<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 000-30392
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(Exact name of Company as specified in its charter)
Florida N/A
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
250 Shields Court
Unit #3
Markham, Ontario
Canada L3R 9W7
(Address of principal executive offices, including postal code.)
(905) 947-9923
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock
Securities registered pursuant to Section 15(d) of the Act:
Title of each class
None
Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [ x ] NO [ ]
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within 60 days prior to the date of
filing. The aggregate market value as of March 28, 2000 was
$91,566,388.
The number of shares outstanding each of the Registrant's classes of
Common Stock, as of March 28, 2000 was 28,002,538.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's Form 10 filed with the Securities and Exchange
Commission on November 18, 1999 and all amendments thereto.
<PAGE> 3
PART I
ITEM 1. BUSINESS
THE COMPANY
GENERAL.
Environmental Solutions Worldwide, Inc. was formed in 1987 under
the name BBC Stock Market, Inc. as a "blank check" or development stage
company for the purpose of seeking to acquire viable businesses.
Through January 1999, the Company was not engaged in any business. 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 Company's catalytic converter technology is under development.
The technology involves the manufacture of catalytic converters without
the use of precious metals, thus reducing the cost of the converter.
The Company also 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. A prototype has been produced, and has
been subjected to preliminary testing. The Company is now in the
process of establishing a small manufacturing operation to begin
producing additional prototypes for further testing and refinement.
The Company's spark plug/fuel injector technology is in the
concept stage. There are U.S. and Canadian patent applications pending
on the technology, but the Company has not yet constructed prototypes
or conducted testing. The spark plug/fuel injector technology is a
mechanism combining the functions of a spark plug and a fuel injector
in a single device. The primary advantage of that technology is that
the Company believes that combining the devices will produce greater
fuel efficiencies, since the devices are synchronized, but that belief
has not been confirmed by tests. A disadvantage of the technology is
that the combined device will likely cost significantly more than
either current spark plugs or fuel injectors (but is likely to be less
expensive than both devices combined).
The Company has depleted its current cash resources, and does not
presently have the funds to fully develop its technology and sustain
the Company until its operating cash flow is positive. The Company
presently expects to raise approximately one million dollars (before
fees and expenses) through a private placement of its common stock (the
"Private Placement"), and anticipates the Private Placement will be
effected prior to the end of 1999. However, there is no assurance that
the Private Placement will be successful. Furthermore, the Private
<PAGE> 4
Placement, if successful, is unlikely to provide sufficient funds to
sustain the Company until its cash flow is positive, and therefore the
Company will likely be required to seek additional external financing,
which may include the issuance of additional debt or equity securities.
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 missions 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 them expensive to manufacture
and subject to price volatility.
The Company holds a Canadian patent covering its catalytic
converter technology. However, there can be no assurance that this
patent, combined with any patents or trade secret protection we may
seek in the future, would survive any legal challenge, or provide
meaningful levels of protection for the Company's technology. In
addition, the Canadian patent only affords protection against the
manufacture, use or sale of the patented technology within Canada; the
Company is in the process of preparing patent applications to protect
its technology within the United States and other countries.
The Company believes that its technology 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. Those beliefs are based
upon (i) internal testing in which the prototype catalytic converter
performed satisfactorily with a engine using diesel fuel; and (ii) the
longevity of the prototype catalytic converter in the testing process.
The Company believes that it has satisfactorily completed the
first stage of its research and development stage, comprised of initial
feasibility testing of its prototype catalytic converter. The Company's
prototype catalytic converter technology was compared to both baseline
emissions and to a new conventional catalytic converter for nitrogen
oxide, carbon dioxide, and hydrocarbons reductions. The results for the
Company's prototype and the conventional catalytic converter are
discussed in detail below under the heading "The Company's Technology."
The Company is now engaged in the second phase, which will entail
setting up a small manufacturing operation to produce additional
prototypes for further testing and refinement. The Company is in the
process of negotiations for the acquisition of manufacturing facilities
and equipment in Toronto, and expects to begin the manufacture of
additional prototype catalytic converters in January 2000.
<PAGE> 5
The initial business plan will focus on the North American market,
due to its proximity and size. The Company expects to initially produce
catalytic converters for automobiles using unleaded and diesel fuels,
with additional applications, including leaded fuels, to follow.
The Company's present plan of operations for the next twelve
months calls for the following estimated expenditures:
Staff Costs $ 435,000
Plant and Equipment 819,000
Office and General 204,000
Professional Fees and Marketing 252,000
-----------
$ 1,710,000
Expenses for staff costs include salaries and benefits for the
Company's technical director, his assistants, officers of the Company
and other personnel. Plant and equipment costs include the cost of a
mixer, an extruder, a laboratory extruder, dies, cut off equipment,
electronic drier, furnace, testing costs, raw materials, casings, plant
space rental, consulting fees and other costs. Office and general costs
include general office costs, equipment, insurance and travel.
Professional fees and marketing include patent, SEC and general legal
fees, accounting fees, and marketing expenses.
The Company believes that its catalytic converter technology will
reach the point of commercial viability by the end of 2000. Once
commercial viability has been achieved, the Company intends to seek to
partner with one or more major automobile component manufacturers to
produce and sell catalytic converters incorporating the Company's
technology.
The Company presently has four employees, and Company's staffing
plan anticipates the expansion of the Company's staff to seven
employees in the near future.
THE EXISTING TECHNOLOGY.
The catalytic converter was originally developed in the late
1950's as a device to reduce the level of toxic emissions in automobile
exhausts, including hydrocarbons ("HC"), nitrogen oxides ("NOx") and
carbon dioxide ("CO"). 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 nonprecious
metals and precious 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 HC, CO and NOx.
<PAGE> 6
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 optimal 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 non-precious 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.
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.
