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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------ -------------
COMMISSION FILE NUMBER 0-9278
--------------------------
GEOWASTE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-2751684
(STATE OR OTHER JURISDICTION OF INCORPORATION) (IRS EMPLOYMENT IDENTIFICATION NO.)
</TABLE>
SUITE 208, 24 CATHEDRAL PLACE, ST. AUGUSTINE, FL 32084
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (904) 824-0201
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE
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 a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $11,155,014 at March 15, 1996. Exclusion
of shares held by any person should not be construed to indicate that such
person possesses the power, direct or indirect, to direct or cause the
direction of management policies of the registrant, or that such person is
controlled by or under common control with the registrant.
At March 15, 1996 the registrant had issued and outstanding an
aggregate of 18,662,605 shares of its common stock.
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PART I
ITEM 1. BUSINESS
GENERAL
GeoWaste Incorporated (the "Company" or "GeoWaste") is a holding
company which was formed in Delaware under the name Utah Shale Land & Minerals
Corporation. The Company, through its subsidiaries, is in the business of
owning, operating and acquiring non-hazardous, solid waste collection,
transportation, transfer and disposal facilities and related solid waste
management operations. On August 2, 1991, Equivest Waste Solutions, Inc.
("Equivest") was merged (the "Merger") into the Company's wholly owned
subsidiary, GeoWaste Acquisition Corp. ("Acquisition"). Immediately following
the Merger, through a wholly owned subsidiary of Acquisition, the Company
purchased a landfill and waste transportation operation located in Valdosta,
Lowndes County, Georgia.
As of March 15, 1996, GeoWaste's solid waste services operations
consist of a solid waste disposal company and a transportation company both
located in Valdosta, Georgia and a solid waste transfer station company located
in St. Augustine, Florida. Solid waste management and related services
accounted for 100% of the Company's total consolidated revenue in 1995. With
the exception of David Joseph Company which accounted for approximately 21% of
the Company's revenue in 1995, no customer accounted for more than 10% of
GeoWaste's revenue in 1995. Fees paid to GeoWaste by its solid waste
collection customers (including charges paid by such customers for disposal)
accounted for approximately 31% of GeoWaste's revenue during 1995. Transfer
and disposal services provided to municipalities, counties and other waste
management companies accounted for approximately 69% of such revenue.
Prior to August 2, 1991, the Company's principal activities were the
management of its cash investments and the ownership of approximately 19,200
acres of land in Uinta Basin, Uinta County, Utah. This land has known deposits
of oil shale which may have the potential for development at some future date.
Simultaneously with the Merger, this oil shale land was transferred to a newly
formed limited partnership in which the Company retained a 75% limited
partnership interest.
The Company's common stock is traded on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") under the trading
symbol "GEOW".
Unless the context indicates to the contrary, all statistical and
financial information under Item 1 of this report is given for the period ended
December 31, 1995.
COLLECTION
Through its wholly owned subsidiary company, GeoWaste of GA, Inc.
("GeoWaste of GA"), the Company provides solid waste collection services to
over 1,200 commercial and industrial customers in South Georgia and Northern
Florida. Collection services are also provided to approximately 5,300 homes
and apartment units.
Commercial and industrial collection services are generally performed
under one to three-year service agreements and fees are determined by such
considerations as market factors, collection frequency, type of equipment
furnished, the type and volume or weight of the waste collected, the distance
to the disposal facility and cost of disposal.
Most of the Company's residential solid waste collection services are
performed under contracts with municipalities giving the Company exclusive
rights to service all or a portion of the
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homes in their respective jurisdictions. Such contracts or franchises usually
range in duration from one to five years. The fees received by GeoWaste are
based primarily on market factors, frequency and type of service, the distance
to the disposal facility and cost of disposal. Residential collection fees are
paid by the residential customers receiving the service.
On March 21, 1996, the Company completed the acquisition of North Florida
Sweeping, Inc. a roll-off collection and street sweeping company based in
Jacksonville, Florida. Substantially all of the newly acquired company's
street sweeping activities are performed under contracts with city, county or
State public works or transportation departments and range in duration from two
to five years. The geographic markets presently served include Jacksonville
and Ft. Walton Beach, Florida.
