SCHEDULE 14C
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of
1934 (Amendment No. ____)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
Omega Development, Inc.
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(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $.001
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2) Aggregate number of securities to which transaction applies:
12,410,666 shares of common stock
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
$0.0003 (One Third of Par Value pursuant to Section
240.0-11(c) and (a)(4). Company has accumulated capital deficit.)
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4) Proposed maximum aggregate value of transaction:
$3,723
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5) Total fee paid:
$75
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
OMEGA DEVELOPMENT, INC.
INFORMATION STATEMENT
SHAREHOLDER MAJORITY ACTION AS OF APRIL _____, 2000
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
NOTICE IS HEREBY GIVEN TO ALL SHAREHOLDERS THAT A MAJORITY ACTION OF
SHAREHOLDERS (THE "ACTION") OF OMEGA DEVELOPMENT, INC. (THE "COMPANY") WILL BE
TAKEN ON APRIL _____, 2000.
1) To approve certain proposed amendments to the Articles of
Incorporation of the Company, including:
a) to amend the Articles of Incorporation to effect a
one for three reverse stock split of the shares of
Common Stock without changing the $0.001 par value of
the Common Stock; and
b) to amend the Articles of Incorporation to change the
name of the Company from OMEGA DEVELOPMENT, INC. to
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.; and
2) To elect five persons to the Company's Board of Directors to
serve until the next annual general meeting of shareholders
and until their respective successors are elected and qualify.
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON MARCH 21, 2000 SHALL BE
ENTITLED TO RECEIPT OF THIS INFORMATION STATEMENT.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ HERBERT MAXWELL
--------------------------------
HERBERT MAXWELL, SECRETARY
_______________, 2000
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OMEGA DEVELOPMENT, INC.
8726 S. FLORENCE AVENUE
TULSA, OKLAHOMA 74137
INFORMATION STATEMENT FOR SHAREHOLDERS
The Board of Directors of Omega Development, Inc., a Nevada corporation
(the "Company") is furnishing this INFORMATION STATEMENT to shareholders in
connection with a Majority Action of Shareholders of the Company to be taken on
April ____, 2000, related to approving certain amendments to the Articles of
Incorporation of the Company and electing five persons to the Company's Board of
Directors.
This Information Statement is first being mailed to shareholders on or
about ____________, 2000. This Information Statement is accompanied by the
Company's Annual Report for the fiscal year ended December 31, 1999. The Annual
Report includes the Company's most recent Annual Report on Form 10-KSB which has
been previously filed with the Securities and Exchange Commission.
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TABLE OF CONTENTS
<TABLE>
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Page
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QUESTIONS AND ANSWERS........................................................................................1
GENERAL INFORMATION..........................................................................................2
OUTSTANDING SHARES AND VOTING RIGHTS................................................................2
APPROVAL OF REVERSE SPLIT...........................................................................3
APPROVAL OF THE NAME CHANGE.........................................................................3
ELECTION OF NEW DIRECTORS...........................................................................3
RECORD DATE.........................................................................................4
EXPENSES OF INFORMATION STATEMENT...................................................................4
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON.............................................4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS..............................................................4
AMENDMENTS TO ARTICLES OF INCORPORATION......................................................................6
THE AMENDMENTS......................................................................................6
SUMMARY OF TRANSACTIONS CONTEMPLATED BY THE
REORGANIZATION AGREEMENT............................................................................7
BACKGROUND OF THE REORGANIZATION....................................................................8
REASONS FOR APPROVAL BY MAJORITY OF SHAREHOLDERS
AND BOARD OF DIRECTORS..............................................................................8
ACCOUNTING TREATMENT OF THE REORGANIZATION..........................................................8
SUMMARY OF THE REORGANIZATION AGREEMENT.............................................................9
MATERIAL TERMS OF THE COMMON STOCK.................................................................11
PREFERRED STOCK....................................................................................12
REGISTRATION RIGHTS................................................................................12
SUMMARY OF PRIVATE PLACEMENT.......................................................................13
SUMMARY OF PRO FORMA FINANCIAL STATEMENTS..........................................................14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................................................15
INFORMATION CONCERNING BBJ..................................................................................16
HISTORY OF BBJ.....................................................................................16
DESCRIPTION OF PRODUCTS............................................................................16
MANUFACTURING......................................................................................17
PURCHASING.........................................................................................17
SALES AND MARKETING................................................................................17
TARGET MARKETS.....................................................................................17
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COMPETITION........................................................................................18
GOVERNMENT REGULATION..............................................................................19
RESEARCH AND DEVELOPMENT...........................................................................19
PROPRIETARY RIGHTS.................................................................................19
EMPLOYEES..........................................................................................19
FACILITIES.........................................................................................19
SELECTED FINANCIAL DATA............................................................................20
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................................................20
FORWARD-LOOKING STATEMENTS.........................................................................21
ELECTION OF DIRECTORS.......................................................................................21
INFORMATION CONCERNING NOMINEES....................................................................22
EXECUTIVE COMPENSATION.............................................................................23
INDEPENDENT ACCOUNTANTS.....................................................................................26
EXHIBITS
A Amendment to Articles of Incorporation of Omega Development, Inc.
B Agreement and Plan of Reorganization
C Pro Forma Financial Statements
D Audited Financial Statements of BBJ Environmental Solutions, Inc.
for the years ended December 31, 1998, and December 31, 1999
</TABLE>
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QUESTIONS AND ANSWERS
Q: What am I being asked to approve?
A: You are not being asked to approve anything. This Information Statement
is being provided to you solely for your information. Shareholders
holding a majority of the outstanding voting common stock of the
Company have already agreed to approve:
o a one-for-three reverse stock split of the Company's
outstanding Common Stock,
o change in the name of the Company to "BBJ Environmental
Technologies, Inc.," and
o election of five persons, who are nominees of BBJ
Environmental Solutions, Inc. ("BBJ"), to the Board of
Directors of the Company.
Q: Why have the Board of Directors and a majority of the shareholders
agreed to approve these actions?
A: All of these actions are necessary to accomplish the terms of the
Agreement and Plan of Reorganization (the "Reorganization Agreement")
dated as of January 31, 2000, between the Company, BBJ and certain of
the shareholders of BBJ.
Q: What are the basic terms of the transaction with BBJ?
A: The shareholders of BBJ will acquire control of the Company
(approximately 83% of the outstanding Common Stock) in exchange for all
of the stock of BBJ. After the transaction is completed, BBJ will be a
subsidiary of the Company and the Company will be controlled by the
former shareholders of BBJ. You will retain all of your present
stockholdings in the Company.
Q: Are there any conditions to the transaction with BBJ?
A: Yes. There are several conditions, including the following:
o the Company must file all reports that it is required to file
with the Securities and Exchange Commission,
o approval of a one-for-three reverse stock split of the
Company's outstanding Common Stock, and
o sale by certain insiders of the Company of a total of
3,465,000 shares of Common Stock back to the Company at a
price of $.0001 per share.
Q: What business is conducted by BBJ?
<PAGE>
A: Established in 1993, BBJ develops, manufactures, and markets products
and devices that control contamination and air pollution in heating,
ventilation and air-conditioning and refrigeration systems of homes,
offices, health care facilities, food processing plants, schools and
public buildings. BBJ is a development stage company with executive
offices at 6802 Citicorp Boulevard, Suite 500, Tampa, Florida 33619.
BBJ's main telephone number is 813-622-8550 and web site address is
www.bbjenviro.com. (See "GENERAL INFORMATION.")
Q: Are there risks involved in the transaction with BBJ?
A: Yes. After the transaction is completed, the Company's success will be
totally dependent upon the success of BBJ. BBJ is a development stage
company and has not been profitable since its inception in 1993. There
are no assurances that BBJ's operations will be profitable after the
closing of the transaction.
Q: When do you expect to complete the transaction with BBJ?
A: Within approximately a month after the date of this Information
Statement. As mentioned previously, there are several conditions to the
closing of the transaction.
Q: Who can I call with questions?
A: Please call Paul Shapansky, President of the Company, at 954-331-7712.
GENERAL INFORMATION
OUTSTANDING SHARES AND VOTING RIGHTS
At February 29, 2000, the Company had 15,000,000 shares of Common
Stock, par value $0.001 outstanding. In connection with the BBJ transaction (the
"Reorganization"), the Company and a majority of its shareholders have agreed to
amend the Articles of Incorporation of the Company to effect a one_for_three
reverse stock split (the "Reverse Split") of the presently issued and
outstanding shares of the Company's Common Stock. The complete text of the
amendment to the Articles (the "Amendment to the Articles") for the Reverse
Split is set forth in Exhibit A to this Information Statement.
Upon filing of the Amendment to the Articles with the Nevada Secretary
of State, the Reverse Split will be effective, and each certificate representing
shares of Common Stock outstanding immediately prior to the Reverse Split (the
"Old Shares") will be deemed automatically without any action on the part of the
shareholders to represent one_third the number of shares of Common Stock after
the Reverse Split (the "New Shares"); provided, however that no fractional New
Shares will be issued as a result of the Reverse Split. All fractional shares
will be rounded to the next highest whole number. After the Reverse Split
becomes effective, shareholders will be
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asked to surrender certificates representing Old Shares in accordance with the
procedures set forth in a letter of transmittal to be sent by the Company. Upon
such surrender, a certificate representing New Shares will be issued and
forwarded to the shareholders.
The Reverse Split alone will reduce the number of outstanding shares of
Common Stock to 5,000,000. After the consummation of the Reverse Split and the
sale by certain shareholders of 3,465,000 post-split shares of Common Stock to
the Company at a price of $.0001 per share as required by the terms of the
Reorganization Agreement, a total of 1,535,000 shares of Common Stock will be
outstanding.
The number of shares of capital stock authorized by the Articles of
Incorporation will not change as a result of the Reverse Split. The Common Stock
issued pursuant to the Reverse Split will be fully paid and nonassessable. The
voting and other rights that presently characterize the Common Stock will not be
altered by the Reverse Split. There is currently no public trading market for
the Company's Common Stock.
APPROVAL OF THE REVERSE SPLIT
Approval of the Reverse Split requires the affirmative consent of at
least a majority of the outstanding shares of Common Stock. Shareholders holding
a total of 10,211,207 shares of Common Stock, representing 68.1% of the
outstanding shares of Common Stock, have already agreed to give such consent.
APPROVAL OF THE NAME CHANGE
The proposed change of the Company's name to "BBJ Environmental
Technologies, Inc." is intended to convey more clearly a sense of the Company's
business after the acquisition of BBJ. Approval of the name change requires the
affirmative consent of at least a majority of the outstanding shares of Common
Stock of the Company. Shareholders holding a total of 10,211,207 shares of
Common Stock (68.1%) have already agreed to give such consent.
ELECTION OF NEW DIRECTORS
The election of new directors is proposed because of the proposed
acquisition by the former BBJ shareholders of over 80% of the outstanding common
stock of the Company. The agreement with BBJ requires that new directors
approved by the former shareholders of BBJ be appointed and elected to the Board
of Directors of the Company. The Bylaws of the Company give the Board of
Directors the authority to determine the number of directors, to increase or
decrease the number of directors and to fill vacancies or eliminate vacancies by
resolution of the Board of Directors. The Board of Directors has set the current
number of directors at five. The directors must receive a plurality of the votes
cast for director. The Articles of Incorporation of the Company do not allow for
cumulative voting. Shareholders holding a total of 10,211,207 shares of Common
Stock or
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68.1% of the outstanding shares of Common Stock have agreed to vote for the
following persons: Robert G. Baker, Jerry V. Schinella, Michael J. Gordon, Frank
P. Ragano, and Rebecca F. Walter.
RECORD DATE
The close of business March 21, 2000, has been fixed as the record date
for the determination of shareholders entitled to receive this Shareholders'
Information Statement.
EXPENSES OF INFORMATION STATEMENT
The expenses of mailing this Information Statement will be borne by the
Company, including expenses in connection with the preparation and mailing of
this Information Statement and all documents that now accompany or may hereafter
supplement it. It is contemplated that brokerage houses, custodians, nominees,
and fiduciaries will be requested to forward the Information Statement to the
beneficial owners of the Common Stock held of record by such persons and that
the Company will reimburse them for their reasonable expenses incurred in
connection therewith.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
BBJ has loaned $50,000 to the Company in exchange for the Company's
demand promissory note payable with interest at the rate of 6% per annum. The
proceeds of this loan are to be used by the Company for the payment of legal and
accounting expenses in connection with the Reorganization, bringing the Company
current in its filings under the Securities Exchange Act of 1934, as amended,
and retiring all debt, accounts payable and accrued expenses through the closing
of the Reorganization so that the Company will have no liabilities (other than
the $50,000 owed to BBJ).
A. Paul Shapansky and Herbert Maxwell have agreed to indemnify and hold
harmless BBJ in respect of any undisclosed liabilities, and any damages
resulting from a misrepresentation or breach of warranty or other breach of the
Reorganization Agreement by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning the ownership of
Common Stock giving effect to the Reverse Split immediately before and after
consummation of the BBJ transaction, with respect to shareholders who were known
to the Company to be beneficial owners of more than 5% of the Common Stock as of
March 21, 2000, and officers and directors as a group. Unless otherwise
indicated, the beneficial owner has sole voting and investment power with
respect to such shares of Common Stock.
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<TABLE>
<CAPTION>
Shares Beneficially Owned Percent of Voting Stock
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Name and Address Before After Before After
of Beneficial Owner Reorganization3 Reorganization Reorganization3 Reorganization4
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Herbert Maxwell (1) 644,045 128,800 13% *
440 E. 56 Street
New York, NY 10022
Dennis W. Rendflesh (1) 604,989 121,000 12% *
508 Whiston Place
Edmonton, Alberta
Canada T6M 2C6
A. Paul Shapansky (1) 2,154,702 275,467 43% 1.8%
1051 S. Park Rd.
Suite 309
Hollywood, FL 33021
James R. Flaherty (1) 51,187 51,187 1% *
1051 S. Park Rd.
Suite 309
Hollywood, FL 33021
Robert G. Baker (2) 0 4,180,648 (5) 0% 27.1%
6802 Citicorp Blvd.
Suite 500
Tampa, FL 33619
Jerry V. Schinella (2) 0 4,335,648 (5) 0% 28.1%
6802 Citicorp Blvd.
Suite 500
Tampa, FL 33619
Michael J. Gordon (2) 0 3,617,408 (6) 0% 22.9%
6802 Citicorp Blvd.
Suite 500
Tampa, FL 33619
Frank P. Ragano (2) 0 0 0% 0.0%
6802 Citicorp Blvd.
Suite 500
Tampa, FL 33619
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Rebecca F. Walter (2) 0 240,000 0% 1.6%
6802 Citicorp Blvd.
Suite 500
Tampa, FL 33619
Executive Officers 3,493,979 12,133,704 70% 78.4%
and Directors as a group (7):
</TABLE>
* Less than one percent.
1 Currently an Officer, Director or 5% shareholder of the Company.
2 Expected to be an Officer, Director or 5% shareholder of the Company
after the Reorganization.
3 Takes into effect Reverse Split but does not include sale to the
Company of 3,465,000 post-split Shares of Common Stock which will occur
immediately before the Reorganization.
4 All post-Reorganization percentages assume issuance of 1,000,000 shares
to investors in a private placement.
5 Includes options to purchase 938,758 shares of Common Stock. Excludes
450,000 shares (900,000 shares in the aggregate) which each of Messrs.
Baker and Schinella have agreed to sell to Mr. Gordon.
6 Includes options to purchase 1,044,198 shares of Common Stock. Also
includes 276,534 shares owned by Mr. Gordon's children and 192,719
shares held by a family trust for his brother that Mr. Gordon oversees
as trustee. Also includes 450,000 shares (900,000 shares in the
aggregate) which Mr. Gordon has agreed to purchase from each of Messrs.
Baker and Schinella.
7 Three persons before Reorganization and five persons after
Reorganization.
AMENDMENTS TO ARTICLES OF INCORPORATION
THE AMENDMENTS
The proposed amendments to the Company's Articles of Incorporation will
cause the Company to effect a one-for-three reverse stock split of its
outstanding Common Stock and to change the name of the Company to "BBJ
Environmental Technologies, Inc." The complete text of the Amendment to the
Articles is set forth in Exhibit A to this Information Statement. Upon filing of
the Amendment to the Articles with the Nevada Secretary of State, the Reverse
Split and the name change will be effective, and each certificate representing
shares of Common Stock outstanding immediately prior to the Reverse Split will
be deemed automatically without any action on the part of the shareholders to
represent one-third the number of shares of Common Stock after the Reverse
Split; provided however that no fractional New Shares will be issued as a result
of the Reverse Split. Fractional New Shares will be rounded up to the next whole
number. After the Reverse Split becomes effective, shareholders will be asked to
surrender certificates representing Old Shares in accordance with the procedures
set forth in a letter of transmittal to be sent by the Company. Upon
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such surrender, a certificate representing New Shares will be issued and
forwarded to the shareholders. The Reverse Split is a condition for the
Reorganization.
