<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
               THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended December 31, 2001
                   -------------------------------------------

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

Commission File Number: 0-24016
-------------------------------

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                      ------------------------------------
             (Exact name of Registrant as specified in its charter)

            Nevada                                      13-3476854
-----------------------------------          -------------------------------
(State of jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                      Identification Number)

6802 Citicorp Blvd., Suite 500
Tampa, Florida                                            33619
-----------------------------------------              ------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number,
including area code:
                                 (813) 622-8550
                                 --------------

Securities registered pursuant to Section 12(b) of the Act:

                                      None

--------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 Par Value
--------------------------------------------------------------------------------

                                (Title of Class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes  X . No    .
                                              ---    ---

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-B (ss.229.405 of this chapter) is not contained herein,  and
will not 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 or any amendment to this Form 10-KSB [x].

     The number of shares  outstanding of the issuer's Common Stock, as of March
15, 2002, was 22,396,578.
<PAGE>

                                     PART I

Item 1. General
------- -------

     BBJ Environmental Technologies, Inc., a Nevada corporation established in
1988, is a holding company which owns 100% of BBJ Environmental Solutions, Inc.,
a Florida corporation established in 1993. BBJ Environmental Technologies
acquired BBJ Environmental Solutions effective June 2000 pursuant to an
Agreement and Plan of Reorganization as described under "Item 12." Our prior
business operations were terminated in September 1996, at which time we began a
period of inactivity until our acquisition of BBJ Environmental Solutions.

     BBJ Environmental Solutions develops, manufactures, and markets products
and devices that control contamination and air pollution in heating,
ventilation, air-conditioning, and refrigeration systems of homes offices,
health care facilities, schools, and public buildings. Consequently, our
products are highly effective in promoting good indoor air quality and indoor
environment quality. Management believes that our leading product, BBJ
MicroBiocide(R), is one of only a few products specifically registered by the
U.S. Environmental Protection Agency for the control of bacterial and algae
growth in air-conditioning systems.

Recent Developments
-------------------

     In June 2001, we hired a Director of Sales to initiate a change in our
sales and marketing strategy to:

     .    Redirect the field sales organization to develop relationships with
          Heating, Ventilation, Air-Conditioning and Refrigeration ("HVAC/R")
          wholesalers for product distribution and promotion;

     .    Develop relationships with industry manufacturer representatives to
          assist with product sales to HVAC/R distribution channels; and

     .    Create industry demand for indoor air quality products through
          education of indoor air quality and the importance of preventative
          maintenance to prevent the systems from becoming a breeding ground for
          bacteria, mold and fungi to germinate and grow.

     Prior to July 2001, our sales organization primarily focused on strategic
channel partners and direct selling while we utilized manufacturer
representatives to sell to HVAC/R wholesalers. At that time, we had only one
manufacturing representative promoting our product line in Florida and we were
only in a handful of the over 4,000 wholesale distributor locations that sell to
the HVAC/R contractors. Beginning in the fourth quarter of 2001, we dramatically
improved our presence through the HVAC/R wholesale distributor. As of March 15,
2002, we have seven field sales personnel and eight manufacturing
representatives covering 22 states and our product line is being sold in over
200 wholesale locations through a number of regional and national wholesale
distributors, such as: Johnstone Supplies, Trane, Lennox, Comfortmakers, CC
Dickson, Tropic, Victors and Young Supplies. Management believes that these
efforts to increase sales will begin to be realized in the first quarter of 2002
and thereafter in subsequent quarters for the foreseeable future.

                                       3
<PAGE>

Development of BBJ Environmental Solutions, Inc.
------------------------------------------------

     Robert Baker, our Chairman of the Board and Chief Executive Officer,
developed the idea for BBJ Environmental Solutions in July 1987 when he acquired
an infection in a hospital that resulted in severe pain and required over six
months to heal. As a result of this experience, he was determined to learn all
he could about the causes of such infections and do everything possible to
prevent or minimize them.

     Through diligent research, Mr. Baker became convinced that a significant
cause of indoor air pollution and disease transmission was directly related to
inadequate maintenance of air-conditioning and air-handling systems. While
managing the facilities and other administrative services of the M.D. Anderson
Cancer Center, during the mid-to-late 1980's, he uncovered several instances
where the air-conditioning systems contributed to serious infection-control
problems.

     Mr. Baker began a study of air quality problems, examining their causes and
methods for improvement. He also developed methods for testing the biological
content of air-conditioning systems, establishing the level of risk relative to
contamination, and conceived methods for controlling the build-up of
contaminating organisms. After about four-years, he discovered an agent that can
be used safely in the air stream that is also highly effective against
troublesome microbes. Although pathogens or disease causing organisms are
normally thought of as the greatest concern, it is not the major problem.
Virtually all bacteria, mold and other fungi that grow to high concentrations in
the indoor environment can cause air quality problems.

The Market for Indoor Air Quality
---------------------------------

     Indoor contaminants are a source of pollution that can cause a host of
symptoms that have become known as sick building syndrome. Sick building
syndrome causes occupant discomfort and complaints, low worker productivity,
and, in severe cases, illness and disability. Such contamination poses a threat
to both human health and the environment. Conventional disinfectants are not a
satisfactory means of control because they actually add more contamination than
they remove. Our products, on the other hand, prevent the formation of and
remove potentially harmful contaminants without introducing additional pollution
to the indoor environment of buildings such as office buildings, residences,
schools, food processing plants, hospitals and nursing homes.

     Contamination of air associated with bacteria, fungi, molds, and yeast
growth is believed by Management to be the primary cause of the indoor air
quality problems that have received so much attention during the past ten years.
The resulting building related illnesses and sick building syndrome cases lead
to illness, discomfort, lost productivity, and significant legal risks for
employers and building owners. Our products are used by heating, ventilation,
air conditioning and refrigeration contractors and building maintenance
technicians both in scheduled maintenance programs and during more in-depth
cleanup operations.

     Indoor air quality has become a major health concern in the United States
and in other developed countries around the world. Indoor air pollution can lead
to the serious problem of sick building syndrome which results in a wide range
of health concerns, including respiratory disease, dizziness, eye irritation,
and general fatigue.

                                       4
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     The Occupational Safety and Health Administration estimated that over 21
million employees are exposed to indoor air quality problems. Due to the
magnitude of the problem, the U.S. Environmental Products Agency, the
Occupational Safety and Health Administration and the Department of Energy have
all concurred that sick building syndrome was one of the principal environmental
problems confronting the United States in the 1990's and beyond. Although sick
building syndrome is a relatively new problem, methods to prevent and control it
are available. The simplest solutions are proper facility management and regular
maintenance programs.

     According to reports by the American Lung Association and the U.S.
Environmental Protection Agency, a clean air-conditioning system of a building
is extremely important since many people spend more than 90 percent of their
time in indoor environments. Levels of indoor contamination can be up to 70
times higher than outside. The re-circulation of stale air in an indoor
environment concentrates airborne particles and organic compounds, byproducts of
combustion and biological contamination.

     When building occupants become ill as a result of sick building syndrome,
it leads to increased employee absenteeism, lost productivity, increased health
insurance premiums and workers' compensation claims. Consequently, sick building
syndrome provides a basis for costly litigation against building owners,
managers, contractors, architects, heating, ventilation, air-conditioning and
refrigeration companies, manufacturers, and others that have worked in the
building. A significant cause of sick building syndrome is microbiological
contamination of indoor environments. The Legionnaires Disease outbreak in
Philadelphia in 1976 is probably the most publicized case of illness caused by a
pathogenic (disease-causing) microbial agent in a building.

     According to the Air Pollution Prevention and Control Division of the U.S.
Environmental Protection Agency, many heating, ventilation and air conditioning
system components can act as direct or indirect sources of particles and/or
volatile organic chemicals. Most prominent is the occurrence of biological
growth and bioaerosol generation in the presence of moisture provided by air
washers and other recirculating water systems, inadequate humidity control,
poorly designed humidifying systems, insufficient cooling coil maintenance, and
condensate drip pans. These problems appear to be exacerbated by dust
accumulation, and infiltration of outdoor contaminants that are distributed to
indoor spaces by the heating, ventilation and air conditioning system, and the
results of such contamination are that allergic reactions can range from mildly
uncomfortable to life-threatening, as in a severe asthma attack. Some common
signs and symptoms are watery eyes, runny nose and sneezing, nasal congestion,
itching, coughing, wheezing and difficulty breathing, headache, and fatigue.

     According to the U.S. Department of Health and Human Services, the heating,
ventilation and air conditioning system must be well maintained, inspected and
cleaned on a prescheduled and periodic basis and repaired as needed. If
maintenance is inadequate, problems that may arise again include growth and
dissemination of microbial agents from water reservoirs or water-damaged areas
as well as the dissemination of irritant dust through air supply from the
heating, ventilation and air conditioning system.

     Commercial building owners, employees, and homeowners have become
increasingly concerned about the effects of bacteria and mold contamination in
air-conditioning systems. During the last few years, many new products have been
brought to the market that claim to improve the quality of

                                       5
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indoor air. None of these products provide the efficacy of our approach. We
believe that our products have a competitive advantage in that our products have
the lowest toxicity and highest benefits of any known products on the market
today.

The Heating, Ventilation and Air-Conditioning Industry
------------------------------------------------------

     The heating, ventilation and air conditioning ("HVAC") industry consists of
the installation, replacement, maintenance service and repair of heating,
ventilation and air conditioning systems at existing residences and commercial
businesses and the installation of HVAC systems at newly constructed homes and
businesses.

     According to Air Conditioning, Heating and Refrigeration News, there are
approximately 43 million central air conditioners, 54 million furnaces and nine
million heat pumps in operation in homes in the United States. They further
state that there are over 30,000 heating, ventilation and air conditioning
contractors currently operating in the United States. According to the Air
Conditioning and Refrigeration Institute, over 61 million air conditioners have
been installed in the United States since 1975.

     According to a report published by the U.S. Department of Housing and Urban
Development for 1995, 80% of all new houses constructed in the United States
included central air conditioning. According to the U.S. Census Bureau,
manufacturers sales for all residential air conditioners and warm air furnaces
produced in 1997 were approximately $5.5 billion, reflecting a compound annual
growth rate of 7.2% from 1993 to 1997.

     Services in the residential market consist of the installation,
replacement, maintenance and repair of heating and air conditioning systems at
existing residences and the installation of heating and air conditioning systems
in newly constructed homes. This market is served by small, owner-operated
businesses operating in a single geographic area and dealers owned by
consolidators, utility companies and others, some of which may operate under a
uniform trade name and in multiple geographic locations. The retail sales and
service market in the United States is comprised of over 30,000 dealers.

The Refrigeration Industry
--------------------------

     The refrigeration industry consists of the installation, replacement,
maintenance service and repair of refrigerative cooling apparatus and systems at
existing commercial businesses and industrial processes and the installation of
refrigeration systems at newly constructed industries and businesses. An
ancillary market that must be addressed with different channels, but similar
products is the transport refrigeration industry. It consists of the
installation, replacement, maintenance service and repair of refrigerative
cooling apparatus and systems on existing vehicles, such as over-the-road
trucks, railroad and shipboard businesses and the installation of refrigeration
systems at newly constructed vehicles.

     The U.S. Census Bureau reports that close to 20,000 food
processing/manufacturing locations that require significant volumes of
refrigerated air to control and preserve their products. In all, according to
the U.S. Census Bureau, the total available market annually for industrial
refrigeration hygiene in food processing/manufacturing plants is estimated to be
over $17 million.

                                       6
<PAGE>

The BBJ Solution to Indoor Air Quality
--------------------------------------

     We manufacture and market 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 safely and
effectively treat the heating, ventilation and air-conditioning/refrigeration
("HVAC/R") systems in homes and commercial and institutional buildings. A major
feature of our flagship product BBJ MicroBiocide(R) is that the treatment
prevents bacteria, mold, mildew and fungi from growing for a period of up to six
months after treatment.

     All of our products provide a non-toxic, environmentally friendly way of
cleaning without harming heating and air-conditioning equipment. Studies by the
American Society of Heating, Refrigeration, and Air-Conditioning Engineers have
shown that with a proper maintenance program the life of the equipment will be
prolonged and breakdowns will occur less often, resulting in overall lower costs
to end-users.

     Our products improve the overall indoor air quality, indoor environmental
quality and air conditioning and refrigeration systems of residential,
commercial, and industrial buildings, decreasing the risk of sick building
syndrome and the diseases associated with it. The overall benefit to an employer
will be increased worker productivity and lower employee absenteeism, lawsuits,
and worker compensation claims.

Description of Products Competitive Strengths and Strategy
----------------------------------------------------------

     Our existing products include the following:

     MicroCoil Clean(R) (Detergent Based Industrial Cleaner) - Removes built-up
          dirt and debris safely without damaging surfaces where applied. The
          coil cleaner has great cleaning activity yet it is safe enough to wash
          your hands in. It does not etch the coil fins and will not damage
          carpeting or furnishings, if accidentally spilled.

     PowerCoil Clean(R) is a non-caustic, non-corrosive heavy duty coil cleaner
          that safely cleans and deodorizes evaporator coils, condenser coils,
          heating coils, window units, air filters, blowers, and other dirty
          HVAC/R components without damaging metal surfaces.

     BBJ  MicroBiocide(R) (Growth Prevention) - Specifically registered by U.S.
          Environmental Protection Agency 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. This product is to be applied after cleaning the
          coils with Micro Coil Clean(R) or Power Coil Clean(R).

