<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES ACT OF 1934
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA n/a
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
30 Wertheim Court
Suite 24, 2nd Floor
Richmond Hill, Ontario
L4B 1B9 Canada
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(905) 763-3799
(ISSUER'S TELEPHONE NUMBER)
SECURITIES TO BE REGISTERED UNDER SECTION 12 (b) OF THE ACT:
NONE
SECURITIES TO BE REGISTERED UNDER SECTION 12 (g) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE
(TITLE OF CLASS)
This Registration Statement contains forward-looking statements which involve
risks and uncertainties. When used in this Registration Statement, the words
"believe", "anticipate", "expects" and similar expressions are intended to
identify such forward-looking statements. The Company's actual results may
differ significantly from the results discussed in the forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
<PAGE>
ITEM 1 - BUSINESS
THE COMPANY
GENERAL. Environmental Solutions Worldwide, Inc. was formed in 1987
under the name BBC Stock Market, Inc. as a development stage company for the
purpose of seeking to acquire viable businesses. In February 1999, the Company
acquired all the issued and outstanding shares of BBL Technologies Inc., a
private company incorporated in Ontario, Canada ("BBL"), and changed its name to
Environmental Solutions Worldwide, Inc. BBL is the owner of a Canadian patent
covering catalytic converter technology for automotive and non-automotive uses.
BBL also has patents pending on spark plug/fuel injector technology for
automotive use. For purposes hereof, references to the "Company" shall be deemed
to be references to Environmental Solutions Worldwide, Inc., and BBL, its
wholly-owned subsidiary.
THE ANTICIPATED BUSINESS OF THE COMPANY. Although the technology
underlying catalytic converters has improved significantly since its inception
in the 1950's, their effectiveness in reducing toxic emissions from internal
combustion engines remains limited. There are many variables that negatively
affect performance of a catalytic converter including temperature, various
chemical compounds in the fuel, and the age of the converter. Existing
converters also contain expensive "rare earth" metals such as platinum,
palladium and rhodium, making it expensive to manufacture and prone to price
volatility.
The Company believes that it possesses technology under a Canadian
patent that will permit the manufacture of catalytic converters less expensively
than current technologies, since it requires no precious metals in the
manufacturing process. In addition, the Company believes that catalytic
converters produced with its technology will (i) operate with fuels in addition
to those with which current catalytic converters operate; and (ii) have a longer
life than existing catalytic converters.
THE EXISTING TECHNOLOGY. The catalytic converter was originally
developed in the late 1950's and over time, the catalytic converter has become
standard equipment on vehicles sold in the North American marketplace. The
introduction of catalytic converters in Europe began in 1993. There has been
substantial resistance in the used car and retrofit markets, based upon price.
To date, catalytic converters have generally used base metals and noble
metals supported on pellets or monoliths of ceramic, usually known as "cakes" or
"honeycombs". The honeycomb effect provides a larger surface area for contact
with the various molecules of the engine exhaust gases. The most significant
toxic emissions from a combustion engine are hydrocarbons (HC), carbon monoxide
(CO) and oxides of nitrogen (NOx).
There are two types of converters presently used in automotive
application; namely, "Oxidation" and "Three Way". Oxidation converters remove CO
and HC, leaving NOx unchanged. For Oxidation converters, air is pumped into the
engine exhaust upstream of the catalyst to ensure the presence of O2. Platinum
and palladium are primarily used as reactants. Three Way converters remove all
three components simultaneously. A "chemically correct" environment is required,
where the engine is operated very close to exact stoichiometric fuel-air ratio
at all times. Feedback controls must be in place to ensure that oxidizing or
reducing atmospheres do not form in the exhaust. Platinum, palladium and rhodium
combined with base metals are used. No sulfur, lead or ammonia may be present in
the fuel, since lead and sulfur poison the converter. High temperature is also a
detriment that can be caused by engine misfiring. The present converters are
generally ineffective at cold start-up temperature (most pollutants are
discharged while the engine is warming up during the first 5-10 minutes of
vehicle operation) and are limited in their useful life span. Current catalytic
converters operate only on unleaded fuels, not diesel or leaded fuels.
THE COMPANY'S TECHNOLOGY. The Company's technology uses raw materials
that are a combination of metals and non-metallic compounds, without precious
metals. The Company believes that this technology will permit the manufacture of
catalytic converters which (i) cost significantly less to produce, (ii) work on
leaded, unleaded and diesel fuels, rather than only unleaded fuel, and (iii)
will not be readily contaminated, and will therefore maintain their efficiency
in extended vehicle operation.
1
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The Company recently conducted testing of its prototype and a new
conventional catalytic converter (an "OEM Converter") in an independent emission
testing lab based in Chicago, Illinois recognized by the EPA. The results for
the tests are shown below.