SUMMARY OF TRANSACTIONS CONTEMPLATED BY THE REORGANIZATION AGREEMENT
The Board of Directors of the Company has unanimously approved the
Agreement and Plan of Reorganization ("Reorganization Agreement") dated January
31, 2000, among the Company, BBJ and certain stockholders of BBJ which provides
for or requires completion of the following series of transactions as conditions
to consummation of the Reorganization:
o the Company becomes current in the filing of reports under the
Securities Exchange Act of 1934;
o the Reverse Split of the Common Stock of the Company on a
one-for-three basis;
o the sale by certain insiders of 3,465,000 post-split shares of
Common Stock to the Company at a price of $.0001 per share so
that the outstanding number of common shares will be reduced
from 15,000,000 to 1,535,000 shares immediately prior to the
Closing of the Reorganization Agreement;
o the issuance of two shares of Common Stock for each share of
BBJ common stock and 3.84 shares of Common Stock for each
share of BBJ preferred stock for a total issuance of
12,410,666 post-split shares of Common Stock to the
shareholders of BBJ;
o the resignation of the three current directors and officers of
the Company; and
o the appointment of five new directors of the Company.
A majority of the Company's shareholders have agreed by way of a
majority action of shareholders to approve the above transactions as well as the
proposed change of the Company's name to "BBJ Environmental Technologies, Inc."
In addition, on or after the Closing of the Reorganization, it is
expected (though not a condition to closing the Reorganization) that the Company
will close a private placement of Common Stock. See "Summary of Private
Placement."
After the closing of the Reorganization, the Company will offer persons
holding options or warrants to acquire BBJ common stock the right to exchange
such options and warrants for options to acquire Common Stock of the Company at
the ratio of two shares of Common Stock for each share of BBJ Common Stock.
There are options and warrants to purchase in the aggregate 3,004,224 shares of
BBJ Common Stock. If all of these options and warrants are exchanged (and
management
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of BBJ expects that substantially all of such options and warrants will be
exchanged), the holders will acquire options to purchase Common Stock at
exercise prices ranging from $.375 to $.625 per share.
BACKGROUND OF THE REORGANIZATION
Since the end of December 1996, following the foreclosure of the
Company's office property in Windsor, Connecticut by the lender on the property,
the conversion of its outstanding liabilities and preferred stock into Common
Stock of the Company, and the sale of its HPA subsidiary, the Company has had no
operating assets or ongoing business and has been engaged in searching for an
appropriate business opportunity for the shareholders. During 1999, management
of the Company reviewed various business plans and chose to pursue the
acquisition of BBJ due to its growth opportunity.
Also in 1999, management of BBJ was seeking additional equity funding
in order to fully implement their business and marketing plan for the expansion
of their business. Michael Gordon and Steven Morse with Lester Morse, P.C.,
counsel to BBJ, commenced discussions with Herb Maxwell, Secretary and a
director of the Company, in 1999 by submitting to Mr. Maxwell information on BBJ
and a proposed plan of reorganization. The same persons together with Paul
Shapansky, President of the Company, negotiated that plan of reorganization
which eventually became the Reorganization Agreement and was signed by the
parties as of January 31, 2000.
REASONS FOR APPROVAL BY MAJORITY OF SHAREHOLDERS AND BOARD OF DIRECTORS
The Board of Directors has given careful consideration to the
Reorganization, the existing business operations of BBJ, the future business
potential and plans of BBJ, the current book value of the Company, the interest
of shareholders of the Company, and the risks of the Reorganization to the
existing shareholders. Based on the foregoing considerations, the Board of
Directors together with a majority of shareholders believes that the
transactions contemplated by the Reorganization Agreement, including the Reverse
Split and the name change, are fair and in the best interests of the Company.
The majority of shareholders believes that the Company will benefit from the
Reorganization, with an immediate impact being the significant new operations
and revenues, assets, and shareholders' equity, as well as giving the Company
the ability to expand the operations of BBJ based on the funding through the
private placement.
ACCOUNTING TREATMENT OF THE REORGANIZATION
Upon Closing of the Reorganization, based upon management's
consultation with the auditors for the Company, Henderson Sutton & Co., P.C., of
Tulsa, Oklahoma, it appears that the proper accounting treatment is a so_called
"reverse acquisition," whereby BBJ will account for the transaction as a
purchase of the Company. BBJ is deemed to be the "acquirer" due to the common
shareholders of BBJ ultimately controlling the reorganized company.
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SUMMARY OF THE REORGANIZATION AGREEMENT
The following contains, among other things, a summary of the material
features of the Reorganization Agreement. This Summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the executed Agreement and Plan of
Reorganization a copy of which is attached hereto as Exhibit B.
General Terms. The Company, BBJ and certain shareholders of BBJ have
entered into an Agreement and Plan of Reorganization which provides that subject
to the meeting of certain conditions, including the Reverse Split on a
one-for-three basis of the Common Stock of the Company, the Company will issue
two shares of Common Stock with restrictive legend for each share of BBJ common
stock and 3.84 shares of Common Stock with restrictive legend for each share of
BBJ preferred stock or a total issuance of approximately 12,410,666 shares of
Common Stock to the former shareholders of BBJ in exchange for all of the
outstanding capital stock of BBJ. After the closing of the Reorganization, BBJ
will be a wholly-owned subsidiary of the Company and the ownership of the
Company will be controlled by the former shareholders of BBJ.
At or after the Closing, the Company intends to issue approximately
1,000,000 shares of Common Stock at a price of $2.00 per share to investors in a
private placement transaction (the "Private Placement"). The exact number of
shares to be issued in the Private Placement will be determined in the sole
discretion of the Board of Directors of the Company. If 1,000,000 shares are
sold, there will be aggregate proceeds of $2,000,000, and maximum net proceeds
to the Company of $1,800,000 after payment of placement agent fees and expenses.
The Private Placement will be made only to Accredited Investors as defined in
Regulation D of the Securities Act of 1933, as amended (the "1933 Act"). No
assurances can be given that the Company will be successful in completing the
Private Placement or, if completed, it will be completed on the terms described
above.
Upon completion of the Reorganization and the Private Placement, the
ownership of the Common Stock by (i) the current shareholders of BBJ, as a
group, (ii) the current Omega shareholders, as a group, and (iii) the investors
in the Private Placement, as a group, is estimated to be as follows:
Groups of Shareholders Common Stock % Owned
- ---------------------- ------------ -------
BBJ Shareholders 12,410,666 83.0%
Omega Shareholders 1,535,000 10.3%
Private Placement Shareholders 1,000,000 6.7%
---------- -----
(assuming placement of 1,000,000 shares)
TOTAL OF ALL SHAREHOLDERS 14,945,666 100.0%
========== ======
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The above table does not include any shares of Common Stock which are
or become issuable upon the exercise of stock options or warrants. It is
anticipated that on or after the Closing, options or warrants entitling the
holders to purchase in the aggregate a total of 3,004,244 shares of BBJ common
stock will be exchanged for stock options to purchase a total of 6,008,488
shares of Common Stock of the Company at exercise prices ranging from $.375 to
$.625 per share. If all of such BBJ options/warrants are exchanged for stock
options to purchase shares of Common Stock and the same are exercised, the
ownership of the Common Stock is estimated to be as follows:
Groups of Shareholders Common Stock % Owned
- ---------------------- ------------ -------
BBJ Shareholders 18,419,154 87.9%
Omega Shareholders 1,535,000 7.3%
Private Placement Shareholders 1,000,000 4.8%
---------- ----
(assuming placement of 1,000,000 shares)
TOTAL OF ALL SHAREHOLDERS 20,954,154 100%
========== ====
Closing. Closing is scheduled to take place at such time as agreed by
the parties but in any event may not occur earlier than 20 days following notice
to shareholders under this Information Statement as prescribed by Section 14C of
the Securities Exchange Act of 1934 (the "Act").
Conditions for Closing. The obligation of each of the parties to
consummate the Reorganization is subject to the following conditions, among
others:
o the Company is current in all reports required to be filed
under the Securities Exchange Act of 1934, as amended;
o the Reverse Split is completed;
o Paul Shapansky, Herbert Maxwell, Denis Rendflesh, Robert A.
Schneider, Lois Shapiro, Shai Sasson, Sidney Borenstein and
Eric Bashford CRT shall have sold back to the Company a total
of 3,465,000 post-split shares at a purchase price of $.0001
per share; and
o at least 90% of the holders of common stock of BBJ and 100% of
the holders of preferred stock of BBJ have executed the
Reorganization Agreement.
Termination; Waivers. The Reorganization may be terminated at any time
prior to the Closing by mutual consent of the parties, or by either party if the
conditions to the obligations of such party to consummate the Reorganization
have not been satisfied, or waived. Each party may, by a written instrument,
waive or extend the time for Closing or performance of any of the obligations of
the other party pursuant to the Reorganization.
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BBJ Loan. BBJ has loaned $50,000 to the Company in exchange for the
Company's demand promissory note payable with interest at the rate of 6% per
annum. The proceeds of this loan are to be used by the Company for the payment
of legal and accounting expenses in connection with the Reorganization
transaction and for the purpose of bringing the Company current in its filings
under the Securities Exchange Act of 1934, as amended, and retiring all debt,
accounts payable and accrued expenses through the closing of the Reorganization
so that the Company will have no liabilities (other than the $50,000 owed to
BBJ).
Indemnification. Paul Shapansky and Herbert Maxwell have agreed to
indemnify and hold harmless BBJ in respect of any undisclosed liabilities and
any damages resulting from a misrepresentation or breach of warranty or other
breach of the Reorganization Agreement by the Company.
Regulatory Approvals. No approvals by any governmental authority are
required in order to complete the Reorganization.
MATERIAL TERMS OF THE COMMON STOCK
The authorized common stock of the Company consists of 25,000,000
shares of $0.001 par value stock. As of February 29, 2000, there were 15,000,000
shares issued and outstanding and after the Reverse Split and the sale of
3,465,000 shares to the treasury by certain key shareholders of the Company (as
contemplated by the Reorganization Agreement) the number of outstanding shares
of common stock will total 1,535,000 immediately prior to the Reorganization. At
the closing of the Reorganization, 12,410,666 shares will be issued in exchange
for all of the issued and outstanding shares of BBJ. Upon completion of the
Reorganization and the Private Placement (assuming 1,000,000 shares are sold in
the Private Placement), 14,945,666 shares of Common Stock will be outstanding.
The holders of shares of Common Stock are entitled to one vote for each
share held of record on each matter submitted to shareholders. Shares of Common
Stock do not have cumulative voting rights for the election of directors. The
holders of shares of Common Stock are entitled to receive such dividends as the
Board of Directors may from time to time declare out of funds of the Company
legally available for the payment of dividends, subject to any prior rights of
holders of Preferred Stock. The holders of shares of Common Stock do not have
any pre_emptive rights to subscribe for or purchase any stock, obligations or
other securities of the Company and have no rights to convert their Common Stock
into any other securities.
Upon any liquidation, dissolution or winding up of the Company, holders
of shares of Common Stock are entitled to receive pro rata all of the assets of
the Company available for distribution to shareholders, subject to any prior
rights of holders of Preferred Stock.
-11-
<PAGE>
PREFERRED STOCK
The Board of Directors of the Company has the authority at any time and
from time to time to establish and designate one or more series of preferred
stock, to fix the number of shares of any series (which number may vary between
series) and to fix the dividend rights and preferences, the redemption price and
terms, liquidation rights, sinking fund provisions (if any), conversion
provisions (if any) and the voting powers (if any). This type of preferred stock
is sometimes referred to as "blank check" preferred stock. The Board of
Directors, without shareholder approval, could issue preferred stock with voting
and conversion rights that could adversely affect the voting power of holders of
Common Stock. Certain companies have used the issuance of preferred stock as an
anti_takeover device and the Board of Directors of the Company could, without
shareholder approval, issue preferred stock with certain voting, conversion
and/or redemption rights that could discourage any attempt to obtain control of
the Company in a transaction not approved by its Board of Directors. As of this
date, there are 5,000,000 shares of Preferred Stock authorized but there are no
shares of Preferred Stock issued or outstanding.
The foregoing summary of the material terms of the capital stock of the
Company does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the provisions
of the Articles of Incorporation of the Company, as amended by the Amendment to
the Articles attached hereto as Exhibit A.
REGISTRATION RIGHTS
After completion of the Private Placement, the Company intends to begin
registration for resale of the following shares of Common Stock issued in
connection with the Reorganization and the Private Placement:
o shares to be issued in connection with the Private Placement;
o shares issuable upon the exercise of certain options to
purchase Common Stock of the Company granted to GunnAllen
Financial, Inc. in exchange for its options to purchase BBJ
stock;
o shares issuable upon exercise of certain warrants of the
Company to be granted to Titan Gulf Partners, Ltd. in exchange
for its BBJ warrants;
o shares issuable in exchange for Series A and Series B
preferred stock of BBJ; and
o shares issuable to Lester Morse, Steven Morse and Adrienne
Grody as part of the consideration for Lester Morse P.C.
representing the Company after closing in connection with the
filing of such registration statement for the resale of the
shares and the filing of a registration statement on Form S-8
for an employee benefit plan.
-12-
<PAGE>
SUMMARY OF PRIVATE PLACEMENT
Private Placement. The Company is conducting a Private Placement of an
estimated 1,000,000 shares of Common Stock (subject to increase or decrease in
the discretion of the Board of Directors) at a price of $2.00 per share. The
Company may, in its discretion, close the Private Placement at any time even if
not all of the offered shares have been purchased. The Private Placement will be
open until May 31, 2000. The closing of the Private Placement is conditioned
upon the closing of the purchase of BBJ.
Use of Proceeds. The net proceeds available to the Company from the
sale of the Common Stock, assuming payment of a 10% commission to any selling
agent, will be $1,800,000 if 1,000,000 shares are sold. There is no minimum
number of shares which must be sold and the closing of the Reorganization is not
contingent upon closing the Private Placement. Assuming that 1,000,000 of shares
are sold, the estimated use of net proceeds from the Private Placement will be
as follows:
Amount Percentage
------ ----------
Equipment Purchases $ 150,000 8.3%
Hiring Additional Personnel 200,000 11.1
Sales & Marketing 850,000 47.3
Research & Product Development 150,000 8.3
Working Capital 450,000 25.0
------- ------
TOTAL $1,800,000 100.0%
========== ======
Although the Company intends to utilize the proceeds of the Private
Placement as disclosed above, the Company's Board of Directors will have
complete discretion as to the final use of proceeds and the appropriateness of
(a) key-man life insurance, (b) obtaining officer and director liability
insurance, (c) employment contracts with executive officers, (d) indemnification
contracts, and (e) incentive plans to award executive officers and key
employees. No assurances can be given that the decisions will lead to agreements
that are on terms advantageous to the Company. Pending the above uses, the
Company intends to invest the net proceeds from this Offering in short-term,
interest bearing, investment grade securities.
Registration Rights. The Company has agreed to register with the
Securities and Exchange Commission the shares of Common Stock issued in the
Private Placement, as well as certain additional shares. (See "REGISTRATION
RIGHTS.")
Restrictions on Resale. The terms of the Private Placement Memorandum
provide that investors in the Private Placement will agree not to publicly sell
one-half of the shares they acquire for a period of six months from the
effective date of the registration statement registering the resale of the
shares.
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<PAGE>
SUMMARY OF PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial information for the Company
is based on the historical financial statements of the Company (which appear in
the Annual Report to Stockholders which accompanies this Information Statement)
and of BBJ (which are attached to this Information Statement as Exhibit D) and
has been prepared on a pro forma basis to give effect to the Reorganization and
the Private Placement (assuming sale of 1,000,000 shares) under the purchase
method of accounting, as if the transaction had occurred at January 1, 1999, for
each operating period presented. The pro forma information was prepared based
upon certain assumptions described below and may not be indicative of results
that actually would have occurred had the Reorganization occurred at the
beginning of the last full fiscal year presented or of results which may occur
in the future. The unaudited pro forma consolidated financial data and
accompanying notes should be read in conjunction with the annual financial
statements and notes thereto of BBJ appearing at Exhibit D in this Information
Statement.
The unaudited pro forma consolidated balance sheet as of December 31,
1999, presents the financial position of the Company as if the Reorganization
had occurred and the Private Placement had been closed on that date and was
prepared utilizing the audited balance sheets as of December 31, 1999, of the
Company and BBJ. The pro forma consolidated statements of operations data
presented assumes the Reorganization occurred at the beginning of the periods
presented. It should not be assumed that the Company and BBJ would have achieved
the unaudited pro forma consolidated results if they had actually been combined
during the periods shown.
The Reorganization is expected to be accounted for as a purchase. The
common shareholders of BBJ will receive two post-split shares of Common Stock
for each share of BBJ common stock and the preferred shareholders of BBJ will
receive 3.84 shares of Common Stock for each share of BBJ preferred stock,
resulting in the current stockholders of BBJ acquiring approximately 83% of the
outstanding Common Stock.
The unaudited pro forma consolidated results are based on estimates and
assumptions, which are preliminary and have been made solely for the purposes of
developing such pro forma information. The unaudited pro forma consolidated
results are not necessarily an indication of the results that would have been
achieved had such transactions been consummated as of the dates indicated or
that may be achieved in the future.
The unaudited pro forma combined results should be read in conjunction
with the historical consolidated financial statements and notes thereto set
forth herein, and other financial information pertaining to the Company and BBJ,
including "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for each of the Company and BBJ. Pro forma financial
information is set forth in greater detail in the Pro Forma Financial Statements
beginning on Exhibit C of this Information Statement.
