allocated
to research and development.  Royalty agreements  provided that the research and
development expenses are to be paid by the royalty holder.

Employees

     As of March 31, 1999 the Company  had no full time  employees.  There are a
total  of  2  contract   employees   engaged  in  the  general   management  and
administration.

Risk of Low-priced Stocks

     Rules 15g-1 through 15g-9 promulgated under the Securities  Exchange Act of
1934 (the "Exchange  Act") impose sales practice and disclosure  requirements on
certain  brokers  and dealers who engage in certain  transactions  involving  "a
penny stock."

     Currently,  the  Company's  Common  Stock is  considered  a penny stock for
purposes of the  Exchange  Act. The  additional  sales  practice and  disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's  Common  Stock  in the  secondary  market.  In  addition,  the  market
liquidity and price for the Company's securities may be adversely affected.

     Under the penny stock  regulations,  a broker or dealer selling penny stock
to  anyone  other  than  an  established  customer  or  "accredited   investor"'
(generally,  an  individual  with a net worth in excess of  $1,000,000 or annual
incomes  exceeding  $200,000,  or $300,000 together with his or her spouse) must
make a special suitability  determination for the purchaser and must receive the
purchaser's  written consent to the transaction prior to sale, unless the broker
or dealer or the transaction is otherwise exempt.  In addition,  the penny stock
regulations  require the broker or dealer to deliver,  prior to any  transaction
involving a penny stock,  a disclosure  schedule  prepared by the Securities and
Exchange  Commission (the "SEC") relating to the penny stock market,  unless the
broker,  or dealer,  or the transaction is otherwise exempt. A broker, or dealer
is also required to disclose commissions payable to the broker or dealer and the
registered   representative  and  current  quotations  for  the  Securities.  In
addition,  a broker or dealer is required to send monthly statements  disclosing
recent  price  information  with respect to the penny stock held in a customer's
account and information with respect to the limited market in penny stocks.






                                        8

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                         ITEM 2 DESCRIPTION OF PROPERTY



     The Company at this time has no  properties.  As of December 31, 1998,  all
activities of the Company have been conducted by corporate  officers from either
their homes or business offices.  Currently, there are no outstanding debts owed
by the company for the use of these  facilities and there are no commitments for
future use of the facilities.



                            ITEM 3 LEGAL PROCEEDINGS



     The Company is not engaged in any legal proceedings other than the ordinary
routine litigation incidental to its business operations, which the Company does
not  believe,  in the  aggregate,  will have a  material  adverse  effect on the
Company, or its operations.



                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS



     No matters were subject to a vote of security holders during the year 1998.


                                     PART II


                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS



MARKET INFORMATION

     The stock is traded  over-the-counter on the NASDAQ Bulletin Board with the
trading symbol "OSIN".  The following high and low bid  information was provided
by PC Financial Network.  The quotations provided reflect  inter-dealer  prices,
without retail  mark-up,  mark-down or commission  and may not represent  actual
transactions.


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                     1997:                  High                   Low
First Quarter                       $            1.750     $           1.500
Second Quarter                      $            0.938     $           0.480
Third Quarter                           (To the best knowledge of
                                         management, there was no trading
                                         of shares for the third quarter
                                         1997.)
Fourth Quarter                      $            0.250     $           0.250

                     1998:
First Quarter                            (To the best knowledge of
Second Quarter                            management, there was no trading
                                          of shares for the first and second
                                          quarter 1998.)
Third Quarter                       $            0.125     $           0.125
Fourth Quarter                      $            1.125     $           0.250


     The number of  shareholders  of record of the Company's  common stock as of
May 12, 1999 was approximately 259.

     The Company has not paid any cash dividends to date and does not anticipate
paying  dividends  in the  foreseeable  future.  It is the present  intention of
management to utilize all available  funds for the  development of the Company's
business.



                       ITEM 6 MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS



General

The following  discusses the financial position and results of operations of the
Company.

Results of Operations

     From 1984 to 1986,  the Company  attempted to  manufacture,  distribute and
sell chemical products for the purification of water. This business activity was
abandoned.  From 1986 to 1990,  the Company  attempted  to acquire  interests in
various  business  opportunities,  all attempts were abandoned.  The Company was
inactive  from 1990 to 1992.  The  Company  was in the  development  stage  from
December 31, 1992 through December 31, 1997. Accordingly, comparisons with prior
periods are not meaningful.