     FreshDuct(R) (Odor Eliminator) - Formulated especially for conditions
          inside of heating, ventilation and air conditioning duct 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 non-toxic, biodegradable, and has a light, pleasing
          fragrance to be used in conjunction with BBJ MicroBiocide(R).

                                       7
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     BBJ  Spray Disinfectant/Cleaner(TM) - Disinfectant cleaner product designed
          to kill and clean infection and disease-causing organisms on
          environmental surfaces, including external portions of heating,
          ventilation, and air conditions systems.

     BBJ  Mold and Mildew Remover Disinfectant/Cleaner(TM) - specifically
          formulated to clean and disinfect walls, floors, and other surfaces
          where mold and mildew grow.

Micro Coil Clean(R)

     Micro Coil Clean(R) is a detergent-based, biodegradable industrial and
residential surface cleaner specially formulated for preventative maintenance
use on HVAC/R coils. The Micro Coil Clean(R) formula is a company trade secret.
It is distinguished from other such cleaners in that it is free from the
properties that make many competing products harmful to users, hard on
equipment, damaging to the environment, and a potential source of air
contamination that their use attempts to prevent.

     This product is formulated using a proprietary combination of highly
engineered surfactants that are classified as "readily biodegradable" according
to the standard U.S. Environmental Protection Agency method. It does not contain
alkalis that are caustic, phosphates that contaminate the environment, solvents
that result in air pollution, or the strong acids that make many products
corrosive. Micro Coil Clean(R) is a companion product to BBJ MicroBiocide(R) in
that a system must be clean before it can be successfully treated with BBJ
MicroBiocide(R). Contamination restricts the movement of air through the coil.
Consequently, contaminated systems have higher operating costs, break down more
frequently and have shorter lives. Thus, system cleaning is extremely cost
effective.

Power Coil Clean(R)

     Power Coil Clean(R), with BBJ Enviro-Gard(R), is a non-caustic,
non-corrosive heavy duty coil cleaner that safely cleans and deodorizes
evaporator coils, condenser coils, heating coils, window units, air filters,
blowers, and other dirty HVAC/R components without damaging metal surfaces. BBJ
Enviro-Gard(R) is an encapsulation control agent that regulates the proven
cleaning power of ammonium bifluoride without damaging metal surfaces or
generating harmful byproducts. This revolutionary patented technology allows
Power Coil Clean(R) to clean like an acid, but without damaging the equipment.

     Power Coil Clean(R) removes stubborn dirt and other deposits on heating,
ventilation, air-conditioning and refrigeration coils. This buildup on coils
causes reduced system efficiency as it interferes with the heat transfer process
of the heating, ventilation, air-conditioning and refrigeration unit. With its
special fast, penetrating action, Power Coil Clean(R) gets to hard to reach
places by cutting through the toughest dirt and grime. Although it leaves coils
clean and shiny, its patented formula is safe and non-corrosive on all metals,
including aluminum, copper and iron. Power Coil Clean(R) also will not stain or
bleach materials or fabrics. Many acid and alkaline cleaners on the market today
clean in part by causing a chemical reaction between the cleaner and the metal
that destroys the surface of the metal. This type of chemical reaction damages
coils causing system inefficiency and failure. Tests have shown that up to 90
percent of the weight of aluminum coil

                                       8
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stock is lost by soaking in these types of cleaners for as little as four hours.
Power Coil Clean(R) has the same powerful cleaning action, but without the
damaging effects of these cleaners.

BBJ MicroBiocide(R)

     BBJ MicroBiocide(R), is specifically registered with the U.S. Environmental
Protection Agency for heating, ventilation, air conditioning and refrigeration
systems, and is highly effective in preventing or inhibiting the growth of
active microorganisms such as bacteria, algae, mold and other fungi that grow in
heating, ventilation, air-conditioning and refrigeration systems for months at a
time. Although BBJ MicroBiocide(R) effectively kills these microorganisms upon
application, what makes this product unique is its ability to make that same
treated surface uninhabitable to future microbial growth for months at a time.
The product is economical to use and does not require highly trained applicators
or complex procedures. Consequently, it is attractive to heating, ventilation,
air-conditioning and refrigeration contractors and building owners who utilize
their own maintenance technicians. BBJ MicroBiocide(R) is sold as a two
component package that the user mixes before use. One bottle contains the BBJ
MicroBiocide(R) diluent and the other bottle contains the activator crystals.
The product is highly concentrated. Following the mixing instructions for the
activator crystals and the diluent, the product is diluted at the rate of three
ounces of concentrate per gallon of tap water. This contributes to the
economical use because a large supply can be shipped long distances at a low
cost. BBJ MicroBiocide(R) is also sold under the Nalco Diversified Technologies
label as Coil Clear. We are in discussions with several companies who have also
expressed an interest in private labeling BBJ MicroBiocide(R). We can provide no
assurances that these discussions will result in contracts.

FreshDuct(R) Odor Eliminator

     FreshDuct(R) Odor Eliminator, introduced in October 1998, was developed for
the control of odors associated with smoke, pets, spoilage, water infiltration,
and other contamination in air-conditioning ducts, plenum and crawl spaces, wall
cavities and other difficult to reach areas. FreshDuct(R) Odor Eliminator is
specially formulated to control odors and other sources of indoor pollution
gently but effectively. It encapsulates odors at the source, not just covers
them up. It freshens and deodorizes interiors of both lined and unlined
ductwork. FreshDuct(R) Odor Eliminator controls odors by both encapsulating and
breaking down odor molecules and time releasing a fresh fragrance. FreshDuct(R)
Odor Eliminator is user friendly and there is no need to evacuate the premise
during application. FreshDuct(R) Odor Eliminator is formulated with non-toxic
and readily biodegradable ingredients that will not accumulate in the
environment.

BBJ Spray Disinfectant/Cleaner(TM)

     BBJ Spray Disinfectant/Cleaner(TM) is a hospital strength
disinfectant/cleaner product designed to kill disease-causing organisms such as
tuberculosis bacillus, Hepatitus B, viruses such as Aids, and Herpes, bacteria,
and fungi. BBJ Spray(TM) is fully registered with the U.S. Environmental
Protection Agency. The product is designed and manufactured for full-strength
use on surfaces, walls, floors, bathrooms and kitchens. It is effective against
the control of both disease and odor causing organisms. The product is low in
toxicity, mild to the skin, and has a light, pleasing fragrance. This is an
advantage because many disinfectant formulations utilize harsh chemicals that
are corrosive,

                                       9
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irritating to the skin, and give off pungent odors. Although BBJ Spray(TM) is a
mild disinfectant, the product exhibits excellent cleaning and germ control
ability.

                                       10
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BBJ Mold and Mildew Remover(TM) Disinfectant/Cleaner

     BBJ Mold and Mildew Remover Disinfectant/Cleaner(TM) combines the germ
killing ability of a disinfectant with a cleaning agent to remove harmful mold
and mildew. It disinfects and cleans hard, non-porous, inanimate environmental
surfaces such as air-conditioning vents, grilles, diffusers and other hard
surfaces where microbial contamination may accumulate. BBJ Mold and Mildew
Remover(TM) is highly effective against a broad range of disease causing
organisms, yet harmless to equipment. BBJ Mold and Mildew Remover(TM) is
convenient and mild to use without any damaging side effects. Its light citrus
scent dissipates rapidly making it a pleasure to use. It will not stain or
blemish most fabrics.

     BBJ Mold and Mildew Remover(TM) was developed as a companion product for
the heating, ventilation and air conditioning market. Service technicians often
encounter unsightly growths of fungi and mold on supply grills and adjacent
surfaces. Not only do these stains detract from the appearance of the facility,
they can cause recontamination of the air-conditioning system following cleaning
unless properly eliminated. BBJ Mold and Mildew Remover(TM) was developed to
kill and remove these troublesome organisms. It is ideal for and disinfecting
exterior system surfaces, internal system surfaces to be treated and rinsed off,
and areas where a "knock down" of contamination is necessary before starting
work. It is also handy to assure contamination is not moved from job to job by
spraying tools, shoes, gloves, etc.

Competitive Strengths
---------------------

     Management believes that we have a combination of strengths that positions
us as a leading provider of indoor air quality, indoor environmental quality and
heating ventilation and air conditioning hygiene products and services. These
competitive advantages are as follows:

     .    Reputation. We have established a reputation for quality products that
          provide solutions for indoor air quality problems, indoor environment
          quality problems and heating, ventilation and air-conditioning
          hygiene.

     .    Commitment to Product Innovation and Technological Leadership.
          Throughout our history, management has dedicated substantial resources
          to our research and development and product innovation. We pioneered
          the introduction of the first U.S. Environmental Protection Agency
          registered antimicrobial to be used in controlling bacteria and other
          growth in the heating, ventilation and air conditioning system.

     .    EPA Registration. Manufacturers developing new formulations will have
          to undergo a time consuming U.S. Environmental Protection Agency
          process, which normally takes two years or more.

     .    Research and Development. Mr. Robert Baker, our Chief Executive
          Officer, is well known in indoor air quality research and heating,
          ventilation, air conditioning science. He is on the Board of Directors
          of the Air Care Division of the Consumer Specialties Products
          Association (CSPA) and chairs its IAQ committee. He serves as a member
          of several Technical Committees of the American Society of
          Refrigeration and Air-conditioning Engineers (ASHRAE) and is a member
          of the IAQ committee of ASTM.

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Strategy
--------

     Our objective is to be a leading provider of indoor air quality, indoor
environmental quality and heating, ventilation and air conditioning hygiene
products and services. The key elements of our strategy to accomplish this
objective include the following:

     .    Enhance Consumer Awareness. We intend to further establish our brand
          name recognition through public relations and mass market advertising.

     .    Expand Awareness in the Heating, Ventilation and Air Conditioning
          Industry. We will continue to work with heating, ventilation, air
          conditioning and refrigeration contractors, dealers, wholesalers,
          original equipment manufactures, and service companies to promote
          indoor air quality, indoor environmental quality and heating
          ventilation and air conditioning hygiene services. We will advertise
          in trade publications and attend trade shows.

     .    Expand Awareness in the Medical Community. The medical profession has
          already acknowledged the benefits of our products. We will continue to
          seek the endorsements of medical professionals, with an emphasis
          toward asthma and allergy physicians.

     .    Continue to Develop New Indoor Air Quality Products. We are currently
          developing several new products.

     .    Expand Distribution System. We will continue to focus on expanding
          distribution through heating, ventilation and air conditioning
          contractors, wholesalers and dealers, maintenance service providers,
          refrigeration wholesalers, dealers, and contractors.

     .    Penetrate Industrial/Commercial Refrigeration Industry. Significant
          users of high-capacity industrial refrigeration units exist in the
          food processing, sales, and distribution industry. These users are
          extremely concerned with bio-contamination of their product and
          consequently are prime candidates for the sale of coil cleaner and
          biocide products for use on their refrigeration coils.

     .    Promote Cross Selling. We will promote cross selling of our products
          as a preventative maintenance solution and encourage heating,
          ventilation, air conditioning and refrigeration service providers to
          leverage this solution into an ongoing source of revenues. Users
          benefit from the reduced system performance deterioration resulting
          from the prevention of micro-organisms generating a biofilm that
          attracts dust thereby restricting heat transfer and organic compounds
          that attack cooling coil metals. Emphasizing these benefits will also
          enhance the attractiveness of the product to the building owner and
          maintenance organizations.

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Manufacturing
-------------

     Currently, all manufacturing is done in our Tampa, Florida facility. The
production facility consists of a modern automated clean liquid filling line and
weight batch blending room. Production and blending operations are climate
controlled and meet GMP specifications. Our management believes that this
facility has the capacity to meet our anticipated production forecasts for the
next five years.

Purchasing
----------

     We rely on various suppliers to furnish the raw materials and components
used in the manufacturing of our products. Management believes that there are
alternative suppliers for all of the key raw material and component needs.

Marketing Orientation
---------------------

     Since 1994, we have been manufacturing quality products that not only help
to remove microbial growth but also aid in the prevention of it. We have
positioned ourselves as an environmental company providing solutions to a
targeted niche market - inhibition of microbial contamination in heating,
ventilation, air conditioning and refrigeration systems. We have developed
relationships with several important industry leaders and associations that have
allowed us to remain on the forefront of all technological advancements in the
indoor air quality field. We also maintain a solid relationship with government
entities, such as the Environmental Protection Agency and Occupational Health
and Safety Administration. By adhering to the guidelines established by these
agencies and remaining active in the development and implementation of new
regulations, we expect to develop new products in the most efficient manner
possible.

     To further our image and promote our product line, we have engaged outside
marketing communications advisors to develop our product brochures, advertising
sheets and some product public relations.

Sales Strategy
--------------

     Our primary sales focus is to distribute our products through established
national and regional wholesale distributors in the heating, ventilation, air
conditioning and refrigeration industry. Our strategy is to gain entry into
these distributors through a combination of our own outside sales force and
manufacturer's representative companies that have already penetrated them with
an experienced and well-trained sales force. Our manufacturer's representatives
are independent sales representatives that sell our products, as well as other
manufacturer's products, to heating, ventilation, and air-conditioning
distributors.

Heating, Ventilation, and Air-Conditioning Distributors
-------------------------------------------------------

     The heating, ventilation, and air-conditioning ("HVAC") contractors who
serve the majority of residential and commercial customers buy most of their
parts and supplies from local heating, ventilation, and air-conditioning
distributors. Such distributors range from small single location companies to
huge national chains. To be successful in moving products through these outlets,
our

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regional managers and manufacturer's representatives spend a significant amount
of time and effort helping distributors sell our products and training sessions
for distributor employees and heating, ventilation, and air-conditioning
contractors. See "Recent Developments."