Without Using the Using
Converter Company's OEM
(BASELINE)(1) CONVERTER(1) CONVERTER
----------- ---------- ---------
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
(1) FTP weighted grams per mile
NOx = Nitrogen Oxides
CO = Carbon Monoxide
HC = Hydrocarbons MPG = Miles per Gallon
While the test results show average NOx emissions as comparable
between the Company's converter and the OEM, or conventional, catalytic
converter, and average HC emissions as higher with the Company's
converter than with the OEM converter, the tests were comprised of
three runs, and in each case the results for the Company's converter
showed a trend toward increased efficiency over time, while the OEM
converter showed a trend toward decreased efficiency, as follows:
<PAGE> 7
NOx
COMPANY CONVERTER OEM CONVERTER
----------------- -------------
Run 1 0.175 0.128
Run 2 0.138 0.158
Run 3 0.121 0.156
HC
COMPANY CONVERTER OEM CONVERTER
----------------- -------------
Run 1 1.790 0.418
Run 2 1.082 0.449
Run 3 0.481 0.438
Further, the OEM converter used in the testing was new, while the
prototype used had already been run for a substantial period of time.
The Company believes that the use of precious metals in conventional
converter manufacturing may result in those metals becoming
contaminated over time, leading to lower levels of efficiency in
reducing NOx and HC emissions. An EPA study published in the spring of
1998 showed that NOx comprises about 7.2 percent of all greenhouse
gases, with cars equipped with catalytic converters producing nearly
half of that NOx. Since the Company's technology does not utilize
precious metals, the Company's converter technology may be more
effective in reducing total NOx and/or HC emissions by providing
greater efficiency over time. However, the Company cannot predict
whether such beliefs will be confirmed or disproved by further testing.
The possibility that the Company's converter may have no advantage over
existing converter technology, or may be less efficient than existing
technology, in reducing some or all noxious emissions may limit the
market acceptance of the Company's technology, and adversely affect the
Company's ability to successfully exploit the technology.
In July 1999, the Company released a press release stating, in
part, that the Company believed that its technology was the only
catalytic converter technology in the world that reduces NOx. That
press release was incorrect, as the independent testing subsequently
conducted by the Company demonstrated a reduction in NOx using
conventional catalytic technology. That press release was predicated on
(a) preliminary testing of the Company's technology that showed a
significant reduction in NOx emissions over a baseline and (b) a review
of publicly available information regarding conventional catalytic
converter technology and NOx emissions.
The Company's tests have heretofore been limited, and there can be
no assurance that further testing and limited production may not reveal
problems with the technology. The testing conducted to date by the
Company has shown that the converter may increase the so-called "back
pressure" in the exhaust system. Back pressure occurs when the flow of
gases through the exhaust system is restricted, making it more
difficult for the engine's cyclinders to clear during the exhaust
stroke and negatively affecting the engine's performance. The prototype
tested by the Company was not specifically designed for the test
vehicle, and the Company expected to encounter back pressure issues
<PAGE> 8
during the testing process. Reengineering of the converter to reduce
back pressure to acceptable levels may result in additional costs and
delays in the introduction of the Company's technology, but the Company
believes that any delay attributable to such redesign will not exceed
ninety days, and that the related costs will not exceed $30,000.
The primary raw materials used in the manufacture of the Company's
converters include molybdenum, copper, nickel and ceramics, all of
which are generally available in the marketplace. The Company does not
anticipate any material shortage of any raw material in the foreseeable
future.
THE MARKET.
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.
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 formulas 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, which the Company currently possesses. The Company will not
be required to secure a license from Corning in connection with such
manufacturing.
COMPETITION.
Direct competition for the Company are other companies involved in
the manufacturing process of the existing catalytic converter,
including Corning and NGK. 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 may face resistance in customer acceptance of a new
technology, particularly since conventional converters have been the
norm in the industry for the last 30 years. The Company will also be
<PAGE> 9
required to overcome long-standing contractual and other obligations
and relationships between catalytic converter suppliers and the large
automotive manufacturers.
PRICING.
A finished catalytic converter currently sells to U.S. auto
manufacturers for approximately $85. A finished exhaust pipe, with
converter and muffler, currently sells to the U.S. auto manufacturers
for about $250. In Europe, the finished exhaust pipe, with converter
and muffler, sells to auto manufacturers for $500 to $700. The
Company's current business plan provides for a sales price for a
finished catalytic converter of approximately $70.
ITEM 2. PROPERTIES.
The Company does not presently own any real property. The Company
leases office space from 404 Corporate Centre Inc. at 250 Shields
Court, Unit #3, Markham, Ontario, Canada L3R 9W7 pursuant to a written
lease agreement dated October 6, 1999. The term of the lease is for a
period of two years terminating on October 31, 2002. The minimum
annual rent is $28,800.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings are pending to which the Registrant
is a party or of which any of Registrant's property is the subject
matter. No legal proceedings are known to be contemplated by
governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the Securities Holders for a vote
during the year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock is quoted on the Bulletin Board
operated by the National Association of Securities Dealers, Inc. under
the symbol "ESWW."
The following table sets forth the high and low bid prices for the
Common Stock for the quarters indicated, as reported by the Bloomberg
Reporting Service. Such market quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions:
<PAGE> 10
BID
Quarter Ended High Low
1999
March 31 4.5625 0.85
June 30 3.0 0.5625
September 30 4.875 1.25
December 31 5.00 1.75
At March 28, 2000, there were approximately 79 holders of record
of the Common Stock.
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 March 28, 2000, 17,168,563 shares of Common
Stock are freely trading shares, with the remainder of 10,833,975
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.
Blue Sky Considerations.
Some laws of some states prohibit the resale of securities issued
by "blank check" or "shell" corporations. Because the Company was
considered a "blank check" corporation until January 1999, it is
possible that current shareholders may be unable to resell their
securities in other states. The Company is unaware which particular
states prohibit such resales, other than Idaho and Indiana.
Further, because each state has a series of exempt securities
transactions predicated upon the particular facts of each transaction,
it is impossible to determine if a contemplated transaction by an
existing shareholder would possibly violate the securities laws of any
particular state.
In the event a current shareholder or broker/dealer resells its
securities in a state where such resales are prohibited, the Company
believes that the seller thereof may be liable criminally and/or
civilly under that particular state's laws. The Company believes that
it will not be liable for such improper secondary sales.
Existing shareholders should exercise caution in the resale of
their shares of common stock in light of the foregoing.
<PAGE> 11
Opinion of the Office of Small Business of the Division of Corporate
Finance of the Securities and Exchange Commission.
