UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to___________
Commission file number: 33-11059-A
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in it charter)
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Nevada 13-3476854
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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6802 Citicorp Blvd., Suite 500, Tampa, Florida 33619
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(Address of principal executive offices)
(813) 622-8550
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(issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 13, 2000, there were
15,445,900 shares outstanding, after giving effect to the issuance of Common
Stock, $.001 par value, pursuant to recent financing transactions.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
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INDEX
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PART I. FINANCIAL INFORMATION Page
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Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000 (Unaudited)
and December 31, 1999 3
Consolidated Statements of Operations (Unaudited) for the
Three and Nine Months ended September 30, 2000 and
September 30, 1999 and Cumulative Amounts from
Inception to September 30, 2000 4
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months ended September 30, 2000 and September
30, 1999 and Cumulative Amounts from Inception to
September 30, 2000 5-6
Notes to Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE 11
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
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(Unaudited)
September 30, 2000 Dec. 31, 1999
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ASSETS
Current assets:
Cash $ 8,277 $ 19,189
Accounts receivable 16,674 25,753
Inventory 47,165 30,942
Prepaids 3,371 3,371
--------------- ---------------
Total current assets 75,487 79,255
Property and equipment, net 111,685 88,754
Security deposits 14,614 4,418
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$ 201,786 $ 172,427
=============== ===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 151,592 $ 131,165
Bank line of credit 68,910 24,869
Current portion of bank loan and capital lease obligations 24,002 21,127
Advances from stockholders 146,500 35,000
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Total current liabilities 391,004 212,161
Bank loan, less current portion 28,021 -
Capital lease obligations, less current portion 23,005 36,925
Convertible debentures 401,742 230,000
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Total liabilities 843,772 479,086
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Stockholders' deficit:
Preferred stock, $1.00 par value; 5,000,000 shares
authorized; none and 543,750 issued and
outstanding, respectively - 543,750
Common stock, $.001 par value; 25,000,000 shares
authorized; 14,045,666 and 10,646,666 shares issued
and outstanding, respectively 14,046 10,647
Additional paid-in capital 1,481,655 548,750
Accumulated deficit during development stage (2,137,687) (1,409,806)
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Net stockholders' deficit (641,986) (306,659)
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$ 201,786 $ 172,427
=============== ===============
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See accompanying notes.
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Cumulative Amounts
Three Months Ended Sept 30, Nine Months Ended Sept 30, from Inception to
2000 1999 2000 1999 Sept 30, 2000
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<S> <C> <C> <C> <C> <C>
Sales, net $ 93,245 $ 46,067 $ 298,340 $ 202,112 1,707,203
Cost of sales 17,125 16,376 67,265 50,533 333,392
------------ ------------ ------------ ---------- ------------
Gross margin 76,120 29,691 231,075 151,579 1,373,811
------------ ------------ ------------ ---------- ------------
Operating Expenses:
Sales and marketing 210,866 113,145 489,155 247,891 1,467,660
General and administrative 125,315 109,861 396,573 324,008 1,796,441
Research and development 22,080 27,258 73,228 61,640 247,397
------------ ------------ ------------ ---------- ------------
Total operating expenses 358,261 250,264 958,956 633,539 3,511,498
------------ ------------ ------------ ---------- ------------
Net loss $ (282,141) $ (220,573) $ (727,881) $ (481,960) $ (2,137,687)
============ ============ ============ ========== ============
Net loss per share $ (0.02) $ (0.02) $ (0.06) $ (0.05) $ (0.24)
============ ============ ============ ========== ============
Weighted Average Shares
Outstanding 14,045,666 10,646,666 12,497,000 10,499,000 8,814,000
============ ============ ============ ========== ============
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See accompanying notes.
