UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to _______
Commission file number: 33-11059-A
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in it charter)
Nevada 13-3476854
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6802 Citicorp Blvd., Suite 500, Tampa, Florida 33619
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(Address of principal executive offices)
(813) 622-8550
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(issuer's telephone number)
OMEGA DEVELOPMENT, INC.
-----------------------
(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 such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 14, 2000, of the
issuer's Common Stock, $.001 par value, there were 14,045,666 shares
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
------------------------------------
INDEX
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
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<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (Unaudited)
and December 31, 1999 3
Consolidated Statements of Operations (Unaudited) for the
Three and Six Months ended June 30, 2000 and June 30,
1999 and Cumulative Amounts from Inception to June
30, 2000 4
Consolidated Statements of Cash Flows (Unaudited) for the
Six Months ended June 30, 2000 and June 30, 1999 and
Cumulative Amounts from Inception to June 30, 2000 5-6
Notes to Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE 12
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2
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
June 30, 2000 Dec. 31, 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 8,440 $ 19,189
Accounts receivable 59,979 25,753
Inventory 45,726 30,942
Prepaids 3,371 3,371
----------- -----------
Total current assets 117,516 79,255
Property and equipment, net 118,612 88,754
Security deposits 14,614 4,418
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$ 250,742 $ 172,427
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 140,221 $ 131,165
Bank line of credit 24,869 24,869
Current portion of bank loan and capital lease obligations 18,560 21,127
Advances from stockholders 164,290 35,000
----------- -----------
Total current liabilities 347,940 212,161
Capital lease obligations, less current portion 27,645 36,925
Convertible debentures 230,000 230,000
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Total liabilities 605,585 479,086
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Stockholders' deficit:
Preferred stock, $1.00 par value; 5,000,000 shares
authorized; none and 543,750 issued and
outstanding, respectively -- 543,750
Common stock, $.001 par value; 25,000,000 shares
authorized; 14,045,666 and 10,646,666 shares issued
and outstanding, respectively 14,046 10,647
Additional paid-in capital 1,486,655 548,750
Accumulated deficit during development stage (1,855,544) (1,409,806)
----------- -----------
Net stockholders' deficit (354,843) (306,659)
----------- -----------
$ 250,742 $ 172,427
=========== ===========
</TABLE>
See accompanying notes.
3
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<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative Amounts
Three Months Ended June 30, Six Months Ended June 30, from Inception to
2000 1999 2000 1999 June 30, 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales, net $ 133,791 $ 131,571 $ 205,096 $ 156,045 $ 1,613,959
Cost of sales 25,855 20,188 50,140 34,157 316,267
------------ ------------ ------------ ------------ ------------
Gross margin 107,936 111,383 154,956 121,888 1,297,692
------------ ------------ ------------ ------------ ------------
Operating Expenses:
Sales and marketing 156,305 84,423 278,289 134,746 1,256,794
General and administrative 117,025 117,205 271,257 214,147 1,671,125
Research and development 31,975 3,777 51,148 34,382 225,317
------------ ------------ ------------ ------------ ------------
Total operating expenses 305,305 205,405 600,694 383,275 3,153,236
------------ ------------ ------------ ------------ ------------
Net loss $ (197,369) $ (94,022) $ (445,738) $ (261,387) $ (1,855,544)
============ ============ ============ ============ ============
Net loss per share $ (0.02) $ (0.01) $ (0.04) $ (0.03) $ (0.22)
============ ============ ============ ============ ============
Weighted Average Shares
Outstanding 12,250,000 10,646,666 11,720,000 10,420,000 8,621,000
============ ============ ============ ============ ============
</TABLE>
See accompanying notes.