<TABLE>
<CAPTION>
Without Using the Using
Converter Company's OEM
(BASELINE)(1) CONVERTER(1) CONVERTER
----------- ---------- ---------
<S> <C> <C> <C>
NOx 3.62 0.14 0.14
CO 23.79 5.84 5.46
HC 2.27 1.12 0.43
MPG 19.35 20.47 20.36
</TABLE>
(1)FTP weighted grams per mile
NOx = Nitrogen Oxides
CO = Carbon Monoxide
HC = Hydrocarbons MPG = Miles per Gallon
THE MARKET. The manufacture of "honeycombs" or "cakes," which act as
the filter of pollution in the catalytic converter, is dominated by two
companies: (i) Corning Glass ("Corning"), which currently holds 70% of the world
market, and NGK of Japan ("NGK") with the remaining 30% of the market. Corning
has licensed NGK to produce the "cakes", using the same equipment and technology
as Corning. The Company expects to manufacture its cakes utilizing the same
extrusion technology currently utilized by Corning and NGK, but extruding its
own proprietary formulas. The Company is presently in contract negotiations with
a manufacturer of catalytic converter cakes.
The automotive/combustion engine marketplace itself is vast,
including automobiles, trucks, outboard marine vehicles, specialty vehicles
and equipment. There are currently 700 million automobiles and 250 million
trucks on the road worldwide. Currently there are 40 million new vehicles and
10 million new trucks being produced each year. The Company intends to focus
its efforts specifically on the North American market in the first three
years of operation. The North American market represents 30% of the world
market (200 million vehicles on the road) with an additional 12 million new
vehicles produced each year.
COMPETITION. Direct competition for the Company are other companies
involved in the manufacturing process of the existing catalytic converter,
including Corning and NGK of Japan. Corning and NGK are the presently the only
two manufacturers of "cakes" for the catalytic converter.
The Company will also face indirect competition in the form of
alternative fuel consumption vehicles, such as those using methanol, hydrogen,
ethanol and electricity. Currently, those technologies have shortcomings in
range of operation, reliability, and availability of the technology and fuels at
reasonable price points. The Company believes that alternative power will not
rival the internal combustion engine in the near to medium-term future. In
addition, the Company believes that it will face resistance in customer
acceptance of the shift away from the use of rare earth metals (palladium,
platinum and rhodium), particularly since they have been the norm in the
industry for the last 30 years. The Company will be required to overcome
long-standing contractual and other obligations and relationships between
catalytic converter suppliers and the large automotive manufacturers.
PRICING. Catalytic converters currently available on the market are
relatively expensive, due to the usage of rare earth metals such as rhodium,
palladium and platinum, which are used to coat the "cake" or ceramic block. The
largest manufacturer of catalytic converter "cakes" in the world is Corning. The
finished catalytic converter sells to U.S. automakers for approximately $250
U.S. In Europe the same product sells to the automakers for $500 to $700 U.S. On
an after-market basis a catalytic converter can be priced as high as $2,000
based on make and model year of the vehicle. Catalytic converters for diesel
applications, although not meeting EPA requirements, sell for between $500 and
$5000 US.
PLAN OF OPERATION. The Company has not yet developed a formal plan
of operations. That plan will depend, in large part, upon the success of the
Company's financing efforts and contract negotiations.
ITEM 2 - FINANCIAL INFORMATION
2
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SELECTED FINANCIAL DATA
The following table sets forth certain financial data for, and as of
the end of, the year ended December 31, 1998, and for the period October 15,
1987 (inception) through December 31, 1998, and for the six month period ending
June 30, 1999:
<TABLE>
<CAPTION>
Six Month Period From Period From October 15, 1987
Period Ended August 4, 1998 to January 1, 1998 to (inception) to
June 30, 1999 December 31, 1998 August 3, 1998 December 31, 1998
------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Expenses $ 451,216 $ 150,000 1,939 $ 152,939
Net Loss (451,216) (150,000) (1,939) (152,939)
Basic Loss per
common share (0.02) (0.15) 0.00 0.0
Weighted average number
of common shares
outstanding 23,890,728 1,000,000 1,000,000 1,000,000
<CAPTION>
As At As At
June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Current Assets $ 379,901 $ -
Patented Technology 11,391,420 -
Current Liabilities 179,797 151,939
Shareholder's Equity
(Deficit) 11,591,515 (151,939)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS
GENERAL
The Company is a development stage company. Prior to January 1999, the Company
had no material operations, and there are no accordingly no meaningful
comparisons with operating results from prior periods.
LIQUIDITY AND CAPITAL RESOURCES
SIX MONTHS ENDED JUNE 30, 1999
3
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During the six month period ended June 30, 1999, the Company's cash and cash
equivalents increased by $379,901, comprised of an increase of $653,250 from the
issuance of common shares and an increase in loans payable of $18,567, offset by
cash utilized in operating activities of $291,916.
PROSPECTIVE INFORMATION
The Company believes that its current cash resources will be sufficient to
fund its operations only through the end of third fiscal quarter of 1999, and
will be insufficient to fully develop its technology and sustain the Company
until its operating cash flow is positive. Accordingly, the Company believes
that it is likely that it will seek additional external financing, which may
include the issuance of additional equity or debt securities.
YEAR 2000
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer program that
is not year 2000 compliant and has date sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000.