TRANSFER STATION
GeoWaste holds a ten year contract to provide solid waste transfer
and transportation services to the City of St. Augustine, Florida. The
contract requires the design, permitting, construction, and operation of a
transfer station which will allow for the loading, removal, and ultimate
disposal at GeoWaste's Pecan Row Landfill of approximately 45 tons per day of
municipal solid waste. GeoWaste, through its subsidiary GeoWaste of FL, Inc.,
began operation of an interim, temporary transfer station in October of 1994
while the Company obtains the permits and approvals necessary for the
construction and operation of the permanent facility.
DISPOSAL
GeoWaste operates, through GeoWaste of GA, Inc., one solid waste
disposal facility, the Pecan Row Landfill, in Valdosta, Lowndes County,
Georgia. The landfill commenced operation on November 5, 1991. The landfill
was constructed and is operated pursuant to a solid waste handling permit
issued by the Georgia Environmental Protection Division. The original permit
authorized the disposal of nonhazardous waste on 46 acres of the site, with a
total permitted volume of approximately 1.8 million tons. On February 2, 1996
the Company received a final modified permit for the Pecan Row Landfill which
modifies the base and height of the facility and adds over 1,467,800 million
tons of capacity to the Landfill, resulting in a total available capacity of
2,642,268 tons. The permit modification increases the estimated life of the
facility to over ten years based on 1995 average daily tonnage of 889 tons.
The permit, as modified, has no termination date and places no restrictions on
the daily tonnages nor on the geographical origin of the waste which may be
disposed of at the landfill.
Suitable sanitary landfill facilities have become increasingly
difficult to obtain because of land scarcity, local resident opposition and
expanding governmental regulation. As GeoWaste's Pecan Row Landfill or future
facilities become filled, the solid waste disposal operations of the Company
are and will continue to be materially dependent on its ability to purchase,
lease or obtain operating rights for additional sites and obtain the necessary
permits from regulatory authorities to operate them. There can be no assurance
that additional sites can be obtained or that the Pecan Row Landfill can
continue to be expanded or operated.
PERMITTING AND CONSTRUCTION PROCESS
When appropriate, the Company pursues obtaining permits for expansion
and/or modification of the Pecan Row Landfill. Permit expansions and
modifications generally take the form of vertical expansions of existing
disposal capacity, lateral expansions of permitted disposal acreage or
modifications of operating restrictions to allow increased disposal volume or
additional waste streams.
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Although the permitting process varies from state to state, the
following summary (which is based on Georgia law) sets forth the typical steps
in the permitting process.
Local Approval. In most instances, some form of local zoning or
planning approval, commonly referred to as siting approval, is required to
permit a site and may be required to expand or modify a landfill. This process
usually requires complying with city or county zoning regulations through a
separate application process to a zoning or planning board. An applicant
generally files various reports or drawings which describe the project and
public hearings are held. In most instances, significant, organized community
opposition will be present and many local zoning authorities will consider
community opposition in deciding whether to grant zoning approval. Following
hearings, a decision is made. Generally, both the applicant and any opposition
have the right to appeal such decision. Although not always required, the
local zoning approval process is usually completed prior to applying for a
state permit.
State Approval. Upon receipt of local approval, an applicant must
then submit detailed construction and operating plans for state approval. Most
states require an applicant to evidence that a new, modified or expanded
facility will meet or exceed state regulations regarding disposal facility
siting and design specifications. States generally consider the technical
merits of an application, particularly such matters as geology, hydrogeology,
ecology, archaeology, soil characteristics, surface drainage, the presence of,
or location relative to, airports, wetlands and local water supply systems and
the adequacy of local road systems.
Engineering consultants design the project to meet state regulations
and standards. This design is reviewed by state officials, comments are
issued and, possibly after negotiations between the applicant and the state
officials, revisions are made by the applicant. Once the design is approved,
public notice is given and a hearing held. Depending on the issues presented
at the hearing, an applicant may wait nine months or more before receiving a
decision. Both the applicant and any opposition generally have the right to
appeal the decision.
