<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the quarterly period ended MARCH 31, 1998.
--------------
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.
For the transition period from to .
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Commission file number: 33-34200
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OMEGA DEVELOPMENT, INC.
----------------------
(Exact name of small business issuer as
specified in its charter)
Nevada 13-3476854
------ ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9422 S. College Pl., Suite 222; Tulsa, OK 74137
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(Address of principal executive offices)
918-299-3212
------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal
year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Common Stock $0.001 Par Value.
15,000,000 shares as of May 12, 1998.
Transitional Small Business Disclosure Format (check one): Yes No X
----- -----
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OMEGA DEVELOPMENT, INC.
MARCH 31, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheets--
March 31,1998 and December 31, 1997..................3
Consolidated Statements of Operations and
Accumulated Deficit--Three Months Ended
March 31, 1998 and 1997..............................4
Consolidated Statements of Cash Flows--Three Months
Ended March 31, 1998 and 1997........................5
Notes to Consolidated Financial Statements
--March 31, 1998.....................................6
ITEM 2. Management's Discussion and Analysis or
Plan of Operation....................................8
PART II. OTHER INFORMATION
- -------- -----------------
ITEM 1. Legal Proceedings....................................9
ITEM 2. Changes in Securities................................9
ITEM 3. Defaults Upon Senior Securities......................9
ITEM 4. Submission of Matters to a Vote of Security Holders..9
ITEM 5. Other Information....................................9
ITEM 6. Exhibits and Reports on Form 8-K.....................9
SIGNATURES........................................................10
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMEGA DEVELOPMENT, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Prepaid expenses $ 599 $ 492
OFFICE AND OTHER EQUIPMENT, net of accumulated
depreciation of $19,879 and $18,511 in 1998 and 1997,
respectively 19,829 21,197
DEFERRED COSTS 4,401 --
----------- -----------
TOTAL ASSETS $ 24,829 $ 21,689
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 27,108 $ 49,110
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; 25,000,000 shares authorized;
15,000,000 shares issued and outstanding at March 31, 1998
and December 31, 1997 15,000 15,000
Additional paid in capital 4,634,153 4,604,134
Accumulated deficit (4,651,432) (4,646,555)
----------- -----------
Total stockholders' deficit (2,279) (27,421)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 24,829 $ 21,689
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
OMEGA DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1998 1997
------------ ------------
REVENUES:
Other income $ 0 $ 0
EXPENSES:
General and administrative 3,509 5,275
Depreciation and amortization 1,368 1,368
------------ ------------
Total operating expenses 4,877 6,643
------------ ------------
NET LOSS (4,877) (6,643)
ACCUMULATED DEFICIT, beginning of period (4,646,555) (4,614,407)
------------ ------------
ACCUMULATED DEFICIT, end of period ($4,651,432) ($4,621,050)
============ ============
NET LOSS PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.00 $ 0.00
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 15,000,000 15,000,000
============ ============
The accompanying notes are an integral part of these statements.
4
<PAGE>
OMEGA DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($4,877) ($6,643)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,368 1,368
Changes in assets and liabilities:
Prepaid expenses (107) 0
Deposits and other assets (4,401) 1,260
Accounts payable and accrued liabilities (22,002) 3,974
------------ ------------
Total adjustments (25,142) 6,602
------------ ------------
Net cash used in operating
activities (30,019) (41)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to office and other equipment 0 0
------------ ------------
Net cash used in investing activities 0 0
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from capital contribution 30,019 0
Proceeds from sale of common shares 0 0
------------ ------------
Net cash provided by financing
activities 30,019 0
------------ ------------
NET INCREASE (DECREASE) IN CASH 0 (41)
CASH, beginning of period 0 120
------------ ------------
CASH, end of period $ 0 $ 79
============ ============
Cash paid during the period for Interest $ 0 $ 0
============ ============
The accompanying notes are an integral part of these statements.
5
<PAGE>
OMEGA DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Omega
Development, Inc. ("Omega" or "the Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information and a current discussion of the
Company's financial status, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1997, previously filed.
NOTE B--ORGANIZATION AND DESCRIPTION OF BUSINESS
ORGANIZATION
- ------------
Omega was incorporated in the State of Nevada on July 15, 1988 under the name of
"Lewison Enterprises, Inc." Since then the Company has experienced a series of
business consolidations and reorganizations, which are described in the
Company's annual report on Form 10-KSB for the year ended December 31, 1997,
previously filed.
DESCRIPTION OF BUSINESS
- -----------------------
The Company's operations and overhead were significantly reduced after the
foreclosure of the ABB Building in September 1996 and the subsequent abandonment
of the HPA business plan. During the current quarter, the Company had only one
employee, no office and the ongoing general and administrative expenses were
near zero.
