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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1999
-----------------
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from_____________to______________
Commission file number: 33-34200
OMEGA DEVELOPMENT, INC.
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(Name of small business issuer in its charter)
Nevada 13-3476854
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8726 S. Florence Ave.
Tulsa, OK 74137
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer(s)telephone number: (918)299-3212
-------------
- --------------------------------------------------------------------------------
(Former name, former address or former
fiscal year, if changed since last report)
Securities registered under Section 12(b) of the Exchange Act: None
----
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
Par Value, $.001
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 (for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No__X___
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ X ]
State Issuer's revenues for its most recent fiscal year. $ 0 .
----
State the aggregate market value of the voting stock held by non-affiliates. The
Common Stock does not trade on any recognized stock exchange. It is estimated
that the value is $0.01 per share or less.
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. 15,000,000 shares of common stock,
$.001 par value, as of March 27, 2000.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT. YES_____ NO X
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<PAGE>
FORM 10-KSB
OMEGA DEVELOPMENT, INC.
ANNUAL REPORT
DECEMBER 31, 1999
Table of Contents
PART I
Page
----
Item 1. Description of Business . . . . . . . . . . . . . . . . 2
Item 2. Description of Property . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . 3
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . 4
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . . 5
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . 6
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . 6
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons, Compliance With Section 16(a)
of the Exchange Act. . . . . . . . . . . . . . . . . . . 7
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . 8
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . 9
Item 12. Certain Relationships and Related Transactions . . . . .10
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . .10
(i)
<PAGE>
OMEGA DEVELOPMENT, INC.
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
PART I
Item 1. Description of Business
General
Omega Development, Inc. ("Omega" or "the Company") was incorporated in the State
of Nevada on July 15, 1988 under the name of "Lewison Enterprises, Inc." Since
then the Company has experienced a series of business consolidations and
reorganizations, the most recent of which are discussed below. At present, the
Company has no ongoing business operations.
On September 27, 1996, the bank holding the mortgage on the only operating asset
of the Company, a general purpose office building (the "ABB Building") located
in Windsor, Connecticut, completed foreclosure proceedings on that building.
Since that time the Company has had no ongoing operations and minimal activity.
Plan of Operation
The Company's business plan at December 31, 1999 is to seek to acquire or merge
with potential businesses that may, in the opinion of management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings. As
of December 2, 1997, the Company entered into a Stock Exchange Agreement and
Plan of Reorganization (the "Agreement") to acquire Heater Specialists, Inc. and
Primenergy, Inc., however, the Agreement was subsequently terminated on August
6, 1998. See footnote 7, Merger Activity, to the Financial Statements following
on page F-8.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ in exchange for that number of
shares of common stock of the Company that will cause the BBJ shareholders to
own in the aggregate approximately 83% of the outstanding common stock of the
Company. It is contemplated that this will be accomplished through a combination
of common stock issuances by the Company, a reverse stock split of the Company's
outstanding common stock and the return of outstanding shares of the Company's
common stock to the treasury. BBJ develops, manufactures and markets indoor
environmental solutions with products and devices that control
2
<PAGE>
contamination and air pollution in heating, ventilation and air-conditioning
systems of homes, offices, health care facilities, food processing plants,
schools and public buildings. Completion of the transaction with BBJ is subject
to several conditions, including completion of a one-for-three reverse stock
split.
Employees
As of December 31, 1999, the Company employed 1 person.
Item 2. Description of Property
As of December 31, 1999, the Company neither owned nor leased any property.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the Company's stockholders during the fourth
quarter of the fiscal year ended December 31, 1999.
3
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
To date there has been no significant public market for the Company's Common
Stock. In light of the Company's lack of business operations or properties as of
December 31, 1999, it is unlikely its Common Stock had any value other than a
nominal value. Of the 15,000,000 shares of the Company's common stock presently
outstanding, approximately 14,252,130 shares or 95.0% are "restricted
securities," as the SEC's rules and regulations define such term. The holders of
these restricted shares may not sell them in the public market unless they are
first registered for sale under the Act, or are sold in compliance with Rule 144
under the Act. The holders of approximately 8,784,564 shares are "affiliates,"
as defined by the Act (See "Item 11. - Security Ownership of Certain Beneficial
Owners and Management," following).
