U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                   FORM 10-KSB

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES EXCHANGE ACT
        OF 1934

For the fiscal year ended June 30, 1999    Commission file number:  0-15992

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

                               OTC AMERICA, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

                                    COLORADO
           --------------------------------------------------------------
           (State or Other Jurisdiction of Incorporation or Organization)

                                   84-1031311
                       ------------------------------------
                       (I.R.S. Employer Identification No.)

600 17th Street, Suite 950S, Denver, Colorado               80202
---------------------------------------------             ----------
(Address of Principal Executive Office)                   (Zip Code)

Issuer's telephone number:  (303) 260-6482

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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. [ ]

State issuer's revenues for its most recent fiscal year:     $-0-

The aggregate market value of the voting stock held by  non-affiliates  (419,864
shares of $.0001 par value Common Stock) was $8397.28 as of October 8, 1999. The
stock price for computation  purposes was $.02,  based on the closing sale price
for the Registrant's Common Stock on NASD Bulletin Board on October 8,1999. This
value is not  intended  to be a  representation  as to the value or worth of the
Registrant's  shares of Common Stock. The number of shares of  non-affiliates of
the  Registrant  has been  calculated  by  subtracting  shares  held by  persons
affiliated with the Registrant from outstanding shares.

The number of shares  outstanding  of the  Registrant's  Common  Stock as of the
latest  practicable  date,  October 5, 1999,  was  1,500,024  shares.  All share
amounts  presented herein reflect the 1 share for 100 shares reverse stock split
on all outstanding  shares of the Company's  common stock effective  October 27,
1998.


<PAGE>



OTC AMERICA, INC.

INDEX TO ANNUAL REPORT
ON FORM 10-KSB

Page

PART I   .....................................................................1

         Item 1.  DESCRIPTION OF BUSINESS.....................................1

         Item 2.  DESCRIPTION OF PROPERTY.....................................5

         Item 3.  LEGAL PROCEEDINGS...........................................5

         Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........5

PART II  .....................................................................5

         Item 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
                           STOCKHOLDER MATTERS................................5

         Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                           OF OPERATION ......................................6

         Item 7.  FINANCIAL STATEMENTS........................................6

         Item 8.  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                           FINANCIAL DISCLOSURE...............................6

PART III .....................................................................6

         Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
                           EXCHANGE ACT.......................................6

         Item 10.          EXECUTIVE COMPENSATION.............................7

         Item 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                           MANAGEMENT.........................................7

         Item 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....8

         Item 13.          EXHIBITS AND REPORTS ON FORM 8-K...................8



                                        i

<PAGE>




PART I

     The matters addressed in this report on Form 10-KSB,  with the exception of
the  historical  information  presented,   contain  forward-looking   statements
involving  risks and  uncertainties.  The Company's  actual results could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain  factors,  including  those  factors set forth in the Business
section (Item 1) and elsewhere in this report.

Item 1.  DESCRIPTION OF BUSINESS

     (a) General Development of Business

     OTC  America,  Inc.  (the  "Company"  or the  "Registrant"),  is a Colorado
corporation.  The  principal  business  address is 600 17th  Street,  Suite 950S
Denver, Colorado 80202. Its phone number is (303) 260-6482.

     The  Company  was  originally  incorporated  under the laws of the State of
Colorado on June 13, 1986 for the primary  purpose of providing  management  and
business  consulting  services to start-up and development  stage  entities.  In
November,  1987,  the Company  acquired  used  printing  equipment and started a
printing  business  under the name  American  Printing.  In February  1989,  the
Company  discontinued  all operations,  recorded a net gain on disposal of those
operations totaling $18,371,  and became an inactive shell company.  The Company
has had no operations since 1989.

     On November 11, 1997, the Company's sole director acquired 6,705,137 of the
Company's common shares, approximately 13.8% of the Company's outstanding shares
from its former  director.  In connection with a Letter Agreement dated November
11,  1997,  L.  Thomas  Tarantelli   ("Tarantelli")   appointed  Randy  Phillips
("Phillips")  as a  director  and Chief  Executive  Officer of the  Company  and
resigned as a director and officer. At present Phillips is the sole director and
officer of the registrant.

     (b) Narrative Description of the Business

     General

     The  Company's  current   operations   consist  solely  of  seeking  merger
candidates.

     Present Business

     Registrant  believes  that the  management  of a  suitable  target  company
entering a merger  transaction  with  registrant  will  benefit  by  eliminating
certain costs and  uncertainties  which registrant  believes are associated with
conducting an Initial Public Offering through an underwriter.

     Management believes the Registrant will offer owners of potential merger or
acquisition  candidates the  opportunity to acquire a controlling  interest in a
public company at substantially less cost than is required to conduct an initial
public offering.  The target company may, however, incur significant post merger
registration  costs in the event  target  company  shareholders  wish to offer a
portion of their shares for subsequent sale in a secondary public offering.

     Registrant  also  believes  target  company  shareholders  may  benefit  in
obtaining a greater  ownership  percentage in the Registrant  remaining  after a
merger or acquisition than may be the case in the event a target company offered
its shares  directly  for sale to the public.  Nevertheless,  Management  of the
Registrant  has not conducted  market  research and is not aware of  statistical
data which would  support  the  perceived  benefits  of a merger or  acquisition
transaction for target company shareholders.


                                        1

<PAGE>


     Further,   while  target  company  shareholders  will  receive  "restricted
securities"  in  any  merger  or  acquisition   transaction,   those  restricted
securities  will  represent,   if  a  trading  market  again  develops  for  the
Registrant's  Common  Stock,  ownership  in a "publicly  traded" as opposed to a
"privately held" company.  Registrant  believes that shares in a publicly traded
company can carry an increased  value, are more liquid and in some instances may
be accepted  by sellers as payment  for  additional  assets or  businesses  that
Registrant may wish to acquire.

     Plan of Operation

     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 merger  transaction
between the Registrant  and a company that  possesses less than ideal  financial
characteristics   could  have  a  material   adverse  effect  on  the  price  of
Registrant's Common Stock. There is no assurance,  however, that Registrant will
not consummate a merger with a financially challenged or troubled company.

     Plan of Acquisition

     To identify its most suitable  candidate,  Registrant  plans to continue to
follow a systematic approach.  First, management plans to identify any number of
preliminary prospects that may be brought to the attention of management through
present  associations.  Management  will  evaluate  the  prospects  using  broad
criteria to determine  whether or not the  prospects  are in an industry  and/or
geographic  location  that  appears  promising  and  to  determine  whether  the
prospects themselves have potential at their location within their own industry.
During this initial screening  process,  management will ask and receive answers
to questions framed to provide appropriate threshold information, depending upon
the  nature of the  prospect's  business.  This  preliminary  evaluation  is not
expected to be an in-depth analysis of the target company's operations, although
Registrant  will look at most, if not all, of the same areas to be examined once
one or more target companies are selected for in-depth review. For instance,  at
this stage,  management may look at a prospect's unaudited balance sheet. Once a
prospect  is  selected  for  an  in-depth  review,  management  may  review  the
prospect's audited financial statements, if any. Management anticipates that its
systematic  approach to evaluation will entail a broad review of the business of
target  companies and should allow management to eliminate a large percentage of
preliminary prospects from further consideration.

     Registrant  expects that negotiations  with target company  management will
focus on the  percentage  of the  Company,  as  computed  following  a merger or
acquisition,  that target  company  shareholders  would  receive for their share
holdings in the target company.  Depending upon, among other things,  the target
company's assets and  liabilities,  the  Registrant's  shareholders  will in all
likelihood hold a  substantially  smaller  ownership  interest in the Registrant
following any merger or  acquisition.  The percentage  ownership of Registrant's
existing  shareholders may be subject to very significant reduction in the event
the Registrant  acquires a target company with substantial assets. Any merger or
acquisition  effected by the Registrant can be expected to have a large dilutive
effect on the percentage of shares held by the Registrant's shareholders.


                                        2

<PAGE>



     Current management would not control the surviving company following such a
dilution and would not be in a position to demand an active participation in the
management of the surviving  company,  nor would management  participate  unless
invited to do so.  Management of  Registrant  does not intend to force an active
participation in the affairs of the acquired  company.  Management will evaluate
any opportunity offered such that the merger may be completed.  Management will,
in all likelihood, be requested to relinquish any voting control it may exercise
prior to a merger to the present management of the acquired business.

     Because the nature of the  transaction  and the needs of the candidate will
dictate the legal  requirements of the  transaction,  management  cannot at this
time commit as to whether a shareholder  will have the right to vote to complete
the merger or acquisition. If a shareholder vote is required, it will be subject
to Proxy Rules  promulgated  by the SEC.  Management has fully complied with SEC
rules in the past and intends to do so in the future.  Management  will make all
reports,  if any,  filed with  federal and state  authorities  available  to its
shareholders upon reasonable request.