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Cumulative Amounts
Nine Months Ended Sept 30, from Inception to
2000 1999 Sept 30, 2000
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Cash flows from operating activities:
Net loss $ (727,881) $ (481,960) $ (2,137,687)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, net of gain on sale 25,512 27,268 131,635
Compensation due to grant of stock options - 21,630 -
Changes in current assets and liabilities:
Accounts receivable 9,079 (14,489) (16,674)
Inventory (16,223) (2,268) (47,165)
Prepaids - - (3,371)
Accounts payable and accrued expenses 27,879 25,212 244,878
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Net cash used in operating activities (681,634) (424,607) (1,828,384)
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Cash flows from investing activities:
Purchase of property and equipment, net of proceeds from sale (48,443) 1,189 (153,709)
Security deposits (10,196) - (14,614)
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Net cash provided by (used in) investing activities (58,639) 1,189 (168,323)
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Cash flows from financing activities:
Proceeds from bank loans 79,084 - 135,600
Principal payments on bank loans and capital leases (18,067) (17,217) (81,273)
Proceeds from convertible debentures - - 334,500
Proceeds from cash advances from stockholders 275,790 126,300 503,290
Repayment of cash advances from stockholders - (69,500) (69,500)
Net proceeds from issuance of preferred and common stock 392,554 455,250 1,182,367
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Net cash provided by financing activities 729,361 494,833 2,004,984
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(continued)
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
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<CAPTION>
Cumulative Amounts
Nine Months Ended Sept 30, from inception to
2000 1999 Sept 30, 2000
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Net increase (decrease) in cash (10,912) 71,415 8,277
Cash, beginning of period 19,189 711 -
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Cash, end of period $ 8,277 $ 72,126 $ 8,277
-============= ============== ===============
Supplemental disclosures of cash flow information:
Interest paid $ 9,987 $ 9,542 $ 55,973
Supplemental disclosures of non-cash financing activities:
Conversion of convertible debentures into 770,878 shares
of common stock $ - $ - $ 200,000
Purchase of property and equipment financed by capital
lease obligations - - 89,611
Conversion of convertible debentures into 666,666 shares
of common stock - 100,000 100,000
Issuance of 80,000 shares of common stock for legal services - 13,334 13,334
Conversion of convertible preferred stock into 1,044,000
shares of common stock 543,750 - 543,750
Recapitalization transactions accounted for similar to
reverse acquisition 1,535 - 1,535
Conversion of cash advances from stockholders to
convertible debenture 164,290 - 287,290
Conversion of accrued interest and consulting services to
convertible debenture 7,452 - 79,952
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See accompanying notes.
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BBJ ENVIRONMENTAL TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements at
September 30, 2000 include the accounts of BBJ Environmental Technologies, Inc.
(the "Company") and its subsidiary, BBJ Environmental Solutions, Inc. (acquired
on June 1, 2000); and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and reflect all adjustments which, in the opinion of
management, are necessary for a fair presentation of financial position as of
September 30, 2000 and results of operations for the three and nine months ended
September 30, 2000 and 1999. All adjustments are of a normal recurring nature.
The results of operations for interim periods are not necessarily indicative of
the results to be expected for a full year. The statements should be read in
conjunction with the financial statements and footnotes thereto of BBJ
Environmental Solutions, Inc. for the year ended December 31, 1999, included in
the Company's Registration Statement Form 8-K filing, dated June 1, 2000. All
significant inter-company accounts and transactions have been eliminated.
NOTE B - Organization and Description of Business
BBJ Environmental Technologies, Inc., formerly known as Omega
Development, Inc., was a development stage enterprise formed under the laws of
the State of Nevada to evaluate, structure and complete a business combination
in the form of a merger with, or acquisition of, prospects consisting of private
companies, partnerships or sole proprietorships. The Company had no business
operations and no intention of engaging in active business prior to a business
combination with another enterprise. Prior to the reverse acquisition, the
Company was a shell company with no material assets, liabilities or operations.