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<PAGE>
For the Period Ended
PRO FORMA INCOME STATEMENT: December 31, 1999
-----------------
Revenues $ 253,975
Cost of Revenues $ 69,196
Gross Profit $ 184,779
Selling, General & Administrative Expenses $ 887,024
Other Income and Expenses $ -0-
Income before provision for taxes $ N/A
Provision for income taxes $ N/A
Net Income (Loss) $(702,245)
Net Income (Loss) Per Share $ (0.05)
As of
PRO FORMA BALANCE SHEET: December 31, 1999
-----------------
Total Assets $2,334,927
Total Liabilities $ 527,409
Stockholders' Equity $1,807,518
Book Value Per Share $ 0.12
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Company has not sought an opinion as to the tax consequences of the
Reorganization, however, because the Reorganization will be treated for tax
purposes as an acquisition of substantially all of the stock of BBJ in an
exchange for shares of Common Stock, the Company believes that the
Reorganization will constitute a tax_free reorganization under Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"), and
accordingly, the Company will not recognize any gain or loss on such exchange.
The Reorganization will, however, significantly limit the Company's
ability to utilize on an annual basis its net operating loss carryforward
("NOL") currently available to the Company. Under Section 382 of the Code,
limitations are imposed on the use of NOLs in the event of a substantial change
in the stock ownership of a corporation. The Reorganization will result in such
an ownership change because, among other reasons, the percentage of voting stock
owned by the existing shareholders of the Company after the Reorganization will
be less than 50% of their ownership prior to the Reorganization. As a result,
the amount of the Company's annual taxable income that could be offset by the
pre_Reorganization NOL will be limited to an amount determined by multiplying
the value of the issued and outstanding shares of Common Stock on the date of
the Reorganization by the federal long_term tax exempt rate. The value of Common
Stock has not yet been ascertained for purposes of determining the limitation on
use of the NOL. To the extent the value of the Common Stock is determined to be
equal to stockholders' equity, the use of the NOL will be significantly limited.
The possibility exists that the Company's NOL may be eliminated completely
-15-
<PAGE>
if the Company is not considered during the two-year period following the
Reorganization to have continued the Company's historic business or to have used
a significant portion of the Company's assets.
INFORMATION CONCERNING BBJ
HISTORY OF BBJ
Established in 1993 by Robert Baker, Chairman and CEO, BBJ develops,
manufactures, and markets products and devices that control contamination and
air pollution in heating, ventilation and air-conditioning ("HVAC"), and
refrigeration systems of homes, offices, health care facilities, food processing
plants, schools, and public buildings.
DESCRIPTION OF PRODUCTS
BBJ manufactures and markets a proprietary line of user and
environmentally friendly products that reduce indoor air contamination and,
therefore, lead to a healthier indoor environment. These products are designed
to treat the heating and air-conditioning systems in homes and commercial and
institutional buildings.
General. BBJ's existing products include the following:
Micro Coil Clean(TM) (Detergent Based Industrial Cleaner) - Removes
built-up dirt and debris without damaging surfaces where applied.
BBJ MicroBiocide(TM) (Growth Prevention) - Only product registered by
EPA for use in air-conditioning and refrigeration systems to control bacterial
and algal growth. It destroys active microbial growth and inhibits future growth
for as long as six months. To be applied after BBJ Micro Coil Clean(TM).
FreshDuct(TM) (Odor Eliminator) - Formulated especially for conditions
inside of HVAC systems, it encapsulates odors at the source, not just covers
them up. Its advanced technology destroys odors on contact to freshen and
deodorize air ducts, basements, attics, crawl spaces, and other areas prone to
odors. It is to be used in conjunction with BBJ MicroBiocide(TM).
BBJ Spray(TM) Disinfectant/Cleaner - Disinfectant cleaner product
designed to kill and clean infection and disease-causing organisms on
environmental surfaces, including external portions of HVAC systems.
The Indoor Air First Aid Kit(TM) - Combined easy-to-use package of BBJ
MicroBiocide(TM), BBJ Micro Coil Clean(TM), and BBJ Spray(TM)
Disinfectant/Cleaner that can be used for one single residential or small office
treatment.
-16-
<PAGE>
MANUFACTURING
Currently, all manufacturing is done in BBJ's Tampa, Florida
facility. The production facility consists of an automated clean liquid filling
line and weight batch blending room. Production and blending operations are
climate controlled and meet GMP specifications.
PURCHASING
BBJ relies on various suppliers to furnish the raw materials and
components used in the manufacturing of its products. Management believes that
there are alternative suppliers for all of the key raw material and component
needs.
SALES AND MARKETING
To date sales and marketing activities have been limited because of the
lack of resources available to BBJ. Currently, products are marketed utilizing
indirect sales channels on a private label and BBJ branded basis. BBJ's
distribution strategy reflects a role of a Channel Partner of Indoor Air Quality
("IAQ"), Indoor Environment Quality ("IEQ") and HVAC hygiene products designed
to leverage off established HVAC and retail distribution channels by using
existing HVAC and Commercial/Industrial Refrigeration service providers and
suppliers.
BBJ has entered into relationships with several major companies who
market its products to the end user, the consumer. The next six months will be
devoted to nurturing relationships with current channel partners while seeking
partners who have experience and a reputation in other industries.
TARGET MARKETS
BBJ has identified the following primary markets for its products:
Residential: The residential market consists of HVAC contractors,
dealers, wholesalers and OEM's that provide equipment, parts and service to
homes and other residences. For treating residential homes, HVAC contractors
will primarily use BBJ Micro Coil Clean(TM), BBJ MicroBiocide(TM), and BBJ
Spray(TM) packaged conveniently in The Indoor Air First Aid Kit(TM) for an easy
15 minute service that is recommended every six months. Since there are many
avenues of distribution to reach the HVAC contractor or dealer, the primary
chain of distribution that BBJ utilizes is: BBJ to Original Equipment
Manufacturer (Lennox, Rheem and Trane) or BBJ to a Channel Partners' (Purolator,
AAF and Nalco) Sales Person/Manufacturer's Representative to the HVAC
distributor/wholesaler to the HVAC contractor/dealer to the residential home end
user.
Commercial: The commercial market consists of commercial buildings
(i.e., hospitals, schools, businesses, etc.) that use their own technicians or
third party service companies to maintain their air-conditioning and
refrigeration systems. Targeted individuals for the company's products
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<PAGE>
are the key purchasing employees or owners of the commercial building. Many
commercial accounts use independent HVAC contractors or duct cleaners to provide
preventative service. When commercial buildings provide their own maintenance
technicians, the primary chain of distribution that BBJ utilizes is: BBJ to
Channel Partners' Sales Person/Manufacturer's Representative to Commercial
Building Purchaser. Current channel partners include Purolator and Nalco NDT.
Future potential partners will be the multi-national control systems
manufacturers and service supplies such as Honeywell, Johnson Controls, and
Landis & Gyr Siemans. Targeted Channel Partners for the commercial refrigeration
business will include Carrier, Lennox and York.
Industrial: The industrial market contains contractors, dealers
wholesalers and OEM's that provide equipment and service to industrial processes
that require large volumes of refrigeration. The most apparent example is the
food processing industry that slaughters, dissects, formulates and packages
animals, animal products and produce. While success has been demonstrated at a
few individual user facilities, BBJ is currently seeking strong Channel partners
to fully realize the potential of this significant market segment. Additional
companies that service the channel must be identified and cultivated.
Other Markets: Automotive and Duct Industry: An Automotive Air First
Aid Kit and a New Formula Duct Product are development. BBJ and the College of
Public Health at the University of South Florida commenced on January 25, 1999,
a study to test a new antimicrobial product for all duct work materials. The
study method is owned by BBJ and was developed in conjunction with the EPA. It
took over three years to develop the study.
Healthcare/Dental/Homeowner: BBJ Spray(TM) has been test marketed and
targeted towards the healthcare and dental industries. There are approximately
865,000 healthcare providers and 35,000 dentists in the U.S. BBJ Spray(TM) is
popular in this market because of its disinfectant ability towards various
diseases such as herpes, tuberculosis and AIDS.
COMPETITION
The HVAC and Industrial/Commercial Refrigeration industries are highly
competitive by nature. Although BBJ believes it enjoys an advantageous
competitive position because of its EPA regulatory approval, its product
performance, product mix and price, BBJ faces competition in this market from
competing technologies and direct competition from additional companies that may
enter this market with greater resources and experience than BBJ. No assurances
can be given that BBJ will be able to successfully compete with other companies
in the future. It should be noted that other expenditures of funds by homeowners
and building owners may adversely affect the potential sale of products whose
application result in problem avoidance by reducing the amount of funds
available for such purpose.
-18-
<PAGE>
GOVERNMENT REGULATION
As a chemical manufacturer, BBJ is subject to a wide variety of local,
state and federal regulations. While BBJ believes it is in compliance with all
applicable regulations, there can be no assurances that from time to time
unintentional violations of such regulations will not occur. Government
regulation results in added costs for compliance activities and the risk of
losing revenues should regulations change.
RESEARCH AND DEVELOPMENT
BBJ and the College of Public Health at the University of South Florida
recently commenced a study to test a new antimicrobial product for all duct work
materials. The study method is owned by BBJ and was developed in conjunction
with the EPA. Management believes that it is the only study method approved so
far by the EPA for determining indoor exposures through product concentration
levels.
PROPRIETARY RIGHTS
BBJ relies on a combination of trade secret laws, nondisclosure and
other contractual agreements and technical measures to protect its proprietary
rights in its products. BBJ believes that its products, trademark, and other
proprietary rights do not infringe on the proprietary rights of third parties.
BBJ holds a primary EPA registration for BBJ MicroBiocide(TM). This
registration gives the Company exclusive right to control the marketing of that
technology for 17 years. BBJ Spray(TM) is also registered with the EPA. Both
products are registered in all states in which they are marketed. The BBJ Micro
Coil Clean(TM) formula is guarded by trade secrets and the FreshDuct(TM) Odor
Eliminator formula has a patent-pending.
EMPLOYEES
As of February 29, 2000, BBJ had 13 full time employees.
FACILITIES
The Company is located in a 7,000 square foot facility at 6802 Citicorp
Blvd., Suite 500, Tampa, Florida. This facility lease, which is from a
non-affiliated party, expires on December 31, 2002. BBJ pays a base monthly rent
of approximately $5,600, which includes rent, common area maintenance, insurance
and real estate taxes. The landlord may increase BBJ's rent and common area
maintenance, capped at 5% per year plus BBJ's pro rata share of insurance and
real estate tax increases.
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<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is obtained from the audited
financial statements of BBJ as of December 31, 1999 and 1998, which are included
elsewhere in Exhibit D to this Information Statement. The selected financial
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
notes thereto referred to above.
BBJ for Year Ended
12/31/99 12/31/98
-----------------------------
Net Sales $ 253,975 $ 285,809
Cost of Goods Sold 69,196 87,536
--------- ---------
Gross Profit 184,779 198,273
Operating Expenses 865,615 656,987
--------- ---------
Net Income (Loss) $(680,836) $(458,714)
Total Assets $ 172,427 $ 183,703
Long-Term Liabilities $ 266,925 $ 188,252
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
- ---------------------
Planned principal operations of BBJ have not commenced, although BBJ
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 BBJ, its
activities from its inception through December 31, 1999 fall within the
referenced guidelines. Accordingly, BBJ has reported its activities in
accordance with the aforesaid Statement of Financial Accounting Standards No. 7.
During the years ended December 31, 1999 and 1998 and from inception in
1993 to December 31, 1999, BBJ sustained a net loss of approximately $680,836,
$458,714 and $1,409,806, respectively. These losses are expected to continue for
a presently undetermined time. The Company's losses in 1999, independent of BBJ,
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. BBJ intends to
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<PAGE>
establish a sales and marketing organization and attempt to develop strategic
partner relationships with national companies and expand advertising and
promotion. No assurances can be given that BBJ will be successful in these
efforts.
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1999, BBJ had net stockholders' deficit of $306,659,
accumulated losses during the development stage of $1,409,806 and a working
capital deficit of $132,906. The foregoing does not give effect to BBJ's
completion of a $375,000 financing in January 2000. There can be no assurance
that BBJ will be able to continue as a going concern or achieve material
revenues or profitable operations. BBJ is dependent upon the proceeds of the
Private Placement and sufficient cash flow from operations to meet its
short-term and long-term liquidity needs. BBJ may require additional financing
beyond the proceeds received in the Private Placement depending upon the number
of shares sold therein 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
BBJ.
The maximum proceeds of the Private Placement are intended to be used
to provide BBJ with the necessary capital to maintain and expand its operations
for a period of 12 months when BBJ expects to achieve significant cash flow from
operations, although no assurances can be given in this regard.
FORWARD-LOOKING STATEMENTS
Certain statements included in this Information Statement regarding the
Company and BBJ which are not historical facts are forward-looking statements,
including the information provided with respect to the future business
operations and anticipated agreements and projects of the Company and BBJ after
the Reorganization. These forward-looking statements are based on current
expectations, estimates, assumptions and beliefs of management; and words such
as "expects," "anticipates," "intends," "plans," "believes," "estimates" and
similar expressions are intended to identify such forward-looking statements.
These forward-looking statements involve risks and uncertainties, including, but
not limited to, the success of BBJ's sales strategies, market acceptance of
BBJ's products and services, BBJ's ability to obtain a larger number and size of
contracts, the timing of contract awards, work performance and customer
response, the impact of competitive products and pricing, and technological
developments by BBJ's competitors. Accordingly, actual results may differ
materially from those expressed in the forward-looking statements.
ELECTION OF DIRECTORS
Because the current officers of the Company will resign their positions
with the Company at the closing of the Reorganization and the five new directors
will be elected by the stockholders pursuant to this Information Statement, all
of the information set forth in this Section regarding the "Election of
Directors" pertains to those executives of BBJ who will become directors and
officers
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<PAGE>
of the Company upon the closing of the Reorganization. Information regarding the
current officers and directors of the Company is set forth in the Company's
Annual Report for 1999, which accompanies this Information Statement.
INFORMATION CONCERNING NOMINEES
The following nominees of BBJ are expected to become executive officers
and directors of the Company at the closing of the Reorganization.
<TABLE>
<CAPTION>
Name Age Expected Position with Company
- ---- --- ------------------------------
<S> <C> <C>
Robert G. Baker 62 Chief Executive Officer and Chairman of the Board
Jerry V. Schinella 40 President, Chief Operating Officer and Director
Michael J. Gordon 42 Vice President, Corporate Administrator, Secretary and
Director
Frank P. Ragano 71 Director
Rebecca F. Walter 48 Director
</TABLE>
ROBERT G. BAKER - Founder, Chairman and Chief Executive Officer of BBJ
since August 1993, Mr. Baker is responsible for the strategy, overall policies,
management development, regulatory and technical issues, and the Company's
future expansion. He has served in a number of senior operations and management
positions. As Vice President, Operations, he was responsible for manufacturing,
research and development, and regulatory affairs for Veridien Corporation for
three years from 1991 to 1994. Prior to that, he was Vice President,
Administrative Services, University of Texas M.D. Anderson Cancer Center in the
Texas Medical Center in Houston from 1985 to 1990. In this position, he was
responsible for the design, construction, maintenance, and operations of the
facilities, safety and security, and compliance with safety, health, and
hazardous materials regulations. Much of his earlier career involved work as a
Senior Manager with Gulf Oil Corporation. Mr. Baker has post graduate training
from Harvard University, the University of Pennsylvania, and Wichita State
University and a BS from Oklahoma State University. He is a member of ASHRAE
where he sits on various Committees and the Chemical Specialties Manufacturer's
Association-Regulatory Affairs Committee, the Small Business Council, the IAQ
Special Committee (which Mr. Baker chairs), and the Labeling Task Force.
JERRY V. SCHINELLA - Founder, President, and Chief Operating Officer of
BBJ since 1994, and member of the Board of Directors since August 1993. Mr.
Schinella is responsible for Company operations, overseeing finance, accounting,
logistics, and administration. Mr. Schinella joined Veridien Corporation in July
1992 as Vice President and Controller. In this capacity, he was responsible for
all corporate accounting and finance activities including internal and external
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<PAGE>
financial reporting, analysis and planning, vendor relations, and collections.
Prior to his work with Veridien, Mr. Schinella was a Senior Manager with KPMG
Peat Marwick in Tampa, Florida. In his eight years with KPMG Peat Marwick, his
professional accomplishments include significant experience in financial
reporting to the SEC, reviewing financial and operational controls of client
companies and extensive communication and negotiations with bank officers. In
1985, Mr. Schinella became a licensed Certified Public Accountant in the State
of Florida. He has a degree in accounting from Central Michigan University and a
Masters of Business Administration from Michigan State University.
MICHAEL J. GORDON - Vice President, Corporate Administrator of BBJ
since April 1998 and member of BBJ's Board of Directors since April 1997. From
August 1987 through December 1997, Mr. Gordon was employed by Phoenix
Information Systems Corp., a public corporation, where he was responsible for
overseeing administrative operations, the filing of all SEC reports and
documents, company news releases and public relations. Mr. Gordon also served as
a financial consultant. Prior to joining Phoenix, Mr. Gordon served as Director
of Legacies and Planned Giving for the American Cancer Society. Mr. Gordon
received his Bachelor of Science degree from the State University of New York in
1980.
FRANK P. RAGANO - Major General, U.S. Army (Ret.). Mr. Ragano has
served as a director of Skylynx Communications, Inc. since 1998 and as its
chairman since 1999. Mr. Ragano was, until earlier this year, President and CEO
of CMS, Inc., a wholly owned subsidiary of Daimler-Benz GmbH. Mr. Ragano
graduated with a B.S. degree from Duquesne University in 1950 and later
graduated with a Master of Business Administration (MBA) from Syracuse
University, New York. After a well-decorated career in the military, Mr. Ragano
retired from active Army service and became Vice-President of the American
Defense Preparedness Association and Chairman and CEO of BEI Defense Systems
Company.