     In  connection  with  Registrant's   acquisition  of  a  private  business,
Registrant may not obtain an independent  appraisal of the value of the acquired
business. Failure to do so by Registrant could result in over valuation or other
related errors which could then  adversely  effect the quantity and terms of any
shares issued  and/or other  consideration  paid by  Registrant  for the private
business. It is possible that an existing shareholder's future share value would
be adversely effected by factors including,  but not limited to, excess dilution
and lack of a market for shares.

     Registrant  is  authorized  to  issue   20,000,000   Preferred  Shares  and
150,000,000  Common  Shares.  On  October  5, 1999  Registrant  had  outstanding
2,500,000 shares of its Series A Preferred Stock and 1,500,024 Common Shares. On
October  27,  1998 the  Registrant  effected  a 1 for 100  reverse  split of the
outstanding  common shares,  resulting in total shares outstanding of 1,500,000.
After the reverse  split,  management  believes  that the  Registrant  will have
adequate  authorized  shares  to issue  for  services  or to  acquire  a private
business.  In  addition,  at such time as the  Company  considers  a proposal to
acquire a private business, it will be able to make available a large percentage
of the Company for control by the owners of the private company acquired.

     Management may use its shares as compensation  for services  rendered to it
by its management, directors, insiders, affiliates or others.

     Competition

     The Registrant is and will remain an  insignificant  participant  among the
firms  that  engage in  mergers  with and  acquisitions  of  privately  financed
entities.  There are many  established  venture  capital and financial  concerns
which have significantly greater financial and personnel resources and technical
expertise than the Registrant.  The combined financial  resources and management
available to  Registrant  and  Registrant's  affiliate are limited and therefore
Registrant  may  experience  certain  competitive   disadvantages   compared  to
Registrant's  competitors.  There is no assurance  that such  disadvantages,  if
experienced,  will not prevent or substantially  delay Registrant in achieving a
merger or acquisition.

     Regulation and Taxation

     The Registrant could be subject to regulation under the Investment  Company
Act of 1940  in the  event  that  Registrant  obtains  and  continues  to hold a
minority interest in a number of entities.  However,  management intends to seek
at most one or two mergers or acquisitions and management's plan of operation is
based  upon  Registrant  obtaining  a  controlling  interest  in any  merger  or
acquisition  target  company.   Accordingly,   Registrant  may  be  required  to
discontinue  any  prospective  merger or  acquisition  of any company in which a
controlling interest will not be obtained.


                                        3

<PAGE>


     The  Registrant  could also be required to  register  under the  Investment
Company  Act of  1940  if the  Registrant  comes  within  the  definition  of an
Investment  Company  contained  in the Act as a result of its assets  consisting
principally  of share  holdings  held in a number  of  subsidiaries.  Management
intends to seek at most one or two mergers or acquisitions,  which  transactions
will result in Registrant holding only majority interest in subsidiaries.

     Any securities  that  Registrant  acquires in exchange for its Common Stock
will be "restricted securities" within the meaning of the Securities Act of 1933
(the "l933 Act").  If  Registrant  elected to resell such  securities,  the sale
could not proceed unless a registration statement had been declared effective by
the Securities and Exchange  Commission or an exemption  from  registration  was
available.  Section 4(2) of the 1933 Act,  which exempts sales of securities not
involving any public offering,  would in all likelihood be available since it is
likely  that any such sale would be a block sale to a private  investor to raise
additional capital. Although management's plan of operation does not contemplate
reselling acquired securities,  if such a sale were necessary,  Registrant would
be required to comply with the provisions of the 1933 Act.

     Registrant  intends to structure a merger or  acquisition  in a manner that
will minimize  federal and state tax  consequences  to Registrant and the target
company.  In the course of any  merger or  acquisition  Registrant  will focus a
substantial  amount of attention on federal and state tax  consequences  to both
Registrant and the target  company.  Presently,  under the provisions of federal
and various state tax laws, a qualified reorganization between business entities
will generally result in tax-free treatment to the parties of the reorganization
if the company  acquires at least 80% of the combined  voting power of shares of
all classes of the target company's stock in exchange for voting stock.

     While  Registrant  expects to undertake any merger or  acquisition so as to
minimize  federal  and state tax  consequences  to both the  Registrant  and the
target company,  there is no assurance that such business  combination will meet
the statutory  requirements of a reorganization  or that the parties will obtain
the  intended  tax-free  treatment  upon  a  transfer  of  stock  or  assets.  A
non-qualifying reorganization could result in the imposition of both federal and
state  taxes  which  could  have a  substantial  adverse  effect on  Registrant.
Further,  there can be no assurance that  Registrant will be able to structure a
merger or  acquisition  to  minimize  federal and state taxes which could have a
substantial adverse effect on the Registrant.

     There can also be no assurance  that federal and state tax laws will not be
amended in the foreseeable future to preclude Registrant from availing itself of
the tax-free  treatment  presently afforded business entities engaged in mergers
and acquisitions.

     As of the date of this  report no  arrangements  for merger or  acquisition
have been made.

     (c) Employees

     The Company does not have any employees.

     (d) Proprietary Information

     The Company has no proprietary information.


                                        4

<PAGE>


     (e) Government Regulation

     The  Company is not  subject to any  material  governmental  regulation  or
approvals.

     (f) Research and Development

     The  Company  has  not  spent  any  amount  in  research  and   development
activities.

     (g) Environmental Compliance

     At the present time,  the Company is not subject to any material  costs for
    compliance with any environmental laws.

Item 2.  DESCRIPTION OF PROPERTY

The Company's business office is located at 600 17th Street, Suite 950S, Denver,
Colorado 80202.

Item 3.  LEGAL PROCEEDINGS

     No legal  proceedings of a material  nature to which the Company is a party
were pending  during the  reporting  period,  and the Company  knows of no legal
proceedings of a material nature,  pending or threatened,  or judgments  entered
against any director or officer of the Company in his capacity as such.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company did not submit any matter to a vote of security holders through
solicitation  of proxies or  otherwise  during the fourth  quarter of the fiscal
year covered by this report.


PART II

Item 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     (a)  Principal  Market or  Markets.  The  Company's  stock is traded on the
over-the-counter market, and is presently quoted on the NASD OTC Bulletin Board.
The  following  table sets forth the high and low bid prices of the Common Stock
during the two years ended June 30,  1999 on the NASD OTC  Bulletin  Board.  The
prices reflect  interdealer  quotations,  without retail  mark-up,  mark-down or
commissions, and may not represent prices at which actual transactions occurred.

                                                            Bid
                                                       -------------
Quarter Ended                                          High     Low
-------------                                          ----    -----
June 30, 1997 .................................        .03     .01
September 30, 1997 ............................        .03     .01
December 30, 1997 .............................        .00     .0025
March 31, 1998 ................................        .00     .0025
June 30, 1998 .................................        .00     .0025
September 30, 1998 ............................        .03     .01
December 31, 1998 .............................        .02     .02
March 31, 1999 ................................        .02     .02
June 30, 1999 .................................        .02     .02


                                        5

<PAGE>



     (b) Approximate Number of Holders of Common Stock. The number of holders of
record of the Company's Common Stock at October 5, 1999, was approximately 487.

     (c)  Dividends.  Holders  of common  stock are  entitled  to  receive  such
dividends as may be declared by the Company's  Board of Directors.  No dividends
on the common stock were paid by the Company during the periods  reported herein
nor does the Company anticipate paying dividends in the foreseeable future.

     (d) Recent Sales of Unregistered  Securities.  On May 11, 1999, the Company
issued to a sole sophisticated investor 2,500,000 shares of the Company's Series
A Preferred  Stock with a stated value of $1.00 per share at a purchase price of
$1.00 per share. The Series A Preferred Stock is subject to mandatory redemption
by the  Company on the date that is 13 months  from the date of  issuance of the
Series A Preferred  Stock for a mandatory  redemption  amount equal to two times
the stated value of the Series A Preferred  Stock.  The Series A Preferred Stock
is  also  subject  to  optional  redemption  at any  time  up to  the  mandatory
redemption  date for a amount equal to two times the state value of the Series A
Preferred  Stock.  Until the mandatory  redemption date, each holder of Series A
Preferred  Stock shall be entitled to  dividends  at the rate of 18% per year of
the stated  value of the holder's  shares.  The  dividends  must be paid monthly
commencing  30 days after the date of issuance of the Series A Preferred  Stock.
In  addition,  each  holder  of the  Series A  Preferred  Stock is  entitled  to
dividends  at the rate of 9% per year of the  stated  value of the  shares for a
period of two years  following  the  mandatory  redemption  date  regardless  of
whether  the  Company  redeems  the  stock.  In the  event  of any  liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,  the
holders of the Series A Preferred  Stock are  entitled to receive a  liquidation
preference  equal to two  times  the  stated  value of their  shares of Series A
Preferred Stock. A consolidation or merger of the Company with or into any other
corporation or corporations or a sale of all or substantially  all of the assets
of the Company shall be deemed a liquidation,  dissolution or winding up is more
than 50% of the surviving entity is not owned by persons who were holders of the
Company's common stock immediately prior to such merger,  consolidation or sale.
In such event, the Series A Preferred Stock  liquidation  preference may be paid
by any entity  surviving the event of liquidation.  The Series A Preferred Stock
was issued in reliance on the exemption  from  registration  provided by Section
4(2) of the Securities Act of 1933.