In connection with the acquisition of HPA in 1995, the selling stockholders
received demand and "piggyback" registration rights for the Common Stock
exchanged and for the Common Stock into which the Series C Preferred Stock was
converted. Additionally, under the terms of a private offering under which
209,000 shares of Common Stock were sold, the investors were granted
registration rights within six months after the closing date of the offering.
As described above, approximately 14,252,130 shares of the Company's Common
Stock which are currently outstanding are "restricted" securities, as Rule 144
promulgated under the Act defines that term. In the future, the holders of these
shares may sell them in compliance with Rule 144. Generally under Rule 144, a
person holding restricted securities for a period of at least one year may, if
there is adequate public information available concerning the Company, every
three months sell in ordinary brokerage transactions or transactions with a
market maker an amount equal to the greater of (i) 1% of the Company's then
outstanding stock, or (ii) the average weekly volume of sales during the four
calendar weeks preceding the sale. After two years have elapsed, a person who is
not an affiliate of the Company may sell an unlimited amount of the restricted
securities. Under Rule 144, however, affiliates of the Company are subject to
these volume limitations as long as they are affiliated with the Company and for
a period of at least three months after their affiliation ends, regardless of
the length of the holding period. Sales under Rule 144 may, in the future, tend
to depress the market price of the Company's securities should a public market
develop.
At March 27, 2000, there were approximately 571 record holders of the Company's
Common Stock. The Company has not paid any cash dividends on shares of its
Common Stock since its inception and currently intends to retain earnings in the
future for the Company's operations and expansion of its business.
4
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Item 6. Managements' Discussion and Analysis or Plan of Operation
PLAN OF OPERATION
The Company's business plan at December 31, 1999 is to seek to acquire or merge
with potential businesses that may, in the opinion of management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings. In
seeking to attain its business objectives, the Company will not restrict its
search to any particular industry. As of December 2, 1997, the Company entered
into a Stock Exchange Agreement and Plan of Reorganization (the "Agreement") to
acquire Heater Specialists, Inc. and Primenergy, Inc., however, the Agreement
was subsequently terminated on August 6, 1998. See footnote 7, Merger Activity,
to the Financial Statements following on page F-8.
Since the loss of the ABB Building through foreclosure (See Item 1, Description
of Business, above), the Company has had no ongoing operations and minimal
activity.
At present, the Company has only one employee, no office and the on going
general and administrative expenses are minimal. During 1996, the Company had a
significant working capital deficit and suffered a severe cash flow problem. The
Company has relied on equity contributions from a stockholder, small equity
placements under a private placement memorandum and loans from Directors and a
private investor to fund its current overhead. The principal shareholder of the
Company made capital contributions of $3,000 in 1999 and $38,519 in 1998 to pay
certain liabilities of the Company. The principal stockholder of the Company has
agreed to fund the operations of the Company in sufficient amounts for the
Company to meet its recorded obligations at December 31, 1999, and its continued
operations as a going concern.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ in exchange for that number of
shares of common stock of the Company that will cause the BBJ shareholders to
own in the aggregate approximately 83% of the outstanding common stock of the
Company. It is contemplated that this will be accomplished through a combination
of common stock issuances by the Company, a reverse stock split of the Company's
outstanding common stock and the return of outstanding shares of the Company's
common stock to the treasury. BBJ develops, manufactures and markets indoor
environmental solutions with products and devices that control contamination and
air pollution in heating, ventilation and air-conditioning systems of homes,
offices, health care facilities, food processing plants, schools and public
buildings. Completion of the transaction with BBJ is subject to several
conditions, including completion of a one-for-three reverse stock split.