4
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<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative Amounts
Six Months Ended June 30, from Inception to
2000 1999 June 30, 2000
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<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (445,738) $ (261,387) $ (1,855,544)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 16,593 19,184 122,716
Compensation due to grant of stock options - 13,284 -
Changes in current assets and liabilities:
Accounts receivable (34,226) (100,018) (59,979)
Inventory (14,784) 1,100 (45,726)
Prepaids - - (3,371)
Accounts payable and accrued expenses 9,056 67,191 226,055
-------------- -------------- ---------------
Net cash used in operating activities (469,099) (260,646) (1,615,849)
--------------- -------------- ----------------
Cash flows from investing activities:
Purchase of property and equipment (46,451) (461) (151,717)
Security deposits (10,196) - (14,614)
--------------- ------------ ----------------
Net cash used in investing activities (56,647) (461) (166,331)
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Cash flows from financing activities:
Proceeds from bank loans - - 56,517
Principal payments on bank loans and capital leases (11,847) (11,432) (75,054)
Proceeds from convertible debentures - - 334,500
Proceeds from cash advances from stockholders 129,290 126,300 356,790
Repayment of cash advances from stockholders - (69,500) (69,500)
Net proceeds from issuance of preferred and common stock 397,554 247,750 1,187,367
-------------- -------------- ---------------
Net cash provided by financing activities 514,997 293,118 1,790,620
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</TABLE>
(continued)
5
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<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
Cumulative Amounts
Six Months Ended June 30, from inception to
2000 1999 June 30, 2000
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<S> <C> <C> <C>
Net increase (decrease) in cash (10,749) 32,011 8,440
Cash, beginning of period 19,189 711 -
-------------- -------------- ---------------
Cash, end of period $ 8,440 $ 32,722 $ 8,440
============== ============== ===============
Supplemental disclosures of cash flow information:
Interest paid $ 6,172 $ 7,826 $ 52,158
Supplemental disclosures of non-cash financing activities:
Conversion of convertible debentures into 770,878 shares
of common stock $ - $ - $ 200,000
Purchase of property and equipment financed by capital
lease obligations - - 89,611
Conversion of convertible debentures into 666,666 shares
of common stock - 100,000 100,000
Issuance of 80,000 shares of common stock for legal
services 13,334 13,334
Conversion of convertible preferred stock into 1,044,000
shares of common stock 543,750 - 543,750
Recapitalization transactions accounted for similar to
reverse acquisition 1,535 - 1,535
</TABLE>
See accompanying notes.
6
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements at June
30, 2000 include the accounts of BBJ Environmental Technologies, Inc. and its
subsidiary, BBJ Environmental Solutions, Inc. (acquired on June 1, 2000); and
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
reflect all adjustments which, in the opinion of management, are necessary for a
fair presentation of financial position as of June 30, 2000 and results of
operations for the three and six months ended June 30, 2000 and 1999. All
adjustments are of a normal recurring nature. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
a full year. The statements should be read in conjunction with the financial
statements and footnotes thereto of BBJ Environmental Solutions for the year
ended December 31, 1999, included in the company's Registration Statement Form
8-K filing. The consolidated companies are collectively referred to herein as
("BBJ" or the "Company"). All significant inter-company accounts and
transactions have been eliminated.
The accompanying financial statements have been prepared on the basis
of accounting principles applicable to a going concern. Accordingly, these
financial statements do not include adjustments, if any, which might be
necessary should BBJ be unable to continue as a going concern.
NOTE B - Organization and Description of Business
BBJ Environmental Technologies, Inc., formerly known as Omega
Development, Inc., was a development stage enterprise formed under the laws of
the State of Nevada to evaluate, structure and complete a business combination
in the form of a merger with, or acquisition of, prospects consisting of private
companies, partnerships or sole proprietorships. The Company had no business
operations and no intention of engaging in active business prior to a business
combination with another enterprise. Prior to the reverse acquisition, BBJ was a
shell company with no material assets, liabilities or operations.
The Company is operating through its newly acquired subsidiary, BBJ
Environmental Solutions, Inc. BBJ Environmental Solutions was formed under the
laws of the State of Florida in August 1993. BBJ Environmental Solutions
develops, manufactures, and markets products and devices that control
contamination and air pollution in heating, ventilation, air-conditioning, and
refrigeration systems ("HVAC/R") in homes, offices, health care facilities,
schools, food processing plants, and public buildings. All references to "the
Company" include BBJ and BBJ Environmental Solutions, Inc. unless the context
indicates otherwise.
NOTE C - Subsequent Event
On May 31, 2000, the Company's stockholders approved a reverse stock
split of one-for-three, which became effective on June 2, 2000.
Contemporaneously, Omega Development, Inc. ("Omega") issued 12,410,666
post-split shares of its common stock in exchange for all the issued and
outstanding shares of capital stock of BBJ Environmental Solutions, Inc. in a
recapitalization transaction accounted for similar to a reverse acquisition
("Recapitalization"). All share and per share amounts in this Form 10-QSB have
7
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been adjusted to give retroactive effect to the aforementioned reverse stock
split of one-for-three and the issuance of the 12,410,666 post-split shares. No
change in per share value or authorized number of shares of capital stock
occurred as a result of the reverse stock split. Omega was formerly a
non-operating public shell corporation with no significant assets and was
treated as the "acquired" company in the transaction, but remains the surviving
legal entity. Accordingly, the transaction was treated as an issuance of stock
by BBJ for the net monetary assets of Omega, accompanied by a recapitalization.
Since this transaction is in substance a recapitalization of BBJ and not a
business combination, a valuation was not performed and no goodwill was
recorded. In connection with the Recapitalization, Omega's name was changed to
BBJ Environmental Technologies, Inc.