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         Plan of Operation

         The  Company  reentered  the  development  stage on July 1,  1997.  The
Company's  plan of operation for the next twelve months is to focus on acquiring
an operating  business entity. The sole officer and director of the Company will
continue  to  seek   candidates  for  merger  or  acquisition   and  anticipates
consummating a transaction in the foreseeable future.

     The Company  currently  expects to be able to satisfy its cash requirements
for the next twelve  months.  On May 11, 1999 the Company  raised  approximately
$2,500,000  through the issuance of 2,500,0000  shares of the Company's Series A
Preferred  Stock at a purchase price of $1.00 per share as described under "Item
5.  Recent  Sales of  Unregistered  Securities."  The Company  currently  has no
operations  or cash flows to support the service or  redemption  of the Series A
Preferred Stock. As described in the notes to the financial  statements included
in this report.  These factors  create an  uncertainty  about the ability of the
Company to continue as a going concern.  As described in note G to the financial
statements,  Management  anticipates  utilizing  additional equity financing and
short-term  working  capital  advances from its sole director in its acquisition
efforts.

Item 7.  FINANCIAL STATEMENTS

     The report of the independent  auditors on the financial statements appears
at Page F-2 and the financial statements and their accompanying footnotes appear
at Pages F-3  through  F-11  hereof.  These  financial  statements  and  related
financial  information required to be filed hereunder are incorporated herein by
reference.

Item 8.  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
         DISCLOSURE

     The Company did not have any  disagreements  on  accounting  and  financial
disclosures with its present accounting firm during the reporting period.

                                       6

<PAGE>


PART III

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

     (a) Directors and Executive Officers.  The names and ages of the
Directors and executive officers of the Company are as follows:

Name                 Age          Position                       Since
--------------       ---      -------------------------    ------------------
Randy Phillips       33       President, CEO and
                              sole officer and director    October 31,  1997

     The Director  serves  until the next annual  meeting of  shareholders,  and
until his successor is elected and qualified.

     The following sets forth information  concerning the principal  occupations
and business experience of the current sole Officer and Director of the Company:

Randy Phillips

From 1992 to 1994,  Mr.  Phillips  served as Director of Trading for an offshore
hedge  fund.  In 1994 Mr.  Phillips  started his own  private  investment  firm,
specializing  in mergers and  acquisitions,  of which he is  currently  the sole
owner and manager.

Item 10.          EXECUTIVE COMPENSATION

     No officers or directors have been compensated during the fiscal year ended
June 30, 1999. The Company has no retirement, pension, profit sharing, insurance
or other similar programs.

     The Company has agreed to  reimburse  its  president  for his  expenses and
intends to reward him on a performance  basis at such time as the acquisition of
an  operating  company  or  business  is  completed.   It  is  likely  both  the
reimbursement and performance award will be in the form of stock grants.

     No Directors fees were paid during the year ended June 30, 1998.

     Stock Option Plan

          Effective July 1, 1986, the Company  adopted an Incentive Stock Option
Plan ("the Plan") and reserved a total of 5,000,000  common  shares for issuance
pursuant to the Plan. The Plan,  designed as an incentive for key employees,  is
administered by the Board of Directors,  which, in its sole discretion,  selects
optionees and determines  the number of shares subject to each option.  The Plan
provides  that no option may be granted at an exercise  price less than the fair
market  value of the common  shares on the date of grant.  Fair market  value is
determined by calculation of an average of the highest and lowest sale prices of
the common shares, as reported by a reporting service the Board may select.  The
Board is also  empowered to determine  fair market value in such other manner as
is deemed  equitable  for  purposes  of the Plan.  Unless  the Board  determines
otherwise,  options  granted under the Plan will expire five years from the date
of grant and may not be exercised  during the initial  one-year period from date
of grant. Thereafter, options may be exercised in whole or in part, depending on
the terms of the particular  option. To date, no options have been granted under
the Plan.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The registrant's securities are recorded on the books of its transfer agent
in registered form. A substantial portion of the shares are, however, registered
in the name of  intermediaries  such as brokerage  houses and clearing houses on
behalf of their  respective  clients.  Management does not have knowledge of the
beneficial owners thereof.

     The following table sets forth information  regarding  beneficial ownership
as of October 5, 1999 of the  Company's  common stock by any person who is known
by the Company to be the beneficial  owner of more than five percent (5%) of the
Company's  voting  securities,  and by each Director of the  Registrant,  and by
officers and Directors of the Registrant as a group. As of October 5, 1999 there
were 1,500,024 common shares issued and outstanding.

     All ownership is beneficial and on record and all beneficial  owners listed
below have sole voting and  investment  power with respect to the shares  shown,
unless otherwise indicated.



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<PAGE>


Title of              Name and Address       Number of Shares   Percent of Class
Class
------------          ----------------       ----------------   ----------------
Common Stock          Randy Phillips         1,080,160                 72%
                      600 17th Street
                      Suite 950S
                      Denver, CO 80202

Item 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Change in Management Control of Company

     On June 11,  1997,  the  Company's  sole  officer and  director,  L. Thomas
Tarantelli  ("Tarantelli"),  entered into an agreement ("option  contract") with
Downeast SonRise, Inc. ("Downeast"),  giving Downeast the option to purchase Mr.
Tarantelli's 6,705,137 shares of the registrant's common stock. On September 26,
1997  Downeast  sold the option  contract to Wathne  Pierce &  Associates,  Inc.
("Wathne"),  for $1. After obtaining the option  contract from Downeast,  Wathne
sold the option  contract to Mr.  Randy  Phillips for  $100,000.  On October 31,
1997, Tarantelli appointed Phillips as a director and Chief Executive Officer of
the Company and  resigned as a director  and  officer.  On November 11, 1997 Mr.
Phillips acquired the 6,705,137 shares,  representing  13.8% of the Registrant's
outstanding  common stock,  from Mr.  Tarantelli for $50,000.  As of October 31,
1997, Mr. Phillips is the sole director and officer of the registrant.

         On  September  22,  1998,  with the consent of the sole  director,  the
Company was authorized to issue  101,310,706 of its restricted  common shares to
its sole officer and director. The shares were issued to Mr. Philips in October,
1998,  thereby giving him approximately 72% ownership of the outstanding  common
stock of the  Company.  The shares were issued to  compensate  Mr.  Phillips for
third-party administrative expenses paid by him on behalf of the Company and for
consulting services provided by him to the Company.

         For the year ended June 30, 1999, Mr.  Phillips has paid  approximately
$34,224 in legal, accounting and transfer agent fees on behalf of the Company.

     Mr.   Phillips  has   provided   certain   consulting,   office  space  and
administrative services to the Company totaling $7,100 as of June 30, 1999.

     Other  than  those  mentioned  above,  there  have  been no  related  party
transactions,  or  any  other  transactions  or  relationships  required  to  be
disclosed pursuant to Item 404 of Regulation S-B.

Item 13.          EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

        The following financial information is filed as part of this report:

     1)   Financial Statements

     2)   Schedules

     3)   Exhibits. The following exhibits are furnished as part of this report:


                                        8

<PAGE>



Item 601
Exhibit No.       Description

3    Articles of Incorporation  (Incorporated herein by reference to the 6/30/97
     10-KSB filed August 26, 1998 with the Securities and Exchange Commission)

3.1  Articles of Amendment to the Articles of Incorporation of OTC America, Inc.
     (filed herewith)

10.  Preferred  Stock Purchase  Agreement dated May 11, 1999 between the Company
     and Dixon Family Charitable Remainder Trust (filed herewith)

27.   Financial Data Schedule (filed herewith)

Reports on Form 8-K

     (b)     Reports on Form 8-K filed during the fourth quarter of 1998 - None.


                                        9

<PAGE>

                                OTC AMERICA, INC.
                         (A Development Stage Company)

                                                                      Page
Independent auditors' report........................................  F-2

Balance sheet as of June 30, 1999...................................  F-3

Statements of operations, for the years ended June 30, 1999
 and 1998 and for the period July 1, 1997 (inception)
 through June 30, 1999............................................... F-4

Statement of shareholders'  deficit,  as of June 30, 1996
 and and for the period July 1, 1997 (inception) through
 June 30, 1999....................................................... F-5

Statement of cash flows,  for the years ended June 30, 1999
 and 1998 and for the period July 1, 1997 (inception)
 through June 30, 1999............................................... F-6

Notes to financial statements.......................................  F-7

<PAGE>



To the Board of Directors and Shareholders
OTC America, Inc.