                                       10

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Total  Revenues - For the year ended  December 31,  1998,  the Company had total
trade revenues of approximately $46,000.

Costs and Expenses - For the years ended  December  31, 1998,  the Company had a
net loss of approximately $78,000. The net loss for 1998 is largely attributable
to  additional  expenses  incurred  by  startup  companies.  Given  the  limited
operations  which took place in 1998, any discussion of operating  expenses as a
percentage of sales would not be meaningful and might be misleading.

Liquidity and Capital Resources

     The  Company  requires  working  capital  principally  to fund its  current
operations.  Generally the Company has adequate funds for its activities.  There
are no formal  commitments  from  banks or other  lending  sources  for lines of
credit or similar  short-term  borrowing.  It is  anticipated  that the  current
operations  will expand and funds  generated  will exceed the Company's  working
capital requirements for the next year.

     The Company intends to seek an acquisition of a larger and potentially more
profitable  business.  The Company intends to focus on  opportunities to acquire
new products or  technologies  in development as well as those  currently  being
operated,   including  a  complete  operating  business  that  has  demonstrated
long-term  growth  potential,  strong  marketing  presence,  and the  basis  for
continuing profitability.  The Company has not identified any specific target or
possible  acquisition.  As the Company pursues its acquisition  program, it will
incur  costs for  ongoing  general  and  administrative  expenses as well as for
identifying, investigating, and negotiating a possible acquisition.

     In order to  complete  any  acquisition,  the  Company  may be  required to
supplement  its  available  cash and other  liquid  assets  with  proceeds  from
borrowings,  the sale of additional securities,  including the private placement
of restricted stock and/or a public offering, or other sources.  There can be no
assurance  that  any such  required  additional  funding  will be  available  or
favorable to the Company.

     Because  management  controls  59.83%  of  voting  rights,  management  may
actively  negotiate or otherwise consent to the purchase of any portion of their
common  stock as a  condition  to or in  connection  with a  proposed  merger or
acquisition.  Furthermore,  management  could consent or approve any  particular
stock buy-out  transaction without  shareholder  approval.  In the event that an
appropriate  merger  candidate  is  located,  the  Company  may need to pay cash
finder's  fees or may issue  securities  (debt or  equity) as a  finders's  fee.
Finder's fees or other acquisition related compensation may be paid to officers,
directors,  promoters  or their  affiliates.  Any such  finder's  fee paid to an
officer,  director,  promoter,  or affiliate  may present a conflict of interest
because of the non-arms  length  nature of such  transaction.  There are no such
negotiations in progress or contemplated.

     There  are  no  arrangements  or  understandings   between   non-management
shareholders and management under which non-management shareholders may directly
or  indirectly  participate  in or influence  the  management  of the  Company's
affairs.

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     The  Company may be required to  supplement  its  available  cash and other
liquid assets with proceeds from borrowing,  the sale of additional  securities,
or other sources.  There can be no assurance  that any such required  additional
funding will be  available  or, if  available,  that it can be obtained on terms
favorable to the Company.

Inflation and Regulation

     The  Company's  operations  have not  been,  and in the  near  term are not
expected to be, materially affected by inflation or changing prices. The Company
will encounter competition from a variety of firms selling barter/trade services
in  its  market  area.   Many  of  these  firms  have  long  standing   customer
relationships and are well-staffed and well financed.  The Company believes that
competition  in the  barter/trade  industry  is  based on  competitive  pricing,
although  the  ability,  reputation  and support of a marketing  network is also
significant. The Company does not believe that any recently enacted or presently
pending proposed  legislation will have a material adverse effect on its results
of operations.