Heating, Ventilation, and Air-Conditioning Contractors/Dealers
--------------------------------------------------------------

     There are approximately 40,000 to 45,000 heating, ventilation, and
air-conditioning contractors in the U.S. serving the residential, commercial,
and industrial markets. These contractors have technicians that provide
equipment, parts, and service to residential and commercial customers.
Traditionally, the majority of the contractor's business was the installation
and repair of heating, ventilation, and air-conditioning equipment. Recently,
contractors have been moving into new areas that generate increased profit
margins. By using our products as part of a regular preventative maintenance
program, contractors can offer a valuable service to their customers, generate
additional revenue, and do not have to lay off their employees during their slow
periods.

Residential and Commercial Customers
------------------------------------

     Residential customers consist of all homeowners that have heating,
ventilation and air conditioning systems installed. Commercial customers are
building owners or maintenance technicians who purchase heating, ventilation,
air-conditioning and refrigeration products or service for the facility. These
facilities consist of hospitals, hotels, schools, government entities, food
processing plants, small and large businesses, and any other type of commercial
facility. In instances where the facility is large enough to have its own
maintenance department, they will buy directly for a HVAC distributor or
strategic channel partner. These consumers are becoming increasingly aware of
the problems associated with poor indoor air quality and are taking active roles
in seeking a solution.

Strategic Channel Partners
--------------------------

     Although our distribution strategy focuses primarily on HVAC distributors,
we also use strategic channel partners of indoor air quality, indoor environment
quality, and heating, ventilation, and air-conditioning hygiene products to
penetrate niche markets. Strategic channel partners distribute our brand line or
their private label line. The characteristics of a strategic channel partners is
a company that:

     .    Buys and resells our products,

     .    Has a good reputation in market assigned segment (preferably a market
          leader),

     .    Has a strong presence with users in market segment,

     .    Outside sales force, telemarketing sales force, and/or e-commerce
          capability,

     .    Carries inventory and finances receivables, and

     .    Orders more than $ 25,000 net sales per year

     Major strategic channel partners that have had success in representing our
products include Abatement Technologies, AAF International, Nalco Diversified
Technologies, Inc. and Mustang Engineering. During the past three years, no
customer accounted for more than 10% of our revenues except for Nalco
Diversified Technologies (17%) and Johnstone Supplies (11%) in 2001, Nalco
Diversified Technologies (29%), Purolator (14%) and Sears Home Central (11%) in
2000, and

                                       14
<PAGE>

Abatement Technologies (10%), Nalco Diversified Technologies (25%) and Sears
HomeCentral (12%) for fiscal 1999.

Other Markets
-------------

     Air Duct and Automobile MicroBiocide: The growth of fungi in air ducts is a
major problem in both homes and public buildings. EPA has not registered any
products for use in ducts. During the past two years, EPA enforcement inspectors
have removed a number of products from the market that have made improper claims
for use in ducts. Therefore, there is a huge unfilled demand for such a product.
We have developed a product that works extremely well in this application. 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 ductwork
materials. We developed the study method in conjunction with the EPA over three
years. The completed study was submitted to the EPA in late 2001. This study
developed data that allows important additional claims for use of this product
on air duct surfaces as well as for use in automobiles. Allergy and asthma
physicians, in particular, have inquired on behalf of their patients for a
product for automobiles. Existing customers have projected that sales of such a
product could exceed the level of sales for all other BBJ products.

     Automated Clean-in-Place: BBJ Environmental Solutions has produced a
innovative new technology. It is currently in a patent pending status in the
United States and consists of a device that a contractor installs on a central
air conditioner unit. This device cleans and treats the air handler cooling
coil, keeping the system in like new condition and eliminating the mold and
bacterial growth and other fouling that normally accumulates during operation.
Systems maintained in this manner will operate more economically, last longer,
and provide cleaner and healthier air to the conditioned spaces in the home or
business where installed. This device is an advantage to the contractor in that
it automates a difficult and messy task that many technicians avoid doing yet is
vitally important to customer satisfaction. It also provides an additional
source of revenue and the opportunity for ongoing revenue by providing annual
replacement of the consumable fluids used in the device. We introduced the
device in January 2002 at the International Air-Conditioning Heating and
Refrigeration (AHR) Exposition in Atlantic City.

     Energy Efficiency: Although most believe that clean systems operate more
efficiently and use less energy than dirty systems, this issue has not been well
studied. Not only do we not know the level of contamination needed to reduce
efficiency and how long it takes to build to that level, we do not know how to
detect when contamination is at a critical point. During 2001, BBJ initiated a
series of studies with the School of Engineering at Oklahoma State University to
better understand this issue. We believe these studies will lead to new products
for both detection and removal of energy wasting contamination.

     Biological Warfare: EPA has launched an industry/government initiative to
establish standards for products that are intended to lessen or prevent
morbidity related to the release of biological agents by a hostile force or
individual. CEO Robert Baker, as a member of the Antimicrobials committee and
Chair of the IAQ committee of CSPA, is an integral part of this initiative. This
will assure that our products are fully considered as to their potential to
protect against acts of terrorism.

                                       15
<PAGE>

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, Hepatitis B, tuberculosis and AIDS.

Major Obstacle - Overcoming Lack of Knowledge
---------------------------------------------

     In the past, heating, ventilation and air conditioning contractors/dealers
have not been knowledgeable about indoor air quality and indoor environmental
quality. Consequently they have looked to equipment sales as the main source of
profit. Heating, ventilation and air conditioning hygiene has been accomplished
through repeated cleaning using products, which are both harsh to the
environment and damaging to the equipment being cleaned. This has changed
dramatically over the past few years. Contractors are becoming more
knowledgeable regarding indoor air quality and indoor environmental quality due
to the articles, seminars, and media attention on the subject. Pricing for major
equipment sales is becoming more competitive, thus bringing margins down. Users
and owners are demanding longer life and improve performance from their existing
systems to avoid additional capital outlays. Therefore, contractors/dealers as
well as original equipment manufacturers are looking towards the service and
parts division of their business for generating increased sales and profits.

Government Regulation
---------------------

     As a chemical manufacturer, we are subject to a wide variety of local,
state and federal regulations. While we believe that our operations are in
compliance with all applicable regulations, there can be no assurances that from
time to time unintentional violations of such regulations will not occur.
Certain of our products are regulated by the United States Environmental
Protection Agency and the individual states where marketed. Government
regulation results in added costs for compliance activities and the risk of
losing revenues should regulations change.

Governmental Influences
-----------------------

     A new industry consensus standard for attaining acceptable levels of indoor
air quality in commercial buildings is being finalized by the American Society
of Heating, Refrigeration, and Air-conditioning Engineers. This standard, which
will be referenced in building codes throughout the United States, will for the
first time, include requirements for the periodic inspection and cleaning of
heating and air-conditioning systems. This new standard is expected to lead to
growth in demand for products that prevent microbial growth in and clean
air-conditioning systems. Management believes that BBJ MicroBiocide(R) has
features that make it desirable to meet the needs of this new market.

Research and Development
------------------------

     The College of Public Health at the University of South Florida and us have
recently commenced a study to test a new antimicrobial product for all duct work
materials. The study method is owned by us and was developed in conjunction with
the Environmental Protection Agency. Management believes that it is the only
study method approved so far by the U.S. Environmental Protection Agency for
determining indoor exposures through product concentration levels. Management
also believes that the submitted results that were made on our new antimicrobial

                                       16
<PAGE>

formulation to the EPA indicate its use in ductwork falls within safety
parameters acceptable to the EPA.

Proprietary Rights
------------------

     We hold a primary U.S. Environmental Protection Agency registration for BBJ
MicroBiocide(R). This registration gives us the exclusive right to control the
marketing of that technology for seventeen years. BBJ Spray
Disinfectant/Cleaner(TM) and BBJ Mold and Mildew Remover
Disinfectant/Cleaner(TM) are also registered with the EPA. Both products are
registered in all states in which they are marketed. BBJ's Micro Coil Clean(R)
formula is guarded by trade secrets, BBJ's Power Coil Clean(R) formula has a
patent-pending with the United States Patent and Trademark Office, and the
FreshDuct(R) Odor Eliminator formula was awarded a patent on September 18, 2001.
We also rely on a combination of trade secret laws, nondisclosure and other
contractual agreements and technical measures to protect our proprietary rights
in our products. We believe that our products, trademarks, and other proprietary
rights do not infringe on the proprietary rights of third parties.

Competition
-----------

     The market for indoor air quality products and services is relatively new.
Management believes that our current competition for our products is limited
because of the U.S. Environmental Protection Agency regulatory approval granted
on the BBJ MicroBiocide(R) product. The market for heating, ventilation, air
conditioning and refrigeration service and replacement industry is highly
competitive. As the market for indoor air quality products and services expands,
competition will likely be greater in the future. Competition may involve
companies with greater experience, financial and other resources than us. The
primary technologies that might be considered as alternatives to our products
for indoor air quality improvement include: air cleaning and filtration and
photocatalytic destruction (UV light).

     Although management believes that there are presently no other products
that inhibit microbial growth on the market that have U.S. Environmental
Protection Agency registration for the air-conditioning system as does BBJ
MicroBiocide(R), heating, ventilation, air conditioning and refrigeration
contractors may perceive any product claiming to control contamination as being
equal to our products.

Competing Technologies
----------------------

     1. Air Cleaning and Filtration: Some potential users initially see improved
air cleaning as a competing technology for use of an antimicrobial (such as our
products) to control growth. However, while high efficiency filtration is
beneficial, it does not substitute for effective control of bacteria and other
growth in the heating, ventilation and air conditioning system.

     2. Ozone and Negative Ion Generation: Although ozone generators and like
devices are aggressively marketed with impressive sounding claims, they are not
effective. In fact, California EPA's position on ozone as well as U.S.
Environmental Protection Agency's absolutely rejects the use of ozone. Ozone
generators that are sold as air cleaners intentionally produce the gas ozone.

                                       17
<PAGE>

Often the vendors of ozone generators make statements and distribute material
that lead the public to believe that these devices are always safe and effective
in controlling indoor air pollution. Some vendors suggest that these devices
have been approved by the federal government for use in occupied spaces. To the
contrary, no agency of the federal government has approved these devices for use
in occupied spaces. Because of these claims, and because ozone can cause health
problems at high concentrations, several federal government agencies have worked
in consultation with the U.S. Environmental Protection Agency to produce public
information on Ozone.

     Manufacturers and vendors of ozone devices often use misleading terms to
describe ozone. Terms such as "energized oxygen" or "pure air" suggest that
ozone is a healthy kind of oxygen. Ozone is a toxic gas with vastly different
chemical and toxicological properties from oxygen. Several federal agencies have
established health standards or recommendations to limit human exposure to
ozone. Potential health effect risks are: decreases in lung function;
aggravation of asthma; throat irritation and cough; chest pain and shortness of
breath; inflammation of lung tissue; and higher susceptibility to respiratory
infection.

     3. UV light: Photocatalytic destruction is an old technology that recently
has received new attention as a possible means of destroying contaminants in air
ducts. Several units have been brought to market during the past few years with
claims that they can be mounted in a duct and will eliminate all contaminants.
Management believed that these claims would not hold up under independent
testing. In addition, installation, operation, and maintenance costs are high
and the units generate considerable heat that adds to the energy load of the
facility. Typically, a well designed and maintained system will cost an owner
ten times the annual operating cost as the semi-annual application of the our
products. Also, the space required for an adequate unit is typically not
available in most facilities.

     The fact is that these devices introduce a whole new set of maintenance
challenges themselves. For example, the efficiency of UV lamps degrades rapidly
when coated with even a light layer of dust. Therefore, most manufacturers
recommend that they be cleaned monthly (which is not likely to happen and
requires more labor than doing it right). Then there is the cost of power to run
them, replacement of lamps, electronics, etc. and the fact that they must be
installed so the direct light must reach every surface where organisms are
likely to grow.

Employees
---------

     As of March 15, 2002, we had 15 full time employees. Additional sales and
marketing personnel may be hired in the future as our sales efforts require such
additional personnel.

                                       18
<PAGE>

Item 2. Description of Property
------- -----------------------

     We are 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. We pay a base monthly rent of approximately
$6,000, which includes rent, common area maintenance, insurance and real estate
taxes. Management believes that these facilities are adequate for our current
and anticipated needs.

Item 3. Legal Proceedings
------- -----------------

     There are no material legal proceedings to which we are a party.

Item 4. Submission of Matters to a Vote of Security Holders.
------- ----------------------------------------------------

     No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2001.

                                       19
<PAGE>

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters
------- --------------------------------------------------------

     On June 29, 2001, our Common Stock commenced trading on the OTC Electronic
Bulletin Board under the symbol "BBJE" and had a closing sales price on that
date of $.65. As of March 15, 2002, the last sale of Common Stock in the
Over-the-Counter Market was $.15. The following table reflects the high and low
closing sales prices of our Common Stock for the periods indicated as reported
by the NASD.

                                  Common Stock
                                  ------------
                                                    High                 Low
                                                    ----                 ---
Year Ended December 31, 2001
----------------------------
      Third Quarter 2002                            $.72.................$.08
      Fourth Quarter 2002                            .33...................09

     The quotations in the table above reflects inter-dealer prices without
retail markeup, markdowns or commissions. The trading activity in our Common
Stock has been limited.

     As of March 15, 2002, there were approximately 615 holders of record of our
outstanding Common Stock. The approximate number of holders of record of our
Common Stock was supplied by our transfer agent StockTrans, Inc., 44 W.
Lancaster Avenue, Ardmore, PA 19003. No cash dividends have been paid by us on
our Common Stock and no such payment is anticipated in the foreseeable future.