                          INDEPENDENT AUDITORS' REPORT

We  have  audited  the  accompanying  balance  sheet  of OTC  America,  Inc.  (a
development  stage  company) as of June 30, 1999 and the related  statements  of
operations,  shareholders'  deficit  and cash flows for the years ended June 30,
1999 and 1998 and for the period July 1, 1997 (inception) through 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 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 OTC America,  Inc. as of June
30,  1999 and the results of its  operations  and cash flows for the years ended
June 30, 1999 and 1998 and for the period July 1, 1997 (inception)  through June
30, 1999 in conformity with generally accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  shown  in the  accompanying  financial
statements,  the  Company  issued  $2,500,000  of  eighteen  percent  redeemable
preferred  stock that is redeemable  for  $5,000,000 at the option of the holder
within  thirteen  months of date of issuance.  The Company has no  operations or
cash  flows to  support  the  service  of the  preferred  stock or to redeem the
preferred  stock.  These  factors  as  discussed  in  Note  G to  the  financial
statements  raise a  substantial  doubt  about the  ability  of the  Company  to
continue as a going concern.  Management's  plans in regard to those matters are
also described in Note G. The Company's ability to achieve its plans with regard
to those  matters,  is uncertain.  The  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.



Cordovano and Harvey, P.C.
Denver, Colorado
October 11, 1999

                                      F-2
<PAGE>


                               OTC AMERICA, INC.
                         (A Development Stage Company)
                                 BALANCE SHEET
                                 June 30, 1999

ASSETS

CURRENT ASSETS
  Cash and cash equivalents...................................    $ 2,211,784
  Marketable securities (Note C)..............................        144,685
  Preferred stock issuance costs, net (Note G)................         81,598
  Prepaid interest............................................         18,750
                                                                  -----------
                                         TOTAL CURRENT ASSETS       2,456,817
                                                                  ===========
DEPOSITS......................................................          1,444
                                                                  -----------
                                                                  $ 2,458,261
                                                                  ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accrued expenses............................................ $        3,000
  Due to related party (Note B)...............................         21,823
                                                                  -----------
                                    TOTAL CURRENT LIABILITIES          24,823
                                                                  -----------
REDEEMABLE PREFERRED STOCK (Note G)
  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 $288,462 accrued accretion.........................      2,788,462
                                                                  -----------
SHAREHOLDERS' DEFICIT (Note E)
  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;
    1,498,000 shares issued and outstanding ..................            150
  Additional paid in capital..................................        557,485
  Accumulated deficit, ($420,346 accumulated during development
  stage)......................................................       (912,659)
                                                                  -----------
                                  TOTAL SHAREHOLDERS' DEFICIT        (355,024)
                                                                  -----------
                                                                  $ 2,458,261
                                                                  ===========

               See accompanying notes to the financial statements

                                      F-3

<PAGE>

<TABLE>

<CAPTION>

                               OTC AMERICA, INC.
                         (A Development Stage Company)
                            STATEMENTS OF OPERATIONS

                                                                                                     July 1, 1997
                                                                    For the Years Ended June 30,     (inception)
                                                                    ----------------------------       Through
                                                                        1999            1998        June 30, 1999
                                                                    ---------       ---------       -------------
<S>                                                                <C>              <C>             <C>
COSTS AND EXPENSES
 Related party (Note B)............................................  $  7,100       $  11,168       $  18,268
 Amortization......................................................    10,643               -          10,643
 General and administrative........................................    56,318          14,630          70,948
                                                                     --------       ---------       ---------
                                          TOTAL COSTS AND EXPENSES     74,061          25,798          99,859
                                                                     --------       ---------       ---------
NON-OPERATING INCOME (EXPENSE)
 Interest expense..................................................  (344,712)              -        (344,712)
 Interest income...................................................    19,853               -          19,853
 Unrealized gain on investments (Note C)...........................     4,372               -           4,372
                                                                     --------       ---------       ---------
                                      NET LOSS BEFORE INCOME TAXES   (394,548)        (25,798)       (420,346)

INCOME TAXES (NOTE D)..............................................         -               -               -
                                                                     --------       ---------       ---------
                                                          NET LOSS  $(394,548)      $ (25,798)     $ (420,346)
                                                                     ========       =========       =========
NET LOSS PER COMMON SHARE:
 Basic and diluted................................................. $   (0.32)      $   (0.05)
                                                                     ========       =========
SHARES USED FOR COMPUTING NET LOSS PER COMMON SHARE:
 Basic and diluted................................................. 1,244,723         484,893
                                                                     ========       =========

               See accompanying notes to the financial statements

                                      F-4

<PAGE>

<CAPTION>

                           OTC AMERICA, INC.
                     (A Development Stage Company)
                  STATEMENT OF SHAREHOLDERS' DEFICIT
As of June 30, 1996 and from July 1, 1997 (Inception) through June 30, 1999


                                                 Preferred Stock         Common Stock          Additional                   Total
                                               -------------------    -------------------      Paid-in     Accumulated Shareholders'
                                                Shares     Amount      Shares     Amount       Capital       Deficit       Deficit
                                               --------   --------    --------   --------    ----------    -----------    ----------
<S>                                            <C>        <C>         <C>        <C>         <C>           <C>            <C>
Balance, June 30, 1996*......................         -    $     -      484,893   $     49    $  486,747    $  (487,809)   $ (1,013)

Net loss for the year ended June 30, 1997.....        -          -            -          -             -         (4,504)     (4,504)
                                               --------   --------     --------   --------    ----------    -----------   ----------
                        BALANCE, June 30, 1997  484,893         49      486,747       (492,313)       (5,517)

Balance, July 1, 1997 inception of development
 stage activities.............................        -          -      484,893         49       486,747       (492,313)     (5,517)

Third party adminstrative costs paid by
 shareholder (Note B).........................        -          -            -          -        20,148              -      20,148

Net loss for the year ended June 30, 1998.....        -          -            -          -             -        (25,798)    (25,798)
                                               --------   --------     --------   --------    ----------    -----------   ----------
                        BALANCE, June 30, 1998        -          -      484,893         49       506,895       (518,111)    (11,167)

Third party adminstrative costs paid by
 shareholder (Note B).........................        -          -            -          -        34,224              -      34,224

Shares issued in exchange for payment of
 expenses and consulting, at cost of services
 and expenses (Note B)........................        -          -    1,013,107        101        16,366              -      16,467

Net loss for the year ended June 30, 1999.....        -          -            -          -             -       (394,548)   (394,548)
                                               --------   --------     --------   --------    ----------    -----------   ----------
                        BALANCE,  June 30, 1999       -    $     -    1,498,000   $    150     $ 557,485   $   (912,659) $ (355,024)
                                               ========   ========    =========   ========    ==========    ===========   ==========

*Common shares retroactively restated for 100:1 reverse split. (See Note E)

              See accompanying notes to the financial statements

                                      F-5

<PAGE>

                               OTC AMERICA, INC.
                         (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS

                                                                                                     July 1, 1997
                                                                    For the Years Ended June 30,      (inception)
                                                                   -----------------------------        Through
                                                                     1999                1998        June 30, 1999
                                                                   ------------     ------------     -------------
<S>                                                                <C>              <C>              <C>
OPERATING ACTIVITIES
 Net loss....................................................... $    (394,548)     $   (25,798)     $   (420,346)
 Non-cash transactions:
  Amortization expense..........................................        10,643                -            10,643
  Unrealized gain on marketable securities......................        (4,372)               -            (4,372)
  Accretion of preferred stock (Note G).........................       288,462                -           288,462
 Purchase of marketable securities, classified as trading.......      (144,685)               -          (144,685)
 Changes in current liabilities.................................        14,301            5,650            19,951
                                                                 ------------       -----------       -----------
                                             NET CASH (USED IN)
                                           OPERATING ACTIVITIES       (230,199)         (20,148)         (250,347)
                                                                 ------------       -----------       -----------
INVESTING ACTIVITIES
                                           NET CASH PROVIDED BY
                                           INVESTING ACTIVITIES              -                -                 -
                                                                 ------------       -----------       -----------
FINANCING ACTIVITIES
 Third party expenses paid by shareholder on behalf
 of the Company, recorded as additional-paid-in capital (Note B)       64,224            20,148            54,372
 Proceeds from issuance of preferred stock (Note G).............    2,500,000                 -         2,500,000
 Costs paid to issue manditorily redeemable preferred stock (Not      (92,241)                -           (92,241)
                                                                 ------------       -----------       -----------
                                           NET CASH PROVIDED BY
                                           FINANCING ACTIVITIES     2,441,983            20,148         2,462,131
                                                                 ------------       -----------       -----------
NET INCREASE  IN CASH AND CASH EQUIVALENTS......................    2,211,784                 -         2,211,784
Cash and cash equivalents, beginning............................            -                 -                 -
                                                                 ------------       -----------       -----------
Cash and cash equivalents, ending............................... $  2,211,784       $         -       $ 2,211,784
                                                                 ============       ===========       ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.......................................... $     75,000       $         -       $    75,000
                                                                 ============       ===========       ===========
Cash paid for income taxes...................................... $          -       $         -       $         -
                                                                 ============       ===========       ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock issued in satisfaction amounts due to shareholder (Note B) $     16,467       $         -       $    16,467
                                                                 ============       ===========        ===========

</TABLE>

              See accompanying notes to the financial statements

                                      F-6

<PAGE>






                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note A:  Nature of organization and summary of significant accounting policies

Nature of organization:

OTC America,  Inc. (the "Company") was  incorporated in the state of Colorado on
June 13,  1986.  During the year  ended June 30,  1988,  the  Company  commenced
operations in the financial services, public relations, and printing businesses.
During the year ended June 30, 1989, the Company discontinued all operations and
became an inactive shell company.  Effective July 1, 1997, the Company reentered
the  development  stage in  accordance  with  Statement of Financial  Accounting
Standard ("SFAS") No. 7. Currently, the Company is a "shell corporation" and its
principal  activities since July 1, 1997 have been organizational  matters.  The
purpose of the Company is to evaluate,  structure  and complete a merger with or
acquisition of, an operating company.