Factors That May Affect Future Results

     Management's  Discussion  and  Analysis and other parts of this form 10-KSB
contain information based on management's beliefs and forward-looking statements
that involve a number of risks, uncertainties,  and assumptions. There can be no
assurance that actual results will not differ materially for the forward-looking
statements  as a result of various  factors,  including  but not  limited to the
following:

     The  markets  for many of the  Company's  offerings  are  characterized  by
rapidly  changing  technology,  evolving  industry  standards,  and frequent new
product  introductions.  The  Company's  operating  results  will  depend  to  a
significant  extent on its ability to design,  develop,  or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors,  including proper  identification of customer needs,  cost, timely
completion  and  introduction,  differentiation  from offerings of the Company's
competitors,  and market acceptance.  The ability to successfully  introduce new
products and services could have an impact on future results of operations.

Year 2000 Compliance

     The Company has made an effort to insure that the  software  components  of
its information  and billing  systems are Year 2000 compliant.  Management is in
the process of confirming that all of such systems are Year 2000 compliant. Upon
such confirmation,  management believes that, after January 1, 2000, the Company
will be able to accurately track and bill for its services and products.  At the
same time, it is likely that the operations of a number of the Company's vendors
rely on software that is not Year 2000 compliant.





                                       12

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                           ITEM 7 FINANCIAL STATEMENTS



     The financial statements of the Company and supplementary data are included
beginning  immediately  following the signature page to this report. See Item 13
for a  list  of the  financial  statements  and  financial  statement  schedules
included.


              ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE



     There are not and have not been any  disagreements  between the Company and
its accountants on any matter of accounting  principles,  practices or financial
statements disclosure.


                                    PART III

               ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
                                THE EXCHANGE ACT




Executive Officers and Directors

     The  following  table  sets  forth  the name,  age,  and  position  of each
executive officer and director of the Company:


Director's Name                 Age     Office                   Term of Office


James O'Brien                   63      CEO/President            1990 to Present

Rose Fischer                    46      Secretary/Treasurer      1996 to Present

Goldie Hunt                     70      Director                 1992 to Present

Jessie Warner                   43      Director                 1998 to Present

Robert Dresser                  70      Director                 1998 to Present

                                       13

<PAGE>



Business Experience

James O'Brien, CEO/President,  founded Optimum Source International Ltd., during
the past five  years  Mr.  O'Brien  developed  software,  established  trade and
countertrade exchanges for Optimum Source International, Ltd.

Rose Fischer,  Secretary/Treasurer,  with an associate degree in accounting, has
been Director and Operations  Facilitator for the past two years, which includes
finalization and  implementation of all electronic  commerce.  Prior to OSI, Ms.
Ros's experience was as a financial  consultant with a privately held firm since
1985.

Goldie Hunt, Director, for the past six years has pursued her personal interests
since retiring from the retail industry.

Jessie Warner, Director, has associates degree in Business Management. Currently
with a  broad  background  in  organizational  management,  sales  and  customer
service,  Mr. Warner  researches  company bios and  backgrounds  of  prospective
clients,  coordinates  road shows  between the senior  stockbrokers  and CEOs of
public companies.

Robert Dresser,  Director, A former newspaper executive, Mr. Dresser's tenure of
the past 30 plus years  directing  the  Stockbrokers  Society  into the  leading
organization that assists public corporations  enhancing their visibility in the
financial and investment community.

Compliance with Section 16(a) of the Exchange Act

     Based  solely  upon a review of forms 3, 4, and 5 and  amendments  thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer,  beneficial owner of more than 10% of any class of equity securities of
the  Company  or any other  person  known to be  subject  to  Section  16 of the
Exchange  Act of 1934,  as  amended,  failed to file on a timely  basis  reports
required by Section 16(a) of the Exchange Act for the last fiscal year.



                         ITEM 10 EXECUTIVE COMPENSATION



     There has been no executive compensation.









                                       14

<PAGE>




                 ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT




Principal Shareholders

     The table below sets forth  information  as to each person owning of record
or who  was  known  by the  Company  to own  beneficially  more  than  5% of the
1,654,051  shares of issued and  outstanding  Common  Stock of the Company as of
March 31, 1999 and  information  as to the ownership of the  Company's  Stock by
each of its directors and executive  officers and by the directors and executive
officers  as a group.  Except  as  otherwise  indicated,  all  shares  are owned
directly,  and the persons  named in the table have sole  voting and  investment
power with respect to shares shown as beneficially owned by them.