Equity Compensation Plan
------------------------

     The following summary information relates to our Compensation Plan
described in Item 11 under which we have granted options to purchase our Common
Stock:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                  (a)                       (b)                 (c)
--------------------------------------------------------------------------------------------------------
<S>                               <C>                       <C>                 <C>
Plan category                     Number of securities to   Weighted average    Number of securities
                                  be issued upon exercise   exercise price of   remaining available for
                                  of outstanding options    outstanding         future issuance under
                                                            options (2)         equity compensation plan
                                                                                (excluding securities
                                                                                reflected in column (a))
--------------------------------------------------------------------------------------------------------
Equity compensation
Plan approved by
Security holders (1)                    6,145,738                1.02                  1,854,262
--------------------------------------------------------------------------------------------------------
Equity  compensation  plan not
approved by  security  holders
(1)                                     5,000,000                 -0-                  5,000,000
--------------------------------------------------------------------------------------------------------
</TABLE>

----------
(1)  Reflects the proposed increase to our existing plan, which increase was
     approved by the Board, subject to stockholder approval.

(2)  Based upon 3,215,250 options exercisable at $1.25 per share, 440,000
     options exercisable at $1.00 per share, 50,000 options exercisable at $2.00
     per share, 1,400,000 options exercisable at $.375 per share, 21,000 options
     exercisable at $.13 per share and 1,019,488 options exercisable at $1.17
     per share.

                                       20
<PAGE>

Item 6. Managements' Discussion and Analysis or Plan of Operation
------- ---------------------------------------------------------

Introduction
------------

     During the past three years, our business plan was to seek to acquire and
merge with a potential business that might bring substantial value to our
stockholders. Effective June 1, 2000, we acquired 100% of the then outstanding
common stock and preferred stock of BBJ Environmental Solutions, Inc. in
exchange for the issuance of 12,410,666 shares of our common stock pursuant to
an Agreement and Plan of Reorganization. In accordance with said agreement, we
also contemporaneously completed a one-for-three reverse stock split and a stock
repurchase of 3,465,000 shares of our common stock at a price of $.0001 per
share from certain shareholders of our company.

Forward Looking Statements
--------------------------

     This Report on Form 10-KSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, and actual results could be
significantly different than those discussed in this Annual Report on Form
10-KSB. Certain statements contained herein are forward-looking statements.
These statements discuss, among other things, expected growth, future revenues,
finances and/or future performance. Although we believe the expectations
expressed in such forward-looking statements are based on reasonable assumptions
within the bounds of our knowledge of our business, a number of factors could
cause actual results to differ materially from those expressed in any
forward-looking statements, whether oral or written, made by us or on our
behalf. The forward-looking statements are subject to risks and uncertainties
including, without limitation, the following: (a) the success of our new sales
and marketing strategy, and (b) adequate financing to support our sales and
marketing efforts. The foregoing should not be construed as an exhaustive list
of all factors that could cause actual results to differ materially from those
expressed in forward-looking statements made by us. All forward-looking
statements included in this document are made as of March 15, 2002, based on
information available to us on the date thereof, and we assume no obligation to
update any forward-looking statements.

Results of Operations
---------------------

     During the years ended December 31, 2001 and December 31, 2000, we had
limited revenues of $328,398 and $326,147, respectively.

     In June 2001, we hired a Director of Sales to initiate a change in our
sales and marketing strategy to:

     .    Redirect the field sales organization to develop relationships with
          HVAC/R wholesalers for product distribution and promotion;

     .    Develop relationships with industry manufacturer representatives to
          assist with product sales to HVAC/R distribution channels; and

                                       21
<PAGE>

     .    Create industry demand for IAQ products through education of indoor
          air quality and the importance of preventative maintenance to prevent
          the systems from becoming a breeding ground for bacteria, mold and
          fungi to germinate and grow.

     Prior to July 2001, our sales organization primarily focused on strategic
channel partners and direct selling while we utilized manufacturer
representatives to sell to HVAC/R wholesalers. At that time, we had only one
manufacturing representative promoting our product line in Florida and we were
only in a handful of the over 4,000 wholesale distributor locations that sell to
the HVAC/R contractors. Beginning in the fourth quarter of 2001, we have
dramatically improved our presence through the HVAC/R wholesale distributor. As
of March 15, 2002, we have seven field sales personnel and eight manufacturing
representatives covering 22 states and our product line is now being sold in
over 200 wholesale locations through a number of regional and national wholesale
distributors, such as: Johnstone Supplies, Trane, Lennox, Comfortmakers, CC
Dickson, Tropic, Victors and Young Supplies.

     During the years ended December 31, 2001 and 2000, we had operating
expenses of $1,675,909 and $1,314,184, respectively. These increases were due
primarily to the expansion of our sales force, increased marketing efforts and
costs associated with recapitalization of the Company. Operating expenses are
expected to increase significantly in future periods as we further develop our
sales and marketing organization and advertise our products to certain
distribution channels to increase sales in future periods.

     During the years ended December 31, 2001 and 2000, we had a net loss of
$1,470,373 and $1,106,289, respectively. Our net loss may increase significantly
in future periods due to increased selling and marketing efforts until such time
as we have substantially increased our revenue base.

     The foregoing results were achieved over the past two years based on poor
market penetration and inadequate financing for sales support, marketing and
advertising, promotional material, and participation in trade shows which
adversely affected our revenues. While our financing is limited, we do believe
that our new sales strategy is proving successful in increasing sales for 2002.
Liquidity and Capital Resources
-------------------------------

     As of December 31, 2001, we had net stockholders' equity of $178,892,
accumulated losses $3,986,468 and working capital of approximately $78,000.

     Net cash was used in operating activities during 2001 and 2000, primarily
due to net losses. During 2001, net cash was used in investing activities to
purchase equipment. During 2001 and 2000, cash was provided from financing
activities through the sale of capital stock and proceeds from cash advances
from stockholders partially reduced by principal payments of bank notes and
capital leases and repayments of cash advances from stockholders.

     We have a revolving line of credit with a financial institution, secured by
our assets, which provides for borrowings of up to $25,000 and is due on demand.
The line of credit is guaranteed by Robert G. Baker and Jerry V. Schinella.
Interest on the line is charged at 2.5% over the current index rate. As of March
15, 2002, there was $25,000 outstanding under this agreement.

                                       22
<PAGE>

     We have an unsecured revolving line of credit with another financial
institution, which provides for borrowings of up to $45,000 and is due on
demand. The line of credit is guaranteed by Robert G. Baker, Jerry V. Schinella
and Michael J. Gordon. Interest on the line is charged at 2.0% over the current
index rate. As of March 15, 2002, there were no monies outstanding under this
agreement.

     As described under Capital Stock Transactions below, we have relied
principally on external financing to provide liquidity and capital resources for
our operations including, without limitation, the recent sale of 244,000 shares
of Series A Preferred Stock at $1.00 per share. As of March 15, 2002, Management
believes that we need approximately $475,000 of additional financing to support
our anticipated liquidity and capital resource needs during the balance of 2002
above and beyond anticipated cash flow from operations. Such financing is
expected to be obtained privately through the April 2002 sale of 122,000 shares
of our Series A Convertible Preferred Stock as described below totaling
$122,000, the collection of outstanding Notes receivable of approximately
$200,000, and additional sales of our capital stock. No assurances can be given
that our efforts to raise additional financing for our short term (and long
term) needs will be successful or, if successful, that such financing will be on
terms satisfactory to us. As a result of our operating losses and capital needs,
our auditors have added a going concern qualification (explanatory paragraph) as
described in our consolidated financial statements and notes thereto which
follow Item 9.

Capital Stock Transactions
--------------------------

     In February and March 2002, we received $244,000 in cash through the sale
of Series A Convertible Preferred Stock from two overseas banks. A third payment
of $122,000 is expected to be received by us on or before April 14, 2002. We
sold 244,000 shares of our Series A Convertible Preferred Stock at a cash
purchase price of $1.00 per share. The Series A Convertible Preferred Stock can
be converted by the holder into eight shares of common stock at any time. Each
share of Series A Convertible Preferred Stock shall have one vote and shall vote
together with our Common Stockholders on each matter presented for shareholder
vote, except when voting as a separate class as required by Nevada law.

     Effective December 31, 2001, we received a Note for $220,500 through an
option exercise of its common stock. We sold 1,400,000 shares of common stock,
par value $.001 per share, at an adjusted cash purchase price of $.1575 per
share. Full payment on the Note is due on or before April 15, 2002 together with
interest.

     In May 2001, we received $225,000 through an option exercise of its common
stock. We sold 600,000 shares of common stock, par value $.001 per share, at a
cash purchase price of $.375 per share.

     In November and December 2000, we sold through subscription agreements
2,804,000 restricted shares of our common stock at a purchase price of $.75 per
share to various overseas banks. A commission in the nature of a finder's fee of
200,000 shares of our common stock was issued to two accredited investors based
on the total amount of financing received by us. The investors in this private
placement also received the right to name two members of our board of directors.
Due to the event that our revenues for the period November 1, 2000 through
October 30, 2001 was less than $1,667,075, the purchase price was adjusted down
to $.375 per share. On November 1, 2001, we made an original issuance of
2,804,000 restricted shares to adjust downward the purchase price of the shares
to $.375 per share.

                                       23
<PAGE>

     We raised $50,000 in August 2000 and $50,000 in October 2000 through two
bridge loans. We 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.

Item 7. Financial Statements
------- --------------------

     The information required by Item 7, and an index thereto, appears at pages
F-1 through F-19 (inclusive) of this Report, which pages follow Item 8.

Item 8. Changes in and Disagreements with Accountants on Accounting and
------- ---------------------------------------------------------------
        Financial Disclosure
        --------------------

     Not Applicable.

                                       24
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                        Consolidated Financial Statements
                           December 31, 2001 and 2000
                   (With Independent Auditors' Report Thereon)

                                      F-1
<PAGE>

(Kirkland, Russ, Murphy & Tapp Logo)
Certified Public Accountants
13577 Feather Sound Drive, Ste 400
Clearwater, Florida 33762-5539
(727) 572-1400 Fax (727) 571-1933
Internet: www.KRMTCPA.com
          ---------------

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

Board of Directors and Stockholders
BBJ Environmental Technologies, Inc.
  and Subsidiary:

We have audited the accompanying consolidated balance sheets of BBJ
Environmental Technologies, Inc. and Subsidiary as of December 31, 2001 and
2000, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of BBJ Environmental
Technologies, Inc. and Subsidiary as of December 31, 2001 and 2000, and the
results of their operations and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

                                      F-2
<PAGE>

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 10 to
the consolidated financial statements, the Company's significant operating
losses and accumulated deficit raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 10. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ KIRKLAND, RUSS, MURPHY & TAPP P.A.

March 1, 2002
Clearwater, Florida

                                      F-3
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 2001 and 2000

                                     ASSETS
                                     ------

                                                         2001           2000
                                                       --------      ---------

Current assets:
  Cash                                                 $ 23,856      1,318,272
  Accounts receivable                                    80,073         28,578
  Inventory                                              48,159         25,045
                                                       --------      ---------

                    Total current assets                152,088      1,371,895

Property and equipment, net                              86,199        113,823
Security deposits                                        14,614         14,614
                                                       --------      ---------

                                                       $252,901      1,500,332
                                                       ========      =========

                                      F-4
<PAGE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

<TABLE>
<CAPTION>
                                                                2001           2000
                                                             -----------    ----------
<S>                                                          <C>                <C>
Current liabilities:
  Accounts payable and accrued expenses                      $    58,748        34,142
  Current portion of capital lease obligations                    15,261        21,664
                                                             -----------    ----------

                   Total current liabilities                      74,009        55,806

Capital lease obligations, less current portion                       --        15,261
                                                             -----------    ----------

                   Total liabilities                              74,009        71,067
                                                             -----------    ----------

Stockholders' equity:
  Common stock, $.001 par value, 50,000,000 and
    25,000,000 shares authorized, 22,396,578 and
    17,592,578 shares issued and outstanding, respectively        22,397        17,593
  Additional paid-in capital                                   4,363,463     3,927,767
  Accumulated deficit                                         (3,986,468)   (2,516,095)
  Stock subscriptions receivable                                (220,500)           --
                                                             -----------    ----------

                   Net stockholders' equity                      178,892     1,429,265
                                                             -----------    ----------

                                                             $   252,901     1,500,332
                                                             ===========    ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                      Consolidated Statements of Operations

                 For the Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                            2001           2000
                                                         -----------    ----------
<S>                                                      <C>               <C>
Sales, net                                               $   328,398       326,147

Cost of sales                                                122,862       118,252
                                                         -----------    ----------

         Gross margin                                        205,536       207,895
                                                         -----------    ----------

Operating expense:
  Sales and marketing                                        992,162       663,684
  General and administrative                                 530,336       552,665
  Research and development                                   153,411        97,835
                                                         -----------    ----------

         Total operating expenses                          1,675,909     1,314,184
                                                         -----------    ----------

         Net loss                                        $(1,470,373)   (1,106,289)
                                                         ===========    ==========

         Net loss per common share - basic and diluted   $      (.08)         (.08)
                                                         ===========    ==========

         Weighted average number
             of common stock                              18,660,000    13,283,000
                                                         ===========    ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                 Consolidated Statements of Stockholders' Equity