The computer hardware and software being utilized by the Company is largely
"off-the-shelf" technology, of a word processing, data base or scientific
research nature. The Company believes that all such hardware and software is
year 2000 compliant, but has not undertaken a full assessment of the Year 2000
preparedness of its internal systems or its suppliers. The Company believes that
a year 2000 related failure in its systems or the systems of its suppliers and
vendors will, at worst, result in delays, and that any such systems or vendors
can be replaced in the open market if necessary.
ITEM 3 - DESCRIPTION OF PROPERTY
The Company does not presently lease or own any real property. Office services
are provided for the Company by its officers without charge.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 30, 1999, the ownership of the
Company's Common Stock by (i) each director of the Company, (ii) all executive
officers and directors of the Company as a group, and (iii) all persons known by
the Company to own more than 5% of the Company's Common Stock.
BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
Number of
Name and Address (1) Common Shares % (2)
- -------------------- ------------- --
<S> <C> <C>
Bengt George Odner (3) 650,000 *
Jervaulx Hall
Jervaulx, North Yorkshire
United Kingdom HG4 4PH
Adam Michael Oliver - -
Dr. Bruno Liber 5,000,000 17.9%
#804-165 LaRose Avenue
Etoicoke, Ontario
Canada
Teodosio V. Pangia (4) 3,170,975 11.3%
All Directors and Officers
as a group (2 persons) 650,000 *
</TABLE>
*Less than 5% of the outstanding shares of Common Stock.
4
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(1) All addresses are c/o the Company, at 30 Wertheim Court, Suite 24, 2nd
Floor, Richmond Hill, Ontario, Canada unless otherwise noted.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities & Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to options or
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of June 30, 1999, are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated in the footnotes to this table and pursuant to applicable community
property laws, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned.
(3) The shares listed as beneficially owned by Mr. Odner include 400,000 shares
held by Crystal Fund Ltd., a Bermuda mutual fund, of which Mr. Odner is a
director.
(4) The shares beneficially owned by Mr. Pangia are held of record by Tyler
Dylan Corp., an Ontario corporation in which Mr. Pangia is the sole stockholder.
ITEM 5 - DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS; OFFICERS AND SIGNIFICANT STOCKHOLDERS
Bengt George Odner is the Chief Executive Officer of the Company. He was
appointed Chief Executive Officer by the Company's sole director in August,
1999. Mr. Odner is a director of Crystal Fund Ltd., a Bermuda mutual fund, and a
director of Crystal Fund Managers, Ltd. Mr. Odner was previously the Chairman of
Altus Nord AB, a wholly-owned subsidiary of Credit Lyonais Bank Paris. As of
August 30, 1999, Mr. Odner was 46 years old.
Adam Michael Oliver is President and the sole director of the Company. Mr.
Oliver was elected director by the written consent of the majority shareholder
of the Company in October, 1998. Mr. Oliver is a Barrister and Soliciter with
the firm of White, Coach, Kapusts & Oliver, a law firm specializing in real
estate, corporate, commercial and estate law. Mr. Oliver is also the sole
director and President of BBL, the Company's wholly-owned subsidiary. As of
August 30, 1999, Mr. Oliver was 45 years old.
Dr. Bruno Benjamin Liber has been the technical director for the Company since
January, 1999. He is the inventor of the catalytic converter technology that
forms the basis for the Company's anticipated business. He was previously a
technical director for Next Catalytic Converter Corporation, and an
independent inventor. As of August 30, 1999, Mr. Liber was 77 years old.
Mr. Teodosio V. Pangia is the principal of TVP Consulting Services, which has
provided consulting services to the Company since November, 1997. Previously,
Mr. Pangia was director and Chief Executive Officer of Ecology Pure Air
International, a Canadian company engaged in the business of developing an
automobile fuel catalyst. In 1997, a petition in bankruptcy was brought
against Mr. Pangia in the Ontario Court of Justice. That petition, and a
related order, were dismissed. As of August 30, 1999, Mr. Pangia was 40 years
old.
ITEM 6 - COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Mr. Oliver, the President sole executive officer of the Company, received a
total of $4,100 in compensation for his services to the Company during the
six months ended June 30, 1999.
5
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
There were no grants of options or other rights to acquire stock to employees of
the Company in the past fiscal year.
EMPLOYMENT AGREEMENTS
The Company does not presently have formal employment agreements with any
employees or officers.
COMPENSATION OF DIRECTORS
The Company does not presently compensate its sole director for his attendance
at meetings of the Board of Directors.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AGREEMENTS WITH AFFILIATED PARTIES
In June, 1999, the Company paid consulting fees of approximately $64,000 to
TVP Consulting Services, a company in which Teodosio Pangia, a beneficial
owner of approximately 11.3% of the Company's sotck, is the principal.
ITEM 8 - LEGAL PROCEEDINGS
None
ITEM 9 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS' COMMON EQUITY AND
RELATED MATTERS
The Company's Common Stock was been quoted on the Over-the-Counter
Bulletin Board ("OTCBB") through January, 1999 under the symbol "BBSM", and
since January, 1999 has been quoted under the symbol "ESWW."
In January, 1999, the National Association of Securities Dealers, Inc.