The Company is operating through its newly acquired subsidiary, BBJ
Environmental Solutions, Inc. BBJ Environmental Solutions was formed under the
laws of the State of Florida in August 1993. BBJ Environmental Solutions
develops, manufactures, and markets products and devices that control
contamination and air pollution in heating, ventilation, air-conditioning, and
refrigeration systems ("HVAC/R") in homes, offices, health care facilities,
schools, food processing plants, and public buildings. All references to "the
Company" include BBJ Environmental Technologies, Inc. and BBJ Environmental
Solutions, Inc. unless the context indicates otherwise.
NOTE C - Recapitalization
On May 31, 2000, the Company's stockholders approved a reverse stock
split of one-for-three, which became effective on June 2, 2000.
Contemporaneously, the Company issued 12,410,666 post-split shares of its common
stock in exchange for all the issued and outstanding shares of capital stock of
BBJ Environmental Solutions in a recapitalization transaction accounted for
similar to a reverse acquisition ("Recapitalization"). All share and per share
amounts in this Form 10-QSB have been adjusted to give retroactive effect to the
aforementioned reverse stock split of one-for-three and the issuance of the
12,410,666 post-split shares. No change in per share value or authorized number
of shares of capital stock occurred as a result of the reverse stock split. The
Company was formerly a non-operating public shell corporation with no
significant assets and was treated as the "acquired" company in the transaction,
but remains the surviving legal entity. Accordingly, the transaction was treated
as an issuance of stock by BBJ Environmental Solutions for the net monetary
assets of the Company, accompanied by a recapitalization.
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Since this transaction is in substance a recapitalization of BBJ and not a
business combination, a valuation was not performed and no goodwill was
recorded. In connection with the Recapitalization, the Company's name was
changed to BBJ Environmental Technologies, Inc.
The assets acquired by the Company include all the assets of BBJ
Environmental Solutions, which it utilizes in its operations. These include
primarily the following: accounts receivable, inventory, furnishings, and
equipment. The nature of the business in which those assets were used by BBJ
Environmental Solutions were for the sale of its EPA registered products. The
Company intends to continue to use such accounts receivable, inventory,
furnishings, and equipment.
NOTE D - Computation of Net Loss Per Common Share
Loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the year.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Planned principal operations of the Company have not commenced,
although it has received limited revenues. In June 1975, the Financial
Accounting Standards Board, in its Statement No. 7, set forth guidelines for
identifying an enterprise in the development stage and the standards of
financial accounting and reporting applicable to such an enterprise. In the
opinion of the Company, its activities from its inception through September 30,
2000 fall within the referenced guidelines. Accordingly, the Company has
reported its activities in accordance with the aforesaid Statement of Financial
Accounting Standards No. 7.
During the three months ended September 30, 2000, BBJ generated
revenues from product sales of $93,245 compared to $46,067 for the three months
ended September 30, 1999. This increase was due to the implementation of a sales
and marketing strategy to develop strategic channel partner relationships with
national companies to expand product distribution and promotion. Total operating
expenses increased to $358,261 for the three months ended September 30, 2000
from $250,264 for the three months ended September 30, 1999 due primarily to the
expansion of the Company's sales force and increased marketing effort. For the
three months ended September 30, 2000 and 1999, the Company incurred a net loss
of $282,141 and $220,573, respectively.
During the nine months ended September 30, 2000, BBJ generated revenues
from product sales of $298,340 compared to $202,112 for the nine months ended
September 30, 1999. This increase was due to the implementation of a sales and
marketing strategy to develop strategic channel partner relationships with
national companies to expand product distribution and promotion. Total operating
expenses increased to $958,956 for the nine months ended September 30, 2000 from
$633,539 for the nine months ended September 30, 1999. The increase was due
primarily to the expansion of the Company's sales force and increased marketing
effort as well as costs associated with the recapitalization of the Company. For
the nine months ended September 30, 2000 and 1999, the Company incurred a net
loss of $727,881 and $481,960, respectively.
The foregoing results were achieved over the past two years when the
Company had inadequate financing for sales support, marketing and advertising,
promotional material and participation in trade shows, which adversely effected
the Company's revenues. The Company now believes it has the financing to fully
implement its business plan to do the following: implement sales plan, create
promotional materials, begin advertising and public relations campaign,
participate in trade shows/organization memberships, and complete current
research, product development and studies currently underway.