5
<PAGE>
RESULTS OF OPERATIONS - FISCAL 1999 VS. FISCAL 1998
---------------------------------------------------
The net loss for the year ended December 31, 1999 was $21,409 compared to a net
loss of $41,012 for the year ended December 31, 1998. Generally, the decreased
net loss for the current year is attributable to a decrease in the merger
activity of the Company during fiscal 1999 and resulting decreases in legal and
accounting expenses.
General and administrative expenses decreased $22,668 (71%) in the current year
as compared to the prior year. The decrease is primarily due to a decrease in
the merger activity of the Company during fiscal 1999 and resulting decreases in
legal and accounting expenses.
Depreciation and amortization expenses increased $3,065 (34%) in 1999 as
compared to 1998. This increase is primarily attributable to accelerating the
depreciation of the fixed assets somewhat due to the expected lives of the
assets.
No income tax expense or benefit has been recorded for 1999, as a valuation
allowance has been provided for the tax effects of the entire net operating loss
carry forwards and other net deductible temporary differences.
Some of the information in this report constitutes "forward looking" statements
under the Private Securities Litigation Reform Act of 1995. Although Omega
believes its expectations are based on reasonable assumptions within the bounds
of its knowledge of its businesses, there is no assurance these transactions and
financial goals will be achieved. Factors that could cause actual results to
differ from those in forward looking statements, or used as a basis for forward
looking statements, include the success in the Company's plan to acquire or
merge with potential businesses and the success of those businesses.
Item 7. Financial Statements
The information required by this Item begins at page F-1 following page 13
hereof.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
6
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange Act
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows. The Company
expects that these persons will serve in these offices until the next annual
meeting or until their respective successors are elected and qualified:
Name Age Position
- -------------------- ------- ------------------
A. Paul Shapansky 49 Chairman of the Board, President
and Chief Executive Officer and
Principal Financial Officer
Herbert Maxwell 79 Director and Secretary
James R. Flaherty 53 Chief Accounting Officer
A. Paul Shapansky. Mr. Shapansky joined the Company in January 1994 as Chief
Operating Officer and was appointed Chairman, President and Chief Executive
Officer in December 1994 in connection with the 1994 Reorganization. He has
served as a financial consultant to the Company through his investment banking
firm, A.G. Group Inc., since March 1993 and was responsible for the combination
with Lewison Enterprises, Inc. and Omega Development Corp. in July 1993,
arranging new funding for the Company's operations and the 1994 Reorganization
in December 1994. Mr. Shapansky has been President and owner of A.G. Group Inc.,
an investment banking firm, since 1988. He is currently the Chief Financial
Officer for eHDL, Inc., a health care services company located in south Florida.
From September 1996 to September 1997, Mr. Shapansky was a Financial Advisor for
Prudential Securities, Inc. Mr. Shapansky has a Bachelor of Commerce (Honours)
degree in Actuarial Mathematics and Finance, from the University of Manitoba in
Winnipeg, Canada.
Herbert Maxwell. Mr. Maxwell has been a director of the Company since December
1994. He has been self-employed as a crisis management consultant and investor
for over 20 years. Mr. Maxwell resides in the Manhattan district of New York
City and also serves as President and a director for Zachary Ventures, Inc. and
is a director on numerous other private companies.
7
<PAGE>
James R. Flaherty. Mr. Flaherty joined the Company in January 1994 as Treasurer
and was appointed Chief Financial Officer and Secretary in December 1994. Prior
to that he was the Vice President-Controller with ADDvantage Media Group, Inc.,
a marketing company which specializes in point-of-sale advertising. From 1981 to
1992, he served as Treasurer and Controller of Geodyne Resources, Inc., an oil
and gas acquisition and exploration company headquartered in Tulsa, OK. From
1972 to 1981, Mr. Flaherty was employed by Ernst & Young, a national accounting
firm. He is currently the Controller for eHDL, Inc., a health care services
company located in south Florida. Mr. Flaherty received his Bachelor of Science
degree in Accounting from the University of Kansas and his Masters of Science
degree in Accounting from Oklahoma State University and is a Certified Public
Accountant.