                 For The Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                 Convertible                            Additional
                                             Preferred Stock          Common Stock        Paid-in
                                           Shares      Amount       Shares     Amount     Capital
                                          --------   ---------    ----------  -------   ----------
<S>                                       <C>        <C>          <C>          <C>      <C>
Balances at December 31, 1999              271,875   $ 543,750    10,646,666  $10,647     548,750

Recapitalization of Company                     --          --     1,535,234    1,535     (52,075)

Issuance of common stock for cash               --          --     3,784,000    3,784   2,487,227

Conversion of convertible
   preferred stock                        (271,875)   (543,750)    1,044,000    1,044     542,706

Conversion of convertible
   debentures                                   --          --       582,678      583     401,159

Net loss                                        --          --            --       --          --

                                          --------   ---------    ----------  -------   ---------
Balances at December 31, 2000                   --          --    17,592,578   17,593   3,927,767

Exercise of options for cash and notes          --          --     2,000,000    2,000     438,500

Issuance of additional shares to adjust
  purchase price of 2000 stock issuance         --          --     2,804,000    2,804      (2,804)

Net loss                                        --          --            --       --          --
                                                                  ----------  -------   ---------

Balances at December 31, 2001                   --   $      --    22,396,578  $22,397   4,363,463
                                          ========   =========    ==========  =======   =========

<CAPTION>
                                                            Stock            Net
                                          Accumulated    Subscriptions   Stockholders'
                                            Deficit       Receivable        Equity
                                          ------------   -------------   -------------
<S>                                        <C>             <C>             <C>
Balances at December 31, 1999              (1,409,806)           --         (306,659)

Recapitalization of Company                        --            --          (50,540)

Issuance of common stock for cash                  --            --        2,491,011

Conversion of convertible
   preferred stock                                 --            --               --

Conversion of convertible
   debentures                                      --            --          401,742

Net loss                                   (1,106,289)           --       (1,106,289)
                                           ----------      --------       ----------

Balances at December 31, 2000              (2,516,095)           --        1,429,265

Exercise of options for cash and notes             --      (220,500)         220,000

Issuance of additional shares to adjust
  purchase price of 2000 stock issuance            --            --               --

Net loss                                   (1,470,373)           --       (1,470,373)
                                           ----------      --------       ----------

Balances at December 31, 2001              (3,986,468)     (220,500)         178,892
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-7
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                 For the Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                         2001           2000
                                                      -----------    ----------
<S>                                                   <C>            <C>
Cash flows from operating activities:
  Net loss                                            $(1,470,373)   (1,106,289)
  Adjustment to reconcile net loss to net
    cash used in operating activities:
    Depreciation                                           40,277        35,305
    Changes in current assets and liabilities:
       Accounts receivable                                (51,495)       (2,825)
       Inventory                                          (23,114)        5,897
       Prepaids                                                --         3,371
       Accounts payable and accrued expenses               24,606       (89,571)
                                                      -----------    ----------

              Net cash used in operating activities    (1,480,099)   (1,154,112)
                                                      -----------    ----------

Cash flows from investing activities:
  Purchase of property and equipment                      (12,653)      (60,374)
  Security deposits                                            --       (10,196)
                                                      -----------    ----------

              Net cash used in investing activities       (12,653)      (70,570)
                                                      -----------    ----------

Cash flows from financing activities:
  Proceeds from bank loans                                     --        80,113
  Principal payments on bank notes and
    capital leases                                        (21,664)     (126,109)
  Proceeds from cash advances from
    stockholders                                               --       376,000
  Repayment of cash advances from
    stockholder                                                --      (246,710)
  Net proceeds from issuance of common stock              220,000     2,491,011
  Recapitalization of company                                  --       (50,540)
                                                      -----------    ----------

              Net cash provided by financing
                 activities                               198,336     2,523,765
                                                      -----------    ----------
</TABLE>

                                                                     (continued)

                                      F-8
<PAGE>

                        BBJ ENVIRONMENTAL SOLUTIONS, INC.
                                 AND SUBSIDIARY

                      Statements of Cash Flows - Continued

<TABLE>
<CAPTION>
                                                                2001           2000
                                                             -----------    ---------
<S>                                                          <C>            <C>
Net increase (decrease) in cash                              $(1,294,416)   1,299,083

Cash, beginning of year                                        1,318,272       19,189
                                                             -----------    ---------

Cash, end of year                                            $    23,856    1,318,272
                                                             ===========    =========

Supplemental disclosures of cash flow information:
    Interest paid                                            $     4,390       48,667
                                                             ===========    =========

Supplemental disclosures of non-cash financing activities:
     Conversion of cash advances from
       stockholders to convertible debenture                 $        --      164,290
    Conversion of accrued interest and
       consulting services to convertible debt                        --        7,452
    Conversion of convertible debentures
     into 582,678 shares of common stock                              --      401,742
    Conversion of convertible preferred stock
     into 1,044,000 shares of common stock                            --      543,750
     Issuance of 1,400,000 shares of common stock
       for stock subscriptions receivable                        220,500           --
                                                             ===========    =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-9
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

(1)  Organization and Business
     -------------------------

     BBJ Environmental Technologies, Inc. (the "Company"), 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.

     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, Inc. ("BBJ Environmental
     Solutions") in a recapitalization transaction accounted for similar to a
     reverse acquisition ("Recapitalization"). All share and per share amounts
     in the accompanying consolidated financial statements have been adjusted to
     give retroactive effect to the one-for-three reverse stock split 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. Since this transaction is in substance a
     recapitalization of BBJ Environmental Solutions 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 Company is operating through its newly acquired subsidiary, BBJ
     Environmental Solutions. 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. BBJ Environmental
     Solutions 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.

                                                                     (continued)

                                      F-10
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(1)  Organization and Business - Continued
     -------------------------------------

     BBJ Environmental Solutions' 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)  Principles of Consolidation
          ---------------------------

          The accompanying consolidated financial statements include the
          accounts of BBJ Environmental Technologies, Inc. and its wholly owned
          subsidiary BBJ Environmental Solutions, Inc. In consolidation, all
          significant intercompany accounts and transactions have been
          eliminated.

     (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.

     (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
          ------------

          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.

                                                                     (continued)

                                      F-11
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(2)  Summary of Significant Accounting Policies - Continued
     ------------------------------------------------------

     (d)  Income Taxes - Continued
          ------------------------

          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 on that date and,
          accordingly, the accompanying consolidated financial statements
          contain no such provision.

     (e)  Research and Development Expenses
          ---------------------------------

          Research and development costs are expensed as incurred.

     (f)  Estimates
          ---------

          In preparing financial statements in conformity with accounting
          principles generally accepted in the United States of America,
          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 seven customers.

     (h)  Reclassification
          ----------------

          Certain amounts in the 2000 consolidated financial statements have
          been reclassified to conform to their 2001 presentation. Such
          reclassifications had no effect on reported net loss.

     (i)  Net Loss Per Share
          ------------------

          Net loss per common share is computed in accordance with Financial
          Accounting Standards Board Statement No. 128, "Earnings Per Share",
          which requires companies to present basic earnings per share and
          diluted earnings per share. The basic net loss per share of common
          stock is computed by dividing net loss applicable to common stock by
          the weighted average number of shares of common stock outstanding. The
          diluted net loss per common share is computed by dividing net loss by
          the weighted average common shares outstanding excluding common stock
          equivalents, as they would be anti-dilutive.

                                                                     (continued)

                                      F-12
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(3)  Property and Equipment
     ----------------------

     Property and equipment consists of the following:

                                                    2001            2000
                                                  ---------       --------
     Furniture and fixtures                       $  32,945         32,945
     Office equipment                               100,681         88,028
     Manufacturing equipment                        106,872        106,872
     Leasehold improvements                          17,272         17,272
                                                  ---------       --------
                                                    257,770        245,117
     Less accumulated depreciation
       and amortization                            (171,571)      (131,294)
                                                  ---------       --------

                                                  $  86,199        113,823
                                                  =========       ========

(4)  Lines 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. As of December 31, 2001, there was no
     outstanding amount under this agreement.

     The Company has an unsecured revolving line of credit with another
     financial institution, which provides for borrowings of up to $45,000 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 2.0% over
     the current index rate. As of December 31, 2001, there was no outstanding
     amount under this agreement.

(5)  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, 2001 and 2000 is $89,611 with accumulated amortization of
     $78,730 and $60,808, respectively.

                                                                     (continued)

                                      F-13
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(5)  Capital Leases - Continued
     --------------------------

     Future minimum lease payments under capital leases as of December 31, 2001
     are as follows:

     Year Ending December 31, 2002                                $16,112

     Amount representing interest                                    (851)
                                                                  -------

     Current installments of capital lease obligations            $15,261
                                                                  =======

(6)  Convertible Debentures
     ----------------------

     In December 1999, the Company entered into a convertible debenture
     agreement with a Director of the Company in the amount of $230,000, bearing
     an interest rate of 10%. The proceeds of the debenture were previously
     advanced to the Company in the form of cash advances in the aggregate
     amount of $157,500, $10,000 of accrued interest, and $62,500 for previous
     services rendered. This debenture was converted into 368,000 shares of
     common stock in December 2000, adjusted for the effects of the Company's
     Recapitalization.

     In July 2000, the Company entered into two convertible debenture agreements
     with the same Director of the Company as an individual in the amount of
     $87,300 and as trustee of a trust in the amount of $84,442, both bearing an
     interest rate of 10%. The proceeds of the debenture were previously
     advanced to the Company in the form of cash advances in the aggregate
     amount of $164,290 and $7,452 of accrued interest. These debentures were
     converted into 109,126 and 105,552 of shares of common stock, respectively,
     in December 2000.

(7)  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 each of the years
          ended December 31, 2001 and 2000 was approximately $71,000. Future
          minimum lease payments under this operating lease for 2002 are
          approximately $53,000.

                                                                     (continued)

                                      F-14
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(7)  Commitments and Contingencies - Continued
     -----------------------------------------

     (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.

(8)  Income Taxes
     ------------

     The Company had no income tax expense in 2001 and 2000 due to its operating
     losses. The Company has net operating loss carryforwards of approximately
     $3.4 million for tax reporting purposes at December 31, 2001. Such loss
     carryforwards, subject to certain limitations, expire through 2016. To the
     extent that the Company has taxable net income, the loss carryforwards will
     be used to offset the taxable income. In addition, the Company had net
     operating loss (NOL's) carryforwards related to its acquisition and
     recapitalization (Note 1). These NOL's are significantly limited under IRC
     382.

     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:

                                                          2001          2000
                                                       -----------    --------
     Deferred tax assets:
         Net operating loss carryforwards              $ 1,200,000     650,000
                                                       -----------    --------

            Total deferred tax assets                    1,200,000     650,000

         Valuation allowance for deferred tax assets    (1,200,000)   (650,000)
                                                       -----------    --------

            Net deferred tax assets                    $        --          --
                                                       ===========    ========

                                                                     (continued)

                                      F-15
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(9)  Stockholders' Equity
     --------------------

     (a)  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 the
          accompanying consolidated financial statements have been adjusted to
          give retroactive effect to the one-for-three reverse stock split 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.
          Since this transaction is in substance a recapitalization of BBJ
          Environmental Solutions and not a business combination, a valuation
          was not performed and no goodwill was recorded.

     (b)  Preferred Stock
          ---------------

          In 1999, BBJ Environmental Solutions 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, $72,187 was used to pay
          brokerage fees and various expenses related to the offerings.

          The holders of the convertible preferred stock had the right to
          convert such shares into shares of BBJ Environmental Solutions' common
          stock prior to the Recapitalization at a conversion price equal to
          1.92 shares of common stock for each share of preferred stock, subject
          to certain provisions of the Recapitalization. As of May 31, 2000, all
          shares of preferred stock were converted into shares of BBJ
          Environmental Solutions common stock.

                                                                     (continued)

                                      F-16
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(9)  Stockholders' Equity - Continued
     --------------------------------

     (c)  Common Stock
          ------------

          In November and December 2000, the Company sold through subscription
          agreements approximately 2.8 million restricted shares of its common
          stock at a purchase price of $.75 per share to group of overseas
          accredited investors for the total amount of approximately $2.1
          million. A commission in the nature of a finder's fee of up to 200,000
          shares of the Company's common stock was issued to two accredited
          investors based on the total amount of financing received by the
          Company. Due to the event that the Company's revenues for the period
          November 1, 2000 through October 31, 2001 was less than $1,667,075,
          the purchase price was adjusted downward to $.375 per share. On
          November 1, 2001, the Company issued an additional 2.8 million
          restricted shares of its common stock to adjust the purchase price
          accordingly.

          In January 2000, BBJ Environmental Solutions raised $375,000 by
          issuing 720,000 shares of common stock.

     (d)  Stock Options
          -------------

          On November 16, 2000, the board of directors adopted the 2000 Employee
          Benefit and Consulting Services Compensation Plan, which was approved
          by the shareholders on May 15, 2001. Under the terms of this plan, 8
          million shares of authorized but unissued shares of Company common
          stock are reserved for issuance. The plan provides for the grant of
          incentive stock options to attract, retain, and reward officers,
          employees, directors, and consultants of the Company and its
          subsidiary. The options granted are at an option price at least equal
          to the fair market value of the Company's common stock on the date the
          option is granted. Options granted under the plan are exercisable for
          a term no longer than ten years, are not transferable, and will
          terminate within a period of time following termination of employment
          with the Company or its subsidiary.

          Option holders of the Company's subsidiary, BBJ Environmental
          Solutions, exchanged their options for options in the Company plan.
          The options were identical, except that the number of shares of common
          stock subject to each option were twice the original number of shares
          with a five-year expiration term. Options to purchase 2,459,244 shares
          of BBJ Environmental Solutions common stock under the BBJ
          Environmental Solutions Plan were converted into options to purchase
          4,918,488 shares of common stock of the Company.