On January 21, 2000, the Office of Small Business of the Division
of Corporate Finance of the Securities and Exchange Commission issued
an opinion addressed to the National Association of Securities Dealers,
Inc. advising it that both before and after a business combination or
transaction with an operating entity, the promoters or affiliates of a
blank check company, as well as their transferees, are "underwriters"
of the securities issued. Accordingly the Office of Small Business
concluded that the securities involved can only be resold through
registration under the Securities Act of 1933 (the "Act") and Rule 144
of the Act is unavailable for resale transactions in this situation,
regardless of the technical compliance with Rule 144.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain financial data for, and as
of the end of, the five years ended December 31, 1995, 1996, 1997, 1998
and 1999:
<TABLE>
<CAPTION>
For the year ended:
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Results of Operation
Total Revenue - - - - -
Net Operating Expenses 845,543 151,939 - - -
Net earnings (loss) (845,543) (151,939) - - -
Net earning per loss
per common share (0.03) (0.15) - - -
Balance Sheets
Total current assets 28,433
Long term assets 2,327
Current liabilities 231,675 151,939 - - -
Long term liabilities - - - - -
Shareholders' equity
(deficiency) (200,905) (151,939) - - -
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
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.
<PAGE> 12
THE BBL ACQUISITION
On January 29, 1999, the Company acquired 100% of the common
shares of BBL Technologies, Inc., an Ontario, Canada corporation, by
issuing 11,048,000 common shares. BBL holds the Canadian patent to the
Company's catalytic converter technology. The Company acquired BBL in
order to develop the technology into a commercial product.
The Company owns the only shares with voting and participating
rights in BBL. The original holder of the patented technology, Next
Catalytic Converter Corporation ("NCCC"), an Ontario, Canada
corporation, which is related to BBL due to common shareholders,
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 redeemable only at the discretion
of BBL. For accounting purposes, no value is attributed to those
shares.
The acquisition has been accounted for by using the purchase
method of accounting. In determining the value of the purchase of BBL,
it is appropriate to use the quoted market price of the shares of the
Company at the time of acquisition if the shares reflected the fair
value of the Company. As the Company was a "shell company" at the time
of acquisition, the fair value of the Company was nominal and thus the
use of the market value of the shares of the Company in determining the
purchase price would not be appropriate. As a result, the purchase
price was determined based upon the fair value of the net assets of
BBL, comprised of the patented technology. Since the technology was
acquired in a non-arm's length transaction between BBL and NCCC, the
original cost of the patented technology, as determined by NCCC, of
$2,321, is deemed to be the acquisition price.
The Company's business plan calls for expenditures of
approximately $1.7 million over the next twelve months, and the
catalytic converter technology is expected to reach the point of
commercial viability on or prior to the end of that period.
From inception through December 31, 1999, the Company expended
approximately $524,892 in professional fees and expenses. Those fees
included legal fees (including general corporate, securities and
intellectual property counsel); audit fees; and consulting fees
(including the services of Teodosio V. Pangia and Dr. Liber). From
inception through December 31, 1999, the Company expended approximately
$348,457 in development costs, which costs included development and
production of the prototype catalytic converter, general research, and
testing.
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
YEAR ENDED DECEMBER 31, 1999
During the twelve months ended December 31, 1999, the Company's
cash and cash equivalents increased by $711,817, comprised of an
increase of $658,250 from the issuance of common shares and an increase
in loans payable of $58,567, offset by cash utilized in operating
activities of $690,540.
The Company has no present source of revenue, and does not
anticipate generating any revenues until the catalytic converter
technology is developed to the point of commercial viability. The
Company believes that this commercial viability will occur on or before
the end of 2000, but there is no assurance that such commercial
viability will not be delayed, or that such commercial viability will
ever be attained. Accordingly, the successful completion of the Private
Placement and/or other financing will be essential for the Company to
continue in operation until such time as the Company will be able to
generate revenue.
The Company has depleted its current cash resources, and does not
presently have the funds to fully develop its technology and sustain
the Company until its operating cash flow is positive. The Company
presently expects to raise approximately one million dollars (before
fees and expenses) through the Private Placement, and anticipates the
Private Placement will be effected prior to January 26, 2000. However,
there is no assurance that the Private Placement will be successful.
Furthermore, the Private Placement, if successful, is unlikely to
provide sufficient funds to sustain the Company until its cash flow is
positive, and therefore the Company will likely be required to seek
additional external financing, which may include the issuance of
additional debt or equity securities.
If the Company is unable to secure the required financing, it may
be forced to take steps to curtail its expenses, such as reducing its
staff or its research and development efforts. Any such action,
however, may result in an inability to develop the catalytic converter
technology to the point of commercial viability. In such event, the
Company may be forced to cease operations.
YEAR 2000
The Company did not experience any material problems as a result
of the Year 2000 nor did the Company incur any material costs in
preparation for the passing of the Year 2000. The Company will
continue to monitor its computer systems, including hardware and
software, to identify the systems that could be affected by the Year
2000 issue. Based upon the Company's lack of problems after December
31, 1999 and its current review of its systems, the Company does not
believe that the Year 2000 problem will pose a material operations
problem for it.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<PAGE> 14
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
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
We have audited the balance sheet of Environmental Solutions Worldwide,
Inc. (formerly BBC Stock Market, Inc.) (a development stage company) as
at December 31, 1999 and 1998 and the statement of operations, cash
flows and changes in shareholders' deficiency for the years ended
December 31, 1999 and 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 audits.
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 Environmental Solutions
Worldwide, Inc. (formerly BBC Stock Market, Inc.) (a development stage
company) as at December 31, 1999 and 1998 and the results of its
operations, cash flows and changes in shareholders' deficiency for the
years ended December 31, 1999 and 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 1
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 1. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
Toronto, Ontario
March 13, 2000
A Member Firm of
Midsnell International
F-1
<PAGE> 15
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Consolidated Balance Sheet
(U.S. Dollars)
As at December 31, 1999 and 1998
<TABLE>
<CAPTION>
December 31, December 31,
Note 1999 1998
<S> <C> <C> <C>
ASSETS
Current
Cash $ 21,277 $ -
Sundry asset 7,166 -
------------ ----------
28,443 -
Patented Technology 4 2,327 -
------------ ----------
$ 30,770 $ -
------------ ----------
LIABILITIES
Current
Accounts payable $ 173,108 $ 151,939
Loan payable, shareholders
and officer, non-interest
bearing and due on demand 58,567 -
------------ ----------
231,675 151,939
------------ ----------
SHAREHOLDERS' DEFICIENCY
Special shares, no par value,
unlimited shares authorized,
700,000 shares issued and
outstanding 4 - -
Common shares, $.001 par value,
50,000,000 shares authorized,
28,002,538 shares issued and
outstanding 5 28,002 1,000
Additional paid-in capital 778,575
(Deficit) accumulated
during development stage (1,007,482) (152,939)
------------ ----------
(200,905) (151,939)
------------ ----------
$ 30,770 $ -
============ ==========
</TABLE>
See accompanying notes.