("NASD") amended NASD Rule 6530 and 6540 to limit quotations on the OTCBB to the
securities of issuers that report their current financial information to the
Securities and Exchange Commission, or to banking or insurance regulators. The
Company is required to become compliant with such amended rules no later than
September 2, 1999 (after taking into effect the benefit of a thirty-day grace
period pursuant to the NASD Rule 6530 and 6540 amendments). If the Company does
not become so compliant by such date, trading of the Common Stock of the Company
will be limited to the so-called "pink sheets," and it may be more difficult to
dispose of or to obtain accurate price quotations on the Common Stock. In
August, 1999, the Company's symbol was changed to "ESWEE" as a result of the
Company's failure to become compliant with the amendments to NASD Rule 6530 and
6540 by that date.
The following table sets forth the high and low sales prices for the
Common Stock for the quarters indicated.
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1999
-------------- -------------
<S> <C> <C>
High 3.875 3.125
Low 0.984 0.625
</TABLE>
At June 30, 1999, there were approximately 50 holders of record of the Common
Stock.
6
<PAGE>
SHARES ELIGIBLE FOR SALE
Sales in the market of substantial amounts of currently outstanding Common Stock
could have an adverse effect on the price of the Common Stock. As of August 30,
1999 16,154,542 shares of Common Stock are freely trading shares, with the
remainder of 11,847,996 shares of Common Stock currently subject to restrictions
as to their resale.
DIVIDENDS
The Company anticipates that for the foreseeable future, earnings will be
retained for the development of its business. Accordingly, the Company does not
anticipate paying dividends on the Common Stock in the foreseeable future. The
payment of future dividends will be at the sole discretion of the Company's
Board of Directors and will depend upon, among other things, future earnings,
capital requirements, the general financial condition of the Company and general
business conditions.
ITEM 10 - RECENT SALES OF UNREGISTERED SECURITIES
In January, 1999, the Company issued 15,000,000 shares of Common Stock
in settlement of indebtedness of $150,000. The shares were issued in reliance on
Rule 504 of the Securities Act of 1933, which provides an exemption from
registration under the Securities Act for certain limited offering and sales of
securities.
In January 1999, the Company issued 11,048,000 shares in connection
with the acquisition of the stock of BBL.
In April, 1999, the Company issued 954,538 shares of Common Stock for
gross proceeds of $790,000 in cash. The shares were sold in reliance on Rule 504
of the Securities Act of 1933, which provides an exemption from registration
under the Securities Act for certain limited offering and sales of securities.
ITEM 11 - DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company has authorized for issuance 50,000,000 shares of common stock, par
value $0.001 per share. Each holder of Common Stock is entitled to one vote for
each share held of record on all matters submitted to a vote of the
stockholders. The quorum for any meeting of shareholders is the presence, in
person or by proxy, of the holders of at least one-third of the outstanding
shares. In all matters other than the election of directors, when a quorum is
present at any stockholders' meeting, the affirmative vote of 50.01% of the
outstanding shares is required to approve any action of shareholders. Directors
are elected by a plurality of the votes of the shares present in person or
represented by proxy at a stockholders' meeting. The Board of Directors of the
Company currently consists of one member, and the By-Laws of the Company provide
that the Board shall consist of no fewer than one but no more than seven
members. The holders of Common Stock are not entitled to cumulative voting
rights with respect to the election of directors, and, as a consequence,
minority stockholders will not be able to elect directors on the basis of their
votes alone. Holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor.
In the event of a liquidation, dissolution or winding up of the Company, holders
of the Common Stock would be entitled to share ratably in all assets remaining
after payment of liabilities and the satisfaction of any liquidation preference
of any then outstanding series of preferred stock. Holders of Common Stock have
no preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are fully paid and
nonassessable.
As of August 30, 1999, there were 28,002,538 shares of Common Stock outstanding
held of record by approximately 50 stockholders. The Company has granted an
option to purchase 90,000 shares of Common Stock at a price of $2.00 per share,
expiring December 31, 2000, and an option to purchase 15,000 shares at $2.00 per
share, expiring June 21, 2000, to two public relations firms. There are warrants
outstanding to purchase 122,500 shares of Common Stock at prices from $2.50 to
$3.00 per share, which expire five years from the date of issue.
7
<PAGE>
TRANSFER AGENT
The Transfer Agent and Registrar for the Company's Common Stock is Interwest
Transfer Co., Inc.
ITEM 12 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with the Florida Corporation Act (the "Act"), the Company's
Articles of Incorporation (the "Articles") contain provisions which state that,
to the fullest extent permitted by law, no director or officer shall be
personally liable to the Company or its shareholders for damages for breach of
any duty owned to the Corporation or its shareholders. The Company also has the
power, by a by-law provision or a resolution of its stockholders or directors,
to indemnify the officers and directors against any contingency or peril as may
be determined to be in the Company's best interests and in connection therewith
to secure policies of insurance.
ITEM 13 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to Item 13 is contained in the Company's financial
statements and is set forth herein beginning on page F-1.
ITEM 14 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL MATTERS
There have been no disagreements with the Company's independent
accountants on accounting and financial matters within the three year period
ended December 31, 1998, or in any period subsequent to that date.