The assets acquired by the Company include all the assets of BBJ
Environmental Solutions, which it utilizes in its operations. These include
primarily the following: accounts receivable, inventory, furnishings, and
equipment. The nature of the business in which those assets were used by BBJ
Environmental Solutions were for the sale of its EPA registered products. The
Company intends to continue to use such accounts receivable, inventory,
furnishings, and equipment.
As described above, the Company issued 12,410,666 post-split shares to
acquire all the capital stock of BBJ Environmental Solutions through a stock for
stock exchange which resulted in the Company acquiring all the assets and
liabilities of BBJ Environmental Solutions. The number of shares issued to the
former shareholders of BBJ Environmental Solutions was not based upon any
particular pricing formula and may, accordingly, be determined to be arbitrarily
determined by the parties to the Agreement based upon arms-length negotiations
between the Company and the former principal stockholders and officers and
directors of BBJ Environmental Solutions. Prior to the completion of the
Company's acquisition of BBJ Environmental Solutions, there was no prior
relationship between persons affiliated with BBJ Environmental Solutions and
persons affiliated with the Company.
NOTE D - Computation of Net Loss Per Common Share
Loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the year.
8
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Planned principal operations of the Company have not commenced,
although it has received limited revenues. In June 1975, the Financial
Accounting Standards Board, in its Statement No. 7, set forth guidelines for
identifying an enterprise in the development stage and the standards of
financial accounting and reporting applicable to such an enterprise. In the
opinion of the Company, its activities from its inception through June 30, 2000
fall within the referenced guidelines. Accordingly, the Company has reported its
activities in accordance with the aforesaid Statement of Financial Accounting
Standards No. 7.
During the six months ended June 30, 2000 and 1999 and from inception
in 1993 to June 30, 2000, BBJ Environmental Solutions sustained a net loss of
approximately $445,738, $261,387 and $1,855,544, respectively. These losses are
expected to continue for a presently undetermined time. Losses of the Company
independent of BBJ Environmental Solutions in 1999 were minimal due to lack of
business operations.
Sales and Revenues
BBJ has derived (or intends to derive) revenues generally from sale of
the products described herein. In order to increase revenue, BBJ has entered
into distribution agreements with Purolator Products Air Filtration Company, AAF
International, Abatement Technologies, and Nalco Diversified Technologies who
have established distribution into target markets. In May 2000, BBJ implemented
a sales and marketing organization and has begun developing strategic partner
relationships with national companies to expand advertising and promotion. No
assurances can be given that BBJ will be successful in these efforts.
Liquidity and Capital Resources
As of June 30, 2000, the Company had net stockholders' deficit of
$354,843, accumulated losses during the development stage of $1,855,544 and a
working capital deficit of $230,424. There can be no assurance that the Company
will be able to continue as a going concern or achieve material revenues or
profitable operations. The Company is dependent upon the proceeds of a private
placement offering and sufficient cash flow from operations to meet its
short-term and long-term liquidity needs. The Company may require additional
financing beyond the proceeds received from the offering depending upon the
number of Shares sold and the amount of revenue derived from operations. In this
event, no assurances can be given that such financing will be available in the
amount required or, if available, that it can be on terms satisfactory to the
Company.
Certain Financing Transactions
In June of 2000, the Company raised $125,000 through a private
placement of its common stock. The Company sold 100,000 shares of common stock,
par value $.001 per share, at a cash purchase price of $1.25 per share.
9
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
------------------
Item 2. Changes in Securities: None, except as described herein.
----------------------
Item 3. Defaults Upon Senior Securities: None
-------------------------------
Item 4. Submissions of Matters to a Vote of Security Holders:
----------------------------------------------------
On May 31, 2000, the Company's stockholders, by majority consent in
lieu of a meeting, approved (a) a change in name to BBJ Environmental
Technologies, Inc., (b) a reverse stock split of one-for-three, which became
effective June 2, 2000, and (c) the election of BBJ's appointed nominees, namely
Robert G. Baker, Chief Executive Officer of BBJ, Jerry V. Schinella, President
of BBJ, Michael J. Gordon, Vice President of BBJ, Frank P. Ragano and Rebecca F.
Walter, as directors of the Company to serve in such capacity until their
successors are elected and shall qualify.
Item 5. Other Information:
-----------------
On January 31, 2000, BBJ entered into an Agreement and Plan or
Reorganization (the "Agreement") to acquire BBJ Environmental Solutions, Inc. At
the consummation of the Agreement on June 1, 2000, in accordance with the
Agreement, the following events occurred:
(1) BBJ agreed to issue 12,410,666 post-split shares of its Common
Stock in exchange for all the issued and outstanding capital stock of
BBJ Environmental Solutions from 36 accredited stockholders of BBJ
Environmental Solutions in accordance with Rule 506 of Regulation D
promulgated under Section 4(2) of the Securities Act of 1933, as
amended.