Approved by the Board: /s/ Michael Oliver
Director
F-2
<PAGE> 16
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Consolidated Statement of Operations
(U.S. Dollars)
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Year Ended Year Ended 10/15/97
December 31, December 31, (Inception) to
Note 1999 1998 12/31/99
<S> <C> <C> <C> <C>
Expenses
Development costs 6 $ 348,457 $ - $ 348,457
Professional fees 167,100 150,000 317,100
Consulting fees 207,792 - 207,792
Office and general 127,094 1,939 130,033
Director fees 4,100 - 4,100
---------- ---------- ------------
Net loss $ (854,543) $ (151,939) $ (1,007,482)
========== ========== ============
Loss per share information:
Basic $ (0.03) $ (0.15) $ (0.03)
Diluted (0.03) (0.15) (0.03)
========== ========== ============
Weighted average
number of shares
outstanding 26,519,481 1,000,000 26,519,481
========== ========== ============
</TABLE>
See accompanying notes.
F-3
<PAGE> 17
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Consolidated Statement of Changes in Shareholders' Deficiency
(U.S. Dollars)
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Share Paid-In Development
ACTIVITY Shares Amount Capital 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) (1,000)
Net loss for the
period ended
December 31, 1998 - - - (151,939) (151,000)
---------- -------- --------- ------------ ---------
Balance,
December 31, 1987
to December 31, 1998 1,000,000 1,000 - (152,939) (151,939)
Net loss for
the year ended
December 31, 1999 - - - (854,543) (854,543)
Shares issued
in settlement
of debt 15,000,000 27,002 122,998 - 150,000
Shares issued for cash,
net of issuance costs
of $136,750 954,538 - 653,250 - 653,250
Shares issued on
acquisition of BBL
Technologies, Inc. 11,048,000 - 2,327 - 2,327
---------- -------- --------- ------------ ---------
Balance,
December 31, 1999 28,002,538 $ 28,002 $ 778,575 $(1,007,482) $(200,905)
========== ======== ========= ============ =========
</TABLE>
See accompanying notes.
F-4
<PAGE> 18
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Consolidated Statement of Cash Flows
(U.S. Dollars)
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Year Ended Year Ended 10/15/97
December 31, December 31, (Inception) to
1999 1998 12/31/99
<S> <C> <C> <C>
Net loss $ (854,543) $ (151,939) $ (1,007,482)
Adjustment to reconcile
net loss to net cash
provided by (used in)
operating activities:
Changes in assets and
liabilities
Increase in sundry
asset (7,166) (7,166)
Increase in accounts
payable 171,169 151,939 324,108
---------- ---------- ------------
Net cash provided by
(used in) operating
activities (690,540) - (690,540)
---------- ---------- ------------
Cash flows from financing
activities:
Issue of common shares,
net of
Issuance costs 653,250 - 653,250
Increase in loan payable 58,567 - 58,567
---------- ---------- ------------
711,817 - 711,817
---------- ---------- ------------
Increase in cash 21,277 - 21,277
Cash and cash equivalents
at beginning of year - - -
---------- ---------- ------------
Cash and cash equivalents
at end of year $ 21,277 $ - $ 21,277
========== ========== ============
Supplemental disclosures
Non-cash investing and
financing activities
Conversion of accounts
payable into equity $ 150,000 - $ 150,000
Acquisition of BBL 2,327 - 2,327
---------- ---------- ------------
</TABLE>
See accompanying notes.
F-5
<PAGE> 19
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
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.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However the Company has
sustained continuing operating losses and lacks a source of commercial
income, which creates uncertainty about the Company's ability to
continue as a going concern. The Company's ability to continue
operations as a going concern and to realize its assets and to
discharge it liabilities is dependent upon obtaining additional
financing sufficient for continued operations as well as the
achievement and maintenance of a level of profitable operations.
Management believes that the actions that are being taken and planned
regarding the Company's operations provide for the opportunity for the
Company to continue as a going concern.
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.
F-6
<PAGE> 20
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
3. SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
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.
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.
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.
F-7
<PAGE> 21
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
4. ACQUISITION
On January 29, 1999, the Company acquired 100% of the common shares of
BBL Technologies Inc., an Ontario, Canada Corporation by issuing
11,048,000 common shares. 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 the only shares of BBL with voting and participating
rights. The original holder of the patented technology Next Catalytic
Converter Corporation ("NCCC"), an Ontario, Canada corporation, which
is related to BBL due to common shareholders, transferred the
technology to BBL on December 14, 1998 in return for 700,000 special
shares with a fixed value of $453,900. These shares are non-voting,
non-participating and are retractable only at the discretion of BBL. No
value has been attributed to those shares.
The acquisition has been accounted for by using the purchase method of
accounting. In determining the value of the purchase of BBL, it is
appropriate to use the quoted market price of the shares of the Company
at the time of acquisition if the shares reflected the fair value of
the Company. As the Company was a "shell company" at the time of
acquisition, the fair value of the Company was nominal and thus the use
of the market value of the shares of the Company in determining the
purchase price would not be appropriate.
As a result, the purchase price was determined based upon the fair
value of the net assets of BBL, being the patented technology. Since
the technology was acquired in a non-arm's length transaction between
BBL and NCCC, the original cost of the patented technology, as
determined by NCCC, being $2,327 is deemed to be the acquisition price.
Patented technology $ 2,327
Special shares -
-------
$ 2,327
=======
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.