The Company's directors are elected for one year terms and hold office until
their successors are elected. The number of directors serving on the Board is
two. The Company's officers are elected annually by the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's common stock, to report their initial ownership of the
common stock and any subsequent changes in that ownership to the SEC and to
furnish the Company with a copy of each such report. SEC regulations impose
specific due dates for such reports, and the Company is required to disclose any
failure to file by these dates.
To the Company's knowledge, during and with respect to fiscal 1999, all Section
16(a) filing requirements applicable to its officers, directors and more than
ten percent stockholders were complied with.
Item 10. Executive Compensation
No executive officer of Omega received any compensation in 1999.
Compensation Of Directors
Directors receive no additional compensation for service on the Board of
Directors or any committee thereof. All Directors are reimbursed by the Company
for out-of-pocket expenses incurred by them in connection with their service on
the Board of Directors and any committee thereof.
8
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Principal Shareholders - Common Stock
The following table shows the number of shares of Common Stock of the Company
beneficially owned, as of March 27, 2000, by (i) the persons known to the
Company to be the beneficial owners of more than five percent (5%) of the
outstanding shares, (ii) each of the directors of the Company, (iii) the
Company's Chief Executive Officer, and (iv) by all executive officers and
directors of the Company as a group, as follows:
Name and Address of Number of Shares Percentage of
Beneficial Owner Beneficially Owned Outstanding Shares
A. Paul Shapansky 6,464,105 (1) 43.0%
8726 S. Florence Ave.
Tulsa, OK 74137
Herbert Maxwell 1,932,135 13.0%
1501 Broadway
Suite 1807
New York, NY 10036
Dennis W. Rendflesh 1,814,967 (2) 12.0%
508 Whiston Pl.
Edmonton, Alberta
Canada T6M2C6
James R. Flaherty 153,560 1.0%
3106 Commerce Parkway
Miramar, Florida 33025
All Executive Officers and 8,549,800 57.0%
Directors as a group (3 persons)
(1) Of these shares, 1,830,000 shares are held by Omega Investors
LLC No. 1, of which Mr. Shapansky is the Manager and
Controlling Member, 1,000,000 shares are held in trust by Mr.
Shapansky's wife and 200,000 shares are held in trust for Mr.
Shapansky's minor children.
(2) Of these shares, 200,000 shares are held in trust by Mr.
Rendflesh's wife and 30,000 shares are held in trust for Mr.
Rendflesh's minor children.
In the event the transaction with BBJ Environmental, described above, is
consummated, the persons listed above will as a group own less than 10% of the
outstanding common Stock of the Company.
9
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Item 12. Certain Relationships and Related Transactions
A. Paul Shapansky contributed $3,000 to the Company in 1999 and $38,519 in 1998
to pay certain liabilities of the Company.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
The following documents are included as exhibits to this Form 10-KSB.
Those exhibits below incorporated by reference herein are indicated as
such by the information supplied in the parenthetical thereafter. If no
parenthetical appears after an exhibit, such exhibit is filed herewith.
Exhibits
2.1 Agreement and Plan of Reorganization by and between Lewison
Enterprises, Inc., Omega Development Corp. and the shareholders of
Omega Development Corp. dated July 13, 1993 (Filed as Exhibit 2.1 to
the Form 8-K dated July 23, 1993, previously filed with the Commission,
File No. 33-34200).
2.2 Plan and Agreement of Reorganization by and among Omega Development
Inc., Omega Development Corporation, P. Thomas Mann, Peter Allen
Dysert, the Peter Allen Dysert Trust UTI dated July 13, 1983, Kirby J.
Bourgeois, Toklan Oil & Gas Corporation, Stephen M. King Properties,
Inc., A. Paul Shapansky and Omega Investors L.L.C. No. 1 consummated on
December 22, 1994 (Filed as Exhibit 2.1 to the Form 8-K dated December
22, 1994, previously filed with the Commission, File No. 33-34200).