(2) The Company agreed to repurchase 3,465,000 shares of BBJ's Common
Stock to the Company at a purchase price of $.001 per share from Paul
Shapansky, Herbert Maxwell, Dennis Rendfish, Robert A. Schneider, Louis
Shapiro, Shai Sasson, Sidney Borenstein and Eric Bashford, thereby
reducing the number of outstanding shares of BBJ's Common Stock to
1,535,000 shares before the closing of the Agreement.
(3) The resignations of all officers of BBJ and the election of Robert
Baker as Chairman of the Board and Chief Executive officer of BBJ,
Jerry V. Schinella as President and Chief Operating Officer of BBJ, and
Michael J. Gordon as Vice President, Secretary and Treasurer of BBJ.
The assets acquired by BBJ include all the assets of BBJ Environmental
Solutions, which it utilizes in its operations. These include primarily the
following: accounts receivable, inventory, furnishings, and equipment. The
nature of the business in which those assets were used by BBJ Environmental
Solutions were for the sale of its EPA registered products. BBJ intends to
continue to use such accounts receivable, inventory, furnishings, and equipment.
As described above, BBJ issued 12,410,666 post-split shares to acquire
all the capital stock of BBJ Environmental Solutions through a stock for stock
exchange which resulted in the Company acquiring all the assets and liabilities
of BBJ Environmental Solutions. The number of shares issued to the former
shareholders of BBJ Environmental Solutions was not based upon any particular
pricing formula and may, accordingly, be determined to be arbitrarily determined
by the parties to the Agreement based upon arms-length negotiations between BBJ
and the former principal stockholders and officers and directors of BBJ
Environmental Solutions. Prior to the completion of BBJ's acquisition of BBJ
Environmental Solutions, there was no prior relationship between persons
10
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affiliated with BBJ Environmental Solutions and persons affiliated with BBJ. The
transaction was reported on Form 8-K dated June 1, 2000.
In June of 2000, BBJ raised $125,000 in cash through a private
placement of its common stock. BBJ sold 100,000 shares of common stock, par
value $.001 per share, at a cash purchase price of $1.25 per share to three
accredited investors. As a result of the foregoing transactions, the Company
currently has 14,045,666 shares issued and outstanding. The Company owns 100% of
BBJ Environmental Solutions, however, BBJ Environmental Solutions has a total of
3,004,244 non-qualified stock options/warrants. The Company may offer BBJ
Environmental Solutions option/warrant holders the opportunity to exchange their
options/warrants for almost identical securities in the Company, except that the
number of shares of Common Stock subject to each option/warrant would be twice
the original number of shares and the exercise price of each option/warrant
would be equal to one-half of the original exercise price. To effect the
foregoing, a new stock option plan will be established by the Company covering
an estimated 8,000,000 shares of its Common Stock pursuant to which replacement
options will be issued as described above unless the options would not be
eligible to be included in a Form S-8 Registration Statement. Replacement
options of the Company that can not be included in a Form S-8 Registration
Statement will be issued outside the Company's new plan.
On June 1, 2000 Mr. Frank P. Ragano and Ms. Rebecca F. Walter, who
joined BBJ as outside board members, were each granted 100,000 options under the
BBJ Plan eligible to purchase shares at an exercise price of $1.25 per share.
Item 6. Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C> <C>
2 Agreement and Plan of Reorganization between Omega Development, Inc, and BBJ
Environmental Solutions, Inc., dated January 31, 2000. (1)
3 Amendment to Articles of Incorporation (2)
16.1 Letter on change in certifying accountant from Henderson Sutton & Co., P.C. (3)
16.2 Letter on change in certifying accountant from Kirkland, Russ, Murphy & Tapp (4)
27 Financial Data Schedule. (5)
--------------------------
(1) Incorporated by reference to Exhibit 2 to the Company's Schedule 14C Information Statement filed on May
10, 1999
(2) Incorporated by reference to Exhibit 3 to the Registrant's Form 8-K dated June 1, 2000, and filed on
June 8, 2000.
(3) Incorporated by reference to Exhibit 16.1 to the Registrant's Form 8-K dated June 1, 2000, and filed on
June 8, 2000.
(4) Incorporated by reference to Exhibit 16.2 to the Registrant's Form 8-K dated June 1, 2000, and filed on
June 8, 2000.
(5) Filed herewith.
</TABLE>
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the quarter ended
June 30, 2000:
The Registrant filed a Current Report on Form 8-K on June 8, 2000, date
of earliest event: June 1, 2000, reporting the Registrant's filing of the
acquisition of all the outstanding capital stock of BBJ Environmental Solutions,
Inc.
11
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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.
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
Dated: August 14, 2000 /s/ Robert G. Baker
-------------------
Robert G. Baker, Chairman and Director
/s/ Jerry V. Schinella
----------------------
Jerry V. Schinella, President and Director
12