F-8
<PAGE> 22
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
5. SHAREHOLDERS' EQUITY (continued)
At inception, the Company issued 1,000,000 shares of common stock with
an ascribed value of $1,000 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.
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.
The Company issued 954,538 common shares for net proceeds of $653,250.
The Company acquired BBL (Note 4) by the issuance of 11,048,000 common
shares with an ascribed value of $2,327.
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 December 31, 1999 are summarized as follows:
Product Development $ 193,592
Consulting 77,256
Travel 77,609
---------
$ 348,457
=========
7. OPTIONS AND WARRANTS
i) Warrants
<TABLE>
<CAPTION>
Exercise
Issued Amount Due Date Exercised Cancelled Outstanding
<S> <C> <C> <C> <C> <C>
60,000 $2.50/warrant April 9, 2004 - - 60,000
62,500 $3.00/warrant April 9, 2004 - - 62,500
</TABLE>
ii) Options
The Company granted options to consultants of the Company. The options
can be exercised any time up to December 31, 2000.
F-8
<PAGE> 23
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
7. OPTIONS AND WARRANTS
Activity of Stock Options is summarized below:
<TABLE>
<CAPTION>
Weighted
Options Low High Average
<S> <C> <C> <C> <C>
Options outstanding
January 1, 1998 - - - -
Granted during period 105,000 $ 2.00 $ 2.00 $ 2.00
------- ------ ------ ------
Options outstanding
December 31, 1999 105,000 $ 2.00 $ 2.00 $ 2.00
------- ------ ------ ------
Weighted average
remaining life of
options 1 year
-------
</TABLE>
Stock-Based Compensation
The compensation expense has been recognized for its stock-based
compensation plan. The compensation costs for the Stock Options
granted has been determined based on the fair value at the grant date,
consistent with the methodology prescribed under SFAS 123.
The weighted average fair value of all options granted during fiscal
1999 was estimated as of the date of grant using the Black-Scholes
option pricing model with the following weighted average results and
assumptions.
Year Ended
12/31/99
Estimated stock-based compensation costs $ 65,520
Weighted average fair value of options issued 0.62
Expected option life, in years 1.00
Volatility 75%
Risk free interest rate 5.5%
Dividend yield -
F-9
<PAGE> 24
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
7. OPTIONS AND WARRANTS (continued)
The Black-Scholes model used by the Company to calculate option values,
as well as other currently accepted option valuation models, were
developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly
differ from the Company's stock option awards. These models also
require highly subjective assumptions, including future stock price
volatility and expected time until exercise, which greatly affect the
calculated values. Accordingly, Management believes that this model
does not necessarily provide a reliable single measure of the fair
value of the Company's stock option awards.
8. RELATED PARTY TRANSACTIONS
i. The patented technology was acquired by the Company's wholly
owned subsidiary BBL for $2,327 from a company with the same
common shareholders (Note 4).
ii. Included in development costs and consulting fees are
payments of $93,514 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.
iv. Included in professional fees are charges for legal services
of $55,747 (1998 - $150,000) from a former officer of BBL.
v. Included in development costs are reimbursement of travel
costs of $42,500 to the CEO of the Company.
9. COMMITMENTS
The Company is committed to a lease for its premises for two years
ending October 31, 2001 with minimum lease payments of $28,800 per
annum.
The Company entered into a consulting agreement with a significant
shareholder to provide technical services regarding the development of
the Company's Patented Technology. The agreement is for two years and
ends in January 2002 and pays the consultant $5,400 per month.
F-10
<PAGE> 25
Environmental Solutions Worldwide, Inc.
(formerly BBC Stock Market, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
(U.S. Dollars)
December 31, 1999 and 1998
10. YEAR 2000
Uncertainty due to the 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. Although the change in
date has occurred, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect the entity, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
11. INCOME TAXES
At December 31, 1999, the Company had net loss carry forwards for
income tax purposes of approximately $1,179,000, which expire at
various years to 2013 the benefits of which have not been recorded in
these statements.
12. CHANGE OF NAME
On February 19, 1999, the Company changed its name to Environmental
Solutions Worldwide, Inc.
13. SUBSEQUENT EVENT
On January 26, 2000 the Company issued 720,000 common shares for
$1,000,000.
F-11
<PAGE> 26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements with the Company's independent
accountants on accounting and financial matters within the three year
period ended December 31, 1999, or in any period subsequent to that
date.
In August 1998, the Board of Directors determined to engage a new
audit firm (the Board of Directors did not, and does not now, have an
audit committee), and terminated the services of the former auditor,
James E. Scheifly & Associates, P.C. There were no disagreements with
the former accountants on any matter of accounting principles or
practices, financial statement, disclosure, or auditing scope or
procedure, that would have caused the former accountants to make
reference thereto in its reports, including matters that were resolved
to the satisfaction of the former accountant.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
Officers and Directors
The officers and directors of the Company are as follows:
Bengt G. Odner 46 Chief Executive Officer
Adam M. Oliver 45 President and sole member of the
Board of Directors
Bruno B. Liber 77 Chief Technology Officer
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or until they
resign or have been removed from office.
Officer and Directors Biographical
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 has been a director of Crystal Fund Ltd., a
Bermuda mutual fund, and a director of Crystal Fund Managers, Ltd.
since 1996. From 1990 through 1995, Mr. Odner was the Chairman of Altus
Nord AB, a property holding company specializing in Scandinavian
properties and a wholly-owned subsidiary of Credit Lyonais Bank Paris.
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 and became
President of the Company in October 1998. For more than the past five
years, Mr. Oliver has been 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.
<PAGE> 27
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. From 1997 through 1999, Dr. Liber was a technical director
for Next Catalytic Converter Corporation, and previous to that Dr.
Liber was an independent inventor. As of August 30, 1999, Mr. Liber was
77 years old.
Teodosio V. Pangia is the principal of TVP Consulting Services,
which has provided consulting services to the Company since November,
1997. Those consulting services consisted of meetings with suppliers
and vendors to coordinate the production of the Company's prototype and
proposed manufacturing activities; overseeing testing activities;
meetings and discussions with the Company's potential business
partners; and acting as liaison between investors and the Company. From
1994 through 1997, 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.
There are no family relationships between any director or
executive officer and any other director or executive officer.