REBECCA F. WALTER - Ms. Walter is an investor. She serves on numerous
civic boards, including the James Madison Institute, WEDU Public Broadcasting
Station, the H. Lee Moffitt Cancer Center and Research Institute, the Tampa Bay
Performing Arts Center, American Red Cross, University of South Florida Economic
Advisory Board, and many other non-profit organizations. Ms. Walter graduated
from Meredith College, Raleigh, North Carolina and received her B.A. at Florida
State University.
EXECUTIVE COMPENSATION
Both Mr. Baker and Mr. Schinella received salaries of $72,000 and
$66,000 for 1999 and 1998, respectively. Mr. Gordon received a salary of $60,000
and $40,000 for 1999 and 1998, respectively. The two outside directors received
no salary. From time-to-time over the past few years, BBJ has accrued salaries
of its executive officers. At January 31, 2000, such arrears total approximately
$17,000.
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<PAGE>
During the period from inception to December 31, 1999, no cash
compensation was paid to any of the directors of BBJ for serving in such
capacity. BBJ's Board of Directors has complete discretion as to the
appropriateness of (a) key-man life insurance, (b) obtaining officer and
director liability insurance, (c) employment contracts with and compensation of
executive officers and directors, (d) indemnification contracts, and (e) bonuses
and incentive plans to award executive officers and key employees.
The following table sets forth the annual salary for each executive
officer of the Company which will be in effect as of the Closing of the
Reorganization:
<TABLE>
<CAPTION>
Annual Salary
Name Office 2000(projected)(2)
- ---- ------ ------------------
<S> <C> <C>
Robert G. Baker Chairman/Chief Executive Officer $72,000(1)
Jerry V. Schinella President/Chief Operating Officer $72,000(1)
Michael Gordon Vice President, Corporate Administrator $60,000
</TABLE>
(1) It is expected that the Company will pay approximately $4,200 during
2000 for $300,000 of life insurance on the lives of Mr. Baker and Mr.
Schinella. Similar amounts were paid in 1998 and 1999. Mr. Baker and
Mr. Schinella are beneficiaries in the amount of $100,000 and their
respective spouses on the remaining $200,000. These amounts are not
included in the above compensation amounts.
(2) The definitive compensation of the Company's officers will be
determined by the Board of Directors of the Company.
Employment Contract with Key Person
- -----------------------------------
Pursuant to an Employment Agreement dated January 21, 2000, BBJ
employed Mr. Richard L. Palke as Director of Worldwide Sales and Marketing for a
term commencing on January 11, 2000 and continuing until December 31, 2004,
unless otherwise terminated pursuant to the terms thereof. Pursuant to the
Agreement, Mr. Palke is paid a base salary of $60,000 per annum and is entitled
to bonuses for reaching certain revenue levels based upon BBJ's sales incentive
plan. Mr. Palke is also entitled to the following: major medical health benefits
equivalent to that provided to the officers in BBJ; indemnification from any
claim or law suit which may be asserted against him when acting as Director of
Worldwide Sales and Marketing for BBJ provided that said indemnification is not
in violation of any federal or state law or rule or regulation of the Securities
and Exchange Commission; and options to purchase up to 250,000 shares of BBJ's
Common Stock at an exercise price of $1.25 per share, 90,000 of which shall be
"Service Options" and 160,000 of which shall be "Cliff Vesting Options." The
Service Options shall vest at the rate of 30,000 shares for each year of
employment, each 30,000 options to expire four years after full vesting. The
Cliff Vesting Options shall all vest if Mr. Palke is employed by BBJ on December
31, 2004 and will all expire on December 31, 2008, unless the schedule for
vesting is accelerated as a result of Mr. Palke
-24-
<PAGE>
accomplishing one or more of the following objectives: an option for 40,000
shares shall vest when $17,500,000 in annual revenues is achieved; an option for
40,000 shares shall vest when $28,000,000 in annual revenues is achieved; and an
option for 80,000 shares shall vest when $40,000,000 in annual revenues is
achieved, in which case any options for which the vesting is accelerated shall
expire on the earlier of four years from their date(s) of vesting or December
31, 2008. Mr. Palke's Employment Agreement also contains certain provisions with
respect to disability, termination, confidentiality and non-competition. BBJ
expects to offer Mr. Palke the opportunity to exchange his BBJ options for the
Company's options. The terms of the new options will be the same as the BBJ
options except that the number of shares subject to the option would double and
the exercise price would be reduced to $.625 per share.
Board of Directors Report on Executive Compensation
- ---------------------------------------------------
The Board of Directors of BBJ has been composed of Robert G. Baker,
Chairman of the Board, Jerry V. Schinella, Treasurer, Michael J. Gordon,
Secretary, and Robert H. Black.
The Company's Board of Directors, which will include Robert G. Baker,
Jerry V. Schinella and Michael J. Gordon, Frank P. Ragano and Rebecca F. Walter,
will be responsible for reviewing and determining the annual salary and other
compensation of the executive officers and key employees of the Company. The
goals of the Company are to align compensation with business objectives and
performance and to enable the Company to attract, retain and reward executive
officers and other key employees who contribute to the long-term success of the
Company. The Company provides base salaries to its executive officers and key
employees sufficient to provide motivation to achieve certain operating goals.
Although salaries are not specifically tied to performance, incentive bonuses
are available to certain executive officers and key employees. In the future,
executive compensation may include without limitation cash bonuses, stock option
grants and stock reward grants. In addition, the Company may set up a pension
plan or similar retirement plans.
Proposed Stock Option Plan
- --------------------------
After the Closing, it is anticipated that the Board of Directors of the
Company will establish a new stock option plan for the Company which will cover
an estimated 7,000,000 shares of its Common Stock, including the estimated
5,008,488 resulting from the exchange of outstanding options to purchase shares
of BBJ common stock. It is expected that this stock option plan will be
registered on Form S-8 with the Securities and Exchange Commission.
Indemnification
- ---------------
Article Eight of the Company's Certificate of Incorporation provides
for it to indemnify any and all directors and officers whom it shall have power
to indemnify under Section 78.751 of the Nevada General Corporation Law from and
against any and all of the expenses, liabilities or other matter referred to in
or covered by such section, and the indemnification provided for herein shall
-25-
<PAGE>
not be deemed exclusive of any other rights to which the persons so indemnified
may be entitled under any By-Law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity by holding such office, and shall continue
as to a person who has ceased to be a director of officer and shall inure to the
benefits of the heirs, executors and administrators of such a person. The
Company has been advised that it is the position of the SEC that insofar as the
foregoing provisions may be invoked to disclaim liability for damages arising
under the Securities Act, that such provisions are against public policy as
expressed in the Securities Act and are therefore unenforceable.
INDEPENDENT ACCOUNTANTS
The Company's current auditor is the Tulsa, Oklahoma firm of Henderson
Sutton & Co., P.C. It is contemplated that upon Closing of the Reorganization,
the auditors of BBJ, Kirkland, Russ, Murphy & Tapp of Clearwater, Florida will
become the Company's auditors. During the past two years there have been no
changes in, or disagreements with, accountants on accounting and/or financial
disclosure.
-26-
<PAGE>
EXHIBIT A
AMENDMENT TO ARTICLES OF INCORPORATION
RESOLVED, the Articles of Incorporation of Omega Development, Inc. are
amended by inserting an Article Tenth so that after Article Ninth, there appears
the following text:
TENTH: On the effective date of this amendment to the Articles of
Incorporation (the "Effective Date"), the Common Stock of the
Corporation will be reverse split on a one-for-three basis so that each
share of Common Stock issued and outstanding immediately prior to the
Effective Date shall automatically be converted into and reconstituted
as one-third of a share of Common Stock (the "Reverse Split"). No
fractional shares will be issued by the Corporation as a result of the
Reverse Split. Each fractional share shall be rounded into one whole
share.
RESOLVED, the Articles of Incorporation of Omega Development, Inc. are
amended by substituting the following Article First for the existing Article
First, so that there appears the following text:
ARTICLE II
FIRST: The name of the Corporation is BBJ ENVIRONMENTAL TECHNOLOGIES,
INC.
-A-1-
<PAGE>
EXHIBIT B
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of January 31, 2000,
by and among Omega Development Incorporated, a Nevada corporation ("Purchaser"
or "Omega"), BBJ Environmental Solutions, Inc. (hereinafter referred to as
"BBJ") and the Stockholders of BBJ listed to at the foot of this Agreement
(collectively referred to as the "Transferors").
W I T N E S S E T H:
WHEREAS, Transferors will immediately prior to the Closing (as
hereafter defined) be the owners and holders of 100% of BBJ's outstanding
capital stock consisting of 5,683,333 shares of BBJ Common Stock held by 24
persons, 100,000 shares of Series A Preferred Stock currently convertible into
160,000 shares of BBJ Common Stock held by 7 persons and 171,875 shares of
Series B Preferred Stock currently convertible into 275,000 shares of BBJ Common
Stock held by 6 persons; and
WHEREAS, the Omega Stockholders, consisting of 18 persons, are currently the
owners and holders of 14,219,630 shares of Purchaser's Common Stock, $.001 par
value, before giving effect to a one-for-three reverse stock split and the
return to treasury of 3,465,000 shares, leaving them with 1,274,877 shares of
Purchaser's Common Stock immediately before Closing; and
WHEREAS, approximately 570 other Omega stockholders of record currently own
780,370 shares of Purchaser's Common Stock, $.001 par value, before giving
effect to a one-for-three reverse stock split, resulting in approximately
260,123 shares of Purchaser's Common Stock to be owned by them immediately
before closing, which when added to the 1,274,877 shares referred to above will
total 1,535,000 outstanding Omega shares immediately before Closing; and
WHEREAS, Purchaser is a publicly held corporation that desires to acquire
control of a business which has growth potential; and
WHEREAS, Purchaser desires to acquire 100% of the issued and outstanding shares
of BBJ capital stock in exchange for 12,410,666 shares of Common Stock (subject
to adjustment pursuant to Article 1.03 herein) of Purchaser (the "Omega Common
Stock") in a tax free transaction pursuant to the provisions of Section
368(a)(1)(B) of the Internal Revenue Code of 1986;
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and undertakings herein contained, and on the terms and
subject to the conditions set forth herein, the parties hereto agree as follows:
-B-1-
<PAGE>
ARTICLE I
PURCHASE AND SALE
-----------------
1.01 Sale and Purchase of Stock. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), the
Transferors shall sell, assign, transfer, convey and deliver to Purchaser, free
and clear of any liens, claims, encumbrances and charges whatsoever, and
Purchaser shall purchase, accept and acquire from the Transferors 5,683,333
shares of the BBJ Common Stock (subject to adjustment as provided in Article
1.03 herein), 100,000 shares of Series A Preferred Stock and 171,875 shares of
Series B Preferred Stock owned by them, as referenced in the signature pages in
Tables I through III below. Purchaser shall purchase, accept and acquire from
the Transferors all the aforesaid securities.
1.02 Closing. The closing of the transaction contemplated hereby (the
"Closing") shall occur on or before March 1, 2000 or such later date to which
Purchaser and BBJ shall agree from time to time to adjourn same. The Closing
shall occur at 10:00 A.M. in the offices of BBJ or at such other time and place
as shall be mutually agreed to in writing by Purchaser and BBJ. In addition to
any other closing conditions referenced herein, it is a condition precedent to
the closing of this transaction that (i) Purchaser is current with all reports
required to be filed under the Securities Exchange Act of 1934, as amended, (ii)
Purchaser effects a one-for-three reverse stock split and a total of 3,465,000
post-split shares are sold back to the treasury of Purchaser at a purchase price
of $.0001 per share and subsequently retired to the status of authorized but
unissued shares of common Stock resulting in Purchaser having no more than
1,535,000 shares of Common Stock outstanding immediately prior to Closing, and
(iii) Paul Shapansky, Herbert Maxwell, Dennis Rendfish, Robert A. Schneider,
Lois Shapiro, Shai Sasson, Sidney Borenstein and Eric Bashford CRT shall be
responsible for the stock sale back referenced in (ii) above.
1.03 Purchase Price. In consideration of the aforesaid securities of BBJ
to be exchanged by the Transferors, Purchaser at the Closing shall deliver to
Michael J. Gordon, as agent for the Transferors, certificates representing an
aggregate of up to 12,410,666 shares of Omega Common Stock, free and clear of
any liens, claims, encumbrances or charges whatsoever, registered as provided in
the signature pages in Tables I through III below. In this respect, it is
understood and agreed as follows: (i) Common Stockholders of BBJ shall receive
two shares of Omega Common Stock in exchange for each share of BBJ Common Stock;
and (ii) Series A and Series B Preferred Stockholders shall each receive 3.84
shares of Omega Common Stock in exchange for each share of BBJ Preferred Stock,
rounded up to the nearest whole number in lieu of issuing any fractional shares
of Omega Common stock. In the event that all Transferors named below do not
execute this Agreement, a pro rata number of shares of Omega Common Stock will
be delivered to the Transferors at Closing. However, it is a condition precedent
to the closing of this Transaction that at least 90% of the BBJ Common
Stockholders and 100% of the Preferred Stockholders execute this Agreement to
become Transferors. Further, in the event that any additional shares of Common
Stock are issued by BBJ prior to Closing, whether from the exercise of options
or otherwise, it is a condition of this Transaction that such stockholders
execute this Agreement to become Transferors
-B-2-
<PAGE>
and, in such event, the Purchaser will increase the number of shares of Omega's
Common Stock to be issued at Closing by an amount equal to two shares of Omega's
Common Stock for each share of BBJ Common Stock.
1.04 Instruments of Transfer; Further Assurances. In order to
consummate the transaction contemplated hereby, the following documents and
instruments shall be delivered:
(a) Documents from Transferors. At the Closing, Transferors
shall deliver to Purchaser the BBJ stock certificates owned by them
plus a duly executed stock power or other instrument of transfer for
each such security with appropriate signature guarantees.
(b) Documents from Purchaser. Pursuant to Article 1.03,
Purchaser shall deliver to Michael J. Gordon, as agent for the
Transferors, at the Closing, Omega stock certificates to which the
Transferors are entitled to be in such denominations as shall be
requested by BBJ not less than three (3) business days prior to the
date of the Closing.
(c) Further Documents. At the Closing, and at all times
thereafter as may be necessary (i) Transferors shall execute and
deliver to Purchaser such opinion of Counsel as may be reasonably
necessary and other instruments of transfer as shall be reasonably
necessary or appropriate to vest in Purchaser good and indefeasible
title to the securities of BBJ owned by them and to comply with the
purposes and intent of this Agreement, and (ii) Purchaser shall execute
and deliver to Transferors such opinion of Counsel as may be reasonably
necessary and other instruments, certificates and documents as shall be
reasonably necessary or appropriate to convey to Transferors, the
Purchase Price and to comply with the purposes and intent of this
Agreement.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser represents, warrants and covenants that, except as otherwise stated,
the following are true and correct as of this date and will be true and correct
through the date of the Closing as if made anew on and as of that date:
2.01 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada with all requisite power and authority to carry on business, to own
properties, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to take all of the other actions provided
for in or contemplated hereby. Purchaser is not presently qualified to transact
business in the State of Florida but, prior to Closing, will qualify to do
business in the State of Florida and will be in good standing at Closing.
Purchaser currently has no active business operations and it is not required to
be authorized to do business in any other jurisdiction. Purchaser has no
subsidiaries or material assets or properties.
-B-3-
<PAGE>
2.02 Authorization and Validity. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by the
Board of Directors of the Purchaser (and, to the extent required by applicable
law or regulation, by the shareholders; notice to non-consenting shareholders
will be given on or immediately after Closing). This Agreement constitutes (or
will not later than the Closing constitute) the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms with the exception of applicable bankruptcy and insolvency laws.
2.03 No Violation. Neither the execution, delivery or performance of
this Agreement nor the consummation of any of the transactions contemplated
hereby now or at any time in the future (whether with the giving of notice or
passage of time or both) will (a) conflict with, or result in a violation or
breach of the terms, conditions and provisions of, or constitute a default
under, the Articles of Incorporation or By-Laws of Purchaser or any agreement,
indenture or other instrument or undertaking of any kind or nature under which
Purchaser is bound or to which the assets of Purchaser are subject, or result in
the creation or imposition of any lien, claim, charge or encumbrance upon any of
such assets or upon any of the stock of Purchaser, or (b) violate or conflict
with any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction over
Purchaser or the properties or assets of Purchaser. To the best of Purchaser's
knowledge, Purchaser has complied (and will through the Closing comply) in all
material respects with all applicable laws, regulations and licensing
requirements, and has filed (and will through the date of the Closing file) with
the proper authorities all necessary statements and reports, tax returns and all
other filings of any kind or nature due at any time up through the date of the
Closing.
2.04 Capitalization. The authorized capital stock of the Purchaser
consists of 25,000,000 shares of Common Stock, $.001 par value per share, of
which amount 15,000,000 shares are currently issued and outstanding, which will
be reduced to 1,535,000 shares immediately prior to the Closing through a
one-for-three reverse stock split and Paul Shapansky, Herbert Maxwell, Dennis
Rendfish, Robert A. Schneider, Lois Shapiro, Shai Sasson, Sidney Borenstein and
Eric Bashford CRT selling back to the Purchaser at a price of $.0001 per share a
total of 3,465,000 shares of Purchaser's Common Stock. All of Purchaser's issued
and outstanding shares have been validly issued and are fully paid and
non-assessable. There are and as of the date of the Closing will be, no
outstanding warrants, options, subscriptions or other rights of any kind or
nature by which any person or entity can acquire any additional shares of Common
Stock or other securities of any kind or nature of the Purchaser; no shareholder
of Purchaser or other person or entity is entitled to any preemptive rights,
rights of first refusal or other rights of any kind or nature arising out of or
relating to the issuance of shares of Omega Common Stock to be issued to the
Transferors under this Agreement; and there are (and as of the Closing will be)
no other commitments requiring the issuance of any additional shares of the
capital stock of the Purchaser except as described herein. All of the shares of
Common Stock to be issued to the Transferors at the Closing will be duly
authorized, fully paid and non-assessable shares and shall not be subject to any
lien, claim, charge, encumbrance or shareholder agreement of any kind or nature,
right of first refusal or preemptive rights.