                                                    # of
Name and Address              Nature of             Shares
of Beneficial Owners          Ownership             Owned                Percent
Directors

James O'Brien                 Common Stock          1,000,000             60%

All Executive Officers        Common Stock          1,000,000             60%
and Directors as a Group
  (5 persons)

Mr. O'Brien has "sole investment power" and "sole voting power". There have been
no common shares issued to any of the directors of the Company.



             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



     James O'Brien, the President of the Company,  provided the Company with the
marketing distribution plans, compensation program, commission payout structure,
operations, and automated monthly ordering system.

     During 1998 and 1997 the Company  borrowed  money from James O'Brien to pay
administrative  expenses.  The loan is payable  on demand and  carries an annual
interest rate of 10 percent.  As of December 31, 1998,  the  principal  owing is
$83,306 with accrued interest of $2,083.

     As of December 31, 1998 all  activities of the Company have been  conducted
by corporate

                                       15

<PAGE>



officers from either their homes or business  offices.  Currently,  there are no
outstanding  debts owed by the Company for the use of these facilities and there
are no commitments for future use of the facilities.



                   ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K




(a)        The following documents are filed as part of this report.

1.         Financial Statements                                             Page

Report of Robison, Hill & Co., Independent Certified Public Accountants......F-1

Balance Sheets as of December 31, 1998, and 1997.............................F-2

Statements of Loss for the years ended
     December 31, 1998, and 1997.............................................F-3

Statement of Stockholders' Equity for the years ended
     December 31, 1998, and 1997.............................................F-4

Statements of Cash Flows for the years ended
     December 31, 1998, and 1997.............................................F-5

Notes to Financial Statements................................................F-6


2.         Financial Statement Schedules

       The following financial statement schedules required by Regulation
S-X are included herein.

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










                                       16

<PAGE>



3.         Exhibits

           The following exhibits are included as part of this report:

Exhibit
Number               Title of Document


3.1                  Articles of Incorporation(1)
3.2                  By-laws(1)
23.1                 Consent of Robison, Hill & Co.
27.1                 Financial Data Schedule

(1) Incorporated by reference.


           (b) No reports on Form 8-K were filed.






























                                       17

<PAGE>




                                   SIGNATURES



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

                       OPTIMUM SOURCE INTERNATIONAL, LTD.


Dated: May 17, 1999                            By  /S/     James O'Brien  
                                                   ----------------------------
                                                           James O'Brien,
                                                           C.E.O., President

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 17th day of May 1999.

Signatures                                     Title

/S/     James O'Brien                                                
James O'Brien                                  C.E.O., President
                                              (Principal Executive, Financial
                                               and Accounting Officer)

/S/     Rose Fischer                                                   
Rose Fischer                                   Secretary/Treasurer


/S/     Goldie Hunt                                        
Goldie Hunt                                    Director


/S/     Jessie Warner                                                 
Jessie Warner                                  Director

/S/     Robert Dresser                                                
Robert Dresser                                 Director







                                       18

<PAGE>









                          INDEPENDENT AUDITOR'S REPORT



Board of Directors
Optimum Source International, LTD.
(Formerly a Development Stage Company)


     We  have  audited  the  accompanying   balance  sheets  of  Optimum  Source
International,  LTD.,  (Formerly A development Stage Company) as of December 31,
1998 and 1997, and the related statements of loss,  retained earnings,  and cash
flows  for  the  years  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 audits.

     We conducted  our audits 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 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 audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in  all  material   respects,   the   financial   position  of  Optimum   Source
International,  LTD.,  (Formerly A development Stage Company) as of December 31,
1998 and 1997 and the  results  of its  operations,  and its cash  flows for the
years then ended in conformity with generally accepted accounting principles.