There are no agreements or understandings for any officer or
director to resign at the request of another person and that none of
the officers or directors are acting on behalf of or will act at the
direction of any other person. The officers and directors may resign,
however, at the time of the acquisition or merger at the request of the
management of the acquisition candidate.
The activities of each Officer and Director will be material to
the operation of the Company. No other person's activities will be
material to the operation of the Company. There are no promoters of
the Company, other than its Officers and Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities and Exchange Act of 1934 requires
certain defined persons to file reports of and changes in beneficial
ownership of a registered security with the Securities and Exchange
Commission and the National Association of Securities Dealers in
accordance with the rules and regulations promulgated by the Commission
to implement the provisions of Section 16. Under the regulatory
procedure, officers, directors and persons who own more than ten
percent of a registered class of a company's equity securities are also
required to furnish the Company with copies of all Section 16(a) forms
they filed.
Based on review of the copies of Forms 3 and a review of the
records of the Company's transfer agent, all reports required to be
filed pursuant to Section 16(a) have been filed with the Commission.
<PAGE> 28
ITEM 11. EXECUTIVE COMPENSATION
Mr. Oliver, the President of the Company, received a total of
$4,100 in compensation for his services to the Company during the year
ended December 31, 1999. Mr. Odner currently serves without
compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Annual Other Stock Other
Name Year Salary Bonus Compensation Awards Compensation
<S> <C> <C> <C> <C> <C> <C>
Adam M. Oliver 1999 0 0 4,100 None 0
Bengt Odner 1999 0 0 0 None 0
</TABLE>
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 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following schedule sets forth the Common Stock ownership of
each person known by the Company to be the beneficial owner of five per
cent or more of the Company's Common Stock, each director individually,
and all officers and directors of the Company as a group. Each person
has sole voting and investment power with respect to the shares of
Common Stock shown, and all ownership is of record and beneficial.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
Name and Number of Percent
Address Common Shares Position of Class [2]
<S> <C> <C> <C>
Bengt G. Odner [3] 650,000 Chief Executive *
Jervaulx Hall Officer
Jervaulx, North Yorkshire
United Kingdom HG4 4PH
Adam M. Oliver [1] 0 President and *
Sole Director
All Directors and
Officers as a
group (2 persons) 650,000 *
<PAGE> 29
Dr. Bruno Liber 5,000,000 Chief Technology 17.9%
#804-165 LaRose Avenue Officer
Etoicoke, Ontario
Canada
Teodosio
V. Pangia (4) 3,170,975 11.3%
</TABLE>
* Less than 5% of the outstanding shares of Common Stock.
[1] Address is c/o the Company, at 250 Shields Court, Unit #3,
Markham, Ontario Canada L3R 9W7, 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
December 31, 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 13. 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 stock, is
the principal.
On January 29, 2000, the Company entered into a consulting
agreement with Bruno B. Liber, an affiliate of the Company, to provide
technical services regarding the development of the Company's
technology. The agreement is for a period of two years and ends
January 29, 2002. Dr. Liber is paid $5,400 per month as consideration
for his services.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Financial Statements are contained in Item 8.
<PAGE> 30
(b) Reports on Form 8-K
No reports on Form 8-K have been filed for the period ended
December 31, 1999.
(c) Exhibits.
The following documents are incorporated herein by reference from
the Registrant's Form 10 Registration Statement (SEC File No. 000-
30392) filed with the Securities and Exchange Commission on November
18, 1999:
Exhibit
Number Description
3.1 Articles of Incorporation of the Company, as amended.
3.2 Bylaws 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.
16.1 Letter from James E. Scheifley & Associates, P.C.
21.1 List of Subsidiaries.
The following exhibits are include in this registration statement:
10.6 Consulting Agreement with Bruno Liber
10.7 Office Lease
<PAGE> 31
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on this 29th day of March, 2000.
ENVIRONMENTAL SOLUTIONS WORLDWIDE, INC.
(Registrant)
BY: /s/ Adam M. Oliver
Adam M. Oliver, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on this 29th day of
March, 2000.
SIGNATURES TITLE DATE
/s/ Bengt G. Odner
Bengt G. Odner Chief Executive Officer March 29, 2000
/s/ Adam Michael Oliver
Adam Michael Oliver President and sole March 29, 2000
Member of the
Board of Directors
<PAGE> 32
EXHIBIT 10.6
CONSULTING AGREEMENT
THIS AGREEMENT MADE AS OF THE 29th DAY OF JANUARY,2000
BETWEEN:
BBL TECHNOLOGIES INC.
("BBL")
-AND-
BRUNO B. LIBER
(THE "CONSULTANT")
WHEREAS:
1. The Consultant is presently engaged, or is about to be
engaged, by BBL in a position of confidence and trust and
under conditions where he has or may have access to
technical, confidential and secret information regarding the
existing or contemplated business of BBL;
2. The Consultant recognizes that as part of the duties of his
engagement, all ideas and suggestions of interest to BBL,
conceived or made by him while he is engaged by BBL, shall be
made available to BBL;
3. BBL is or will be associated as subsidiary, affiliate,
associate or parent with corporations and unincorporated
business enterprises, the number of which may vary but all of
which during all pertinent times will have common business
interests either through ownership or agreement (the "Joint
Venture");
4. It is essential to keep secret and confidential, information
relating to the interests of BBL and the Joint Venture:
IN CONSIDERATION of the compensation by BBL of the Consultant and
the monies heretofore paid or to be paid to the Consultant for his
services during the term of his engagement with BBL, the
Consultant agrees and covenants with BBL as follows:
1. The Consultant agrees that the monies received from BBL shall
be full consideration and compensation for services performed by
him for all inventions, discoveries and improvements and for
assignments of the same to BBL. The Consultant's compensation may
be changed without affecting any provision of this agreement.
2. BBL will engage the Consultant and the Consultant will render
services to BBL under the terms of this contract, as an Inventor
and technical advisor. The term of this agreement shall be for a
period of two (2) years, during which time the Consultant shall be
paid a fee of eight thousand dollars ($8,000) (Cdn.) per month, on
the first of every month, commencing the first day of February,
2000.