On October 3, 1997, the Company filed amended articles of incorporation with the
State of  Colorado,  at which  time the  Company  changed  the par  value of its
20,000,000 shares of authorized preferred stock from $.01 to no par value.

On November 11, 1997, a shareholder,  after obtaining approximately 13.8 percent
of the Company's  outstanding  $.0001 par value common stock, was appointed sole
board member and officer of the Company.

Summary of significant accounting policies:

Basis of presentation

The accompany  financial  statements have been presented in accordance with SFAS
No. 7, "Accounting and Reporting by Development Stage Enterprises."

Use of estimates

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

Reclassifications

Certain  prior-year  amounts have been reclassified for comparative  purposes to
conform to the current-year presentation.




                                       F-7

<PAGE>

                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note A: Nature of organization and summary of significant  accounting  policies,
continued

Summary of significant accounting policies, continued:

Cash and cash equivalents

The Company considers all short-term, highly liquid investments with an original
maturity date of three months or less to be cash  equivalents.  Cash at June 30,
1999  was  held in an  account  in the name of the  sole  officer  and  majority
shareholder  on behalf of the  Company.  - See Note F-  Concentration  of credit
risk.

Income taxes

Income taxes are provided  for the tax effects of  transactions  reported in the
financial  statements  and consist of taxes  currently due plus  deferred  taxes
related  primarily to differences  between the recorded book basis and tax basis
of assets and liabilities  for financial and income tax reporting.  The deferred
tax assets and liabilities represent the future tax return consequences of those
differences,  which will  either be taxable  or  deductible  when the assets and
liabilities  are recovered or settled.  Deferred  taxes are also  recognized for
operating  losses that are  available to offset  future  taxable  income and tax
credits that are available to offset future federal income taxes.

Fair value of financial instruments

SFAS 107,  "Disclosure  About Fair  Value of  Financial  Instruments,"  requires
certain  disclosures  regarding  the fair value of  financial  instruments.  The
Company has determined,  based on available  market  information and appropriate
valuation   methodologies,   the  fair  value  of  its   financial   instruments
approximates carrying value. The carrying amounts of cash, accounts payable, and
other accrued liabilities  approximate fair value due to the short-term maturity
of the instruments.

Marketable securities

Marketable  securities  consist of various  equity  securities and are stated at
current market value. All equity securities are considered  "trading" securities
under the  provisions  of Statement of Financial  Accounting  Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". Accordingly,
unrealized  gains  and  losses  on  equity   securities  are  reflected  in  the
accompanying statements of operations.







                                       F-8

<PAGE>


                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note A: Nature of organization and summary of significant  accounting  policies,
continued

Summary of significant accounting policies, continued:

Loss per share

In February 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 128,  "Earnings Per Share" (SFAS 128). The Company  adopted SFAS 128 for the
two year period  ended June 30, 1999.  Under SFAS 128, net loss per  share-basic
excludes  dilution  and is  determined  by  dividing  loss  available  to common
shareholders by the weighted average number of common shares  outstanding during
the period.  Net loss per  share-diluted  reflects the  potential  dilution that
could  occur if  securities  and other  contracts  to issue  common  stock  were
exercised or converted  into common  stock.  As of June 30, 1999,  there were no
outstanding  options,  securities  or  contracts  to issue or  convert to common
stock.

Recently issued accounting pronouncements

The Company has adopted the following new accounting pronouncements for the year
ended June 30, 1999.  There was no material  effect on the financial  statements
presented from the adoption of the new pronouncements.

SFAS No. 130,  "Reporting  Comprehensive  Income,"  requires the  reporting  and
display  of  total  comprehensive  income  and its  components  in a full set of
general-purpose financial statements.

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information," is based on the "management" approach for reporting segments.  The
management  approach  designates  the  internal  organization  that  is  used by
management  for making  operating  decisions  and assessing  performance  as the
source  of the  Company's  reportable  segments.  SFAS  No.  131  also  requires
disclosure about the Company's products,  the geographic areas in which it earns
revenue and holds long-lived assets, and its major customers.

SFAS No. 132, "Employers'  Disclosures about Pensions and Other  Post-retirement
Benefits,"  which  requires  additional  disclosures  about  pension  and  other
post-retirement   benefit  plans,   but  does  not  change  the  measurement  or
recognition of those plans.









                                       F-9

<PAGE>


                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note A: Nature of organization and summary of significant  accounting  policies,
continued

Summary of significant accounting policies, continued:

Recently issued accounting pronouncements, continued

Statement  of  Position  ("SOP")  98-1,  "Accounting  for the Costs of  Computer
Software  Developed  or  Obtained  for  Internal  Use." This SOP  requires  that
entities  capitalize certain  internal-use  software costs once certain criteria
are met.

SOP 98-5,  "Reporting on the Costs of Start-Up  Activities."  SOP 98-5 provides,
among other things, guidance on the reporting of start-up costs and organization
costs.  It requires costs of start-up  activities and  organization  costs to be
expensed as incurred.

The Company will  continue to review these new  accounting  pronouncements  over
time,  in  particular  SFAS 131 and SOP 98-1,  to  determine  if any  additional
disclosures are necessary based on evolving circumstances.

Note B:  Related party transactions

During the years ended June 30,  1999 and 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  $7,100  and   $11,168,
respectively.  These amounts are included in the  financial  statements as costs
and expenses, related party.

On September  22, 1998,  the Company was  authorized to issue  1,013,107  (after
effect of the 100 for 1 reverse stock split) of its restricted  common shares as
payment  for a total of $16,468  (of the  cumulative  $18,268  for the two years
ended  June 30,  1999) in  related  party  expenses  due to the  president.  The
remaining  $1,800 along with a $1,444 lease deposit,  paid by the president,  is
included in the accompanying  financial  statements as due to related party. The
issuance of the  restricted  common  stock gives the sole  officer and  director
approximately 72% ownership of the outstanding common stock of the Company.

The Company incurred certain legal, accounting,  transfer agent fees and general
and administrative  costs during the years ended June 30, 1999 and 1998 totaling
$34,224 and $20,148,  respectively,  which were paid on behalf of the Company by
the same individual  mentioned above. The total of these transactions,  $54,372,
has been reported in the financial  statements  as  additional-paid-in  capital.
Additional  third party  expenses  totaling  $18,579  have been paid by the sole
officer during the fourth quarter of the Company's fiscal  year-end.  As of June
30, 1999 they have been included in the  financial  statements as due to related
party as the sole officer anticipates reimbursement from the Company.


                                      F-10


<PAGE>


                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS


Note C:  Marketable securities
Marketable securities consisted of the following at June 30, 1999:

                                                        Market
                                          Cost          Value
                                       ---------     ----------
Equity securities......................$ 140,312     $  144,685
                                       =========     ==========

Following is a summary of  investment  earnings  recognized in income during the
year ended June 30, 1999:

Trading securities:
  Realized gains.................... $      -
  Realized losses...................        -
                                     --------
       Realized gains (losses), net         -
                                     --------

  Unrealized gains.................. $  4,372
  Unrealized losses.................    4,372
                                     --------
       Unrealized gains (losses), net   4,372
                                     --------
                    GAIN (LOSS) ON
           TRADING SECURITIES, NET   $  4,372
                                     ========

Note D:  Income taxes

A reconciliation of the U.S.  statutory federal income tax rate to the effective
tax rate follows:

                                                            June 30,
                                                --------------------------------
                                                    1999               1998
                                                --------------     -------------
    U.S. statutory federal rate................      34.53%             15.00%
    State income tax rate,
       net of federal benefit...................      3.27%              4.25%
    Net operating loss for which no tax
      benefit is currently available...........     (37.80)            (19.25%)
                                                --------------     -------------
                                                         - %                -%
                                                ==============     =============





                                      F-11

<PAGE>

                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note D:  Income taxes, continued

Deferred taxes consisted of the following:
                                                          June 30,
                                          --------------------------------------
                                                1999                   1998
                                          ------------------     ---------------
    Deferred tax assets,
       Net operating loss.................  $      149,158        $      4,966
    Valuation allowance...................        (149,158)             (4,966)
                                          ------------------     ---------------
          Net deferred taxes..............  $           -0-       $         -0-
                                          ==================     ===============

The valuation allowance offsets the net deferred tax asset for which there is no
assurance of recovery. The change in the valuation allowance for the years ended
June  30,  1999  and  1998  totaled  $149,158  and  $4,966,  respectively  which
approximates  the current tax benefit for each period.  The net  operating  loss
carryforward  expires  through the year 2018.  The valuation  allowance  will be
evaluated at the end of each year,  considering  positive and negative  evidence
about  whether  the  deferred  tax asset will be  realized.  At that  time,  the
allowance  will either be  increased or reduced;  reduction  could result in the
complete  elimination of the allowance if positive  evidence  indicates that the
value of the deferred tax assets is no longer  impaired and the  allowance is no
longer required.