REGULATION
The Company and the waste services industry in general are subject to
extensive, expansive and evolving regulation by federal, state and local
authorities. In particular, the regulatory process requires firms in the
industry to obtain and retain numerous governmental permits to conduct various
aspects of their operations, any of which may be subject to revocation,
modification or denial. The continually shifting policies and attitudes of the
regulatory agencies relating to the industry may impact the Company's ability
to obtain applicable permits from governmental authorities on a timely basis
and to retain such permits. The Company is not in a position to assess the
extent of any such impact, but it could be significant.
State and local governments have also from time to time proposed or
adopted other types of laws, regulations or initiatives with respect to the
environmental services industry. Included among these are laws, regulations
and initiatives to ban or restrict the interstate or inter-county shipment of
wastes, impose higher taxes on out-of-state waste shipments than in-state
shipments and regulate disposal facilities as public utilities.
The Company makes a continuing effort to anticipate regulatory,
political and legal developments that might affect operations, but cannot
predict the extent to which any legislation or regulation that may be enacted
or enforced in the future may affect its operations.
Operating permits are generally required at the state and local level
for landfills and collection vehicles. Operating permits need to be renewed
periodically and may be subject to revocation,
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modification, denial or non-renewal for various reasons, including failure of
the Company to satisfy regulatory concerns. In the solid waste collection
phase, regulation takes such forms as permitting of transfer stations,
licensing of collection vehicles, truck safety requirements, vehicular weight
limitations and, in certain localities, limitations on rates, area and time and
frequency of collection. In the solid waste disposal phase, regulation covers
various matters, including methane gas emission, liquid runoff and rodent,
pest, litter and traffic control. Zoning and land use requirements and
limitations are encountered in the solid waste collection and disposal phases
of the Company's business. In addition, the Company's operations may be
subject to water pollution laws and regulations; air and noise pollution laws
and regulations; and safety standards under the Occupational Safety and Health
Act ("OSHA"). Governmental authorities have the power to enforce compliance
with these various laws and regulations and violators are subject to
injunctions, fines and revocation of permits. Private individuals may also
have the right to sue to enforce compliance.
Regulatory or technological developments relating to the environment
may require GeoWaste (as well as others in the solid waste management business)
to modify, supplement or replace equipment and facilities at costs which may be
substantial. Because GeoWaste is engaged in a business intrinsically connected
with the protection of the environment and the potential discharge of materials
into the environment, a material portion of the Company's capital expenditures
are, directly or indirectly, related to such items. The Company does not
expect such expenditures, which are incurred in the ordinary course of
business, to have a materially adverse impact on its earnings or competitive
position in the foreseeable future because GeoWaste's business is based upon
compliance with environmental laws and regulations and its services are priced
accordingly.
Although the Company intends to conduct its operations in compliance
with applicable laws and regulations, the Company believes that heightened
political and citizen sensitivity causes companies in the solid waste
management industry to be faced, in the normal course of operating their
businesses, with the possibility of expending funds for fines, penalties and
expenses incurred as a result of changes to environmental compliance
regulations. While the Company has expended no such funds to date, the
possibility remains that technological, regulatory or enforcement developments,
the results of environmental studies or other factors could materially alter
this expectation at any time. In any event, such matters could have a material
impact on earnings for a particular fiscal quarter.
Resource Conservation and Recovery Act ("RCRA") RCRA regulates the
generation, treatment, storage, handling, transportation and disposal of
hazardous and solid waste and requires states to develop programs to insure the
safe disposal of solid waste in sanitary landfills. RCRA divides solid waste
into two groups, hazardous and nonhazardous. Wastes are generally classified
as hazardous wastes if they: (i) either (a) are specifically included on a list
of hazardous wastes or (b) exhibit certain characteristics; and (ii) are not
specifically designated as nonhazardous. Wastes classified as hazardous under
RCRA are subject to much stricter regulation than wastes classified as
nonhazardous. Among the wastes that are specifically designated as
nonhazardous waste are household waste and various types of special waste.
These wastes, which will be accepted at the Company's landfills, may contain
incidental hazardous substances.