2.3 Stock Purchase/Exchange Agreement by and among Home Partners of
America, Inc., RAS Investment Banking Group, J. Tabs Investment and
Michael Coleman and Omega Development, Inc. dated June 2, 1995 (Filed
as Exhibit 2.1 to the Form 8-K dated June 21, 1995, previously filed
with the Commission, File No. 33-34200).
2.4 Stock Exchange Agreement and Plan of Reorganization by and between
Omega Development, Inc. And the shareholders of Heater Specialists,
Inc. and Primenergy, Inc. dated December 2, 1997.
3.1 (a) Articles of Incorporation of Lewison Enterprises, Inc. filed
with the Secretary of State of Nevada July 14, 1988
(incorporated by reference to Registration Statement on Form
S-1, File Number 33-34200, of Lewison Enterprises, Inc.);
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(b) Amendment to Articles of Incorporation of the Company, as
filed with the Secretary of State of Nevada on September 22,
1989 (incorporated by reference to Form 10-K of the Company
[then known as The Postal Group, Inc.] for year ended December
31, 1989);
(c) Amendment to Articles of Incorporation of the Company filed
with the Secretary of State of Nevada on October 27, 1992
(incorporated by reference to Form 10-KSB of the Company for
the year ended December 31, 1992);
(d) Amendment to Articles of Incorporation of the Company filed
with the Secretary of State of Nevada on January 19, 1994
(incorporated by reference to Form 10-KSB of the Company for
the year ended December 31, 1993).
3.2 Bylaws of the Company (incorporated by reference to Registration
Statement on Form S-1, File Number 33-34200, previously filed with the
Commission).
4.1 Specimen Form of Certificate for Common Stock (incorporated by
reference to Registration Statement of Form S-1, File Number 33-34200,
previously filed with the Commission).
4.2 Board of Directors Action dated November 8, 1993, designating
preferences of Class B Preferred Stock, pursuant to authority in
Certificate of Amendment of Exhibit 3.1(c) above (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1993).
4.3 Specimen Form of Certificate for Preferred Stock (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1993).
4.4 Certificate of Designation of Series C Convertible Preferred Stock
filed June 7, 1995 (incorporated by reference to Form 10-KSB of the
Company for the year ended December 31, 1995).
10.1 Agreement and plan of Reorganization dated June 15, 1989 among the
Company, Mail-it-Quik, Inc., and the shareholders of Mail-it-Quik, Inc.
(incorporated by reference to Form 8-K dated June 30, 1989).
10.2 Rescission and revocation of Agreement and Plan of Reorganization
(incorporated by reference to Form 8-K dated December 31, 1990).
10.3 Agreement and Plan of Reorganization by and between Lewison
Enterprises, Inc., Omega Development Corp. and the shareholders of
Omega Development Corp. dated July 13, 1993 (incorporated by reference
to Form 8-K dated July 23, 1993).
11
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10.4 HPA Stock Purchase Agreement by and between Omega Development, Inc. and
Omega Investors LLC #1, effective December 15, 1996 (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1996).
10.5 Agreement and Plan of Reorganization dated January 31, 2000, by and
among the Company, BBJ Environmental Solutions, Inc. and the
Stockholders of BBJ Environmental (incorporated by reference to Form
10-KSB of the Company for the year ended December 31, 1998).
16.1 Letter dated August 17, 1995, issued by Arthur Andersen LLP addressing
Registrant disclosures in Form 8-K reporting a change in auditors
(Filed as Exhibit 1 to the Form 8-K dated August 15, 1995, previously
filed with the Commission, File No. 33-34200).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed with the Securities
and Exchange Commission during the last quarter of fiscal
1999.
12
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OMEGA DEVELOPMENT, INC.