                                                                     (continued)

                                      F-17
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(9)  Stockholders' Equity - Continued
     --------------------------------

     (d)  Stock Options - continued
          -------------------------

          Changes in stock options are as follows:

<TABLE>
<CAPTION>
                                                   2001                   2000
                                          ---------------------   --------------------
                                                       Weighted               Weighted
                                                        Average                Average
                                                       Exercise               Exercise
                                            Shares       Price      Shares     Price
                                          ----------   --------   ---------   --------
<S>                                        <C>          <C>       <C>          <C>
     Beginning balance                     8,068,488    $1.12     4,284,488    $1.15
     Granted                               3,283,000     0.41     3,924,000     1.10
     Exercised                            (2,000,000)    0.23            --       --
     Canceled                             (2,038,000)    1.09      (140,000)    1.25
                                          ----------    -----     ---------    ------

     Ending balance                        7,313,488    $1.03     8,068,488    $1.12
                                          ==========    =====     =========    =====

     Exercisable                           6,998,488    $1.02     7,324,488    $1.10
                                          ==========    =====     =========    =====

     Weighted average fair value of
        options granted during the year                 $0.41                  $1.10
                                                        =====                  =====
</TABLE>

     The following table summarizes information about stock options outstanding
     at December 31, 2001:

                                     Weighted
                                     Average
                       Number       Remaining       Number
       Exercise      Outstanding   Contractual    Exercisable
         Price         12/31/01   Life in Years    12/31/01
     -------------   -----------  -------------   -----------
     $   2.00            50,000        4.4            20,000
         1.25         3,229,000        3.9         2,944,000
         1.17         1,019,488        4.4         1,019,488
         1.04         1,175,000        0.3         1,175,000
         1.00           440,000        4.4           440,000
         0.38         1,400,000        1.0         1,400,000
     -------------    ---------        ---         ---------

     $0.38 - $2.00    7,313,488        2.9         6,998,488
     =============    =========        ===         =========

                                                                     (continued)

                                      F-18
<PAGE>

                      BBJ ENVIRONMENTAL TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

             Notes to Consolidated Financial Statements - Continued

(10) Going Concern
     -------------

     As indicated in the accompanying consolidated financial statements, the
     Company has sustained losses of approximately $1.4 million in 2001 and has
     an accumulated deficit of approximately $4.0 million as of December 31,
     2001. These factors raise substantial doubt as to the Company's ability to
     continue as a going concern. Management intends to cure these issues
     through the full implementation of its new sales and marketing strategy to
     create product demand through HVAC/R distribution channels and seek
     alternative sources of financing.

     Although management believes the Company can attain a positive cash flow
     position in 2002, it also recognizes that the Company must secure
     alternative sources of financing to continue operations. As of March 15,
     2002, the Company received $244,000 in cash through the sale of 244,000
     shares of Series A Convertible Preferred Stock at $1.00 per share from two
     overseas banks that were part of the same group that invested approximately
     $2.1 million in the Company in 2000 (see Note 9(c)). An additional $122,000
     has been committed by the same banks to be received by the Company in April
     2002. The Series A Convertible Preferred Stock can be converted by the
     holder into eight shares of common stock at any time. Additionally,
     effective December 31, 2001, the Company received a note receivable for
     $220,500 through an option exercise of 1.4 million shares of Company common
     stock at an adjusted cash purchase price of $.1575 per share. The note is
     due on or before April 15, 2002 together with interest. The Company also
     expects to obtain additional financing through the sales of capital stock.

                                      F-19
<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
------- -------------------------------------------------------------
                Compliance with Section 16(a) of the Exchange Act
                -------------------------------------------------

     The names, ages and principal occupations of our present directors, and the
date on which their term of office commenced and expires, are listed below.

                           Term
                           of               Principal
Name                 Age   Office           Occupation
----                 ---   ------           ----------

Robert G. Baker       63    (1)     Chief Executive Officer
                                    and Chairman of the Board

Jerry V. Schinella    42    (1)     President, Chief Operating
                                    Officer and Director

Michael J. Gordon     44    (1)     V.P., Corporate Administrator
                                    Secretary, Director

Frank P. Ragano       72    (1)     Director

Walter R. Arnett      73    (1)     Director

Olivier d'Auriol      55    (1)     Director

Jean Caillet          55    (1)     Director

----------
(1) Directors are elected at the annual meeting of stockholders and hold office
to the next annual meeting.

     Robert G. Baker is our Chairman of the Board and Chief Executive Officer.
Jerry V. Schinella is our President and Chief Operating Officer. Michael Gordon
is our Vice President, Corporate Administrator and Secretary. The terms of all
officers expire at the annual meeting of directors following the annual
stockholders meeting. Officers may be removed, either with or without cause, by
the Board of Directors, and a successor elected by a majority vote of the Board
of Directors, at any time.

     ROBERT G. BAKER - Founder, Chairman and Chief Executive Officer of BBJ
Environmental Solutions since August 1993 and Chief Executive Officer and
Chairman of the Board of BBJ Environmental Technologies since May 30, 2000. Mr.
Baker is responsible for the strategy, overall policies, management development,
regulatory and technical issues, and our 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

                                       25
<PAGE>

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 American Society of Heating, Refrigeration, and Air-Conditioning Engineers
where he sits on various Committees and the Chemical Specialties Manufacturer's
Association-Regulatory Affairs Committee, the Small Business Council, the Indoor
Air Quality Special Committee (which Mr. Baker chairs), and the Labeling Task
Force.

     JERRY V. SCHINELLA - Founder, President, and Chief Operating Officer of BBJ
Environmental Solutions since 1994 and a director since August 1993, and
President, Chief Operating Officer and Director of BBJ Environmental
Technologies since May 30, 2000. Mr. Schinella is responsible for our
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 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
Environmental Solutions since April 1998 and member of BBJ's Environmental
Solutions board of directors since April 1997. He has held the same positions
with BBJ Environmental Technologies since May 30, 2000. 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 reports and documents with the
Securities and Exchange Commission, company news releases and public relations.
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 - has been a director of BBJ Environmental Technologies
since May 2000. 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, NY. 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.

     WALTER R. ARNETT - has been a director of BBJ Environmental Technologies
since January 2002. Since 1992, Mr. Arnett has been Director of HVAC Insider, a
Florida industry trade publication, with a circulation of 7,000 contractors,
wholesalers and associated members. Mr. Arnett has 52 years experience in the
HVAC and refrigeration industry as a licensed HVAC contractor,

                                       26
<PAGE>

Independent Wholesale Distributor, and manufacturer of HVAC equipment and has
been the recipient of several sales awards with Marbut Company, Chrysler
Airtemp, John Zink Company and Certified Equipment Corp. Mr. Arnett attended
Mercer University and the University of Mississippi.

     OLIVIER d'AURIOL - has been a director of BBJ Environmental Technologies
since November 2000. Mr. d'Auriol, a Swiss born citizen, is founder, Chairman,
and Chief Executive Officer of Olivier d'Auriol Asset Management SA, a Swiss
Family Office Company he created in 1998 to advise private clients on the
investment of their wealth. Mr. d'Auriol has served in a number of senior
operation and management positions in international banks. From 1992 to 1997 he
served as Executive Vice President, President of the Management Committee of
Banque Privee Edmond de Rothschild S.A., Luxembourg, a Private bank dedicated to
asset management for private clients, investment funds and financial
engineering. Prior to that, as Executive Vice President and member of the
Management Committee of Swiss Bank Corp in Geneva, Mr. d'Auriol headed the Trust
Department in charge of private and institutional clients. He started his career
at Paribas where he held successive management responsibility between 1972 and
1987 in asset management for private individuals and in fixed income management
for institutional clients. Mr. d'Auriol holds a Baccalaureat in Mathematics from
Lycee Louis le Grand, Paris and studied three years as an engineer in Physics at
Ecole Polytechnique Federale in Lausanne, Switzerland. He is member of the Swiss
Financial Analyst Society and sits on the board of LightWave Systems, Santa
Barbara-USA, Guardware Inc., Budapest-Hungary, European Secondary Fund,
Paris-France, and Chateau de Ripaille Foundation, Thonon-France.

     JEAN CAILLET - has been a director of BBJ Environmental Technologies since
November 2000. Mr. Caillet, a French born citizen, is founder of Telliac SA, a
company he created in 1997 that specializes in Financial Engineering. Jean
Caillet has served before in different senior positions in the fields of
commodities and banking. From 1985 to 1993, Mr. Caillet founded and managed in
Switzerland and France for Banque Paribas a department that specialized
worldwide in barter and financial engineering. From 1981 to 1985 he was a Senior
VP with Finagrain (group Continental Grain) in Geneva. He has started his
working career in Paris in 1973 at Imetal (group Rothschild), which he left in
1981 as Senior VP Marketing & Commercial to move to Geneva where he is living
today.

Committees
----------

     In November 2000, we established a Compensation Committee and Audit
Committee. As of March 15, 2002, Frank Ragano is chairman and Olivier d'Auriol
and Robert Baker are members of the Compensation Committee and Jean Caillet is
chairman and Walter Arnett and Jerry Schinella are members of the Audit
Committee. The Compensation Committee has the power to review compensation of
our executive officers, including salaries, the granting of stock options and
other forms of compensation for executive officers whose salaries are within the
purview of the board of directors. In some cases, the Compensation Committee may
make recommendations to the entire board of directors for its approval or,
itself exercise the powers and authority of the board of directors to designate
compensation.

     Pursuant to the audit committee's written charter, which was adopted in May
2001, the audit committee's responsibilities include, among other things:

                                       27
<PAGE>

     .    annually reviewing and reassessing the adequacy of the committee's
          formal charter;

     .    reviewing the annual audited financial statements with our management
          and independent auditors and the adequacy of internal accounting
          controls;

     .    reviewing analyses prepared by our management and independent auditors
          concerning significant financial reporting issues and judgments made
          in connection with the preparation of financial statements;

     .    making recommendations concerning the engagement of the independent
          auditor;

     .    reviewing the independence of the independent auditors;

     .    reviewing our auditing and accounting principles and practices with
          the independent auditors and reviewing major changes to auditing and
          accounting principles and practices as suggested by the independent
          auditor or management; and

     .    reviewing all related party transactions on an ongoing basis for
          potential conflict of interest situations.

Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the
"Commission"). Officers, directors and greater than ten percent stockholders are
required by the Commission's regulations to furnish us with copies of all
Section 16(a) forms they file. During fiscal 2001, none of our officers,
directors or 10% or greater stockholders filed any forms late to the best of our
knowledge.

                                       28
<PAGE>

Item 10. Executive Compensation
-------- ----------------------

     During the past three fiscal years, no executive officer had salaries and
bonuses of $100,000 or more. None of our executive officers have any employment
contracts with us. For the past three years, the following table sets forth
certain compensation paid to Robert G. Baker, Chief Executive Officer.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                 Long Term Compensation
                                                          ------------------------------------
                    Annual Compensation                     Awards                     Payouts
----------------------------------------------------------------------------------------------
   (a)       (b)       (c)          (d)         (e)          (f)          (g)          (h)        (i)
                                               Other                                               All
   Name                                        Annual     Restricted     Number                   Other
   and                                         Compen-       Stock         of          LTIP      Compen-
Principal                                      sation      Award(s)     Options /     Payouts     sation
 Position    Year    Salary($)    Bonus($)       ($)          ($)       Warrants        ($)         ($)
--------------------------------------------------------------------------------------------------------
<S>          <C>      <C>           <C>       <C>            <C>        <C>             <C>        <C>
Robert G.    2001     74,000        -0-       4,200(1)       -0-        978,758(3)      -0-        -0-
Baker,       -------------------------------------------------------------------------------------------
Chief        2000     72,000        -0-       4,200(1)       -0-(2)         -0-         -0-        -0-
Executive    -------------------------------------------------------------------------------------------
Officer      1999     72,000        -0-       4,200(1)       -0-            -0-(3)      -0-        -0-
--------------------------------------------------------------------------------------------------------
</TABLE>

----------
     (1)  We paid $3,750 during 2001 for $500,000 of life insurance on the life
          of Mr. Baker and $4,200 during 2000 and 1999 for $300,000 of life
          insurance on the life of Mr. Baker. We are a beneficiary in the amount
          of $250,000 and his spouse on the remaining $250,000. These amounts
          are included in other annual compensation amounts.
     (2)  Does not include 3,219,890 shares received in connection with the
          reorganization pursuant to which we acquired BBJ Environmental
          Solutions as a wholly-owned subsidiary. See Items 1 and 12.
     (3)  Includes options to purchase 938,758 shares issued as replacement
          options exchanged for our subsidiary options as described herein.

                                       29
<PAGE>

                               OPTION GRANTS TABLE

     The information provided in the table below provides information with
respect to individual grants of our stock options during fiscal 2001 of the
executive officer named in the summary compensation table above. We did not
grant any stock appreciation rights during 2001.