-B-4-
<PAGE>
2.05 Corporate Records. The copies of the Articles of Incorporation and
all amendments thereto and the By-Laws, as amended, of Purchaser that will be
delivered to BBJ at or prior to the Closing will be true, correct and complete.
The minute book of Purchaser, copies of which will be delivered to BBJ at or
prior to the Closing upon request will contain minutes of all meetings of and
consents to all actions taken without meetings by the Board of Directors and the
shareholders of Purchaser since the formation of Purchaser, all of which will be
accurate in all material respects. The books and records, financial and others
of Purchaser are in all material respects complete and correct and have been
maintained in accordance with good business and accounting principles.
2.06 Financial Statements/SEC Filings. Purchaser will furnish BBJ a
copy of Purchaser's audited financial statements for the fiscal year ended
December 31, 1999 contained in its Form 10-KSB for that fiscal year; and will
furnish a copy of all reports filed under the Securities Exchange Act of 1934,
as amended, for the last three years. The information set forth in these filings
are true, correct and complete in all material respects, and the financial
statements contained therein fairly presents financial condition of the
Purchaser as of those dates, and the results of its operations for those periods
referred to in the financial statements, in accordance with generally accepted
accounting principles consistently applied. Purchaser did not have, as of the
date of each such balance sheet, except as to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or contingent) which
should be reflected in the balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. Purchaser is, or will
be as of the Closing, current in all SEC, income and franchise tax and other
reporting and filing obligations consistent with law and its contractual
undertakings (if any).
2.07 Absence of Certain Changes. Except for a $50,000 loan received
from BBJ, since December 31, 1999, Purchaser has not: (a) suffered any material
adverse change in its financial condition, assets, liabilities or business; (b)
contracted for or paid any capital expenditures; (c) incurred any indebtedness
or borrowed money, issued or sold any debt or equity securities or discharged or
incurred any liabilities or obligations except in the ordinary course of
business as heretofore conducted (as described in the Form 10_KSB for the year
ended December 31, 1999); (d) mortgaged, pledged or subjected to any lien,
lease, security interest or other charge or encumbrance any of their properties
or assets; (e) paid any material amount on any indebtedness prior to the due
date, forgiven or canceled any material debts or claims or released or waived
any material rights or claims; (f) suffered any damage or destruction to or loss
of any assets (whether or not covered by insurance); (g) acquired or disposed of
any assets or incurred any liabilities or obligations except in the ordinary
course of business; (h) made any payments to its affiliates or associates or
loaned any money to any person or entity; (i) formed or acquired or disposed of
any interest in any corporation, partnership, joint venture or other entity; (j)
entered into any employment, compensation, consulting or collective bargaining
agreement or any other agreement of any kind or nature with any person or group,
or modified or amended in any respect the terms of any such existing agreement;
(k) entered into any other commitment or transaction or experienced any other
event that relates to or affects in any way this Agreement or to the
transactions contemplated hereby, or that has affected, or may adversely affect
Purchaser's business, operations, assets, liabilities or financial condition; or
(l) amended its Certificate of Incorporation or By-Laws beyond those provided to
BBJ in accordance with Article 2.05 contained herein.
-B-5-
<PAGE>
2.08 Disclosure. No representation or warranty by Purchaser in this
Agreement nor any statement or certificate furnished or to be furnished by it
pursuant hereto or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading or necessary in order to provide BBJ and the Transferors
with complete and accurate information.
2.09 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of Purchaser.
2.10 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation involving the current or
prior property and/or business of Purchaser; there are no known, noticed or
threatened current or prior violations or any state of facts involving Purchaser
which would constitute such a violation; and this Agreement and the consummation
of the transactions contemplated hereby will not give rise to any such
violation.
2.11 Litigation. Purchaser has not had any legal action or
administrative proceeding or investigation instituted or, to the best of its
knowledge, threatened against it. Purchaser is not (a) subject to any continuing
court or administrative order, writ, injunction or decree applicable
specifically to Purchaser or to its business, assets, operations or employees,
or (b) in default with respect to any such order, writ, injunction or decree.
Purchaser knows of no basis for any such action, proceeding or investigation.
2.12 Tax and Franchise Returns. Purchaser has prepared and filed, or
has caused to be prepared and filed, with the appropriate United States, state
and local government agencies, and all political subdivisions thereof, all tax
and franchise returns required to be filed by, on behalf of or on account of the
operations of Purchaser; all such returns required to be filed prior to the
Closing will be so filed; and all taxes, assessments, interest and penalties
required to be paid in respect of all periods covered thereby have and will be
paid. The federal income tax returns of Purchaser have not been examined by the
Internal Revenue Service and the state income tax returns have not been examined
by state authorities. Purchaser has not executed or filed with the IRS or any
other taxing authority (whether domestic or foreign) any agreement extending the
period for assessments or collection of any income or other taxes. Purchaser is
not a party to a pending action or proceeding by any domestic or foreign
governmental authority for assessment or collection of taxes, nor has any
written claim for assessment or collection of taxes been asserted against it.
The federal and state income tax and franchise returns of Purchaser included in
the Omega Schedules are true and correct. Copies of all federal and state income
tax and franchise returns of Purchaser filed for all fiscal periods for the last
six years have been supplied to BBJ. Such returns accurately reflect the taxes
due for the periods covered thereby.
-B-6-
<PAGE>
2.13 Purchaser Schedules. Purchaser has delivered (or will deliver
prior to closing) to BBJ the following separate schedules, which are
collectively referred to as the "Omega Schedules," certified by an officer of
Omega to be complete and accurate:
(a) Schedule "A": a copy of Purchaser's filings for the last
five years under the Securities Exchange Act of 1934, as amended;
(b) Schedule "B": a copy of Purchaser's Registration Statement
and Prospectus pursuant to which Purchaser originally went public;
(c) Schedule "C": recent Nevada and Florida good standing
certificates;
(d) Schedule "D": Copies of Certificate of Incorporation and
By-Laws and all amendments thereto;
(e) Schedule "E": Copies for the last six years and the most
current federal, state and local income tax and/or franchise returns and any
applicable extensions relating thereto;
(f) Schedule "F": copies of all existing contracts and
amendments thereto;
(g) Schedule "G": Copies of all insurance plans; and
(h) Schedule "H": Copies of all prior payroll returns.
Purchaser will cause the schedules, instruments, and data delivered to
BBJ hereunder to be updated after the date hereof to the Closing.
2.14 Undisclosed Liabilities. Purchaser has at closing no liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for taxes, except for
liabilities owed to BBJ in the principal amount of $50,000 plus interest.
2.15 Contracts and Agreements. Purchaser has no contracts or agreements
with any party which is not cancelable upon giving not more than thirty (30)
days' notice without incurring any liability. Each of the contracts and
agreements of Purchaser listed on the Disclosure Schedule is valid and
subsisting in full force and effect as of the date hereof. Copies of all
agreements and contracts in the Disclosure Schedule have been provided to BBJ to
the extent that such contracts and agreements are written.
2.16 Insurance. The Disclosure Schedule contains a copy of any and all
policies of insurance in force with respect to Purchaser. Purchaser carries all
required public liability, workmen's compensation and other usual types of
insurance of reasonable amounts and Purchaser will deliver to BBJ copies of any
such policies and certificates of insurers showing such insurance to be in
effect as of the date of this Agreement. Purchaser has not received notice from
any existing insurance carrier of its intent to cancel any insurance policy
provided in the Disclosure Schedule and
-B-7-
<PAGE>
to Purchaser's knowledge, any and all such policies are currently in full force
and effect. All premiums due and payable on such policies have been paid and
Purchaser is not a co-insurer under any term of any insurance policy.
2.17 Labor Disputes. Purchaser has no employees, employee benefit
plans, Collective Bargaining Agreement, union contract, profit sharing plan,
group life insurance, group health insurance and/or fringe benefit plan. The
Company is not currently required to file any payroll returns. Copies of all
prior payroll returns for the last six years have been supplied to BBJ at
Closing in accordance with the Purchaser Disclosure Schedules.
2.18 Broker's Fees. Purchaser has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
2.19 Interested Transactions. Purchaser is not a party to any contract,
instrument, transaction or other arrangement with any officer or director of the
Purchaser, or any member of their family, which continues on after the date
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BBJ
-------------------------------------
BBJ represents, warrants and covenants that the following are true and
correct as of this date and will be true and correct through the date of the
Closing as if made anew on and as of that date and that parties will comply with
the provisions of Articles 3.14 and 3.15 after Closing:
3.01 Organization and Good Standing. BBJ is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns, to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to take all of
the other actions provided for in or contemplated hereby. BBJ is not licensed to
transact business outside of the State of Florida and it is not required to do
so by the nature and conduct of its business. BBJ has no active subsidiaries.
3.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by BBJ and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by
BBJ. This Agreement constitutes or will constitute legal, valid and binding
obligations of BBJ, enforceable against BBJ in accordance with its terms. This
Agreement will, at the time of the Closing, be authorized by the Board of
Directors (and stockholders, if required) of BBJ and will constitute the valid
and binding agreement of BBJ, enforceable in accordance with its terms, and
neither the execution or delivery of this Agreement nor the consummation by BBJ
of the transactions contemplated hereby (i) violates any statute or law or any
rule, regulation or order of any court or any governmental authority, or (ii)
violates or conflicts with, or constitutes a default under or will constitute a
default under, any contract, commitment,
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<PAGE>
agreement, understanding, arrangement, or restriction of any kind to which BBJ
is a party or by which BBJ is bound.
3.03 No Violation. Neither the execution, delivery or performance of
this Agreement nor the consummation of any of the transactions contemplated
hereby now or at any time in the future (whether with the giving of notice or
passage of time or both) will (a) conflict with, or result in a violation or
breach of the terms, conditions and provisions of, or constitute a default
under, the Articles of Incorporation or By-Laws of BBJ or any agreement,
indenture or other instrument or undertaking of any kind or nature under which
BBJ is bound or to which the assets of BBJ are subject, or result in the
creation or imposition of any lien, claim, charge or encumbrance upon any of
such assets or upon any of the stock of BBJ, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over BBJ or the
properties or assets of BBJ. BBJ has complied (and will through the Closing
comply) in all material respects with all applicable laws, regulations and
licensing requirements, and has filed (and will through the date of the Closing
file) with the proper authorities all necessary statements and reports, tax
returns and all other filings of any kind or nature due at any time up through
the date of the Closing. BBJ possesses all necessary licenses, franchises,
permits and governmental authorizations to conduct its business as now or
heretofore conducted and as this Agreement contemplates it will be conducted
after the Closing.
3.04 Capitalization. As of the date hereof, BBJ had an authorized
capitalization of 30,000,000 shares of Common Stock, $.0005 par value, of which
5,683,333 shares are issued and outstanding. BBJ has outstanding options and/or
warrants of BBJ to purchase a total of 3,306,343 shares of Common Stock. BBJ
also has 5,000,000 shares of Preferred Stock, $2.00 par value, authorized,
consisting of 100,000 shares of Series A Preferred Stock outstanding and 171,875
shares of Series B Preferred Stock outstanding. The record and beneficial
shareholders of at least 90% of the outstanding BBJ Common Stock, 100,000 shares
of Series A Preferred Stock and 171,875 shares of Series B Preferred Stock at
the time of the Closing will be the Transferors, which capital stock will be
owned free and clear by the Transferors of all liens, claims, encumbrances,
equities and proxies. Each outstanding share of capital stock at the time of
Closing will be legally and validly issued and fully paid and non-assessable.
There will be, at the time of the Closing, no other outstanding securities,
obligations, rights, subscriptions, warrants, options or other rights to
purchase shares of capital stock of BBJ except for options to purchase 2,806,343
shares of BBJ Common Stock and warrants to purchase 500,000 shares of BBJ Common
Stock. After Closing, BBJ intends to utilize its best efforts to exchange BBJ
options/warrants for Purchaser's options/warrants on terms to be determined by
the Board of Directors of Purchaser. It also intends to complete the private
placement referenced in Article 7.02.
3.05 Corporate Records. The copies of the Articles of Incorporation and
all amendments thereto and the By-Laws of BBJ that will be delivered to
Purchaser at or prior to the Closing will be true, correct and complete. The
minute book of BBJ, copies of which will be delivered to Purchaser at or prior
to the Closing will contain minutes of all meetings of and consents to all
actions taken without meetings by the Board of Directors and the shareholders of
BBJ since the formation of BBJ, all of which will be accurate in all material
respects. The books and records, financial and others of
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<PAGE>
BBJ are in all material respects complete and correct and have been maintained
in accordance with good business and accounting principles.
3.06 Financial Statements. The unaudited financial statements of BBJ
for the nine months ended September 30, 1999 (the "BBJ Financial Statements")
fairly present the financial position of BBJ as of the balance sheet dates
included therein and the results of its operations and changes in cash flow for
the periods covered. The BBJ Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved. Each of such balance sheets presents fairly the
financial condition of BBJ as of its date. BBJ did not have, as of the date of
each of such balance sheet, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. Such statements of
operations and stockholders' equity present fairly the results of operations and
changes in stockholders' equity of BBJ for the periods indicated. Such
statements of changes in cash flow present fairly the information which should
be presented therein in accordance with generally accepted accounting
principles.
3.07 Absence of Certain Changes. Since December 31, 1999, BBJ has not:
(a) suffered any material adverse change in its financial condition, assets,
liabilities or business; (b) acquired or disposed of any assets or incurred any
liabilities or obligations or borrowed money, issued or sold any debt or equity
securities or discharged or incurred any liabilities or obligations except in
the ordinary course of business as heretofore conducted; (c) mortgaged, pledged
or subjected to any lien, lease, security interest or other charge or
encumbrance any of their properties or assets; (d) paid any material amount on
any indebtedness prior to the due date, forgiven or canceled any material debts
or claims or released or waived any material rights or claims; (e) suffered any
damage or destruction to or loss of any assets (whether or not covered by
insurance); (f) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity; (g) entered into any
other commitment or transaction or experienced any other event that relates to
or affects in any way this Agreement or to the transactions contemplated hereby,
or that has affected, or may adversely affect BBJ's business, operations,
assets, liabilities or financial condition; or (h) amended its Certificate of
Incorporation or By-Laws.
3.08 Disclosure. No representation or warranty by BBJ in this Agreement
nor any statement or certificate furnished or to be furnished by it pursuant
hereto or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading or necessary in order to provide Purchaser with complete and accurate
information.
3.09 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of BBJ.
-B-10-
<PAGE>
3.10 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation involving the property or
business of BBJ; there are no known, noticed or threatened violations or any
state of facts involving BBJ which would constitute such a violation; and this
Agreement and the consummation of the transactions contemplated hereby will not
give rise to any such violation.
3.11 Litigation. BBJ has not had any legal action or administrative
proceeding or investigation instituted or threatened against it. BBJ is not (a)
subject to any continuing court or administrative order, writ, injunction or
decree applicable specifically to BBJ, or to its business, assets, operations or
employees, or (b) in default with respect to any such order, writ, injunction or
decree. Such persons know of no basis for any such action, proceeding or
investigation.
3.12 Tax and Franchise Returns. BBJ has prepared and filed, or has
caused to be prepared and filed, with the appropriate United States, state and
local government agencies, and all political subdivisions thereof, all tax and
franchise returns required to be filed by, on behalf of or on account of the
operations of BBJ; all such returns required to be filed prior to the Closing
will be so filed; and all taxes, assessments, interest and penalties required to
be paid in respect of all periods covered thereby have and will be paid. Such
returns accurately reflect the taxes due for the periods covered thereby, except
for amounts which, in the aggregate, are immaterial. The federal income tax
returns of BBJ have not been examined by the Internal Revenue Service and the
state income tax returns have not been examined by the applicable State
Department which audits such returns.
3.13. BBJ Schedules. BBJ has made available (and will upon request
deliver prior to closing) to Purchaser the following separate schedules, which
are collectively referred to as the "BBJ Schedules," certified by an officer of
BBJ to be complete and accurate.
(a) Schedule "A": copies of the Certificate of Incorporation
and By-Laws of BBJ, including all amendments thereto, now in effect or to be in
effect;
(b) Schedule "B": copies of all financial statements
identified in Article 3.06;
(c) Schedule "C": copies of all material contracts , leases,
and other instruments to which BBJ is a party or is bound (other than insurance
policies).
(d) Schedule "D": a list setting forth the name and address of
each shareholder of BBJ and for each such shareholder, the number of shares of
BBJ capital stock held;
BBJ shall cause the schedules, instruments, and data delivered to
Purchaser hereunder to be updated after the date hereof to the Closing.
3.14 Information for Purchaser's Report on Form 8-K. BBJ will furnish
Purchaser with all information concerning BBJ and its affiliates required for
inclusion in the current report on Form 8-K to be filed by Purchaser pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to report
the consummation of this Agreement. BBJ represents and warrants to Purchaser
that all information so furnished for such report or other public release by
Purchaser shall
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<PAGE>
be true and correct in all material respects without omission of any material
fact required to make the information stated not misleading.