Date: March 30, 2000 By: /s/ A. Paul Shapansky
--------------------------
A. Paul Shapansky
Chairman of the Board, President
and Chief Executive Officer and
Principal Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated:
Signature Title Date
- --------------------- --------------------------------- ---------------
/s/ A. Paul Shapansky Chairman of the Board, March 30, 2000
- -------------------- President and Chief
A. Paul Shapansky Executive Officer and
Principal Financial Officer
/s/ Herbert Maxwell Director and Secretary March 30, 2000
- ------------------
Herbert Maxwell
/s/ James R. Flaherty Chief Accounting Officer March 30, 2000
- --------------------
James R. Flaherty
13
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Omega Development, Inc.:
We have audited the accompanying consolidated balance sheet of Omega
Development, Inc. and subsidiaries as of December 31, 1999 and the related
statements of operations and accumulated deficit, changes in stockholders'
deficit and cash flows for each of the years in the two year period then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 disclosure 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 audits provide 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 Omega Development, Inc. and
subsidiaries as of December 31, 1999, and the results of its operations and its
cash flows for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
HENDERSON SUTTON & CO., P.C.
Tulsa, Oklahoma
March 29, 2000
F-1
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS December 31,
1999
---------------
CURRENT ASSETS $0
OFFICE AND OTHER EQUIPMENT, net of accumulated
depreciation of $39,708 0
---------------
TOTAL ASSETS $0
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $48,323
COMMITMENTS AND CONTINGENCIES (Note 5) ---
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; 25,000,000 shares authorized;
15,000,000 shares issued and outstanding 15,000
Additional paid in capital 4,645,653
Accumulated deficit (4,708,976)
---------------
Total stockholders' deficit (48,323)
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $0
===============
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
December 31,
1999 1998
------------- ------------
REVENUES:
Total revenues $0 $0
EXPENSES:
General and administrative 9,278 31,946
Depreciation and amortization 12,131 9,066
------------- ------------
Total operating expenses 21,409 41,012
------------- ------------
NET LOSS (21,409) (41,012)
ACCUMULATED DEFICIT, beginning of period (4,687,567) (4,646,555)
------------- ------------
ACCUMULATED DEFICIT, end of period ($4,708,976) ($4,687,567)
============= ============
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
Net loss per common share $0.00 $0.00
============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING 15,000,000 15,000,000
============= ============
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Common Additional
Shares Stock Paid-In Accumulated
Outstanding Par Value Capital Deficit
------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 15,000,000 $15,000 $4,604,134 ($4,646,555)
Capital contribution by principal
shareholder -- -- 38,519 --
Net loss for the period -- -- -- (41,012)
------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 15,000,000 15,000 4,642,653 (4,687,567)
Capital contribution by principal
shareholder -- -- 3,000 --
Net loss for the period -- -- -- (21,409)
------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 15,000,000 $15,000 $4,645,653 ($4,708,976)
==================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 31,
1999 1998
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($21,409) ($41,012)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,131 9,066
Changes in assets and liabilities:
Prepaid expenses 0 492
Accounts payable and accrued liabilities 6,278 (7,065)
--------------- ---------------
Total adjustments 18,409 2,493
--------------- ---------------
Net cash used in operating activities (3,000) (38,519)
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from capital contribution 3,000 38,519
--------------- ---------------
NET INCREASE (DECREASE) IN CASH 0 0
CASH, beginning of period 0 0
--------------- ---------------
CASH, end of period $0 $0
=============== ===============
Cash paid during the period for interest $0 $0
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization
Omega Development, Inc. ("Omega" or "the Company") was incorporated in the State
of Nevada on July 15, 1988 under the name of "Lewison Enterprises, Inc." Since
then the Company has experienced a series of business consolidations and
reorganizations, the most recent of which are discussed below.
On September 27, 1996, the bank holding the mortgage on the Company's sole
operating asset, the ABB Building, a 142,000 square foot general purpose office
building, located in Windsor, Connecticut, a suburb of Hartford completed
foreclosure proceedings on the building.