The Company's business plan at March 31, 1998 is to seek to acquire or merge
with potential businesses that may, in the opinion of management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings.
(See Note C following.)
6
<PAGE>
NOTE C--SUBSEQUENT EVENT
On April 15, 1998, the Company executed an Agreement and Plan of Merger (the
"Agreement"), which was entered into as of December 2, 1997, by and among the
Company, two newly formed limited liability companies owned by the Company and
Heater Specialists, Inc. ("HSI") and Primenergy, Inc. ("Prime"). The Agreement
provides for a merger of HSI and Prime with and into the two limited liability
companies of Omega. The shareholders of HSI and Prime will receive 8,480,000
newly issued shares of Omega. After the merger, current shareholders of Omega
will hold 1,000,000 shares of common stock (following a reverse stock split of
one (1) new share of the Company for each fifteen (15) shares currently held, to
be accomplished immediately prior to closing) and 1,120,000 shares of common
stock will be held by new investors who will contribute approximately $3,000,000
of common equity through a private equity offering. The merger will qualify
under either Section 351 or Section 368(a)(1)(C), or both, of the Internal
Revenue Code of 1986, as amended, as a "tax-free" exchange or reorganization,
subject to the terms and conditions as more fully provided in the Agreement.
The closing is scheduled to take place on or about May 8, 1998, unless closing
is delayed by mutual agreement. The new equity of $3,000,000 will be used to
pay down bank credit lines and to fund the business plans of HSI and Prime. The
funding is a stipulated condition precedent to closing, however management of
Omega cannot assure that such equity will be provided.
Primenergy, Inc. possesses a license which permits the integrated application of
several technologies to convert biomass into energy. Prime's proprietary
process design incorporates a low temperature, air-starved gasification of
biomatter to produce an energy source for electricity generation, steam
production, process heat, or any combination of these useful forms of energy.
Prime has been working with government officials within the Republic of the
Philippines, and more specifically Metro Manila, for over a year on an
opportunity to build a $60 million plant that will convert municipal solid waste
to energy. Prime has been working with the Philippine Presidential Task Force
on Waste Disposal which management believes will lead to multiple projects in
the Philippines for energy cogeneration over the next few years. Although
management of Prime is confident that a contract will be executed with the
Republic of the Philippines, at the date of this writing a firm contract has not
yet been received and no assurance can be given that this objective will be
achieved.
Heater Specialists, Inc. is a fully integrated single source manufacturer of
refractory lined vessels and equipment for the oil refining, chemical process,
power generation and incineration industries. HSI offers a unique combination
of steel fabrication expertise and refractory technology and is the primary
contractor for gasifier units sold by Prime and performs the steel fabrication
and refractory work on the gasifiers.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ------- ---------------------------------------------------------
Plan of Operation
- -----------------
The Company's business plan at March 31, 1998 is to seek to acquire or merge
with potential businesses that may, in the opinion of Management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings.
In seeking to attain its business objectives, the Company will not restrict its
search to any particular industry. (See Note C to the unaudited financial
statements.)
After the 1994 Reorganization and the 1996 foreclosure of the ABB Building and
the abandonment of the HPA plans, discussed above, the Company has only one
employee, no office and the ongoing general and administrative expenses are near
zero.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
- -------------------------------------------------------------------------------
The net loss for the three months ended March 31, 1998 was $4,877 compared to a
net loss of $6,643 for the three months ended March 31, 1997.
General and administrative expenses decreased $1,766 (33%) in the first quarter
of 1998 as compared to the first quarter of 1997. The reduction is due to
decreased general office type expenses, e.g. telephone, photocopy expense, etc.,
in the current quarter as compared to the same quarter in 1997.
Depreciation and amortization expenses were the same amount in both the quarter
ended March 31, 1998 and March 31, 1997.
No income tax expense or benefit has been recorded for 1998, as a valuation
allowance has been provided for the tax effects of the entire net operating loss
carry forwards and other net deductible temporary differences.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
---------
None.
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OMEGA DEVELOPMENT, INC.
(Registrant)
Date: May 12, 1998 By: /s/ A. Paul Shapansky
------------ ------------------------------------------
A. Paul Shapansky, President and Chief
Executive Officer, and Principal Financial
Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 599
<PP&E> 39,708
<DEPRECIATION> 19,879
<TOTAL-ASSETS> 24,829
<CURRENT-LIABILITIES> 27,108
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> (17,279)
<TOTAL-LIABILITY-AND-EQUITY> 24,829
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,877
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,877)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,877)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,877)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