3.15 Audited Financial Statements. On or before 75 days from the date
hereof, BBJ shall deliver to Purchaser audited financial statements for its most
recently completed fiscal year, including the notes thereto, together with the
opinion of the independent accountants of BBJ as required under Form 8-K
pursuant to the Exchange Act. All such financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and applicable provisions of Regulation S-B
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. The balance sheets shall present fairly the
financial condition of BBJ as of the dates required and shall contain all
liabilities or obligations (absolute or contingent) which should be reflected on
a balance sheet or the notes thereto prepared in accordance with generally
accepted accounting principles. Such statement of operations shall present
fairly the results of operations for the period(s) indicated. The statements of
cash flow and stockholders' equity shall present fairly the information, which
should be presented therein in accordance with generally accepted accounting
principles.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFERORS
---------------------------------------------
The Transferors represent, warrant and covenant that the following are
true and correct as of this date and will be true and correct through the date
of the Closing as if made anew on and as of that date and the Transferees will
comply with the provisions of Article 4.08 after Closing:
4.01 Organization and Good Standing. Each corporate Transferor, if any,
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite power and authority to
carry on the business in which it is and/or has been engaged, to own the
properties it owns, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to take all of the other actions provided
for in or contemplated hereby.
4.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by each non-individual Transferor and the
consummation of the transactions contemplated hereby have been or will be prior
to Closing duly authorized by each non-individual transferor. This Agreement
constitutes or will constitute legal, valid and binding obligations of the
Transferors, enforceable against the Transferors in accordance with its terms.
This Agreement will, at the time of the Closing, be authorized by the Board of
Directors or governing body of each non-individual Transferor and will
constitute the valid and binding agreement of the Transferors, enforceable in
accordance with its terms, and neither the execution or delivery of this
Agreement nor the consummation by the Transferors of the transactions
contemplated hereby (I) violates any statute or law or any rule, regulation or
order of any court or any governmental authority, or (ii) violates or conflicts
with, or constitutes a default under or will constitute a default under, any
contract, commitment, agreement, understanding, arrangement, or restriction of
any kind to which the Transferors are a party or by which the Transferors are
bound.
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<PAGE>
4.03 No Liens or Encumbrances. The record and beneficial shareholders
of up to 5,683,333 shares of BBJ Common Stock (subject to adjustment as set
forth in Article 1.03 herein), 100,000 shares of Series A Preferred Stock and
171,875 shares of Series B Preferred Stock at the time of the Closing will be
the Transferors, which capital stock will be owned free and clear by the
Transferors of all liens, claims, encumbrances, equities, proxies and other
agreements and the Transferors shall have the unqualified right to transfer the
BBJ securities to the Purchaser.
4.04 Disclosure. No representation or warranty by any Transferor in
this Agreement nor any statement or certificate furnished or to be furnished by
it pursuant hereto or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading or necessary in order to provide Purchaser with complete
and accurate information.
4.05 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of the Transferors.
4.06 Litigation. The Transferors have not had any legal action or
administrative proceeding or investigation instituted or threatened against
them. The Transferors are not (a) subject to any continuing court or
administrative order, writ, injunction or decree applicable specifically to the
BBJ securities owned by them, or (b) in default with respect to any such order,
writ, injunction or decree. The Transferors know of no basis for any such
action, proceeding or investigation.
4.07 Transferor Representations. Each of the Transferors will cause a
counterpart copy of this Agreement to be signed for purposes of representing and
warranting that the shares of BBJ capital stock being sold by him, her or it are
owned of record and beneficially by that Transferor, and are being sold free and
clear of any lien, claim, charge, encumbrance, equity, proxy of any kind or
other agreement.
4.08 Information for Purchaser's Report on Form 8-K. The Transferors
will furnish Purchaser with all information concerning them and their affiliates
required for inclusion in the current report on Form 8-K to be filed by
Purchaser pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to report the consummation of this Agreement. The Transferors
represent and warrant to Purchaser that all information so furnished for such
report or other public release by Purchaser shall be true and correct in all
material respects without omission of any material fact required to make the
information stated not misleading.
4.09 Approval of Third Parties. To the extent any consent and approvals
of third parties are necessary to effect the transactions contemplated in this
agreement, the Transferors will obtain the same.
4.10 Representation Letters. The Transferors confirm their
understanding that the Omega Common Stock to be received by them is restricted
and may not be freely resold unless the shares
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<PAGE>
are registered or an exemption from registration is available. Further, the
Transferors consent to an appropriate Securities and Exchange Commission
restrictive legend to be placed on each certificate of Purchaser to be issued
and delivered to them. Such legend shall read substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER SAID ACT, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT THEN
REQUIRED UNDER SAID ACT.
ARTICLE V
BBJ'S ADDITIONAL UNDERTAKINGS
-----------------------------
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
5.01 Opinion. Counsel to BBJ shall have delivered to Purchaser its
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to counsel for Purchaser, to the effect that (a) BBJ is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has duly qualified to do business and is in good standing in
the states where the nature of its business makes such qualification necessary,
(b) BBJ has full corporate power and authority to execute and perform this
Agreement, (c) this Agreement has been duly authorized by all necessary
corporate action on the part of BBJ, and has been duly executed and delivered by
BBJ and constitutes the legal, valid and binding obligation of BBJ, enforceable
in accordance with its terms, except as may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally or the availability
of equitable remedies, (d) to the best of such counsel's knowledge, immediately
prior to the Closing, the authorized, issued and outstanding capital stock of
BBJ will be as set forth in Article 3.04, (e) neither the execution and
performance of this Agreement nor the consummation of the transactions
contemplated hereby by BBJ will conflict with, or result in a breach of the
terms, conditions and provisions of, or constitute a default under, the Articles
of Incorporation or By-Laws of BBJ or, to the best of such counsel's knowledge,
any agreement, indenture or other instrument of which such counsel has knowledge
under which BBJ is bound or to which any of the assets of BBJ is subject, or to
the best of such counsel's knowledge, result in the creation or imposition of
any lien, charge or encumbrance upon any such assets, and (f) to the best of
such counsel's knowledge, there are no options, warrants or other securities or
rights outstanding which are convertible into or exercisable for any shares of
capital stock of BBJ, except as described in Article 3.04.
5.02 Consents and Approvals. BBJ shall have obtained, and delivered to
Purchaser evidence thereof, all consents and approvals (if any) required to be
obtained by it in connection with the consummation of the transactions
contemplated hereby.
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<PAGE>
ARTICLE VI
ADDITIONAL UNDERTAKINGS OF PURCHASER
------------------------------------
Except as may be waived in writing by BBJ, the obligations of the
Transferors hereunder are subject to fulfillment at or prior to the Closing of
each of the following conditions in addition to those provided for in Article
1.02 hereof:
6.01 Opinion. Counsel to Purchaser shall have delivered to BBJ its
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to counsel for BBJ to the effect that (a) Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada and has duly qualified to do business and is in good standing in the
State of Florida which is the only state where the nature of its business makes
such qualification necessary, (b) Purchaser has full corporate power and
authority to execute and perform this Agreement, (c) this Agreement has been
duly authorized by all necessary corporate action on the part of Purchaser, and
has been duly executed and delivered by Purchaser and constitutes the legal,
valid and binding obligation of Purchaser enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally or the availability of equitable remedies,
(d) immediately prior to the Closing, the authorized, issued and outstanding
capital stock of Purchaser will be as set forth in Article 2.04 after completing
the one-for-three reverse stock split and stock sale back to Purchaser
referenced therein, (e) neither the execution and performance of this Agreement
nor the consummation of the transactions contemplated hereby by Purchaser will
conflict with, or result in a breach of the terms, conditions and provisions of,
or constitute a default under the Articles of Incorporation or By-Laws of
Purchaser or, to the best of such counsel's knowledge, any agreement, indenture
or other instrument of which such counsel has knowledge under which Purchaser is
bound or to which any of the assets of Purchaser is subject, or to the best of
such counsel's knowledge, result in the creation or imposition of any lien,
charge or encumbrance upon any such assets, (f) to the best of such counsel's
knowledge, there are no options, warrants or other securities or rights
outstanding which are convertible into or exercisable for any shares of capital
stock of Purchaser, and (g) to the best of such counsel's knowledge, the
Purchaser is current and has filed all reports required under the securities
Exchange Act of 1934, as amended, and to the best of such counsel's knowledge,
the Purchaser's Form 10-KSB for its fiscal year ended December 31, 1999 is
accurate and complete and does not contain any untrue statement(s) of a material
fact or omit to state a material fact necessary to make the statement(s)
contained therein not misleading or necessary in order to provide readers of the
Form 10-KSB with complete and accurate information.
6.02 Consents and Approvals. Purchaser shall have obtained, and
delivered to BBJ and to Michael J. Gordon as agent for the Transferors evidence
thereof, all consents and approvals (if any) required to be obtained by it in
connection with the consummation of the transactions contemplated hereby.
6.03 Filing of SEC Forms. In addition to the previously referenced
filings, a Form 8-K shall be filed by Purchaser promptly upon the Closing to
reflect these transactions.
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<PAGE>
6.04 Board Representation. At or prior to the Closing, the current
members of the Board of Directors and executive officers of Purchaser shall
resign one by one with each vacancy created thereby to be filled by a person
designated by Robert G. Baker or Jerry V. Schinella.
6.05 Delivery of Corporate Records. At or prior to the Closing,
Purchasers shall deliver to Michael J. Gordon, all the corporate and business
records of Purchasers, including, but not limited to the Minute Book, book of
accounts, all financial statements, all banking records and banking resolutions
naming new signatories covering all cash owned by Purchasers.
ARTICLE VII
ADDITIONAL UNDERTAKING BY PURCHASER AND BBJ
-------------------------------------------
7.01 Access to Corporate Records. BBJ and the Purchaser agree to allow
the other Party's professional representatives and executive officers access to
the books and records of the other Party at anytime prior to the Closing, after
giving the other party at least three business days prior written notice.
7.02 Cooperation of Parties. BBJ and the Purchaser will cooperate with
each other in the preparation of a $2,000,000 (i.e. 1,000,000 post-split shares
at an estimated price of $2.00 per share) Private Placement Memorandum of
Purchaser and the Purchaser's Form S-8 Registration Statement and Purchaser's
Form SB-2 Registration Statement to be filed with the Securities and Exchange
Commission. Executive officers and directors of BBJ will become executive
officers and directors of Purchaser immediately after Closing. From the
execution of this Agreement until the Closing Date, all proceeds received under
the private placement offering will be escrowed and released to Purchaser only
after Closing of this Agreement. The Form S-8 Registration Statement will cover
an employee benefit plan. After the completion of the above referenced Private
Placement Offering, it intends to file the Form SB-2 Registration Statement to
register the resale of shares of Purchaser's Common Stock issuable upon exercise
of (i) certain options of Purchaser to be granted to GunnAllen Financial, Inc.
in exchange for its BBJ options and (ii) certain warrants of Purchaser to be
granted to Titan Gulf Partners, Ltd. in exchange for its BBJ warrants, the
resale of shares of Purchaser's Common Stock sold in the private placement
offering, the Purchaser's Common Stock issuable to the January 3, 2000 private
offering Common Stockholders and to the Series A and Series B Preferred
Stockholders who are both Transferors under this Agreement and the resale of
Purchaser's Common Stock issuable to Transferors Lester Morse, Steven Morse and
Adrienne Grody as part of the consideration for Lester Morse P.C. representing
the Purchaser after closing in connection with filing of the aforesaid
Registration Statements.
ARTICLE VIII
OTHER AGREEMENTS
----------------
8.01 BBJ Loan. BBJ intends (or has loaned) $50,000 to Omega against
delivery of a demand Promissory Note payable with interest at the rate of 6% per
annum. Omega represents that such monies have been (or will be) utilized for the
payment of legal and accounting expenses in
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<PAGE>
connection with this transaction and the purpose of bringing Omega current under
the Securities Exchange Act of 1934, as amended, and retiring all debt, accounts
payable and accrued expenses through the Closing Date so that Omega will have no
liabilities (other than the $50,000 owed to BBJ) or commitments (whether accrued
or not) and will be (other than the $50,000 owed to BBJ) a clean shell as of the
Closing Date.
8.02 Indemnification by Herbert Maxwell and Paul Shapansky. Paul
Shapansky and Herbert Maxwell (the "Indemnitors") shall indemnify and hold
harmless BBJ and the Purchaser at all times after the date of this Agreement
against and in respect of:
(a) Undisclosed Liabilities. At closing, the Purchaser shall
present a Closing Balance Sheet which is expected to demonstrate that Purchaser
shall have no assets or liabilities except $50,000 owed to BBJ as referenced in
Article 8.01. Such indemnification shall pertain to all liabilities of the
Purchaser of any nature, whether accrued, absolute, contingent, or otherwise,
existing at the Closing Date, to the extent not reflected or reserved against in
full in the Purchaser's Closing Balance Sheet, including, without limitation,
any tax liabilities to the extent not so reflected or reserved against, accrued
in respect of, or measured by the Purchaser's income for any period prior to the
Closing Date, or arising out of transactions entered into, or any state of facts
existing, prior to the Closing Date;
(b) Misrepresentations. Any damage or deficiency resulting
from any misrepresentation, breach of warranty, or nonfulfillment of any
agreement on the part of the Purchaser under this Agreement, or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished to BBJ and the Transferors hereunder; and
(c) Incidental Expenses. All actions, suits, proceedings,
demands, assessments, judgments, costs, attorney's fees, and expenses incident
to any of the foregoing.
The Indemnitors shall reimburse BBJ or, at is election, the Purchaser
(the "Indemnities"), on demand, for any payment(s) made by the Indemnities at
any time after the Closing Date, in respect of any liability, claim and/or
individual expenses to which the foregoing indemnity relates under (a) and (c)
above. In the event of an undisclosed liability or claim, the Indemnitors shall
be given notice in writing by the Purchaser of a prospective claim for
indemnification that has or may arise. The Indemnitors shall be given a
reasonable period of time not to exceed 30 days to clear up the matter at their
sole cost. If the Indemnitors are unsuccessful, then the Indemnities at their
sole discretion may settle the matter and charge the Indemnitors with
responsibility to promptly reimburse the Indemnities upon receipt of a demand
for payment. The Board of Directors of the Indemnities may, at its sole option
and discretion, accept cash, property and/or securities (including the return
for cancellation of Purchaser's Common Stock at the then fair market value) in
settlement of payment sought from the Indemnitors pursuant to the terms of this
Article 8.02.
8.03 Waiver of Jury Trial. All of the parties hereby waive trial by
jury in any action or proceeding of any kind with respect to, in connection with
or arising out of this Agreement, any instrument, document or Indemnification
Agreement delivered pursuant hereto, or the validity, protection,
interpretation, administration, collection or enforcement hereof or thereof.
-B-17-
<PAGE>
ARTICLE IX
MISCELLANEOUS
-------------
9.01 Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
9.02 Parties in Interest. This Agreement shall be binding on and inure
to the benefit of and be enforceable by Transferors, BBJ, and the Purchaser,
their respective heirs, executors, administrators, legal representatives,
successors and assigns. The representations, warranties and other provisions
hereof shall survive the Closing.
9.03 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by any party hereto.
9.04 Notice. Any notice or other communication hereunder must be in
writing and given by depositing the same in the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested or by delivering the same in person against receipt.
Notice shall be deemed received on the date on which it is hand-delivered or on
the third business day following the date on which it is so mailed.
For purposes of notice, the addresses of the parties shall be:
If to BBJ and the Transferors: With a copy to:
- ------------------------------ ---------------
c/o Michael J. Gordon Lester Morse P.C.
BBJ Environmental Solutions, Inc. 111 Great Neck Road
6802 Citicorp Boulevard Inc. Suite 420
Suite 500 Great Neck, NY 11021
Tampa, FL 33619
If to Purchaser: With a copy to Purchaser's attorney:
- ---------------- ------------------------------------
Paul Shapansky Del L. Gustafson, Esq.
c/o Health Net Hall Estill Hardwick Gable Golden &
3106 Commerce Parkway Nelson, P.C.
Miramar, FL 33025 320 S. Boston Ave., Suite 400
Tulsa, OK 74103
And
Omega Development Incorporated
8726 South Florence Avenue
Tulsa, OK 74137
Any party may change its address or addresses for notice by written notice given
to the other parties.
-B-18-
<PAGE>
9.05 Entire Agreement. This Agreement and any exhibits hereto supersede
all prior agreements and understandings between the parties relating to the
subject matter hereof, except that the obligations of any party under any
agreement executed pursuant to this Agreement shall not be affected by this
Article.
9.06 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' and accounting fees) except that each party
hereto agrees to pay the costs and expenses, including reasonable attorneys'
fees, incurred by the other parties in successfully (i) enforcing any of the
terms of this Agreement against a party alleged to be in breach, or (ii) proving
that the other parties breached any of the terms of this Agreement in any
material respect.
9.07 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance hear from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement, a provision as similar in its
terms to such illegal, invalid or unenforceable provision as may be possible and
still be legal, valid and enforceable.
9.08 Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the State of Florida. The parties agree that any litigation relating
directly or indirectly to this Agreement must be brought before and determined
by a court of competent jurisdiction sitting in the State of Florida and County
of Hillsborough.
9.09 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
9.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9.11 Waiver. No waiver of any term or provision hereof shall be
effective unless in writing, signed by the party to be charged.