ITEM 15 - FINANCIAL STATEMENTS AND EXHIBITS
a. Each of the following items are contained in the Company's financial
statements and are set forth herein beginning on page F-1.
(i) Auditor's Report of Daren, Martenfeld, Carr, Testa and Company LLP,
Chartered Accountants
(ii) Balance Sheet as of December 31, 1998 and August 3, 1998
(iii) Statement of Operations for the period from August 4, 1998 to December 31,
1998, and for the period from January 1, 1998 to August 3, 1998, and for the
period October 15, 1987 (inception) to December 31, 1998
(iv) Statement of Changes in Shareholders' Deficiency from inception through
December 31, 1998
(v) Statement of Cash Flows for the period from August 4, 1998 to December 31,
1998, and for the period from January 1, 1998 to August 3, 1998, and for the
period October 15, 1987 (inception) to December 31, 1998
(vi) Notes to Financial Statements
(vii) Consolidated Balance Sheet as at June 30, 1999 and December 31, 1998
(unaudited)
(viii) Consolidated Statement of Operations for the six month period ended June
30, 1999, and for the period from August 4, 1998 to December 31, 1998, and for
the period from October 15, 1987 (inception) to June 30, 1999 (unaudited)
(ix) Consolidated Statement of Changes in Shareholders' Deficiency from
inception through June 30, 1999 (unaudited)
8
<PAGE>
(x) Consolidated Statement of Cash Flows for the six month period ended June 30,
1999, and for the period from August 4, 1998 to December 31, 1998, and for the
period from October 15, 1987 (inception) to June 30, 1999 (unaudited)
(xi) Notes to Financial Statements
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
b. Exhibits
3.1 Articles of Incorporation of the Company, as amended
3.2 By-laws of the Company
4.1 Warrant Certificate
10.1 Agreement dated January 29, 1999 by and between the shareholders of BBL
Technologies Inc.. and the Company
10.2 Consulting Agreement dated March 31, 1999 by and between May Davis Group
and the Company
10.3 Commission Agreement dated March 31, 1999 by and between May Davis Group
and the Company
10.4 Option Agreement dated June 21, 1999, between David Coates o/a Fifth
Business and the Company
10.5 Option Agreement dated June 21, 1999, between Zoya Financial Corp. and the
Company
10.6 Canadian Patent 2010754*
21.1 List of Subsidiaries
* Certain portions of this exhibit have been omitted based upon a request for
confidential treatment. The non-public information has been filed with the
Commission.
9
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August , 1999
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
By:
-------------------------------
Adam Michael Oliver
President
10
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
(U.S. DOLLARS)
FINANCIAL STATEMENTS
AS AT DECEMBER 31, 1998
F-1
<PAGE>
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
CHARTERED ACCOUNTANTS
20 Eglinton Avenue West Telephone: 416-480-0160
Suite 2100 Facsimile: 416-480-2646
Toronto, Ontario
M4R 1K8
AUDITORS' REPORT
To the Shareholders' and Board of Directors of
BBC Stock Market, Inc.
(A Development Stage Company)
We have audited the balance sheet of BBC Stock Market, Inc. (a development stage
company) as at December 31, 1998 and the statement of operations, cash flows and
changes in shareholders' deficiency for the period from August 4, 1998 to
December 31, 1998. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of BBC Stock
Market, Inc. (a development stage company) from inception (October 15, 1987) to
August 3, 1998 were audited by another auditor whose report which expressed a
going concern as described below issued an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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. In our opinion,
these financial statements present fairly, in all material respects, the
financial position of BBC Stock Market, Inc. (a development stage company) as at
December 31, 1998 and the results of its operations, cash flows and changes in
shareholders' deficiency for the period August 4, 1998 to December 31, 1998 in
accordance with generally accepted accounting principles in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has suffered recurring losses from operations
and has no established source of revenue, which raise substantial doubts about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 4. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP (Signed)
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
Toronto, Ontario August 16, 1999 A Member Firm of 1.