                        Option Grants in Last Fiscal Year
                        ---------------------------------

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                                         Potential
                                                                    Realizable Value at
                                                                       Assumed Annual
                        Individual Grants                           Rates of Stock Price
                                                                       Appreciation
                                                                    for Option Term (2)
----------------------------------------------------------------------------------------
      (a)            (b)         (c)          (d)         (e)        (f)         (g)
                                 % of
                                Total
                               Options/
                              Granted to
                   Options    Employees     Exercise    Expira-
                   Granted    in Fiscal      Price        Tion
     Name            (#)       Year(1)       ($/Sh)       Date       5%($)      10%($)
----------------------------------------------------------------------------------------
<S>                <C>           <C>          <C>       <C>         <C>        <C>
Robert G. Baker     40,000        1.1         1.25      03/07/05     10,800     23,200
                   720,000       20.5         1.25      05/15/06    252,000    547,200
                   138,758        4.0         1.17      05/15/06     34,690     95,518
                    80,000        2.3         1.00      05/15/06     22,080     48,840
----------------------------------------------------------------------------------------
</TABLE>

(1)  The percentage of total options granted to our employees in 2001 is based
     upon options granted to officers, directors and employees totaling
     3,511,214.
(2)  The potential realizable value of each grant of our options assumes that
     the market price of its Common Stock appreciates in value from the date of
     grant to the end of the option term at annualized rates of 5% and 10%,
     respectively, and after subtracting the exercise price from the potential
     realizable value.

                                       30
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

     The information provided in the table below provides information with
respect to each exercise of our stock option during fiscal 2001 by the executive
officer named in the summary compensation table and the fiscal year end value of
our unexercised options.

--------------------------------------------------------------------------------
       (a)              (b)          (c)           (d)                (e)

                                                                     Value of
                                                Number of         Unexercised
                                               Unexercised        In-the-Money
                                                Options at         Options
                      Shares        Value        FY-End (#)        at Fy-End($)
                    Acquired on    Realized    Exercisable/       Exercisable/
      Name         Exercise (#)     ($)(1)     Unexercisable    Unexercisable(1)
--------------------------------------------------------------------------------
Robert G. Baker        -0-           -0-         978,758/0            0/0
--------------------------------------------------------------------------------

----------
(1)  The aggregate dollar values in column (c) and (e) are calculated by
     determining the difference between the fair market value of the Common
     Stock underlying the options and the exercise price of our options at
     exercise or fiscal year end (i.e., $.10 per share), respectively. In
     calculating the dollar value realized upon exercise, the value of any
     payment of the exercise price is not included.

                                       31
<PAGE>

Report on Executive Compensation
--------------------------------

     Our board of directors includes Robert G. Baker, Jerry V. Schinella,
Michael J. Gordon, Frank P. Ragano, Walter R. Arnett, Olivier d'Auriol and Jean
Caillet. Our Compensation Committee was established in November 2000 and, as of
this date, includes Frank P. Ragano, Olivier d'Auriol and Robert G. Baker. Our
board of directors or Compensation Committee is responsible for reviewing and
determining the annual salary and other compensation of our executive officers
and key employees and determining the appropriateness of key man life insurance,
obtaining officer and director liability insurance and employment contracts. Our
goals are to align compensation with business objectives and performance and to
enable us to attract, retain and reward executive officers and other key
employees who contribute to our long-term success. We provide base salaries and
stock options to our 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 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, we may set up a pension plan or similar retirement plans. During the
period from the date of inception of our operating subsidiary, BBJ Environmental
Solutions, in August 1993 to December 31, 2001, cash compensation in the form of
salaries were paid and stock options in our subsidiary were granted to our three
executive officers, namely Robert G. Baker, Jerry V. Schinella, and Michael J.
Gordon.

                                   The foregoing report has been approved by all
                                   members of the Board of Directors.

                                   Robert G. Baker
                                   Jerry V. Schinella
                                   Michael J. Gordon
                                   Frank P. Ragano
                                   Walter R. Arnett
                                   Olivier d'Auriol
                                   Jean Caillet

Indemnification
---------------

     Article Eighth of our Certificate of Incorporation provides for us to
indemnify any and all directors and officers whom we 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
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. We have
been advised that it is the position of the Securities and Exchange Commission
that insofar as the foregoing provisions may be invoked to disclaim liability
for damages arising under the Securities Act of 1933, as amended, that such
provisions are against public policy as expressed in the Securities Act and are
therefore unenforceable.

                                       32
<PAGE>

2000 Employee and Consulting Compensation Plan
----------------------------------------------

     On November 16, 2000, BBJ Environmental Technologies established an
Employee and Consultant Compensation Plan (the "Plan") covering 8,000,000
shares. In March 2002, the Board of Directors approved, subject to stockholder
approval, an increase in the number of shares covered by the Plan to 13,000,000.
The Board believes that the increase in the number of shares reserved for
issuance pursuant to the Plan is necessary to provide us with incentives to
attract and retain qualified and competent officers, employees and non-employee
directors.

Administration
--------------

     The Plan is administered by the Compensation Committee, subject to the
Board's right to grant options during the existence of the Plan. The
Compensation Committee, subject to the provisions of the Plan, has the authority
to determine and designate officers, employees, directors and consultants to
whom awards shall be made and the terms, conditions and restrictions applicable
to each award (including, but not limited to, the option price, any restriction
or limitation, any vesting schedule or acceleration thereof, and any forfeiture
restrictions). The Compensation Committee may, in its sole discretion,
accelerate the vesting of awards or extend the period during which an option may
be exercised after an optionee ceases to be an employee of us, but not beyond
the expiration of its stated term. The Board of Directors must approve all
grants of Options and Stock Awards issued to our officers or directors.

Types of Awards
---------------

     The Plan is designed to enable us to offer certain officers, employees,
directors and consultants of us and our subsidiaries equity interests in us and
other incentive awards in order to attract, retain and reward such individuals
and to strengthen the mutuality of interests between such individuals and our
stockholders. In furtherance of this purpose, the Plan contains provisions for
granting non-qualified stock options and Common Stock Awards.

     Stock Options. A "stock option" is a contractual right to purchase a number
of shares of Common Stock at a price determined on the date the option is
granted. The option price per share of Common Stock purchasable upon exercise of
a stock option and the time or times at which such options shall be exercisable
shall be determined by the Compensation Committee at the time of grant. Such
option price shall not be less than 100% of the fair market value of the Common
Stock on the date of grant. The option price must be paid in cash, money order
or check or other form of equivalent cash consideration approved by the
Committee.

     Options shall be exercisable at the times and subject to the conditions
determined by the Compensation Committee at the date of grant, but no option may
be exercisable more than ten years after the date it is granted. If the optionee
ceases to be an employee of our company for any reason other than death, any
option exercisable on the date of the termination of employment may be exercised
for a period of thirty days (unless otherwise agreed in writing or determined by
the Compensation Committee at or after the date of grant) or until the
expiration of the stated term of the option, whichever period is shorter. In the
event of the optionee's death, any option exercisable at the date of death may
be exercised from the date of death until the expiration of the stated term of
the

                                       33
<PAGE>

option by the legal heirs of the Optionee, unless otherwise determined by the
Compensation Committee at the date of grant.

     Common Stock Award. "Common Stock Award" are shares of Common Stock that
will be issued to a recipient at the end of a restriction period, if any,
specified by the Compensation Committee if he or she continues to be an
employee, director or consultant of us. If the recipient remains an employee,
director or consultant at the end of the restriction period, the applicable
restrictions will lapse and we will issue a stock certificate representing such
shares of Common Stock to the participant. If the recipient ceases to be an
employee, director or consultant of us for any reason (including death,
disability or retirement) before the end of the restriction period unless
otherwise determined by the Compensation Committee, the restricted stock award
will be terminated.

     Forfeiture. Unless otherwise determined by the Compensation Committee at
the time of grant, any award of stock options will be immediately forfeited if
the Compensation Committee in its sole discretion finds (after full
consideration of the facts presented on behalf of both us and the Eligible
Participant) that the Eligible Participant breached his or her employment or
service contract, if any, with us or has been engaged in disloyalty to our
company or has disclosed trade secrets or confidential information of us. In
such event, the participant will also forfeit all shares of Common Stock for
which we have not yet delivered the share certificates (upon refund by us of the
option price in the case of stock options).

Eligibility
-----------

     Our officers, employees, directors and consultants of BBJ Environmental
Technologies and our subsidiaries are eligible to be granted stock options, and
Common Stock Awards. Eligibility shall be determined by the Compensation
Committee; however, all Options and Stock Awards granted to officers and
directors must be approved by the Board.

Termination or Amendment of the Plan
------------------------------------

     The Board may at any time amend, discontinue, or terminate all or any part
of the Plan, provided, however, that unless otherwise required by law, the
rights of a participant may not be impaired without his or her consent, and
provided that we will seek the approval of our stockholders for any amendment if
such approval is necessary to comply with any applicable federal or state
securities laws or rules or regulations. Unless sooner terminated, the Plan will
expire on November 16, 2010 and no awards may be granted after that date.

Awards
------

     Currently, we have outstanding options to purchase 6,145,738 shares of our
Common Stock under the Plan, not including 1,400,000 options exercised at $.1575
per share in 2001. It is not possible to predict the individuals who will
receive future awards under the Plan or the number of shares of Common Stock
covered by any future award because such awards are wholly within the discretion
of the Compensation Committee and/or Board of Directors. The table below
contains information as of March 15, 2002 on the known benefits provided to
certain persons and group of persons under the Plan.

                                       34
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                                                            Value of
                                                                           unexercised
                                                                           options at
                              Number of Shares      Range of exercise       March 15,
Name and Position             Subject to Options    price ($) per Share      2002(1)
--------------------------------------------------------------------------------------
<S>                               <C>                 <C>                     <C>
Robert G. Baker,
Chief Executive Officer             978,758           $1.00  - $1.25           -0-
--------------------------------------------------------------------------------------
Jerry V. Schinella,
President                           978,758             1.00 -  1.25           -0-
--------------------------------------------------------------------------------------
Michael J. Gordon,
Vice President                    1,222,956             1.17 -  1.25           -0-
--------------------------------------------------------------------------------------
All Executive Officers
as a group (three persons)        3,180,472             1.00 -  1.25           -0-
--------------------------------------------------------------------------------------
All Non-Employee
Directors as a group
(4 persons)                         280,000                     1.25           -0-
--------------------------------------------------------------------------------------
Non-Executive Officer
Employee Group                      469,500              .13 -  1.25          $420
--------------------------------------------------------------------------------------
Consultants(2)                    2,276,774             .375 -  2.00           -0-
--------------------------------------------------------------------------------------
</TABLE>

(1)  The closing sale price of the Common Stock on March 15, 2002 was $.15 per
     share as reported by OTC Electronic Bulletin Board. Value is calculated by
     multiplying (a) the difference between $.15 and the option exercise price
     by (b) the number of shares of Common Stock underlying the option.

(2)  Not included in the table are options to purchase 1,400,000 shares of our
     Common Stock which were exercised by consultants at $.1575 per share.

BBJ Environmental Solutions Stock Option Plan
---------------------------------------------

     Our subsidiary, BBJ Environmental Solutions, has a Plan almost identical to
ours except as to the number of shares subject to each Plan. After the November
16, 2000 adoption by the Board of our Plan, the Board authorized us to offer BBJ
Environmental Solutions option holders the opportunity to exchange their options
for almost identical options in our Plan, except that the number of shares of
common stock subject to each option would be twice the original number of shares
and the term of the options shall expire five years from the date of stockholder
approval of the above matters, which occurred on May 15, 2001. All option
holders in BBJ Environmental Solutions as of May 15, 2001, accepted our exchange
offer. We have no plans to issue options under the BBJ Environmental Solutions
Plan.

                                       35
<PAGE>

Other Stock Options
-------------------

     Outside of our stock option plans, we have granted to a non-affiliated
person options to purchase 50,000 shares of our common stock at an exercise
price of $1.25 per share. These options are currently beneficially owned by
Karen Vickers. These options expire February 25, 2004. We also granted GunnAllen
Financial, Inc., a member of the NASD, options to purchase 55,000 shares of our
common stock at an exercise price of $1.25 per share. These options expire
October 31, 2004. We also granted options to purchase 150,000 shares of our
common stock at an exercise price of $1.25 per share to Charles Sanford, a
non-affiliated person, with expiration dates ranging from August 8, 2002 to
October 11, 2002. The aforesaid options to Karen Vickers and GunnAllen
Financial, Inc. were originally granted by our subsidiary, BBJ Environmental
Solutions and were exchanged for options in BBJ Environmental Technologies on
the same terms, except that the number of options received in the exchange were
twice the original number granted in BBJ Environmental Solutions.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
-------- ---------------------------------------------------------------

     The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of March 15, 2002 by all persons known by us to
be beneficial owners of more than 5% of our Common Stock and all of our officers
and directors, both individually and as a group. Unless otherwise indicated, all
shares are directly beneficially owned and investing power is held by the
persons named. The address of each person is c/o BBJ Environmental Technologies,
Inc. at 6802 Citicorp Blvd., Suite 500, Tampa, FL 33619. The percentage of
outstanding shares is based upon 22,396,578 shares outstanding and includes
options which are expected to vest within 60 days thereof, by all persons known
by us to be beneficial owners of more than 5% of its common stock and all of our
officers and directors, both individually and as a group.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                            Amount and Nature of Beneficial    Percentage Outstanding
Name and Address of Beneficial Owner (1)             Ownership (1)
-----------------------------------------------------------------------------------------------------
<S>                                              <C>                                    <C>
Robert G. Baker(2)                                3,815,648                             16.3
-----------------------------------------------------------------------------------------------------
Jerry V. Schinella(3)                             3,955,648                             16.9
-----------------------------------------------------------------------------------------------------
Michael J. Gordon(4)                              2,937,970                             12.5
-----------------------------------------------------------------------------------------------------
Frank P. Ragano(5 )                                 140,000                               *
-----------------------------------------------------------------------------------------------------
Walter R. Arnett                                     19,272                               *
-----------------------------------------------------------------------------------------------------
Olivier d'Auriol(6 )                                110,000                               *
-----------------------------------------------------------------------------------------------------
Jean Caillet(7)                                    600,000                               2.7
-----------------------------------------------------------------------------------------------------
Includes all of our officers and
directors as a group
(7 persons)                                      11,578,538                             45.1
-----------------------------------------------------------------------------------------------------
Banque Privee Edmond De Rothschild(8)             2,440,000                             10.6
-----------------------------------------------------------------------------------------------------
Discount Bank and Trust Company(9)                3,168,000                             12.9
-----------------------------------------------------------------------------------------------------
</TABLE>

                                       36
<PAGE>

----------
*    Represents less than one percent of the outstanding shares of Common Stock.