9.12 Brokerage and Finder's Fees. Each of the parties hereto represents
and warrants to the others that neither such party nor its officers or directors
have employed any broker or finder or have made arrangements for the payment of
any brokerage commissions or finder's fees in connection with the transactions
contemplated by this Agreement and are not otherwise obligated to pay any such
fee or commission, except for warrants already granted to Titan Gulf Partners,
Ltd., as described in Article 3.04, for its finder and consulting services in
connection with this Transaction and to compensate Titan for certain future
financial consulting services to be rendered by it. In the
-B-19-
<PAGE>
event that any claim is asserted by any other person claiming a commission or
finder's fee with respect to this Agreement or the transactions contemplated
hereby arising from any act, representation, or promise of such person or its
representatives, such party will indemnify the other parties against and hold
them harmless from any cost or expense with respect thereto.
9.13 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other parties or their
attorneys, provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing party will use its best efforts to advise the other parties prior to
making the disclosure).
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
PURCHASER:
OMEGA DEVELOPMENT INCORPORATED
By: /s/ A. Paul Shapansky
----------------------------------------
A. Paul Shapansky, President
BBJ ENVIRONMENTAL SOLUTIONS, INC.
By: /s/ Jerry V. Schinella
----------------------------------------
Jerry V. Schinella, President
-B-20-
<PAGE>
TRANSFERORS
TABLE I
-------
<TABLE>
<CAPTION>
Number of Shares of Omega
Development
Incorporated
Common Stock to be issued
Number of Shares to
of Common Stock Transferors in
of BBJ Exchange for all
Environmental BBJ Common Stock owned
Solutions, Inc. by them
owned immediately
Name of Transferor prior to closing Signature
<S> <C> <C> <C>
Robert G. Baker 1,927,195 3,854,390
Barbara Baker Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Jerry V. Schinella 1,927,195 3,854,390
Beth Schinella Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Walter Arnett 9,636 19,272
Jean Arnett Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Michael J. Gordon Trustee for
Robert P. Gordon Family Trust 192,719 385,438
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Michael J. Gordon 505,619 1,011,238
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Donald Daley 10,000 20,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Daniel T. Woodward 18,000 36,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Dennis DiNardo 9,636 19,272
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Jerry A. Black 25,000 50,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Lester Morse 21,000 42,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Steven Morse 21,000 42,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Adrienne Grody 1,400 2,800
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Michael J. Gordon on behalf of
Kelly Gordon, Minor 69,134 138,267
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Michael J. Gordon on behalf of
Mikaela
Gordon, Minor 69,133 138,267
- ------------------------------------ ------------------------- ---------------------------- ---------------------
-B-21-
<PAGE>
Lexus Partners Ltd. 183,333 366,666
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Robert P. Gordon 333,333 666,666
Elizabeth Gordon Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Kennan G. Dandar 24,000 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Joseph K. Keegan 24,000 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Jane Hollister 24,000 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Richard E. Olson 24,000 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
John C. Summer 24,000 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Joseph F. Morgan 60,000 120,000
Teresa F. Morgan Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Peter Futro 60,000 120,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Rebecca F. Walters 120,000 240,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
TOTAL 5,683,333 11,366,666
========= ==========
- ------------------------------------ ------------------------- ---------------------------- ---------------------
</TABLE>
-B-22-
<PAGE>
TRANSFERORS
TABLE II
--------
<TABLE>
<CAPTION>
Number of Shares of Common
Stock of Omega
Development
Incorporated
Number of Shares Common Stock to be issued
of Series A Preferred to
Stock Transferors in
of BBJ Exchange for all
Environmental BBJ Common
Solutions, Inc. Stock owned
owned immediately by them
Name of Transferor prior to closing Signature
<S> <C> <C> <C>
Brian Wyka 18,750 72,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
John Fabre 25,000 96,000
Diane Fabre Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Walter J. Daniels 12,500 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Philip Amuso 6,250 24,000
Jean Amuso Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Jack Frankel 6,250 24,000
Florence Frankel Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Energy Electric, Inc. 25,000 96,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Thomas Fell Jr.
Pension Plan 6,250 24,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
TOTAL 100,000 384,000
========= ==========
- ------------------------------------ ------------------------- ---------------------------- ---------------------
</TABLE>
-B-23-
<PAGE>
TRANSFERORS
TABLE III
<TABLE>
<CAPTION>
Number of Shares of Common
Stock of Omega
Development
Incorporated
Number of Shares Common Stock to be issued
of Series B Preferred to
Stock Transferors in
of BBJ Exchange for all
Environmental BBJ Common
Solutions, Inc. Stock owned
owned immediately by them
Name of Transferor prior to closing Signature
<S> <C> <C> <C>
Brian Wyka 62,500 240,000
Pamela Wyka Joint Tenant Joint Tenant
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Charles R. Sanford 12,500 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Richard K. Means, Jr. 50,000 192,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Charles F. Sornberger 12,500 48,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
Shenandoah Associates LP 25,000 96,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
George G. Mabrey 9,375 36,000
- ------------------------------------ ------------------------- ---------------------------- ---------------------
TOTAL 171,875 660,000
======= ===========
- ------------------------------------ ------------------------- ---------------------------- ---------------------
</TABLE>
-B-24-
<PAGE>
EXHIBIT C
Omega Development, Inc.
and
BBJ Environmental Solutions, Inc.
Pro Forma Balance Sheets
December 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
Pro Forma Combined
Omega BBJ Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ -- $ 19,189 $ 2,162,500 (2) $ 2,181,689
Accounts receivable -- 25,753 -- 25,753
Inventory -- 30,942 -- 30,942
Prepaids -- 3,371 -- 3,371
----------- ----------- ----------- -----------
Total current assets -- 79,255 2,162,500 2,241,755
Furniture and equipment, net -- 88,754 -- 88,754
Security deposits -- 4,418 -- 4,418
----------- ----------- ----------- -----------
$ -- $ 172,427 $ 2,162,500 $ 2,334,927
=========== =========== =========== ===========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses $ 48,323 $ 131,165 $ -- $ 179,488
Bank line of credit -- 24,869 -- 24,869
Current portion of bank loan and capital lease obligations -- 21,127 -- 21,127
Advances from stockholders -- 35,000 -- 35,000
----------- ----------- ----------- -----------
Total current liabilities 48,323 212,161 -- 260,484
Capital lease obligations, less current portion -- 36,925 -- 36,925
Convertible debenture -- 230,000 -- 230,000
----------- ----------- ----------- -----------
Total liabilities 48,323 479,086 -- 527,409
----------- ----------- ----------- -----------
Stockholders' equity (deficit):
Convertible preferred stock -- 543,750 (543,750) (3) --
Common stock 15,000 2,662 (2,716) (4) 14,946
Additional paid-in capital 4,645,653 556,735 2,708,966 (4) 7,911,354
Accumulated deficit (4,708,976) (1,409,806) -- (6,118,782)
----------- ----------- ----------- -----------
Net stockholders' equity (deficit) (48,323) (306,659) 2,162,500 1,807,518
----------- ----------- ----------- -----------
$ -- $ 172,427 $ 2,162,500 $ 2,334,927
=========== =========== =========== ===========
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
Omega Development, Inc.
and
BBJ Environmental Solutions, Inc.
Pro Forma Statement of Operations
For Year Ended December 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
Pro Forma Combined
Omega BBJ Adjustments Pro Forma
----- --- ----------- ---------
<S> <C> <C> <C> <C>
Sales, net $ -- $ 253,975 $-- $ 253,975
Cost of sales -- 69,196 -- 69,196
------------ ------------ --- ------------
Gross margin -- 184,779 -- 184,779
------------ ------------ --- ------------
Operating expenses:
Sales and marketing -- 353,465 -- 353,465
General and administrative 21,409 427,613 -- 449,022
Research and development -- 84,537 -- 84,537
------------ ------------ --- ------------
Total operating expenses 21,409 865,615 -- 887,024
------------ ------------ --- ------------
Net loss $ (21,409) $ (680,836) $-- $ (702,245)
============ ============ === ============
Basic and diluted loss per share $ (0.05)
============
Pro forma common shares outstanding 14,945,666
============
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
Omega Development, Inc.
and
BBJ Environmental Solutions, Inc.
Notes to Pro Forma Financial Statements
December 31, 1999
1. Basis of Presentation. The accompanying unaudited pro forma financial
statements are presented to reflect the consummation of the Agreement
and Plan of Reorganization dated January 31, 2000 ("Reorganization"),
between Omega Development, Inc. ("Omega" or the "Company"), BBJ
Environmental Solutions, Inc. ("BBJ") and certain shareholders of BBJ
as described in the accompanying Information Statement. The unaudited
pro forma balance sheet as of December 31, 1999, presents the financial
position of the Company as if the Reorganization had occurred and the
Private Placement (assuming the sale of 1,000,000 shares of Omega
common stock, as described in the accompanying Information Statement)
had been closed on that date, under the purchase method of accounting,
utilizing the audited balance sheets as of December 31, 1999, of Omega
and BBJ. The unaudited pro forma statement of operations, including
basic and diluted earnings per share, is presented as if the
Reorganization occurred at the beginning of the period presented. The
pro forma information was prepared based upon certain assumptions
described below and may not be indicative of results that actually
would have occurred had the Reorganization occurred on the dates
presented or of results which may occur in the future. The unaudited
pro forma financial data and accompanying notes should be read in
conjunction with the annual financial statements and notes thereto of
Omega and BBJ appearing elsewhere in the accompanying Information
Statement.
2. The Company is conducting a Private Placement of 1 million shares of
Common Stock at a price of $2.00 per share. The net proceeds available
to the Company from the sale of 1 million shares of Common Stock,
assuming payment of a 10% commission to any selling agent, is
$1,800,000. There is no minimum number of shares that must be sold and
the closing of the Reorganization is not contingent upon closing the
Private Placement. The closing of the Private Placement, however, is
conditioned upon the closing of the purchase of BBJ. Additionally, BBJ
issued 360,000 shares of its common stock in January 2000 for $362,500
in net proceeds.
3. Preferred stock shareholders of BBJ will be issued 3.84 shares of
Common Stock for each share of BBJ preferred stock.
4. A total of 14,945,666 shares of Common Stock, par value $0.001,
("Common Stock") will be outstanding upon 1) a pre-Reorganization
reverse split of Common Stock on a one-for-three basis, 2) the sale by
certain Omega shareholders of 3,465,000 post-split shares of Common
Stock to the Company at a price of $.0001 per share, 3) the issuance of
two shares of Common Stock for each share of BBJ common stock, 4) the
issuance of 3.84 shares of Common Stock for each share of BBJ preferred
stock, and 5) the issuance of 1 million shares of Common Stock under
the Private Placement.
-C-1-
<PAGE>
EXHIBIT D
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Financial Statements
December 31, 1999 and 1998
(including cumulative amounts since
inception on August 25, 1993)
(With Independent Auditors' Report Thereon)
-D-1-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of BBJ Environmental Solutions, Inc.
We have audited the accompanying balance sheets of BBJ Environmental Solutions,
Inc. as of December 31, 1999 and 1998, and the related statements of operations,
stockholders' deficit, and cash flows for the years then ended and for the
period from August 25, 1993 (inception) to December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BBJ Environmental Solutions,
Inc. as of December 31, 1999 and 1998, and the results of its operations and its
cash flows for the years then ended and for the period from August 25, 1993
(inception) to December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that BBJ
Environmental Solutions, Inc. will continue as a going concern. The Company's
recurring losses from operations and its net working capital deficiency during
its development stage raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 11. The financial statements do not include any adjustments relating to
the recoverability and classification of reported asset amounts or the amounts
and classification of liabilities that might result from the outcome of this
uncertainty.
February 4, 2000
-D-2-
<PAGE>
<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Balance Sheets
December 31, 1999 and 1998
ASSETS
1999 1998
---------- --------
<S> <C> <C>
Current assets:
Cash $ 19,189 711
Accounts receivable 25,753 18,547
Inventory 30,942 31,012
Prepaids 3,371 3,371
----------- -----------
Total current assets 79,255 53,641
Property and equipment, net 88,754 125,644
Security deposits 4,418 4,418
----------- -----------
$ 172,427 183,703
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 131,165 122,567
Bank line of credit 24,869 25,000
Current portion of bank loan and capital lease
obligations 21,127 23,052
Advances from stockholders 35,000 --
----------- -----------
Total current liabilities 212,161 170,619
Bank loan, less current portion -- 2,567
Capital lease obligations, less current portion 36,925 55,485
Convertible debentures 230,000 100,000
Advances from stockholders -- 30,200
----------- -----------
Total liabilities 479,086 358,871
----------- -----------
Stockholders' deficit:
Convertible preferred stock, $2.00 par value, 5,000,000
shares authorized, 271,875 shares issued and outstanding 543,750 --
Common stock, $.0005 par value, 30,000,000 shares
authorized, 5,323,333 and 4,950,000 shares issued
and outstanding, respectively 2,662 2,475
Additional paid-in capital 556,735 551,327
Accumulated deficit during development stage (1,409,806) (728,970)
----------- -----------
Net stockholders' deficit (306,659) (175,168)
----------- -----------
$ 172,427
===========
183,703
===========
</TABLE>
See accompanying notes to financial statements
-D-3-
<PAGE>
<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Statements of Operations
Years Ended December 31, 1999 and 1998
and Cumulative Amounts from Inception
Cumulative Amounts
from inception to
1999 1998 December 31, 1999
---------- ----------- -------------------
<S> <C> <C> <C>
Sales, net $ 253,975 285,809 1,408,863
Cost of sales 69,196 87,536 266,127
-------- -------- ----------
Gross margin 184,779 198,273 1,142,736
------- ------- ---------
Operating expense:
Sales and marketing 353,465 225,224 978,505
General and administrative 427,613 383,917 1,399,868
Research and development 84,537 47,846 174,169
--------- --------- -----------
Total operating expenses 865,615 656,987 2,552,542
-------- -------- ----------
Net loss $ (680,836) (458,714) (1,409,806)
======== ======== ==========
</TABLE>
See accompanying notes to financial statements.
-D-4-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit
Period from August 25, 1993 (inception) to December 31, 1999
<TABLE>
<CAPTION>
Convertible Additional
Preferred Stock Common Stock Paid-in
Shares Amount Shares Amount Capital
------ ------ ------ --------- ----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for cash - $ - 4,657,389 $ 2,329 12,171
Net loss - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1993 - - 4,657,389 2,329 12,171
Acquisition and retirement of common
stock - - (802,999) (402) (2,098)
Net income - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1994 - - 3,854,390 1,927 10,073
Net loss - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1995 - - 3,854,390 1,927 10,073
Net loss - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1996 - - 3,854,390 1,927 10,073
Issuance of common stock for cash
and notes - - 587,794 294 310,956
Compensation related to grant of
stock options - - - - 15,800
Net loss - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1997 - - 4,442,184 2,221 336,829
Issuance of common stock for cash - - 507,816 254 194,746
Collection of subscription receivable - - - - -
Compensation related to grant of
stock options - - - - 19,752
Net loss - - - - -
----- ---- ---------- ---------- ----------
Balances at December 31, 1998 - - 4,950,000 2,475 551,327
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Accumulated
Deficit During Stock Net
Development Subscriptions Stockholders'
Stage Receivable Deficit
-------- ----------- ----------
<S> <C> <C> <C>
Issuance of common stock for cash - - 14,500
Net loss (5,124) - (5,124)
---------- ---------- ----------
Balances at December 31, 1993 (5,124) - 9,376
Acquisition and retirement of common
stock - - (2,500)
Net income 33,669 - 33,669
---------- ---------- ----------
Balances at December 31, 1994 28,545 - 40,545
Net loss (721) - (721)
---------- ---------- ----------
Balances at December 31, 1995 27,824 - 39,824
Net loss (39,561) - (39,561)
---------- ---------- ----------
Balances at December 31, 1996 (11,737) - 263
Issuance of common stock for cash
and notes - (106,250) 205,000
Compensation related to grant of
stock options - - 15,800
Net loss (258,519) - (258,519)
---------- ---------- ----------
Balances at December 31, 1997 (270,256) (106,250) (37,456)
Issuance of common stock for cash - - 195,000
Collection of subscription receivable - 106,250 106,250
Compensation related to grant of
stock options - - 19,752
Net loss (458,714) - (458,714)
---------- ---------- ----------
Balances at December 31, 1998 (728,970) - (175,168)
</TABLE>
(continued)
-D-5-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Statements of Stockholders' Deficit - Continued
<TABLE>
<CAPTION>
Convertible Additional
Preferred Stock Common Stock Paid-in
Shares Amount Shares Amount Capital
------ ------ ------ -------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of convertible preferred
stock for cash 271,875 $ 543,750 - - (72,187)
Issuance of common stock for
services - - 40,000 20 13,314
Conversion of convertible
debenture - - 333,333 167 99,833
Cancellation of unexercised
options - - - - (35,552)
Net loss - - - - -
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1999 271,875 $ 543,750 5,323,333 2,662 556,735
========== ========== ========== ========== ==========
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Accumulated
Deficit During Stock Net
Development ubscriptions Stockholders'
Stage Receivable Deficit
------------ ----------- -------
<S> <C> <C> <C>
Issuance of convertible preferred
stock for cash - - 471,563
Issuance of common stock for
services - - 13,334
Conversion of convertible
debenture - - 100,000
Cancellation of unexercised
options - - (35,552)
Net loss (680,836) - (680,836)
---------- ----- ---------
Balances at December 31, 1999 (1,409,806) - (306,659)
========== ====== =========
</TABLE>
See accompanying notes to financial statements.