Midsnell International
F-2
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31, August 3,
1998 1998
<S> <C> <C>
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 151,939 $ 1,939
- --------------------------------------------------------------------------------
SHAREHOLDERS' DEFICIENCY
Common shares, $.001 par value,
50,000,000 shares authorized, 1,000,000
shares issued and outstanding 1,000 1,000
(Deficit) accumulated during development stage (152,939) (2,939)
- --------------------------------------------------------------------------------
(151,939) (1,939)
- --------------------------------------------------------------------------------
$ -- $ --
- --------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
Approved by Michael Oliver (Signed) Director
--------------------------------------------
F-3
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Period From Period From October 15, 1987
August 4, 1998 to January 1, 1998 to (Inception) to
December 31, August 3, December 31,
1998 1998 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional fees $ 150,000 $ -- $ 150,000
Operating expenses -- 1,939 2,939
- ---------------------------------------------------------------------------------------
Net loss $ (150,000) $ (1,939) $ (152,939)
- ---------------------------------------------------------------------------------------
Per share information:
Basic loss per common
shares $ (0.15) $ -- $ (0.15)
- ---------------------------------------------------------------------------------------
Weighted average shares
outstanding 1,000,000 1,000,000 1,000,000
- ---------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIENCY
(U.S. DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEFICIT
ADDITIONAL ACCUMULATED
COMMON SHARE PAID-IN DURING
ACTIVITY SHARES AMOUNT CAPITAL DEVELOPMENT STAGE TOTAL
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares issued at inception for
services 1,000,000 $ 1,000 -- $ -- $ 1,000
Net loss for the period ended
December 31, 1987 -- -- -- (1,000)
Net loss for the period ended
August 3, 1998 -- -- -- (1,939) (1,939)
- -------------------------------------------------------------------------------------------------------------
Balance, December 31, 1987
to August 3, 1998 1,000,000 1,000 -- (2,939) (1,939)
Net loss for the period ended
December 31, 1998 -- -- -- (150,000) (150,000)
- -------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 1,000,000 $ 1,000 $-- $(152,939) $(151,939)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM OCTOBER 15, 1987
AUGUST 4, 1998 TO JANUARY 1, 1998 TO (INCEPTION) TO
DECEMBER 31, AUGUST 3, DECEMBER 31,
1998 1998 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss $(150,000) $ (1,939) $(152,939)
Adjustment to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Common stock issued for services -- -- 1,000
Changes in assets and
liabilities
Increase in accounts payable and accrued
liabilities 150,000 1,939 151,939
- -------------------------------------------------------------------------------------------------
Net cash from operating activities -- -- --
Cash flows from investing activities -- -- --
Cash flows from financing activities -- -- --
- -------------------------------------------------------------------------------------------------
Increase (decrease) in cash -- -- --
Cash and cash equivalents at
beginning of period -- -- --
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-6
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(U.S. DOLLARS)
1. ORGANIZATION
The Company was incorporated on October 15, 1987, in the State of Florida.
The Company is in the development stage and its intent is to locate
suitable business ventures to acquire. The Company has had no significant
business activity to date and has chosen December 31 st as a fiscal year
end.
2. SIGNIFICANT ACCOUNTING POLICIES
Estimates
The preparation of the Company's financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from these estimates.
Fair Value of Financial Instruments
The Company's short-term financial instruments consists of accounts
payable. The carrying amounts of the Company's financial instruments
approximates fair value because of their short-term maturities. The
Company does not hold or issue financial instruments for trading purposes
nor does it hold or issue interest rate or leveraged derivative financial
instruments.
3. SHAREHOLDERS' EQUITY
On July 22, 1998, the Company's Board of Directors approved an amendment
to the Company's Articles of Incorporation whereby the authorized capital
was increased to 50,000,000 of $.001 par value common stock. Additionally,
a forward stock split of 10,000 shares to 1 share was approved. All share
and per share data included in these financial statements has been
restated to reflect the effect of the stock split.
At inception, the Company issued 1,000,000 shares of common stock to an
officer for services provided in connection with the organization of the
Company. The value of the services had been charged to operations for the
period ended December 31, 1987.
4. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a "going
concern" basis which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business.
The Company has no established source of revenue and has incurred
operating losses since its inception aggregating $152,939 and has negative
working capital at December 31, 1998 of $151,939. There can be no
assurance that profitable operations will be attained or that management
will be successful in raising additional equity capital for the Company.
Management plans to seek an operating company as a merger partner for the
Company which would provide a base of operations and additional capital.
F-7
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(U.S. DOLLARS)
5. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Office
services are provided without charge by an officer. The cost of such
services are immaterial to the financial statements and, accordingly, have
not been reflected therein. The officers and directors of the Company are
involved in other business activities and may, in future, become involved
in other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict of interest in
carrying out their specific duties with respect to the Company. The
Company has not established a policy for the resolution of such potential
conflicts.
6. INCOME TAXES
At December 31, 1998, the Company has net loss carry forwards for income
tax purposes of approximately $153,000 which expires in various years to
2012.
7. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems, which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure, which could affect an
entity's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 Issue affecting the
company, including those related to the efforts of customers, suppliers,
or other third parties, will be fully resolved.
8. SUBEQUENT EVENTS
i. On January 21, 1999 the Company satisfied $150,000 of the accounts
payable and accrued liabilities by the issuance of 15,000,000 common
shares.
ii. On January 29, 1999, the Company acquired 100% of the common shares
of BBL Technologies Inc., an Ontario, Canada Corporation. BBL
Technologies Inc. ("BBL") holds the Canadian patent to a catalytic
converter/muffler technology. The Company acquired BBL in order to
develop the technology into a commercial product.
The Company owns all of the common shares, the only shares with
voting and participating rights of BBL. The original holder of the
patented technology Next Catalytic Converter Corporation ("NCCC"),
an Ontario, Canada corporation which transferred the technology to
BBL on December 14, 1998 in return for 700,000 special shares with a
fixed value of $453,900 which are non-voting, non-participating and
are only retractable by BBL.