On October 9, 1991, the EPA promulgated new regulations pursuant to
Subtitle D of RCRA. These new regulations include location standards, facility
design standards, operating criteria, closure and post-closure requirements,
financial assurance standards and groundwater monitoring requirements as well
as corrective action standards, all of which have not previously been uniformly
applied at landfills within the fifty states. In addition, the new regulations
require new landfills which received municipal solid waste for disposal after
April 9, 1994 to have one or more liners (typically high-density polyethylene
liners) to keep leachate out of groundwater and have extensive systems to
collect leachate for handling and treatment. In addition, by October 9, 1996
groundwater wells must also be installed at virtually all landfills to monitor
groundwater quality and the leachate collection system
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operation. The regulations also require (where threshold test levels are met)
that methane gas generated at landfills be controlled in a manner that will
protect human health and the environment. Because some states have already
adopted regulations at least as stringent as the new federal regulations, the
new Subtitle D regulations will cause greater changes in the landfill
regulation of certain states than of others.
The Company's Pecan Row Landfill was designed and constructed in
accordance with the requirements of Subtitle D.
The Federal Water Pollution Control Act ("Clean Water Act") The Clean
Water Act established rules regulating the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into waters of the
United States. For any discharge, the Clean Water Act would require the
Company to apply for and obtain a discharge permit, conduct sampling and
monitoring and, under certain circumstances, reduce the quantity of pollutants
in those discharges. Also, virtually all landfills are required to comply with
the new federal storm water regulations, which are designed to prevent possibly
contaminated storm water from flowing into surface waters.
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") CERCLA addresses problems created by the release of any hazardous
substance into the environment. CERCLA's primary mechanism for remedying such
problems is to impose strict joint and several liability for cleanup of
facilities among all past and current owners and operators of the site as well
as the generators and the transporters who arranged for disposal and
transportation of hazardous substances. The costs of CERCLA cleanup can be very
substantial. Liability under CERCLA does not depend upon the existence or
disposal of "hazardous waste" but can also be founded upon the existence of even
very small amounts of the more than 1,000 "hazardous substances" listed by the
EPA.
The Clean Air Act, as Amended ("Clean Air Act") The Clean Air Act
provides for federal, state and local regulation of the emission of air
pollutants and is applicable to landfills. The EPA has proposed new source
performance standards regulating overall air emissions from solid waste
landfills. The EPA may also issue regulations controlling the emissions of
particular air pollutants from solid waste landfills. Moreover, landfills
located in areas with air pollution problems may be subject to even more
extensive air pollution controls.
State and Local Regulations The States of Georgia and Florida, as
well as those states in which the Company may operate in the future, have laws
and regulations governing the generation, handling, transfer, transportation
and disposal of solid waste, water and air pollution and, in most cases, the
design, operation, maintenance, closure and post-closure maintenance of
landfills.
Georgia and Florida, like most other states, have tightened the
regulatory requirements on the permitting of new and expanded solid waste
facilities and on the continued operation of existing facilities. State
regulations are expected to become both more stringent and more uniform
nationwide as the dates for the implementation of additional requirements of
Subtitle D occur. The increased stringency of state regulations may be
expected to benefit the Company, as older landfills are forced to close,
thereby further reducing the available landfill capacity. However, the
increasing state and local scrutiny of landfills also makes it difficult for
the Company to comply with the continually evolving and expansive regulation
applicable to the disposal of solid waste.
Increasing public opposition to the siting and operation of landfills
has led many states, including Georgia and Florida, to enact legislation at the
state and/or local level which attempts to prohibit or greatly restrict the
interstate and intrastate movement of solid waste. In addition, after two
recent decisions by the Supreme Court which recognized that the Commerce Clause
of the United States Constitution imposes substantial limits upon the ability
of state and local governments to restrict
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the movement of solid waste across state lines, legislation has been introduced
in the United States Congress which attempts to restrict interstate waste
transportation. For the foreseeable future, the Company, like all others in
the solid waste industry, faces uncertainty regarding the circumstances under
which it will be able to accept out-of-state waste for disposal at its
facility. A significant portion of the solid waste volume disposed of at the
Company's Pecan Row Landfill is generated from outside the State of Georgia.
COMPETITION
GeoWaste encounters competition, primarily in the pricing and
rendering of services, from various sources in all phases of its operations.
In the solid waste collection phase, competition is encountered, for the most
part, from national, regional and local collection companies as well as from
municipalities and counties (which, through use of tax revenues, may be able to
provide such services at lower direct charges to the customer than can third
parties) and some large commercial and industrial companies which handle their
own waste collection. In the solid waste disposal operations, competition is
encountered primarily from municipalities, counties, local governmental
agencies, and other national or regional waste management companies.