Since the foreclosure of the ABB Building , the Company ceased all operations
and currently has one employee. Omega's current business plan is to seek to
acquire or merge with potential businesses that may, in the opinion of
management, warrant the Company's involvement. The Company recognizes that as a
result of its limited financial, managerial or other resources, the number of
suitable potential businesses that may be available to it will be extremely
limited. The Company's principal business objective will be to seek long-term
growth potential in the business in which it participates rather than immediate,
short-term earnings. As of December 2, 1997, the Company entered into a Stock
Exchange Agreement and Plan of Reorganization (the "Agreement") to merge with
Heater Specialists, Inc. and Primenergy, Inc., however, the Agreement was
subsequently terminated on August 6, 1998. See footnote 7, Merger Activity.
The principal stockholder of the Company has agreed to fund the operations of
the Company in sufficient amounts for the Company to meet its recorded
obligations at December 31, 1999, and its continued operations as a going
concern.
F-6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The Company's consolidated financial statements at December 31, 1999 include the
accounts of Omega and its wholly owned subsidiary, Omega Capital Corp. All
intercompany transactions have been eliminated.
Depreciation and Amortization
Depreciation is recorded using the straight-line method over the estimated
useful lives of the office equipment.
Income Taxes
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). Deferred
taxes are determined based on the estimated future tax effects of differences
between the financial statements and tax basis of assets and liabilities and of
net operating loss carry forwards ("NOL"). SFAS 109 requires that the tax
benefit of such NOLs be recorded as an asset to the extent that management
concludes the realization of the NOLs is "more likely than not."
Earnings per Share
In 1997, the Financial Accounting Standards Board issued statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
<PAGE>
3. STOCKHOLDERS' EQUITY
The principal shareholder of the Company has agreed to fund the operations of
the Company to meet its recorded obligations at December 31, 1999, and its
continued operations as a going concern. The principal stockholder of the
Company contributed $3,000 in 1999 and $38,519 in 1998 to pay for certain
liabilities of the Company.
4. INCOME TAXES
The Company had certain federal income tax net operating loss carry forwards
(NOLs) at December 31, 1999. SFAS 109 requires that the tax benefit of such NOLs
be recorded as an asset to the extent that management concludes the realization
of the NOLs is "more likely than not." Realization of the future tax benefits is
dependent on the Company's ability to generate taxable income within the carry
forward periods. Management has concluded that, using the criteria of SFAS 109,
a valuation allowance should be provided for the entire balance of the net
deferred tax asset.
5. COMMITMENTS AND CONTINGENCIES
At December 31, 1999, no lease commitments existed.
6. STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash includes cash and money market
accounts that are due on demand. No cash payments for income taxes were made in
1999 or 1998.
7. MERGER ACTIVITY
On April 15, 1998, the Company executed an Agreement and Plan of Merger (the
"Agreement"), which was entered into as of December 2, 1997, by and among the
Company, Heater Specialists, Inc. ("HSI") and Primenergy, Inc. The Agreement to
merge the companies was conditioned upon Omega raising new equity of not less
then $3,000,000 on or before May 31, 1998, subject to extension by mutual
agreement. Omega was unable to provide the new equity in accordance with the
terms of the Agreement and the Agreement was terminated on August 6, 1998.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ
F-8
<PAGE>
in exchange for that number of shares of common stock of the Company that will
cause the BBJ shareholders to own in the aggregate approximately 83% of the
outstanding common stock of the Company. It is contemplated that this will be
accomplished through a combination of common stock issuances by the Company, a
reverse stock split of the Company's outstanding common stock and the return of
outstanding shares of the Company's common stock to the treasury. BBJ develops,
manufactures and markets indoor environmental solutions with products and
devices that control contamination and air pollution in heating, ventilation and
air-conditioning systems of homes, offices, health care facilities, food
processing plants, schools and public buildings. Completion of the transaction
with BBJ is subject to several conditions, including completion of a
one-for-three reverse stock split.
F-9
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000839439
<NAME> Omega Development, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 39,708
<DEPRECIATION> (39,708)
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 48,323
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> (63,323)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21,409)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,409)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,409)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