Should the Company undergo an ownership  change as defined in Section 382 of the
Internal  Revenue  Code,  the Company's  tax net  operating  loss  carryforwards
generated prior to the ownership change will be subject to an annual limitation,
which could reduce or defer the utilization of these losses.

Note E:  Shareholders' deficit

Preferred Stock

The  Company  is  authorized  to issue  twenty  million  shares  of no par value
preferred  stock,  which  may  be  issued  in  series  with  such  designations,
preferences,  stated values, rights, qualifications or limitations as determined
by the Board of Directors.

Common Stock

Management and the board of directors  received  shareholder  approval for a one
for one hundred  share reverse  stock split,  on October 27, 1998,  resulting in
149,800,000   outstanding  shares  being  converted  to  1,498,000  shares.  The
accompanying  financial  statements  have been  retroactively  restated  to give
effect to the reverse split.

The Company is authorized to issue an additional  2,000 (after effect of the 100
for 1 reverse stock split) shares of its restricted common stock to an unrelated
party in exchange for $200. Those shares were not issued as of June 30, 1999.

                                      F-12

<PAGE>

                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note F:  Concentration of credit risk

The  Company  maintains  cash and cash  equivalents  with  one  major  financial
institution.  Cash equivalents  include  investments in money market securities.
The  investments  are  not  insured  by  the  U.S.  Federal  Deposit   Insurance
Corporation  ("FDIC");  however,  the Company has not  experienced any losses in
such accounts and  management  of the Company  believes it is not exposed to any
significant credit risk to cash or cash equivalents.

Note G:  Redeemable preferred stock

On May 11, 1999 the Company  issued  2,500,000  shares of its Series A Preferred
Stock for  $2,500,000.  The preferred  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
as in connection with the issuance of the preferred  stock. The $92,241 has been
recorded in the  accompanying  financial  statements as a deferred charge titled
preferred stock issuance costs, net of $10,643 of accumulated amortization.  The
costs are amortized over thirteen months which  approximates the period prior to
mandatory  redemption.  For the year ended June 30, 1999,  the Company  recorded
$10,643 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 $288,462 was recorded at June 30, 1999.  The accretion  expense was
charged to interest  expense  during the year ended June 30, 1999.  All dividend
payments have accordingly been charged to interest expense during the year ended
June 30, 1999.







                                      F-13

<PAGE>

                                OTC AMERICA, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

Note G:  Redeemable preferred stock, continued

The planned  use of proceeds  from the  issuance of the  preferred  stock was to
acquire an operating  company.  The  acquisition  was not  consummated,  and the
Company is now seeking other potential merger or acquisition candidates.

At June 30, 1999,  the Company has no  operations  or cash flows.  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.

Note H:  Year 2000 Compliance

The Year 2000 issue ("Y2K") is the result of computer programs written using two
digits  rather  than  four to define  the  applicable  year.  Any  computer  and
telecommunications  programs that have date  sensitive  software may recognize a
date using "00" as the year 1900  instead of 2000.  This could  result in system
failure or  miscalculations  causing  disruptions in  operations,  including the
ability to process  transactions,  send  invoices,  or engage in similar  normal
business activities.  As of June 30, 1999, the Company did not have any computer
equipment.

The Company  cannot  determine  the extent to which the Company is vulnerable to
third parties' failure to remediate their own Y2K problems.  As a result,  there
can be no guarantee  that the systems of other  companies on which the Company's
business relies will be timely converted,  or that failure to convert by another
company  would have a material  adverse  affect on the  Company.  In view of the
foregoing, there can be no assurance that the Y2K issue will not have a material
adverse effect on the Company's business.

                                      F-14


<PAGE>


                                SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

(Registrant):                             OTC AMERICA, INC.



By:   /s/ Randy Phillips                  Date: October 13, 1999
      ------------------
      Randy Phillips
      President

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
date indicated.


By:   /s/ Randy Phillips                  Date: October 13, 1999
      ------------------
      Randy Phillips
      President


                                       21

<PAGE>
                              ARTICLES OF AMENDMENT
                                     TO THE
                            ARTICLES OF INCORPORATION
                              OF OTC AMERICA, INC.


     FIRST: The name of the corporation is OTC America, Inc.

     SECOND:  The Board of Directors of the corporation  duly adopted on May 11,
1999 the  designations,  preferences,  limitations,  and relative  rights of the
Series  A  Preferred   Stock  of  the  corporation  and  the  amendment  to  the
corporation's Articles of Incorporation set forth herein concerning the Series A
Preferred Stock.

     THIRD: Article FOURTH of the corporation's  Articles of Incorporation shall
be amended to include a new Section (f) to read in its entirety as follows:

     (f) Series A Preferred Stock.

     (1)  Designation  of  Series A  Preferred  Stock.  2,500,000  shares of the
preferred  stock of the  corporation  shall be  designated as Series A Preferred
Stock, stated value $1 (the "Stated Value").

     (2) Optional  Redemption.  The  corporation  shall have the right until the
Mandatory Redemption Date (as defined herein), exercisable on not less than five
(5) business days prior written  notice to the holders of the Series A Preferred
Stock to  redeem  all or any  portion  of the  outstanding  shares  of  Series A
Preferred  Stock in accordance with this Article  FOURTH,  Section  (f)(2).  Any
notice that the  corporation  is exercising its optional  redemption  right (the
"Optional  Redemption  Right")  hereunder  shall be  delivered to the holders of
Series A Preferred Stock at their  registered  addresses  appearing on the books
and  records of the  corporation  and shall  state (i) that the  corporation  is
exercising  its right to redeem all or any potion of the  outstanding  shares of
Series A Preferred Stock and (ii) the date of redemption.  On the date fixed for
redemption (the "Optional  Redemption Date"), the corporation shall make payment
of the Optional  Redemption  Amount (as defined  herein) to or upon the order of
the holders as specified by the holders in writing to the  corporation  at least
one (1) business day prior to the Optional Redemption Date, or if such notice is
not received by the corporation in the time permitted the corporation shall make
payment of the Optional Redemption Amount to or upon the order of the holders as
specified  on the books  and  records  of the  corporation.  If the  corporation
exercises  its Optional  Redemption  Right under this Section,  the  corporation
shall make payment to the holders of an amount in cash (the "Optional Redemption
Amount") equal to the Mandatory Redemption Amount as defined below.

     (3)  Mandatory  Redemption.  On the date that is thirteen (13) months after
the date on which the Preferred Stock Purchase Agreement between the corporation
and Dixon  Family  Charitable  Remainder  Trust was  concluded  and the Series A
Preferred  Stock is issued (the  "Mandatory  Redemption  Date") the  corporation
shall  purchase each holder's  shares of Series A Preferred  Stock for an amount
per share  equal to two (2) times the  Stated  Value of the  Series A  Preferred
Stock (the "Mandatory Redemption Amount"). On the Mandatory Redemption Date, the
corporation shall make payment of the Mandatory Redemption Amount to or upon the
order of the holders as specified  by the holders in writing to the  corporation
at least one (1) business day prior to the Mandatory Redemption Date, or if such
notice is not received by the  corporation in the time permitted the corporation
shall make payment of the  Mandatory  Redemption  Amount to or upon the order of
the holders as specified on the books and records of the corporation.



                                        1

<PAGE>





     (4) Dividends.

     (i) Each  holder of the  Series A  Preferred  Stock  shall be  entitled  to
dividends at the rate of 18% per year of the Stated Value of the holder's Series
A Preferred Stock from the date the Series A Preferred Stock is issued until the
Mandatory  Redemption Date  regardless of whether the corporation  exercises its
Optional Redemption Right. Such dividend shall be paid monthly commencing thirty
(30) days after  issuance of the Series A  Preferred  Stock and on the same date
each month thereafter (the "Dividend Payment Date").

     (ii) Each holder of the Series A Preferred  Stock shall also be entitled to
dividends at the rate of 9% per year of the Stated Value of the holder's  Series
A Preferred  Stock for a period of two (2) years after the Mandatory  Redemption
Date regardless of whether the corporation  redeems the Series A Preferred Stock
in  accordance  with the  mandatory  redemption  provisions  of Article  FOURTH,
Section (f)(3). Such dividend shall be paid monthly on the Dividend Payment Date
for said two (2) year period.