F-8
<PAGE>
BBC STOCK MARKET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(U.S. DOLLARS)
8. SUBEQUENT EVENTS (Cont'd.)
The acquisition has been accounted for by using the purchase method of
accounting. Net assets acquired are summarized as follows:
<TABLE>
<S> <C> <C>
Patented technology $ 11,391,420
Special shares (453,900)
------------
$ 10,937,520
------------
------------
</TABLE>
iii The Company changed its name to Environmental Solutions
Worldwide, Inc. on February 19, 1999.
iv. On April 5, 1999 the Company issued 435,000 common shares for
net proceeds of $653,250.
F-9
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
AS AT JUNE 30, 1999
F-10
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
June 30, December 31,
1999 1998
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash $ 379,901 $ --
- -----------------------------------------------------------------------------------
Patented Technology 11,391,420 --
- -----------------------------------------------------------------------------------
$ 11,771,321 $ --
- -----------------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable $ 161,230 $ 151,939
Loan payable, shareholder, non-interest
bearing and due on demand 18,567 --
- -----------------------------------------------------------------------------------
179,797 151,939
- -----------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Special shares, no par value, unlimited shares
authorized, 700,000 shares issued and outstanding 453,900 --
Common shares, $.001 par value,
50,000,000 shares authorized, 27,483,000
shares issued and outstanding 50,000 1,000
Additional paid-in capital 11,691,770
(Deficit) accumulated during development stage (604,155) (152,939)
- -----------------------------------------------------------------------------------
11,591,515 (151,939)
- -----------------------------------------------------------------------------------
$ 11,771,321 $ --
- -----------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-11
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Six Month Period from
Period August 4, 1998 October 15, 1987
Ended to (Inception) to
June 30, December 31, June 30,
1999 1998 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
EXPENSES
Development costs $ 373,110 $ -- $ 373,110
Professional fees 62,371 150,000 212,371
Office and general 11,635 -- 14,574
Director fees 4,100 -- 4,100
- -----------------------------------------------------------------------------------
Net loss $ (451,216) $ (150,000) $ (604,155)
- -----------------------------------------------------------------------------------
Loss per share information:
Basic $ (0.02) $ (0.15) $ (0.025)
- -----------------------------------------------------------------------------------
Weighted average shares
outstanding 23,890,728 1,000,000 23,890,728
- -----------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-12
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIENCY
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Deficit
Additional Accumulated
Common Special Share Paid-In During Develop-
ACTIVITY Shares Shares Amount Capital ment Stage Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued at inception for
services 1,000,000 $ -- $ 1,000 $ -- $ -- $ 1,000
Net loss for the period ended
December 31, 1987 -- -- -- -- (1,000) (1,000)
Net loss for the period ended
August 3, 1998 -- -- -- -- (1,939) (1,939)
Net loss for the period ended
December 31, 1998 -- -- -- -- (150,000) (150,000)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1987
to December 31, 1998 1,000,000 -- 1,000 -- (152,939) (151,939)
Net loss for the period ended
June 30, 1999 -- -- -- -- (451,216) (451,216)
Special shares -- 453,900 -- -- -- 453,900
Shares issued in settlement of
debt 15,000,000 -- 49,000 101,000 -- 150,000
Shares issued for cash, net
of issuance costs of $136,750 435,000 -- -- 653,250 -- 653,250
Shares issued on acquisition
of BBL Technologies, Inc. 11,048,000 -- -- 10,937,520 -- 10,937,520
- --------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1999 27,483,000 $ 453,900 $ 50,000 $ 11,691,770 $ (604,155) $ 11,591,515
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-13
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1999
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Six Month Period from
Period August 4, 1998 October 15, 1987
Ended to (Inception) to
June 30, December 31, June 30,
1999 1998 1999
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss $(451,216) $(150,000) $(604,155)
Adjustment to reconcile net
loss to net cash provided by
(used in) operating activities:
Common shares issued of
settlement of debt 150,000 -- 150,000
Changes in assets and liabilities
Increase in accounts payable 9,300 (150,000) 161,239
- --------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities (291,916) -- (291,916)
Cash flows from financing activities:
Issue of common shares, net of
Issuance costs 653,250 -- 653,250
Increase in loan payable 18,567 -- 18,567
- --------------------------------------------------------------------------------------
Increase in cash 379,901 -- 379,901
Cash and cash equivalents at
beginning of period -- -- --
- --------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period $ 379,901 $ -- $ 379,901
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-14
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
1. BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY
Environmental Solutions Worldwide, Inc. ("the Company") is considered to
be in the development stage, and the accompanying financial statements,
represent those of a development stage enterprise. The successful
completion of the company's business plan and, ultimately, the attainment
of profitable operations is dependent upon future events, including
obtaining adequate financing to fulfil its business plan.
2. BUSINESS
The Company was incorporated on October 15, 1987 in the state of Florida
and was inactive until January 29, 1999 when it acquired 100% of the
issued and outstanding common shares of BBL Technologies Inc. ("BBL"), a
private Ontario, Canada corporation. BBL, a wholly owned subsidiary of the
Company holds the Canadian patent to a catalytic converter/muffler
technology. As the technology is in its development phase, the Company is
still considered to be a development stage company.
3. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. All significant intercompany transactions
are eliminated.