(1)  Unless otherwise indicated, all shares are directly beneficially owned and
     investing power is held by the persons named. The address of each person is
     c/o BBJ Environmental Technologies, Inc. at 6802 Citicorp Blvd., Suite 500,
     Tampa, FL 33619.

(2)  Robert G. Baker may be deemed to be a founder or parent of BBJ
     Environmental Solutions. Includes options to purchase 978,758 shares of our
     Common Stock.

(3)  Jerry V. Schinella may be deemed to be a founder or parent of BBJ
     Environmental Solutions. Includes options to purchase 978,758 shares of our
     Common Stock.

(4)  Includes options to purchase 1,084,198 shares of our Common Stock. The
     figure in the table above also includes 276,534 shares owned by Mr.
     Gordon's children but does not include 530,990 shares held by a family
     trust for his brother's children that Mr. Gordon was a trustee.

(5)  Includes or represents options to purchase 140,000 shares of our Common
     Stock.

(6)  Includes or represents options to purchase 40,000 shares of our Common
     Stock.

(7)  Includes or represents options to purchase 40,000 shares of our Common
     Stock.

(8)  The figure in the table above includes 1,720,000 shares of Common Stock
     plus the full conversion of 90,000 shares of Series A Convertible Preferred
     which can be converted at any time into 720,000 shares of our Common Stock.
     Each share of Series A Convertible Preferred Stock has one vote and shall
     vote together with BBJ's Common Stockholders on each matter presented for
     shareholder vote, except when voting as a separate class as required by
     Nevada law.

(9)  The figure in the table above includes 960,000 shares of Common Stock plus
     the full conversion of 276,000 shares of Series A Convertible Preferred
     which can be converted at any time into 2,208,000 shares of our Common
     Stock. Each share of Series A Convertible Preferred Stock has one vote and
     shall vote together with BBJ's Common Stockholders on each matter presented
     for shareholder vote, except when voting as a separate class as required by
     Nevada law. In addition, 480,000 shares of our Common Stock is included in
     the table although such shares were transferred into a nominee's name
     without any change in the beneficial ownership.

     We do not know of any arrangement or pledge of our securities by persons
now considered in control of us that might result in a change of control of us.

                                       37
<PAGE>

Item 12. Certain Relationships and Related Transactions
-------- ----------------------------------------------

     Some of the paragraphs to follow describe transactions between BBJ
Environmental Solutions, Inc. and its officers, directors and affiliated
persons. Those transactions that occurred prior to June 1, 2000, which resulted
in the issuance of shares in BBJ Environmental Solutions, Inc.'s common stock,
were later exchanged into shares of BBJ Environmental Technologies, Inc.'s
common stock, on the basis of two shares of BBJ Environmental Technologies,
Inc.'s common stock for every one share of BBJ Environmental Solutions, Inc.'s
common stock.

     Herbert Maxwell, a former director and founder of us, was issued 10,000
shares in March 1996 in connection with a working capital loan. Mr. Maxwell also
received 90,466 shares in December 1996 in connection with the conversion of
liabilities to common stock. A. Paul Shapansky, formerly a director and our
chief executive officer, was issued 1,056,146 shares in December 1996 in
connection with the conversion of liabilities to common stock. Mr. Shapansky
contributed $14,354 in 2000, $3,000 in 1999, $38,519 in 1998 and $18,920 in 1997
to pay certain of our liabilities.

     On March 4, 1997 BBJ Environmental Solutions entered into a convertible
debenture agreement with the R.P. Gordon Children Family Trust and Michael J.
Gordon in the amount of $100,000 each. The proceeds of the debenture were
advanced to BBJ Environmental Solutions in four equal amounts of $50,000 each,
bearing an interest rate of 12%. The Trust and Mr. Gordon could each elect, at
any time after September 1, 1997 but before the maturity date of the debenture
(September 4, 1998), to convert the debenture into 4.5% of the then issued and
outstanding shares of common stock of BBJ Environmental Solutions. As of
December 31, 1997, the Trust and Mr. Gordon both elected to convert their
respective debentures and related accrued interest into 192,719 shares of BBJ
Environmental Solution's common stock. In addition, Mr. Gordon agreed to invest
an additional $100,000 in BBJ Environmental Solutions for 192,720 shares of its
common stock.

     On June 30, 1998, Michael J. Gordon invested $50,000 in BBJ Environmental
Solutions to acquire 48,180 shares of its common stock at a price of $.9636 per
share. On July 30, 1998 and November 1, 1998, Michael J. Gordon, invested an
additional $50,000 and $30,000 in BBJ Environmental Solutions to acquire 166,667
and 100,000 shares, respectively, of its common stock at a price of $.30 per
share.

     On March 2, 1999, Robert P. Gordon converted $100,000 he loaned to BBJ
Environmental Solutions during 1998 into 333,333 shares of its common stock.

     In December 1999, BBJ Environmental Solutions entered into a convertible
debenture agreement with Michael J. Gordon in the amount of $230,000. The
proceeds of the debenture were previously advanced BBJ Environmental Solutions
in the form of cash advances in the aggregate amount of $157,500, $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.
In September 2000, this debenture was transferred by Michael J. Gordon to Robert
P. Gordon.

     In 1997, BBJ Environmental Solutions extended one of its executives a
compensatory stock option to purchase up to 192,720 shares of its 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, we

                                       38
<PAGE>

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. Upon termination of employment,
we provided the executive six months of severance pay in exchange for canceling
all options held by the executive to purchase its common stock. 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 was fully accrued as of December 31,
1999.

     On January 4, 1999, our securities counsel agreed to convert $13,334 in
legal fees into 40,000 shares of common stock. In March 1999, BBJ Environmental
Solutions raised $200,000 by selling a total of 100,000 shares of series A 10%
convertible preferred stock to seven investors; and during the third quarter of
1999, we raised $343,750 by selling a total of 171,875 shares of series B 10%
convertible preferred stock to BBJ Environmental Solution's six investors. In
January 2000, BBJ Environmental Solutions raised $375,000 by selling a total of
360,000 shares of its common stock to eight investors.

     Pursuant to an Agreement and Plan of Reorganization dated as of January 31,
2000 by and among BBJ Environmental Solutions and certain Stockholders of BBJ
Environmental Technologies, we agreed to acquire up to 100% of the capital stock
of BBJ Environmental Solutions for 12,410,666 shares of our common stock subject
to certain closing conditions which included, without limitation, the following:
(i) a reverse stock split by us of one-for-three followed by a stock repurchase
of 3,465,000 shares for nominal consideration from certain stockholders of BBJ
Environmental Technologies; (ii) BBJ Environmental Technologies being a clean
shell without assets or liabilities (other than $50,000 owed to BBJ
Environmental Solutions, which was borrowed by us in connection with this
transaction); and (iii) BBJ Environmental Technologies being current with all
reports required to be filed under the Exchange Act of 1934, as amended. At the
completion of the Reorganization, BBJ Environmental Solutions became the
operating subsidiary of BBJ Environmental Technologies.

     In November and December 2000, we sold through subscription agreements
2,804,000 restricted shares of our common stock at a purchase price of $.75 per
share to various overseas banks and foreign investors, for a total amount of
financing of $2,103,000. A commission in the nature of a finder's fee of up to
200,000 shares of our common stock was issued to two accredited investors. The
investors in this private placement also received the right to name two members
of our board of directors, namely, Olivier d'Auriol and Jean Caillet. Due to the
event that our revenues for the period November 1, 2000 through October 30, 2001
was less than $1,667,075, an additional 2,804,000 shares of our common stock was
issued so that the purchase price was adjusted down to $.375 per share.

     BBJ Environmental Technologies entered into a convertible debenture
agreement with the R.P. Gordon Children Family Trust in the amount of $84,441.37
in July 2000 and two convertible debenture agreements with Robert P. Gordon,
brother of Michael J. Gordon, a Director of BBJ, in the amounts of $230,000.00
and $87,300.49 in September 2000. (The two debentures were transferred to Robert
P. Gordon from Michael J. Gordon.) The proceeds of the debentures were advanced
to BBJ Environmental Solutions, bearing an interest rate of 10%. The Trust and
Mr. Gordon could each elect, at any time before the maturity date of the
debenture (January 10, 2001), to convert the debenture into shares of common
stock of BBJ Environmental Technologies. In December 2000, the Trust and Mr.

                                       39
<PAGE>

Gordon both elected to convert their respective debentures into 105,552 and
477,126 shares, respectively, of our common stock.

     On February 6, 2001, Robert G. Baker, Jerry V. Schinella and Michael J.
Gordon sold back to us 33,000 shares, 33,000 shares and 34,000 shares,
respectively, at a purchase price of $1.00 per share. On the same date, we sold
50,000 shares of our common stock to each of Nicholas Salerno and Donald
Mintmire at a purchase price of $1.00 per share.

     In May 2001, we received $225,000 through an option exercise of its common
stock. We sold 600,000 shares of common stock, par value $.001 per share, at a
cash purchase price of $.375 per share.

     Effective December 31, 2001, we received a Note for $220,500 through an
option exercise of its common stock. We sold 1,400,000 shares of common stock,
par value $.001 per share, at an adjusted cash purchase price of $.1575 per
share. Full payment on the Note is due on or before April 15, 2002 together with
interest.

     In February and March 2002, we received $244,000 in cash through the sale
of Series A Convertible Preferred Stock from two overseas banks. A third payment
of $122,000 is expected to be received by us on April 14, 2002. We sold 244,000
shares of our Series A Convertible Preferred Stock at a cash purchase price of
$1.00 per share. The Series A Convertible Preferred Stock can be converted by
the holder into eight shares of common stock at any time. Each share of Series A
Convertible Preferred Stock shall have one vote and shall vote together with our
Common Stockholders on each matter presented for shareholder vote, except when
voting as a separate class as required by Nevada law.

                                       40
<PAGE>

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------- ----------------------------------------------------------------

<TABLE>
   <S>        <C>
   (a)(1)(2)        Financial Statements and Financial Statement Schedules.
                    A list of the Financial Statements and Financial
                    Statement Schedules filed as a part of this Report is
                    set forth in Item 8, and appears at Page F-1 of this
                    Report, which list is incorporated herein by
                    reference.

   (a)(3)           Exhibits

   2.1        Agreement and Plan of Reorganization (incorporated by reference to Form 8-K dated June 1, 2000)
   3.1        Amended and Restated  Articles of  Incorporation as filed with the Secretary of State of the State
              of Nevada on June 19, 2001 (Incorporated by reference to the
              Registrant's Form 10-QSB for its quarter ended June 30, 2001).
   3.2        Designation of Rights and Preferences of Series A Convertible Preferred Stock.*
   3.6        By-Laws of the Registrant  (incorporated by reference to Registration  Statement on Form S-1, file
              Number 33-34200).
   10.1       Facility lease and Amendment No. 1 thereto (Incorporated by reference to Registrant's
              Form 10-QSB for its quarter ended June 30, 2001).
   11.1       Statement re: Computation of per share earnings (see Consolidated Statements of
              Operations and the Notes thereto).
   23.1       Consent of Accountants*
   99.1       Employee Benefit and Consulting Services Compensation Plan
              adopted November 16, 2000 (Incorporated by reference to the
              Registrant's Exhibit C to its Proxy Statement, filed in April
              2001).
   99.2       Audit Committee Charter adopted in May 2001*
</TABLE>

----------
   *Filed herewith.

   (b)  Reports on Form 8-K.

     No Reports on Form 8-K were filed or required to be filed during the
quarter ended December 31, 2001.

                                       41
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized this 25nd day of March, 2002.

                                        BBJ ENVIRONMENTAL
                                        TECHNOLOGIES, INC.


                                        By: /s/ Robert G. Baker
                                           -------------------------------
                                        Robert G. Baker, Chief Executive Officer

     In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed by the following persons in the
capacities and on the dates stated.

SIGNATURE                            TITLE                           DATE
---------                            -----                           ----


/s/ Robert G. Baker            Chairman of the Board,          March 25, 2002
--------------------------     Chief Executive Officer
Robert G. Baker


/s/ Jerry V. Schinella         President, Chief Operating     March 25, 2002
--------------------------     Officer, Chief Financial
Jerry V. Schinella             Officer, Director


/s/ Michael J. Gordon          VP Corporate Administrator,     March 25, 2002
--------------------------     Secretary, Director
Michael J. Gordon


/s/ Frank P. Ragano            Director                       March 25, 2002
--------------------------
Frank P. Ragano


/s/ Walter R. Arnett           Director                        March 25, 2002
--------------------------
Walter R. Arnett


/s/ Olivier d'Auriol           Director                        March 25, 2002
--------------------------
Olivier d'Auriol


/s/ Jean Caillet               Director                        March 25, 2002
--------------------------
Jean Caillet

Robert S. Baker, Jerry V. Schinella, Michael J. Gordon, Frank P. Ragano, Walter
R. Arnett, Olivier d'Auriol and Jean Caillet represent all the members of the
Board of Directors.

                                       42