     (iii) If any  distributions  payable on any share of the Series A Preferred
Stock shall not be paid for any reason,  the right of the holders of such shares
of Series A Preferred  Stock to receive payment of such  distribution  shall not
lapse  or   terminate,   but  each  such  unpaid   distribution   (the   "Unpaid
Distribution")  shall  accumulate  and shall be paid  without  interest  to such
holders, when and as authorized by the Board of Directors of the corporation. No
distribution  shall be  declared  or paid or any  other  distribution  declared,
ordered or made upon the corporation's common stock, or upon any other series or
class of  preferred  stock nor shall any sums be set aside for or applied to the
purchase or redemption of any shares of the corporation's  common stock,  unless
and until all Unpaid  Distributions  payable on all shares of Series A Preferred
Stock shall have been fully paid or a distribution  shall have been declared and
a sum  sufficient  for  full  payment  of the  Unpaid  Distributions  set  apart
therefor.

     (5)      Liquidation Preference.

     (i) In the  event of any  liquidation,  dissolution  or  winding  up of the
corporation,  either voluntary or involuntary, the holders of Series A Preferred
Stock shall be entitled to receive,  prior and in preference to any distribution
of any of the assets or surplus funds of the  corporation  to the holders of the
corporation's  common stock by reason of their ownership thereof,  two (2) times
the Stated Value of their respective shares of Series A Preferred Stock plus all
unpaid  dividends to which their  respective  shares of Series A Preferred Stock
are entitled  before and after the  Mandatory  Redemption  Date and no more (the
"Series A Preferred Liquidation Preference").

                                        2

<PAGE>



If upon the  occurrence  of such  event,  the assets and funds thus  distributed
among the  holders of the Series A  Preferred  Stock  shall be  insufficient  to
permit the payment to such holders of the full aforesaid  preferential  amounts,
then the  entire  assets  and funds of the  corporation  legally  available  for
distribution  shall be  distributed  ratably  among the  holders of the Series A
Preferred Stock in proportion to the shares then held by them.

     (ii) A consolidation  or merger of the  corporation  with or into any other
corporation or corporations or a sale of all or substantially  all of the assets
of the  corporation  shall be deemed a  liquidation,  dissolution  or winding up
within the  meaning of this  Section  if more than  fifty  percent  (50%) of the
surviving  entity is not owned by persons  who were  holders of common  stock or
securities convertible into common stock of the corporation immediately prior to
such  merger,  consolidation  or sale.  In such  event,  the Series A  Preferred
Liquidation  Preference  may be  paid  in  cash  by any  entity  surviving  such
liquidation event.

     (6) No Voting  Rights.  The holder of each share of the Series A  Preferred
Stock shall not be entitled to vote for any matter brought before the holders of
the corporation's common stock.

     (7)  Denial of  Preemptive  Rights.  No  holder  of any  shares of Series A
Preferred Stock shall have any preemptive or  preferential  right to acquire any
shares or securities of the corporation,  including shares or securities held in
the treasury of the corporation.

     (8) Amendment.  The  designation,  rights,  limitations and preferences set
forth  herein may be amended by a vote of the  holders of the Series A Preferred
Stock  holding  certificates  representing  not  less  than  a  majority  of the
outstanding Series A Preferred Stock at a special meeting called for the purpose
of approving  such an amendment or by the  unanimous  consent of such holders in
writing.

     (9)  Notices.  Any  notice,  communication,   request,  reply,  or  advice,
hereinafter severally and collectively called "notice," provided or permitted to
be given under this Article 4 Section  (f),  made or accepted by either party to
the other must be in writing and may be given by personal delivery or U.S. mail,
or confirmed  telefax.  If given by mail, such notice must be sent by registered
or certified mail, postage prepaid, mailed to the party addressed as follows: if
to the corporation,  to the principal  office of the  corporation,  and, if to a
stockholder,  to the address of such  stockholder  as it appears in the books of
the  corporation,  and shall be effective only if and when received by the party
to be notified.






                                OTC AMERICA, INC.




                                        3

<PAGE>


                                               By: /S/ Randy L. Phillips
                                                   ----------------------------
                                                   Randy L. Phillips, President


                                        4

<PAGE>





<PAGE>


                                 PREFERRED STOCK
                               PURCHASE AGREEMENT

         This Preferred Stock Purchase  Agreement (this  "Agreement") is entered
into this 11th day of May 1999 between OTC America, Inc., a Colorado corporation
(the "Company"), and Dixon Family Charitable Remainder Trust (the "Purchaser").

                                    RECITALS

         WHEREAS,  the Company has authorized the sale and issuance of 2,500,000
shares of its Series A Preferred Stock (the "Shares") to the Purchaser;

         WHEREAS,  the Purchaser desires to purchase the Shares, and the Company
desires  to  issue  and sell the  Shares  to the  Purchaser,  on the  terms  and
conditions set forth herein; and

         WHEREAS,  the Company plans to use the proceeds it receives  under this
Agreement to acquire Retech  International,  Inc., a Colorado based company with
patented enzyme technology to create fish meal and other potential products.

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE 1
                         AGREEMENT TO SELL AND PURCHASE

         Subject  to  the  terms  and  conditions  hereof,  at the  Closing  (as
hereinafter  defined)  the  Company  hereby  agrees  to  issue  and  sell to the
Purchaser  2,500,000  shares  of the  Company's  Series A  Preferred  Stock at a
purchase price of $1.00 per share of Series A Preferred Stock.

                                    ARTICLE 2
                              CLOSING AND DELIVERY

Section 2.1 Closing. The closing under this Agreement (the "Closing") shall take
place at 10:00 a.m.  local time on the 11th day of May 1999,  at the  offices of
Ballard  Spahr  Andrews & Ingersoll,  LLP,  1225 17th Street,  Denver,  Colorado
80202,  or at such  other time or place as the  Company  and the  Purchaser  may
mutually agree (the "Closing Date").

Section  2.2  Delivery.  At the  Closing,  subject  to the terms and  conditions
hereof, the Company will deliver to the Purchaser a certificate representing the
number  of  Shares  to  be  purchased  at  the  Closing  by  the   Purchaser  in
consideration  of payment of the purchase price  therefor by certified  check or
wire  transfer  made payable to the order of OTC America,  Inc.  less any amount
required to be paid by Purchaser as an early  termination  penalty required as a
result of  engaging  in this  transaction  as of the  Closing  Date.  Such early
termination penalty shall not exceed $100,000.00.


                                        1

<PAGE>



                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

Section 3.1  Representations  and Warranties of the Company.  The Company hereby
represents and warrants to the Purchaser as of the Closing Date as follows:

                  (1) Organization and Standing of the Company. The Company is a
corporation  duly organized and validly  existing and in good standing under the
laws  of the  State  of  Colorado.  It has all  requisite  corporate  power  and
authority  to carry on its business as now being  conducted,  to enter into this
Agreement  and to  carry  out and  perform  the  terms  and  provisions  of this
Agreement.

                  (2) Authorized  Series A Preferred  Stock. The Company is duly
and lawfully  authorized by its Articles of Incorporation,  as amended, to issue
2,500,000  shares of Series A Preferred Stock, of which no shares are issued and
outstanding. All Shares to be issued pursuant to this Agreement to the Purchaser
shall be duly  authorized  by all  other  necessary  corporate  action,  validly
issued, fully paid,  nonassessable,  issued in compliance with state and federal
securities laws and upon compliance  with the exemptions  promulgated  under the
Securities Act of 1933, as amended (the  "Securities  Act"),  and will be issued
with a restrictive legend.

                  (3) The Company's  Authority.  The  execution,  delivery,  and
performance of this Agreement  shall have been duly  authorized by all requisite
corporate action.  This Agreement  constitutes a valid and binding obligation of
the  Company  enforceable  in  accordance  with its terms  (except as limited by
bankruptcy,  insolvency,  or other laws affecting the  enforcement of creditors'
rights).  The  execution,  delivery and  performance  of this Agreement will not
conflict with any provision of the Articles of Incorporation  and any amendments
thereto, Bylaws and any amendments thereto, minutes or share certificates of the
Company, or of any contract to which the Company is a party or otherwise bound.

                  (4)  Financial  Reports.  The  Company  has  furnished  to the
Purchaser  its Annual  Report for the year ended June 30, 1998 and its Quarterly
Reports  for the  quarters  ended  September  30,  1998 and  December  31,  1998
(collectively, the "Financial Reports"). All of Financial Reports present fairly
the  financial  position of the  Company as of the  respective  periods  therein
specified.

                  (5) Absence of Certain  Changes or Events.  Since December 31,
1998,  there has not been any material  adverse change in, or event or condition
materially  and adversely  affecting,  the condition  (financial or  otherwise),
properties,  assets,  liabilities  or,  to the  knowledge  of the  Company,  the
business or prospects of the Company.

                  (6) Brokers or Finders.  All  negotiations  on the part of the
Company relative to this Agreement and the transactions contemplated hereby have
been carried on by the Company without the  intervention of any person or as the
result  of any act of the  Company  in such  manner as to give rise to any valid
claim for a brokerage commission, finder's fee, or other like payment.