Liquidity and Capital Resources
As of September 30, 2000, the Company had net stockholders' deficit of
$641,986, accumulated losses during the development stage of $2,137,687 and a
working capital deficit of $315,517. During the nine months ended September 30,
2000 and September 30, 1999, the Company used in operating activities $681,634
and $424,607, respectively. This was a result of losses incurred by the Company
during its development stage operations partially reduced primarily from
depreciation expenses and increases in payables and accrued expenses. During the
nine months ended September 30, 2000 and September 30, 1999, net cash provided
by (used in) investing activities was $(58,639) and $1,189, respectively. During
the nine months ended September 30, 2000, cash was used to purchase property and
equipment and for security deposits. During the nine months ended September 30,
2000 and September 30, 1999, cash flows from financing activities amounted to
$729,361 and $494,833, respectively. During the nine months ended September 30,
2000, cash was provided through net proceeds from the sale of capital stock,
proceeds from bank loans and cash advances from stockholders partially offset by
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payments made on bank loans and capital leases. During the nine months ended
September 30, 1999, cash was provided from the sale of capital stock and cash
advances from stockholders partially offset by a repayment of these cash
advances and payments made on bank loans and capital leases.
As described below, the Company received in November 2000, $1,050,000
in cash through subscription agreements of its Common Stock from two overseas
banks. The Company sold 1,400,000 shares of its Common Stock at a cash purchase
price of $.75 per share. Management believes that the funds received from this
financing together with funds anticipated to be received from operations will be
sufficient to finance the Company's liquidity and capital resource needs on a
short term and long term basis over a period of at least the next 15-18 months.
Recent Developments
In November 2000, the Company sold through subscription agreements 1,400,000
restricted shares of its Common Stock at a purchase price of $.75 per share to
two overseas banks. The Company has also received indications of interest from
four other overseas accredited investors to purchase an additional 1,404,000
shares at the same price per share, for a total of $1,053,000 in additional
financing, bringing the total amount of financing to $2,103,000. A commission in
the nature of a finder's fee of up to 200,000 shares of the Company's Common
Stock will be issued to one accredited investor based on the total amount of
financing received by the Company. This transaction was exempt under Sections
4(2) and 4(6) and Rule 506 of Regulation D of the Securities Act. The investors
in this private placement also received the right to name two members of the
Company's Board of Directors. In the event that the Company's revenues for the
period November 1, 2000 through October 30, 2001 is less than $1,667,075, the
purchase price is subject to proportionate adjustment down to a minimum of $.375
per share.
In August and October 2000, the Company raised $50,000 in August 2000 and
$50,000 in October 2000 through two bridge loans. The Company granted an option
for 75,000 shares of Common Stock, par value $.001 per share, at an exercise
price of $1.25 per share for each bridge loan. The loans have been paid in full
as of the date of this filing.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
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Item 2. Changes in Securities: None
---------------------
Item 3. Defaults Upon Senior Securities: None
-------------------------------
Item 4. Submissions of Matters to a Vote of Security Holders: None
----------------------------------------------------
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibits
Exhibit No. Description
----------- -----------
3 Amendment to Articles of Incorporation (1)
27 Financial Data Schedule. (2)
--------------------------
(1) Incorporated by reference to Exhibit 3 to the Registrant's Form 8-K dated
June 1, 2000, and filed on June 8, 2000.
(2) Filed herewith.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended September
30, 2000:
However, the Registrant filed a Current Report on Form 8-K (date of
earliest event: June 1, 2000), reporting the Company's acquisition of all the
outstanding capital stock of BBJ Environmental Solutions, Inc., change in
control, and a change in certifying public accountants.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
Dated: November 13, 2000 /s/ Jerry V. Schinella
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Jerry V. Schinella, President and CFO
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