                                                    Respectfully submitted,



                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants

Salt Lake City, Utah
April 29, 1999




                                      F - 1

<PAGE>


<TABLE>
<CAPTION>

                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                                 BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997



                                                               1998         1997
                                                             ---------    ---------
<S>                                                          <C>          <C> 
Assets
Current Assets
    Inventory ............................................   $  50,000    $  14,013
    Prepaid Expense ......................................        --         10,000
                                                             ---------    ---------

     Total Current Assets ................................      50,000    $  24,013
                                                             =========    =========

Liabilities and Stockholders' Equity
Liabilities
   Accounts Payable ......................................      18,689        2,455
   Trade Dollars Payable .................................      65,000         --
   Accrued Liabilities ...................................       2,133        8,455
   Loans From Shareholder ................................      83,306       54,580
                                                             ---------    ---------

     Total Liabilities ...................................     169,128       65,490
                                                             ---------    ---------

Stockholders' Equity
   Preferred Stock, authorized 5,000,000 shares of
        $.01 par value, issued and outstanding 0 .........        --           --
   Common Stock, authorized 50,000,000 shares of
         $.001 par value, issued and outstanding 1,654,051       1,654        1,654
    Additional Paid in Capital ...........................      92,765       93,876
    Retained Deficit .....................................    (213,547)    (135,896)
    Less: Treasury Stock 59,738 shares at Cost ...........        --         (1,111)
                                                             ---------    ---------

     Total Stockholders' Equity (Deficit) ................    (119,128)     (41,477)
                                                             ---------    ---------


   Total Liabilities and Stockholders' Equity ............   $  50,000    $  24,013
                                                             =========    =========

</TABLE>








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

                                      F - 2

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                               STATEMENTS OF LOSS
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997



                                                        1998             1997
                                                      ---------       ---------

Revenues .......................................      $  45,905       $    --
Cost of Revenues ...............................         14,013            --
                                                      ---------       ---------

     Gross Profit ..............................         31,892            --
                                                      ---------       ---------

Expenses
   General and Administrative Expenses .........        101,878           2,554
   Other Expense - Interest ....................          7,615           5,707
                                                      ---------       ---------

     Total Expenses ............................        109,493           8,261
                                                      ---------       ---------

Net Loss Before Taxes ..........................        (77,601)         (8,261)

Income Taxes ...................................            (50)           --
                                                      ---------       ---------

Net Loss .......................................      $ (77,651)      $  (8,261)
                                                      =========       =========

Net Loss Per Share .............................      $   (0.05)      $    --
                                                      =========       =========

Weighted Average shares 
 Outstanding ...................................      1,654,051       1,654,051
                                                      =========       =========















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


                                      F - 3

<PAGE>


<TABLE>
<CAPTION>

                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                       Additional
                                   Common Stock         Paid-in     Retained     Treasury
                               ---------------------
                                 Shares     Amount      Capital      Deficit       Stock
                               ---------   ---------   ---------    ---------    ---------
<S>                <C>         <C>         <C>         <C>          <C>          <C>      
Balance at January 1, 1997 .   1,654,051   $   1,654   $  93,876    $(127,635)   $   1,111
Net Loss ...................        --          --          --          8,261         --
                               ---------   ---------   ---------    ---------    ---------
Balance at December 31, 1997   1,654,051       1,654      93,876     (135,896)       1,111
Treasury stock canceled ....        --          --        (1,111)      (1,111)
Net Loss ...................        --          --          --        (77,651)        --
                               ---------   ---------   ---------    ---------    ---------
Balance at December 31, 1998   1,654,051   $   1,654   $  92,765    $(213,547)   $    --
                               =========   =========   =========    =========    =========





</TABLE>












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

                                      F - 4

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997



                                                                December
                                                           --------------------
                                                             1998        1997
                                                           --------    --------
Cash Flows From Operating
Net cash used by operating activities ..................   $(28,726)   $ (1,600)
                                                           --------    --------
Cash Flows From Investing Activites
Net cash used by investing activities ..................       --          --
                                                           --------    --------
Cash flows From Financing Activities
Loans from shareholder .................................     28,726       1,600
                                                           --------    --------
Net cash provided by financing activities ..............     28,726       1,600
                                                           --------    --------
Net increase (decrease) in cash and
  Cash equivalents .....................................       --          --
                                                           --------    --------
Cash and cash equivalents at beginning
 of year ...............................................       --          --
                                                           --------    --------
Cash and cash equivalents at end of year ...............   $   --      $   --
                                                           ========    ========