                                        2

<PAGE>



Section 3.2       Representations and Warranties by Purchaser.     The Purchaser
represents and warrants to the Company as of the Closing Date as follows:

                  (1) Investment Representations. Purchaser understands that the
Shares  have not been  registered  under  the  Securities  Act.  Purchaser  also
understands  that the  Shares  are being  sold  pursuant  to an  exemption  from
registration under Section 4(2) of the Securities Act. Purchaser  represents and
warrants that it is acquiring the Shares with investment intent and not with the
intent of further distribution. Purchaser further understands that the following
restrictive  legend  will be on the  certificates  for all Shares  received as a
result of this Agreement:

         The Shares  represented  by the  certificate  have not been  registered
         under  the  Securities  Act of 1933  ("the  Act")  and are  "restricted
         securities"  as that term is  defined  in Rule 144  under the Act.  The
         Shares  may not be  offered  for sale,  sold or  otherwise  transferred
         except pursuant to an effective registration statement under the Act or
         pursuant  to  an  exemption  from  registration   under  the  Act,  the
         availability  of which is to be established to the  satisfaction of the
         Company.

                  (2)  Purchaser   Bears   Economic   Risk.  The  Purchaser  has
substantial   experience  in  evaluating  and  investing  in  private  placement
transactions  of  securities  in companies  similar to the Company so that it is
capable of evaluating  the merits and risks of its investment in the Company and
has the  capacity  to protect its own  interests.  The  Purchaser  must bear the
economic risk of this investment.  Accordingly, the Shares represent an illiquid
investment.  Purchaser also understands that circumstances such as a lack of any
market for the Shares may be such that the Purchaser  cannot transfer all or any
portion  of the  Shares  in the  amounts  or at the times  the  Purchaser  might
propose.

                  (3)  Acquisition  for Own Account.  Purchaser is acquiring the
Shares for the Purchaser's own account.

                  (4) Purchaser Can Protect Its Interest.  Purchaser  represents
that by  reason of its  business  or  financial  experience,  Purchaser  has the
capacity  to protect  its own  interests  in  connection  with the  transactions
contemplated in this Agreement. Further, Purchaser is aware of no publication or
any  advertisement  in  connection  with the  transactions  contemplated  in the
Agreement.

                  (5) Company Information. Purchaser has received and had a full
opportunity to review the Company's Financial Reports and has had an opportunity
to discuss  the  Company's  business,  management  and  financial  affairs  with
directors, officers and management of the Company and has had the opportunity to
review the  Company's  operations  and  facilities.  Purchaser  has also had the
opportunity  to ask questions of and receive  answers from,  the Company and its
management  regarding the terms and conditions of this  investment and Purchaser
desires  no  additional  information  with  respect  to  the  Company  and  this
investment.

                  (6) State of  Organization.  Purchaser is a trust formed under
the laws of Colorado.

                                        3

<PAGE>



                  (7) Brokers or Finders.  All  negotiations  on the part of the
Purchaser  relative to this Agreement and the transactions  contemplated  hereby
have been carried on by the Purchaser  without the intervention of any person or
as the result of any act of the  Purchaser in such manner as to give rise to any
valid claim for a brokerage commission, finder's fee, or other like payment.

                                    ARTICLE 4WARRANTIES

         All statements of fact contained  herein,  any  certificate or schedule
delivered by or on behalf of the Company or the Purchaser  pursuant to the terms
hereof,  shall be deemed  representations and warranties made by the Company and
the  Purchaser,   respectively,   to  each  other  under  this  Agreement.   The
representations  and  warranties  of the parties shall survive the Closing for a
period of one year.

                                    ARTICLE 5
                                  MISCELLANEOUS

Section 5.1  Amendment.  This  Agreement  may be amended in any manner as may be
determined  in the  judgment  of the Board of  Directors  of the Company and the
Purchaser  to be  necessary,  desirable,  or  expedient  in order to clarify the
intention  of the  parties  hereto or to effect or  facilitate  the  purpose and
intent of this  Agreement,  subject to the  provision  herein that any amendment
shall be ineffective unless in writing and executed by the parties hereto.

Section 5.2  Counterparts and Facsimile  Signatures.  In order to facilitate the
execution  of  this  Agreement,  the  same  may be  executed  in any  number  of
counterparts and signature pages may be delivered by telefax.

Section 5.3 No Third Party  Beneficiary.  Nothing in this Agreement,  express or
implied,  is intended to confer upon any person,  other than the parties  hereby
and their respective successors, assigns, heirs, executors,  administrators,  or
personal  representatives,  any  rights or  remedies  under or by reason of this
Agreement.

Section 5.4 Entire Agreement.  This Agreement and the other documents  delivered
pursuant  hereby  constitute  the full and entire  understanding  and  agreement
between  the parties  with  regard to the  subject  hereof and no party shall be
liable or bound to any other in any manner by any  representations,  warranties,
covenants or  agreements  except as  specifically  set forth  herein.  All prior
agreements and understandings are superseded by this Agreement.

Section 5.5 Governing Law. This  Agreement  shall be governed by the laws of the
State of Colorado.

Section 5.6  Severability.  In case any  provision  of this  Agreement  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.



                                        4

<PAGE>



Section 5.7  Notices.  Any notice,  communication,  request,  reply,  or advice,
hereinafter  severally  and  collectively  called  "notice,"  in this  Agreement
provided or permitted to be given, made or accepted by either party to the other
must be in  writing  and may be given by  personal  delivery  or U.S.  mail,  or
confirmed  telefax.  If given by mail, such notice must be sent by registered or
certified mail,  postage prepaid,  mailed to the party at the respective address
set forth below,  and shall be effective  only if and when received by the party
to be notified.  For  purposes of notice,  the  addresses of the parties  shall,
until changed as hereinafter provided, be as follows:

         (1)      If to the Company:

                           OTC America, Inc.
                           Attention: Randy L. Phillips
                           600 Seventeenth St., Suite 950 South
                           Denver, Colorado 80202
                           Telefax: (303) 260-6486

                  with copies to:

                           Ballard Spahr Andrews & Ingersoll, LLP
                           Attention: Roger V. Davidson, Esq.
                           1225 17th Street, Suite 200
                           Denver, Colorado 80202
                           Telefax: (303) 296-3956

         (2)      If to the Purchaser:

                           Robert C. Dixon
                           Attention: _____________________
                           P.O. Box 100
                           Palmer Lake, CO 80133
                           Telefax: (719) 481-6708

or at such other  address or telefax  number as any party may have  advised  the
other in writing.

Section  5.8  Attorney  Fees.  If any action at law or in equity,  including  an
action for declaratory relief, is brought to enforce or interpret the provisions
of this Agreement,  the prevailing party shall be entitled to recover reasonable
attorney  fees from the other party or parties,  which fees shall be in addition
to any other relief which may be awarded.

Section 5.9 Indemnification by the Company.  The Company agrees to indemnify and
hold the  Purchaser  harmless  against  any loss,  liability,  damage or expense
(including  reasonable  attorney fees and costs) which the Purchaser may suffer,
sustain or become subject to as a result of or in connection  with the breach by
the  Company of any  representation,  warranty,  covenant or  agreements  of the
Company  contained in this Agreement.  Notwithstanding  the foregoing  Purchaser
shall not be entitled to make a claim against the Company,  or be indemnified by
the  Company,  with  respect to any  representation  or  warranty of the Company
contained  in this  Agreement  if  Purchaser  has been  advised in  writing,  or
otherwise  has  actual  knowledge  prior  to  the  Closing  of  the  inaccuracy,
non-performance,  non-fulfilment or breach which is the basis for such claim and
the  Purchaser  completes  the  transactions   contemplated  in  this  Agreement
notwithstanding such inaccuracies, non-performance, non-fulfilment or breach.


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<PAGE>



Section 5.10 Indemnification by the Purchaser. The Purchaser agrees to indemnify
and hold the Company  harmless  against any loss,  liability,  damage or expense
(including  reasonable  attorney  fees and costs)  which the Company may suffer,
sustain or become subject to as a result of or in connection  with the breach by
the Purchaser of any  representation,  warranty,  covenant or agreements of such
Purchaser  contained  in this  Agreement.  Notwithstanding  the  foregoing,  the
Company  shall not be entitled  to make a claim  against  the  Purchaser,  or be
indemnified by the Purchaser,  with respect to any representation or warranty of
the  Purchaser  contained  in this  Agreement if the Company has been advised in
writing,  or  otherwise  has  actual  knowledge  prior  to  the  Closing  of the
inaccuracy,  non-performance,  non-fulfilment  or breach  which is the basis for
such claim and the  Company  completes  the  transactions  contemplated  in this
Agreement notwithstanding such inaccuracies, non-performance,  non-fulfilment or
breach.

         IN WITNESS  WHEREOF,  this  Agreement  is hereby duly  executed by each
party hereto as of the date first written above.


COMPANY:

OTC AMERICA, INC.,
a Colorado corporation


By:/S/ Randy L. Phillips
   -------------------------------
       Randy L. Phillips, President

PURCHASER:

DIXON FAMILY CHARITABLE
REMAINDER TRUST

By:/S/ Robert C. Dixon
   ------------------------
     Robert Dixon, Trustee

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