<PAGE> 33
3. The duties of the Consultant shall be such as may be
designated by BBL from time to time. At the date of this
agreement, the Consultant shall act as chief technical advisor to
BBL and, without limiting the generality of the foregoing, shall
assist in the development of prototypes, complete and file all
patent applications and other filings as may be necessary to
protect the proprietary interests of BBL in it's technologies.
4. Any and all discoveries, ideas and suggestions, improvements or
inventions of any character coming within the scope of the
business of BBL or the Joint Venture, made or developed by the
Consultant while engaged by BBL, whether or not conceived or made
during his regular working hours, or whether or not the Consultant
is specifically instructed to make or develop the same, shall be
for the benefit of BBL and shall be considered to have been made
under and by virtue of this contract and shall immediately become
the property of BBL.
5. The Consultant will treat as confidential any knowledge of
patents (including applications therefor), formulae,
specifications or secret processes or other confidential
information he may acquire in the course of his engagement and he
will not, during the term or this agreement nor within a
reasonable time from the termination of the engagement, divulge
any information with respect to any formulae, specifications,
methods or processes or other confidential information of BBL or
the Joint Venture or with respect to any other matter of a secret
nature which may have come into his possession, or publish or
cause to be published, or otherwise utilize, any subject-matter,
except, however, as he may be authorized so to do in writing by an
officer of BBL.
6. The Consultant will disclose to BBL any and all
improvements, discoveries and inventions which he may make solely,
jointly or in common with others, during the term of his
engagement and which relate to any method, product, process,
machine or apparatus for use in any industry or which relate to
the commercial and Industrial activities of BBL or of the Joint
Venture.
7. The Consultant will assign, set over and transfer to BBL
his entire right, title and interest in and to any and all
inventions, improvements and discoveries referred to in this
agreement and in and to all letters patent and applications for
letters patent which may be, or may have been, filed on such
improvements, inventions and discoveries by him or for him or in
his name, or which may have been issued to him, or his benefit,
whether filed or issued in the Dominion of Canada or any other
country whatever, and the Consultant agrees to execute and deliver
to BBL any and all instruments and papers necessary or desirable
<PAGE> 34
to accomplish the assignment and transfer and to perfect the
title, and all instruments or papers which may be necessary or
desirable to obtain and promote the right to the exclusive
enjoyment of the improvements, inventions and discoveries by BBL,
whether within or without the Dominion of Canada; and the
Consultant will, when requested by BBL testify in any legal
proceeding on behalf of BBL and will sign, at the request of BBL,
ail lawful papers and execute and sign any original, additional,
provisional or re-issue applications for letters patent with
respect to the inventions, improvements and discoveries which may
be necessary or desirable to accomplish the foregoing, and in
general will do all lawful acts to aid BBL to obtain and enforce
protection of its inventions, improvements and discoveries in any
and all countries. Such assistance will be without compensation
other than the remuneration due to him by virtue of his
engagement; provided, however, that in giving assistance and in
testifying and signing documents as mentioned, the Consultant
shall not be required to expend any money, but all expenses in
connection therewith shall be assumed and paid
by BBL, provided the expenses shall have been incurred at the
request of BBL.
8. Notwithstanding the termination or cancellation of this
contract, for any reason, the provisions of paragraphs 5 and 7
shall remain in full force and effect.
9. This agreement shall bind the parties, their heirs,
executors, administrators, successors and assigns.
10. If any provision of this agreement shall be determined to
be illegal or unenforceable, such provision shall be severable
herefrom and the balance of this agreement shall remain in full
force and effect.
11. This agreement is without prejudice to the rights of BBL
under any agreements entered into between the parties or under any
assignments previously given by the Consultant.
IN WITNESS WHEREOF the parties have set their hands a and seals
this 24th day of January, 2000.
/s/ Bruno B. Liber /s/ Robert Viagrew
Bruno B. Liber Witness
BBL TECHNOLOGIES INC.
Per: /s/ B. Odner, CEO
Authorize Officer
<PAGE> 35
EXHIBIT 10.7
OFFER TO LEASE
THIS OFFER TO LEASE is made this 6th day of October 1999,
TO: 404 CORPORATE CENTRE INC.
WE, Environmental Solutions Worldwide Inc., having inspected Me
premises or plans, hereby to offer to lease a through Royal LePage
Commercial Inc, your agent(s) premises known as Unit #3, 250
Shields Court, Markham, Ontario, containing apart approximately
6,091 square feet for a term of Two (2) years from November 1,
1999 to October 31, 2001, at a rental $42,637.00 Net per annum,
($700.00 Net per square foot of Rentable Area), payable $3.653.06
monthly, in advance on the 1st day of each month during the sold
Term. Cheque for $10,416.94 payable to your agent(s) for the Lessor
as a deposit to be held by such agent(s) pending completion or
other termination of this agreement is attached hereto to apply as
a deposit on first and last months' net rental plus allowances and
to be returned if this offer is not accepted. Upon acceptance of
this Offer, the deposit shall be applied $5,208.47 against first
month's rental plus allowances and the balance of $5,208.47 shall
be held as a deposit against last month's rental plus allowances
or in Lessor's option as security for the due performance by the
Lessee of its obligations under this Offer and pursuant to the
Lease. Lease shall be drawn by you and executed by both parties
forthwith. Premises to be used for lab and R&D for catalytic
converters, and in accordance with Section 6.1.1 of Town of Markham
by law 28-82 (Select Industrial Zones).
It is understood and agreed that
1. The Lessee shall pay heat, gas, hydro and water rates.
2. The Lessee shall pay its proportionate share of reality
taxes, outside maintenance and building insurance and other charges
as set out in the Lease form attached in equal monthly
installments, currently established to be $1,314-64 per month
($2.50 per square foot of Rentable Area) for the Calendar year
1999, based or fifteen percent (15%) So%) finished am. and to be
adjusted from time to time and reconciled annually according to
actual costs.
3. The Lessee may assign or sublet said aid promises in whole
or in part Subject to the Lessor's consent; such consent shall not
be unreasonably withheld or delayed and subject to the Lessor's
right to take back the premises as set out in the Lease.
4. The Lessee agrees to sign a Lee se in the form attached
hereto as Schedule "C" and initiated by the parties to evidence
their acceptance of the terms thereat Incorporating the terms of
this offer prior to occupancy.