-D-6-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended December 31, 1999 and 1998 and Cumulative Amounts from Inception
<TABLE>
<CAPTION>
Cumulative Amounts
from inception to
1999 1998 December 31, 1999
---------- ----------- -------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (680,836) (458,714) (1,409,806)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation, net of gain on sale 35,701 35,089 106,123
Compensation due to grant of stock
options (35,552) 19,752 -
Changes in current assets and liabilities:
Accounts receivable (7,206) (4,385) (25,753)
Inventory 70 (4,224) (30,942)
Prepaids - (3,371) (3,371)
Accounts payable and accrued expenses 94,432 57,669 216,999
---------- ---------- ----------
Net cash used in operating
activities (593,391) (358,184) (1,146,750)
---------- ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment, net of
proceeds from sale 1,189 (56,299) (105,266)
Security deposits - - (4,418)
---------- ---------- ----------
Net cash provided by (used in)
investing activities 1,189 (56,299) (109,684)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from bank loans - 2,000 56,517
Principal payments on bank notes and
capital leases (23,183) (20,025) (63,207)
Proceeds from convertible debenture 34,500 100,000 334,500
Proceeds from cash advances from
stockholders 197,300 30,200 227,500
Repayment of cash advances from
stockholder (69,500) - (69,500)
Net proceeds from issuance of preferred and
common stock 471,563 301,250 789,813
---------- ---------- ----------
Net cash provided by financing
activities 610,680 413,425 1,275,623
---------- ---------- ----------
(continued)
</TABLE>
-D-7-
<PAGE>
<TABLE>
<CAPTION>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Statements of Cash Flows - Continued
Cumulative Amounts
from inception to
1999 1998 December 31, 1999
---------- ----------- -----------------
<S> <C> <C> <C>
Net increase (decrease) in cash $ 18,478 (1,058) 19,189
Cash, beginning of period 711 1,769 -
-------- -------- --------
Cash, end of period $ 19,189 711 19,189
======== ======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 14,872 17,656 45,986
Supplemental disclosures of non-cash financing activities:
Conversion of convertible debentures
into 385,439 shares of common stock $ - - 200,000
Purchase of property and equipment
financed by capital lease obligations - - 89,611
Conversion of convertible debentures
into 333,333 shares of common stock 100,000 - 100,000
Issuance of 40,000 shares of common
stock for legal services 13,334 - 13,334
Conversion of cash advances from
stockholders to convertible debenture 123,000 - 123,000
Conversion of accrued interest and
consulting services to convertible debt 72,500 - 72,500
</TABLE>
See accompanying notes to financial statements.
-D-8-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999 and 1998
(1) Organization and Business
BBJ Environmental Solutions, Inc. (the "Company"), formerly known as BBJ
Chemical Compounds, Inc., conducts research on the causes of and develops
solutions to biologically related indoor air quality problems. It
develops, manufactures, and markets products and devices that control
contamination and air pollution in heating, air-conditioning and
refrigeration systems of homes, offices, health care facilities, food
processing plants, schools, and public buildings. The Company was founded
upon the premise that these issues can be addressed by the development of
products that not only are effective against indoor air quality
contaminants, but also do not have dangerous side effects to users,
building occupants, equipment, or the environment.
The Company's activities to date have been related to market positioning
of its products, registering certain products with the appropriate
federal and state regulatory agencies, forming distribution networks for
its products, and obtaining financing for operations and marketing.
(2) Summary of Significant Accounting Policies
(a) Development Stage
The Company has not had significant revenues since inception and
is therefore in the development stage. The excess costs incurred
over revenues generated to date are disclosed as accumulated
deficit during development stage.
(b) Inventory
Inventory, consisting primarily of raw materials and finished
goods, is stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.
(continued)
-D-9-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(2) Summary of Significant Accounting Policies - Continued
(c) Property and Equipment
Property and equipment are stated at cost. Depreciation on
property and equipment is calculated on the straight-line method
over the estimated useful lives ranging from three to seven years.
Equipment under capital leases and leasehold improvements are
amortized by the straight-line method over the terms of the
related leases.
(d) Income Taxes
From inception through July 20, 1998, the Company elected to be
treated as a Subchapter S corporation for federal and state income
tax purposes. Profits and losses of the Company were, therefore,
included on the tax returns of the individual stockholders of the
Company. No provision for income taxes was provided for financial
statement purposes. Effective July 21, 1998, the Company
terminated its S corporation election for federal and state income
tax purposes.
As of July 21, 1998, the Company has adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under the asset and liability method of SFAS No.
109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS
No. 109, the effect of a change in tax rates on deferred tax
assets or liabilities is recognized in income in the period that
included the enactment.
Under SFAS No. 109, deferred taxes shall be recognized for
temporary differences at the date the Company became a taxable
entity. There were no significant net temporary differences at
July 21, 1998. Accordingly, the financial statements contain no
provision as of July 21, 1998.
(continued)
-D-10-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(2) Summary of Significant Accounting Policies - Continued
(e) Research and Development Expenses
Research and development costs are expensed as incurred.
(f) Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(g) Concentration of Credit Risk
Cash balances are maintained in financial institutions.
Occasionally, deposits exceed amounts insured by the Federal
Deposit Insurance Corporation.
The Company's customers are located primarily in the United States.
Approximately 50% of the Company's sales are generated from three
customers.
(h) Reclassification
Certain amounts in the 1998 and cumulative financial statements
have been reclassified to conform to their 1999 presentation. Such
reclassifications had no effect on reported net loss.
(continued)
-D-11-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(3) Property and Equipment
Property and equipment consists of the following as of December 31, 1999
and 1998, respectively:
<TABLE>
<CAPTION>
1999 1998
-------- ---------
<S> <C> <C>
Furniture and fixtures $ 32,945 $ 32,945
Office equipment 39,634 44,443
Manufacturing equipment 94,891 94,541
Leasehold improvements 17,272 17,272
-------- --------
184,742 189,201
Less accumulated depreciation
and amortization (95,988) (63,557)
-------- --------
$ 88,754 125,644
========= =======
</TABLE>
(4) Line of Credit
The Company has a revolving line of credit with a financial institution,
secured by the assets of the Company, which provides for borrowings of up
to $25,000 and is due on demand. The line of credit is guaranteed by some
of the stockholders of the Company. Interest on the line is charged at
2.5% over the current index rate (11% at December 31, 1999). As of
December 31, 1999, the total outstanding amount of this agreement is
$24,869.
(5) Indebtedness
(a) Note Payable
The Company has a note payable to a financial institution, secured
by the assets of the Company. The note bears interest at 11%, is
due on April 25, 2000 and had outstanding balances as of December
31, 1999 and 1998 of $2,567 and $9,718, respectively. This note is
also guaranteed by some of the stockholders of the Company.
(b) Advances from Stockholders
Advances from stockholders represent amounts due to the Company's
stockholders. The 1998 advances were converted into the
convertible debenture described in Note 7. The 1999 advances bear
interest at 10%.
(continued)
-D-12-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(6) Capital Leases
The Company is obligated under various lease agreements for certain
equipment. These leases are noncancellable and require monthly payments
through September 2002. The cost of equipment under these capital leases
at December 31, 1999 and 1998 is $89,611 with accumulated amortization of
$42,594 and $24,672, respectively.
Future minimum lease payments under capital leases as of December 31,
1999 are as follows:
Year Ending
December 31:
------------
2000 $ 25,900
2001 25,900
2002 16,112
--------
67,912
Amount representing interest (12,427)
-------
Present value of future payments 55,485
Current installments of capital lease obligations 18,560
-------
Capital lease obligations, less current installments $ 36,925
======
(continued)
-D-13-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(7) Convertible Debentures
During 1998, the Company entered into a convertible debenture agreement
in the amount of $100,000, which was advanced to the Company in two equal
payments of $50,000 each, bearing an interest rate of 8%. In 1999, the
lender elected to convert the debenture and its related accrued interest
into 333,333 shares of Company common stock.
In December 1999, the Company entered into a convertible debenture
agreement with a Director of the Company in the amount of $230,000. The
proceeds of the debenture were previously advanced to the Company in the
form of cash advances in the aggregate amount of $167,500, $10,000 of
accrued interest, and $62,500 for previous services rendered. The
debenture bears interest at 10% per annum with principal and interest due
in January 2001.
This debenture can be converted at $1.25 per share into 184,000 shares of
common stock, adjusted for the effects of any stock dividends or split or
like transactions that effect the capital structure of the Company, prior
to its maturity date.
(8) Commitments and Contingencies
(a) Leases
In November 1997, the Company entered into an operating lease to
expand the size of it operating facility from 1,782 square feet to
6,964 square feet for the five-year period from January 1, 1998
through December 31, 2002. Total rent expense for the years ended
December 31, 1999 and December 31, 1998 was approximately $65,000
and $58,000, respectively.
Future minimum lease payments under this operating lease are
approximately as follows:
2000 $ 49,000
2001 51,000
2002 53,000
======
(b) Potential Legal Claims
The Company recognizes that claims may arise during the normal
course of business, however, currently the Company's management
and legal counsel are unaware of any pending, threatened or
unasserted claims made against the Company.
(continued)
-D-14-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(9) Income Taxes
The Company had no income tax expense in 1999 and 1998 due to its
operating losses. The Company has net operating loss carryforwards of
approximately $800,000 for tax reporting purposes at December 31, 1999.
Such loss carryforwards, subject to certain limitations, expire through
2014. To the extent that the Company has taxable net income, the loss
carryforwards will be used to offset the taxable income.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities as of December 31 are as follows:
<TABLE>
<CAPTION>
1999 1998
------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 310,000 61,000
Accrued compensation 11,000 20,000
Other - 3,000
-------- ------
Total deferred tax assets 321,000 84,000
Valuation allowance for deferred tax assets (321,000) (84,000)
-------- -------
Net deferred tax assets $ - -
============ ==========
</TABLE>
(10) Stockholders' Equity
(a) Preferred Stock
In 1999, the Company completed a private placement of 100,000
shares of Series A 10% convertible preferred stock at an aggregate
price of $200,000 and another private placement of 171,875 shares
of Series B 10% convertible preferred stock at an aggregate price
of $343,750. Of the total proceeds of $515,625, $72,187 was used
to pay brokerage fees and various expenses related to the
offerings.
(continued)
-D-15-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(10) Stockholders' Equity - Continued
(a) Preferred Stock - Continued
The holders of the convertible preferred stock have the right to
convert such shares into shares of the Company's common stock at
any time at a conversion price equal to 1.6 shares of common
stock for each share of preferred stock, subject to certain
mandatory conversion provisions. As of December 31, 1999, no
shares of preferred stock have been converted into common stock.
Dividends on the Series A and B convertible preferred stock are
cumulative from the date of issue. Dividends were not declared
in 1999, therefore these dividends are in arrears. The aggregate
amount of arrearages in cumulative preferred dividends as of
December 31, 1999 is approximately $30,000.
(b) Common Stock
In September 1997, the Company increased the authorized number of
shares of common stock from 1.5 million to 30 million shares.
Further, the Company's common stock was modified so that each
share has a par value of $.0005 per share. Concurrently, the Board
of Directors approved a 20 for 1 stock split effective September
30, 1997. Additionally, the Board of Directors approved a 1.927195
for 1 stock split effective July 17, 1998. The accompanying
financial statements have been retroactively adjusted to reflect
these transactions.
On December 31, 1997, the holders of two convertible debentures
totaling $200,000 elected to convert their notes, their related
accrued interest, with an additional investment of $100,000 into
578,158 shares of the Company's common stock.
On June 30, 1998, the Company issued 48,180 shares of its common
stock to a director of the Company and 9,636 shares of its common
stock to an independent investor for $50,000 and $10,000,
respectively.
(continued)
-D-16-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
\ (A Development Stage Company)
Notes to Financial Statements - Continued
(10) Stockholders' Equity - Continued
(b) Common Stock - Continued
On July 30, 1998 and November 1, 1998, the same director of the
Company invested $50,000 and $30,000 in the Company to acquire
166,667 and 100,000 shares, respectively, of the Company's
common stock. Portions of these shares were transferred to a
former Company director and legal counsel of the Company.
On November 29, 1998, a partnership entity invested $55,000 in
the Company to acquire 183,333 shares of the Company's common
stock.
Additionally, on January 4, 1999, the Company's securities
counsel agreed to accept 40,000 shares of Company common stock
in lieu of cash payment for $13,334 in legal fees.
On March 2, 1999, the holder of a convertible debenture in the
amount of $100,000 elected to convert it and its related accrued
interest into 333,333 shares of Company common stock.
(c) Stock Options
The Board of Directors of the Company has adopted an Employee
Benefit and Consulting Services Compensation Plan. Under the
terms of the Plan, 5,000,000 shares of authorized but unissued
shares of common stock of the Company are reserved for issuance.
The Plan provides for the grant of incentive, as well as
compensatory, stock options to officers, employees, and key
consultants at an option price to be determined by the Board of
Directors of the Company. Options granted under the Plan are
exercisable for a term no longer than five years and are not
transferable.
(continued)
-D-17-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(10) Stockholders' Equity - Continued
(c) Stock Options - Continued
In 1997, the Company extended one of its executives a compensatory stock
option to purchase up to 192,720 shares of Company common stock at a
price of $0.00649 per share that vested over a five-year employment
period. For the years ended December 31, 1998 and 1997, the Company
recorded compensation expense of $19,752 and $15,800, respectively, for
the difference between the deemed fair value of shares at the time the
options were granted and the exercise price related to this stock option
plan. Upon termination of employment, the Company provided the executive
six months of severance pay in exchange for canceling all options held by
the executive to purchase common stock of the Company. Options canceled
included 192,720 at $0.00649 per share, 40,000 at $1.00 per share, and
69,379 at $1.17 per share. Severance pay expense is fully accrued as of
December 31, 1999.
The Company measures compensation expense under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and no
compensation expense has been reported for its fixed stock option plans,
except as discussed above for 1997 and 1998 that was subsequently
reversed in 1999 when the options were canceled. Had compensation expense
for the Company's stock option plans been determined using the fair value
method under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation," the impact on net loss would
have been immaterial.
(continued)
-D-18-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(10) Stockholders' Equity - Continued
(c) Stock Options - Continued
Changes in stock options are as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------------- -----------------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Beginning balance 931,843 $ 0.90 444,220 $ 0.66
Granted 1,512,500 1.15 487,623 1.11
Exercised
- - - -
Canceled (302,099) 0.40 - -
---------------- ---------------- ---------------- -----------------
Ending balance 2,142,244 $ 1.15 931,843 $ 0.90
================ ================ ================ =================
Exercisable 1,032,872 $ 1.04 623,189 $ 1.00
================ ================ ================ =================
Weighted average fair value of
options granted during the year $ 1.15 $ 1.11
================ =================
</TABLE>
-D-19-
<PAGE>
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Weighted
Average
Number Remaining Number
Exercise Outstanding Contractual Exercisable
Price 12/31/99 Life in Years 12/31/99
---------------------- ----------------------- -------------------- ----------------------
<S> <C> <C> <C>
$ 1.25 1,212,500 5.0 172,500
1.17 509,744 3.0 440,372
1.00 120,000 1.6 120,000
0.75 300,000 4.0 300,000
------------------------- ----------------------- ------------------- ----------------------
$0.75 - $1.25 2,142,244 4.2 1,032,872
========================== ======================= ====================== =====================
(continued)
</TABLE>
-D-20-
<PAGE>
BBJ ENVIRONMENTAL SOLUTIONS, INC.
(A Development Stage Company)
Notes to Financial Statements - Continued
(11) Going Concern
As shown in the accompanying financial statements, the Company has
incurred recurring losses from operations during its development stage
resulting in negative cash flow from operating activities and net
working capital deficiencies. These factors raise doubt about the
Company's ability to continue as a going concern. Management recognizes
that the Company must generate additional resources to enable it to
continue operations. Management's plans include establishing a market
for its products, the sale of additional equity securities under
appropriate market conditions and a plan of reorganization.
On January 31, 2000, the Company entered into an Agreement and Plan of
Reorganization ("Reorganization") with Omega Development, Inc.
("Omega"). Under the terms of the agreement, Omega has agreed to acquire
up to 100% of the capital stock of the Company for an estimated
12,410,666 shares of Omega's common stock subject to certain closing
conditions which include, without limitation, the following: (i) a
reverse stock split by Omega of one-for-three followed by a stock
repurchase of 3,465,000 shares by Omega for nominal consideration from
certain stockholders of Omega; (ii) due diligence of Omega verifying
that it has no assets or liabilities (except for $50,000 loaned to Omega
by the Company in connection with this transaction); and (iii) Omega
being current with all reports required to be filed under the Exchange
Act of 1934, as amended. At the completion of the Reorganization, the
Company will become a wholly owned subsidiary of Omega and Omega will
continue to operate through its newly acquired subsidiary.
On the closing date of the Reorganization, the officers and directors of
Omega will resign and designees of the Company will be appointed to the
vacated positions. At this time, management will also file an amendment
to change Omega's name to BBJ Environmental Technologies, Inc. Each
common stockholder of the Company will receive two shares of Omega
common stock in exchange for each share of Company common stock and each
Series A and Series B preferred stockholder will receive 3.84 shares of
Omega common stock in exchange for each share of Company preferred
stock.
In addition to raising $375,000 by issuing 360,000 shares of Company
common stock in January 2000, the Company and Omega will jointly pursue
issuing 1 million shares of Omega common stock through a private
placement memorandum in the amount of $2 million during the first half
of 2000. On the closing date of the Reorganization, all proceeds
received under the private placement offering will be released from
escrow to the Company.
-D-21-