Reconciliation of Net Loss to Cash Provided (Used) by
Operating Activities
Net loss ...............................................   $(77,651)   $ (8,261)
Changes in Assets and Liabilities
Amortization ...........................................       --          --
Increase in inventory ..................................    (35,987)       --
Increase in prepaid expense ............................     10,000        --
Increase in accounts payable ...........................     16,234         855
Increase in trade dollars payable ......................     65,000        --
Increase (Decrease) in accrued expenses ................     (6,322)      5,806
                                                           --------    --------
Net Cash Used by Operating Activities ..................   $(28,726)   $ (1,600)
                                                           ========    ========
Supplemental Disclosure of Cash Flow Information
Interest ...............................................   $   --      $   --
Income Taxes ...........................................   $   --      $   --









    The accompanying notes are an integral part of these financial statements

                                      F - 5

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1997

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     This summary of accounting policies for Optimum Source International,  LTD.
is presented to assist in understanding the Company's financial statements.  The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

Organization and History

     The Company was incorporated under the laws of the State of Utah on October
24, 1984. The Company  Redomiciled to the State of Nevada on June 29, 1990. From
1984 to 1986, the Company attempted to manufacture, distribute and sell chemical
products for the  purification of water.  This business  activity was abandoned.
From 1986 to 1990,  the  Company  attempted  to  acquire  interests  in  various
business  opportunities,  all attempts were abandoned.  The Company was inactive
from 1990 to 1992.  The Company was in the  development  stage from December 31,
1992 through December 31, 1997.

Nature of Business

     The Company's primary mission is  Barter/Counter-trade  and its proprietary
interactive  services  both  Domestic and  International  and  encompassing  the
liquidation & auction industries globally.

Cash and Cash Equivalents

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Loss per Share

     The  reconciliations  of the  numerators  and  denominators  of  the  basic
earnings per share computations are as follows:









                                      F - 6

<PAGE>



                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1997
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Loss per Share (Continued)


                                                                     Per-Share
                                              Income       Shares      Amount
                                            (Numerator) (Denominator)

                                            For the year ended December 31, 1998
Basic Earnings per Share
Income available to common shareholders      $ (77,651)   1,654,051   $  (0.05)
                                             =========    =========   ========


                                            For the year ended December 31, 1997
Basic Earnings per Share
Income available to common shareholders      $  (8,261)   8,297,472   $    --
                                             =========    =========   =========


     The effect of outstanding  common stock  equivalents  would be antidilutive
for 1998 and 1997 and are thus not considered.

Pervasiveness of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  required  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

NOTE 2 - INCOME TAXES

     As of December 31, 1998, the Company had a net operating loss  carryforward
for income tax reporting  purposes of  approximately  $186,000  expiring in 1999
through  2013.  Current tax laws limit the amount of loss that can offset future
taxable  income when there is a substantial  change in ownership.  The amount of
net operating loss available to offset future income will be limited if there is
a substantial change in ownership.




                                      F - 7

<PAGE>


                       OPTIMUM SOURCE INTERNATIONAL, LTD.
                     (Formerly A Development Stage Company)
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1997
                                   (Continued)


NOTE 3 - COMMITMENTS

     As of December  31, 1998 and 1997 all  activities  of the Company have been
conducted by  corporate  officers  from either their homes or business  offices.
Currently,  there are no  outstanding  debts owed by the  company for the use of
these facilities and there are no commitments for future use of the facilities.

NOTE 4 - RELATED PARTY TRANSACTIONS

     During  1998 and 1997 the  Company  borrowed  money  from an officer to pay
administrative  expenses.  The loan is payable  on demand and  carries an annual
interest rate of 10 percent.  As of December 31, 1998,  the  principal  owing is
$83,306 with accrued interest of $2,083.

NOTE 5 - STOCK SPLIT

     On December 23, 1998, 1998 the Board of Directors authorized 5 to 1 reverse
stock split of the Company's  $.001 par value common  stock.  As a result of the
split,  6,703,159  shares were  canceled,  and  additional  paid-in  capital was
increased by $6,703. All references in the accompanying  financial statements to
the number of common shares and per-share amounts for 1997 have been restated to
reflect the reverse stock split.



                                      F - 8