<PAGE> 36
The Lessee agrees that in We term, the terms and conditions Set out
in Schedule "C" are hereby incorporated into and form part of this
Office to Lease.
5. The Lessor shall not be liable for any costs or resulting
losses to the Lessee in the event the premises are not completed on
the commencement date.
6. All garbage shag be stared inside the unit in a disposal box
and removed by a disposal contractor at the Lessee's expense.
7. The Lessee agrees to install, at its own cost off-white vinyl
vertical blinds on all windows of the demissed premises.
8. The Lessee shall have the option to renew said Lease for a
further term of three (3) years on the same terms and conditions
save and except for a further renewal and rental rate which shall
be negotiated at the time of renewal provided that the Lessee
advises the Lessor, in writing, of its desire to exercise said
option four (4) months prior to the Lease expiry. If such rental
rate has not be settled two (2)months prior to said expiration,
such rate shall be de determined pursuant to the Arbitrations Act
of Ontario and the costs of the; arbitration shall be shared
equally by he Lessor and Lessee.
9. Provided and it is hereby agreed that if, due to the failure of
Lessor to complete construction or to make available the services
which the Lessor is hereby obligated to furnish, the demised
premises or any part thereof are not ready for occupancy by the
Lessee on the date of the commencement of the term, no part of the
rent or only a proportionate part there 4 in the event that Me
Lessee shall occupy part of the demised premises, shall be payable
for the period prior to the date when the entire demised premises
are ready for occupancy and the full rent shall accrue on only
after such aforementioned date. The Lessee hereby agrees to accept
such abatement of rent in full settlement of any and all claims
which the Lessee may otherwise have by reason of the demised
premise s not being ready for occupancy on the date of the
commencement of the term. The decision of the Lessor as to whether
the premises are ready for occupancy and when they are ready for
occupancy shall be binding upon the parties.
<PAGE> 37
SCHEDULE "A
Annexed hereto forms part of this Offer to Lease dated and
October 5, 1 1999
BETWEEN: 404 Corporate Centre Inc,, as Lessor
AND: Environmental Solutions Worldwide Inc., as Lessee
RE: Unit #3 25D Shield Court, Markham. Ontario
G.S.T.
The Lessee shall pay all applicable Goods and Services Tax (G.S.T.)
FACSIMILE TRANSMISSION
The parties he hereto agree that notice of acceptance and delivery
of the within Offer to Lease and all communications thereto may be
made by facsimile machine addressed to the parties hereto or their
solicitors or their agents. The parties hereto agree (hat said id
copies shah be a legal and binding agreement of acceptance of it is
Offer to Lease.
LEGAL ADVICE
The parties here be acknowledge to Royal LePage Commercial Inc.
recommends that any legal advice be obtained ad through their own
legal counsel and further acknowledge that no Information provided
by Rapt LePage Commercial Ina is to be construed a legal tax or
engineering advice.
DUAL AGENCY
This will confirm that Royal LePage Commercial In.. (the "Company")
Is acting as a Dual Agent on the proposed transaction between the
two principals above noted.
The Lessee and Lessor herewith consent to such Di Dual Agency and
waive any conflict of interest or duty of confidentiality against
the Company arising from the Dual Agency
LESSOR'S REPRESENTATION
The Lessor represents that all mechanical heating, plumbing and
electrical systems will be in good working condition upon
occupancy.
<PAGE> 38
LESSOR'S WORK
The Lessor shaft perform the following in a good and workmanlike
manner prior to Lease commencement:
1. Paint all walls In the office (colour to be selected led
by the Losses from the Lessor's samples);
2. Steam clean carpets in stairway and second floor offices
3. Clean tile floor In first floor offices (repair any
loose or damaged tiles);
4. Replace any damaged or stained ceiling tiles;
5. Repair any damaged vinyl baseboard in office areas.
PRIOR ENTRY
The Lessee will be permitted to enter upon the premises, at its
own risk and peril, immediately after signing of the Lease, but
rental shall commence only an November 1, 1999.
Y2K COMPUTER BUG
The Lessee has been advised by the Broker to seek independent
advice concerning the potential impact of the so called "Year 2000
Computer Bug" on the premises.
OFFER TO LEASE
10. In the event the City of Markham or any municipal authority,
or the Lessor's Insurance company, requires the installation of a
flame-enclosed reznor-type heater, such shall be installed by the
Lessor at the Lessee's cost. The Lessee agrees to pay for the
heater and the installation thereof prior to installation, subject
to readjustment, it necessary.
11. Schedules "A", "B" and "C" attached I hereto form an Integral
part of this Offer to Lease,
12. It Is understood and agreed that all representations made by
the Lessor or any of his representatives are set out In it is Offer
to Lease.
13. This Offer shall be Irrevocable until p.m. on October 11, 1929
after Mich time if not accepted Us offer shall be null and void.
DATED at London, England this 6th of October, 1999.
<PAGE> 39
SIGNED, SEALED AND DELIVERED
in the presence of
Susan Sobbara ENVIRONMENTAL SOLUTIONS WORLDWIDE INC.
41 Hollybush 2d
Kingston upon Thawes
Surrey KT3 1HP Per: /s/ Bendt Odner
Authorized Signing Officer
The undersigned hereby accepts the above offer and agrees
with above agent(s) to pay. In consideration of the procuring by
agent(s) of this offer the commission of _________% of the rest
year rental and _____________% of the rent if for the balance of
the lease. Upon occupancy end upon signing of lease, said
commission is due and payable and may be deducted from deposit any
remaining balance, to be paid forthwith. If this offer to lease
contains an option to renew the lease the undersigned agrees to pay
the said agent(s) upon the exercising by the Lessee of the said
option a further commission of _______________% of the whole rental
payable during such renewal lease.
DATED at ____________ this _____ day of _____________.
404 CORPORATE CENTRE INC.
Per: ___________________________
Authorized Signing Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at December 31, 1999 Audited and
the Consolidated Statement of Income for the twelve month ended December 31,
1999 Audited and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 21,277
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,443
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,770
<CURRENT-LIABILITIES> 231,675
<BONDS> 0
0
0
<COMMON> 28,002
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30,770
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 854,543
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (854,543)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