ESTIMATES
The preparation of the Company's financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from these estimates. Estimates that are particularly susceptible to
change in the near term include the evaluation of the recoverability of
the patented technology.
FINANCIAL INSTRUMENTS
The Company's short-term financial instruments consists of accounts
payable. The carrying amounts of the Company's financial instruments
approximates fair value because of their short-term maturities. The
Company does not hold or issue financial instruments for trading purposes
nor does it hold or issue interest rate or leveraged derivative financial
instruments.
NET LOSS PER SHARE
The basic loss per share is computed by dividing the net loss for the
period by the weighted average number of common shares outstanding for the
period. When present, common stock equivalents are excluded from the
computation if their effect would be antidilutive. Shares issued at
inception are considered to be outstanding for the entire period
presented.
F-15
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
3. SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
CASH AND CASH EQUIVALENTS
Cash and cash equivalent consist of cash and other highly liquid debt
instruments with an original maturity of less than three months.
PATENTED TECHNOLOGY
The patented technology is carried at cost less amounts amortized.
Amortization will be provided once the product has begun its test
marketing phase and will be based on an estimate of the time required for
the Company to cover its initial investment.
On an ongoing basis, management reviews the valuation of the technology,
taking into consideration any events and circumstances which might impair
the recorded value. The asset is written down to fair value when declines
in value are considered to be other than temporary based upon expected
future cash flow.
RECENT PRONOUNCEMENTS
SFAS N. 120, "Reporting Comprehensive Income", establishes guidelines for
all items that are to be recognized under accounting standards as
components of comprehensive income to be reported in the financial
statements. The statement is effective for all periods beginning after
December 15, 1997 and reclassification of financial statements for earlier
periods will be required for comparative purposes. To date, the Company
has not engaged in transactions which would result in any significant
difference between its reported net loss and comprehensive net loss as
defined in the statement.
4. ACQUISITON
On January 29, 1999, the Company acquired 100% of the common shares of BBL
Technologies Inc., an Ontario, Canada Corporation. BBL Technologies Inc.
holds the Canadian patent to a catalytic converter/muffler technology. The
Company acquired BBL in order to develop the technology into a commercial
product.
The Company owns all of the common shares, the only shares with voting and
participating rights of BBL. The original holder of the patented
technology Next Catalytic Converter Corporation ("NCCC"), an Ontario,
Canada corporation which transferred the technology to BBL on December 14,
1998 in return for 700,000 special shares with a fixed value of $453,900
which are non-voting, non-participating and are only retractable by BBL.
F-16
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
4. ACQUISITION (Cont'd.)
The acquisition has been accounted for by using the purchase method of
accounting. Net assets acquired are summarized as follows:
<TABLE>
<S> <C> <C>
Patented technology $ 11,391,420
Special shares (453,900)
------------
$ 10,937,520
------------
------------
</TABLE>
5. SHAREHOLDERS' EQUITY
On July 22, 1998, the Company's Board of Directors approved an amendment
to the Company's Articles of Incorporation whereby the authorized capital
was increased to 50,000,000 of $.001 par value common stock. Additionally,
a forward stock split of 10,000 shares to 1 share was approved. All share
and per share data included in these financial statements has been
restated to reflect the effect of the stock split.
At inception, the Company issued 1,000,000 shares of common stock to an
officer for services provided in connection with the organization of the
Company. The value of the services had been charged to operations for the
period ended December 31, 1987.
6. DEVELOPMENT COSTS
The Company through its wholly owned subsidiary has commenced the
development phase of its patented technology. The development costs
incurred up to June 30, 1999 are summarized as follows:
<TABLE>
<S> <C> <C>
Product Development $ 279,585
Consulting 93,525
---------
$ 373,110
---------
---------
</TABLE>
7. OPTIONS AND WARRANTS
The following options and warrants are outstanding:
<TABLE>
<CAPTION>
ISSUED AMOUNT DUE DATE EXERCISED CANCELLED OUTSTANDING
<S> <C> <C> <C> <C> <C>
15,000 $2.00/option June 21, 2000 - - 15,000
90,000 $2.00/option Dec. 31, 2000 - - 90,000
60,000 $2.50/warrant April 9, 2004 - - 60,000
62,500 $2.00/warrant April 9, 2004 - - 62,500
</TABLE>
F-17
<PAGE>
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(FORMERLY BBC STOCK MARKET, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
(U.S. DOLLARS)
8. RELATED PARTY TRANSACTIONS
i. The patented technology was acquired by the Company's wholly owned
subsidiary BBL for $453,900 from a company with common shareholders
(Note 4).
ii. Included in development costs are consulting fees of $25,390 which
were paid to Bruno Liber, a significant shareholder.
iii. Included in development costs are consulting fees of $64,234 which
were paid to TVP Consulting Services, a company which is related to
a shareholder of the Company.
9. YEAR 2000
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems, which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure, which could affect an
entity's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 Issue affecting the
company, including those related to the efforts of customers, suppliers,
or other third parties, will be fully resolved.
10. INCOME TAXES
At June 30, 1999, the Company had net loss carry forwards for income tax
purposes of approximately $602,000 which expire at various years to 2013.
F-18