INSURANCE
The Company currently maintains liability insurance coverage for
occurrences under various environmental impairment, primary casualty and excess
liability insurance policies.
The Company has secured Environmental Impairment Liability Insurance
(EIL) in amounts believed to be sufficient to offset an unforeseen
occurrences. The Company currently maintains $1,000,000 of loss coverage.
However, in the event an environmental impairment exceeds the loss coverage,
the Company's financial condition could be adversely affected.
In 1991, as required by law, the Company established a trust fund for
the benefit of the State of Georgia securing the closure and post-closure care
of the Pecan Row Landfill which, as of December 31, 1995, held a balance of
$685,535. In December 1995, the Company was successful in obtaining a surety
bond which can be used as an alternative to the trust account for the cost
associated with the closure and post-closure care of the Landfill. The surety
bonds requirement of depositing $300,000 as collateral was met in December 1995
and the trust fund will be terminated and the Company expects to receive the
trust fund balance during the second quarter of 1996.
Operating expenses include the estimated costs of closure and
post-closure care for the Pecan Row Landfill. Charges in each operating period
are based upon actual landfill capacity utilized.
From time to time, the Company may be required to post performance
bonds, financial assurances or bank letters of credit issued by surety
companies which act as a financial guarantee of the Company's performance.
EMPLOYEES
At March 15, 1996, GeoWaste and its subsidiaries employ a total of 37
persons in its operations. None of GeoWaste's employees are represented by
labor unions under collective bargaining agreements.
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ITEM 2. PROPERTIES
The Company leases office space at 24 Cathedral Place, St. Augustine,
Florida 32084. The principal fixed assets of the Company consist of land which
is owned, land improvements and heavy equipment at the Pecan Row Landfill, the
collection and transportation company in Valdosta, Georgia, and the transfer
station company in St. Augustine, Florida. The heavy equipment, which is owned
or leased, includes collection vehicles, refuse compactors, bulldozers,
scrapers, backhoes, transfer trailers, and miscellaneous other equipment used
in disposal operations. A portion of land owned by the Company is represented
by its interest in the Uintah Basin Limited Partnership. The Company's
principal real estate interest is its landfill in Valdosta, Georgia.
As of December 31, 1995, aggregate annual rental payments on real
estate leased by the Company and its subsidiaries was $45,285.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings against the Company.
The business in which the Company is engaged is intrinsically
connected with the protection of the environment and the potential discharge of
materials into the environment. In the ordinary course of conducting its
business activities, the Company may become involved in judicial and
administrative proceedings involving governmental authorities at the federal,
state and local level including, in certain instances, proceedings instituted
by citizens or local governmental authorities seeking to overturn governmental
action where governmental officials or agencies are named as defendants
together with the Company or one or more of its subsidiaries, or both.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded on the over-the-counter market.
The stock is quoted in NASDAQ (trading symbol GEOW). The quarterly price
ranges (as reported on NASDAQ) for 1995 and 1994 were:
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<CAPTION>
Low Bid High Bid
1995 Prices Prices
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First Quarter $0.44 $0.63
Second Quarter 0.50 0.69
Third Quarter 0.66 2.00
Fourth Quarter 0.75 1.31
1994
First Quarter $0.63 $0.63
Second Quarter 0.41 0.63
Third Quarter 0.41 0.56
Fourth Quarter 0.38 0.75
</TABLE>
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As of March 19, 1996 there were 4,949 stockholders of record owning
the outstanding common stock.
The Company did not pay any dividends in 1995, 1994 or 1993 nor does
the Company expect to pay any dividends in the foreseeable future. Pursuant to
the terms of a Purchase Agreement dated March 5, 1992, the Company is
prohibited, until March 1997 (with certain limited exceptions), from paying
dividends on its common stock if the aggregate amount of all such payments from
and after March 5, 1992 exceeds (i) 50% of the net after tax income of the
Company, plus (ii) 100% of any amounts received by the Company from the
issuance of its equity securities or certain subordinated debt securities, less
(iii) 100% of all losses.
Due in part to the high level of public awareness of the business in
which the Company is engaged, regulatory enforcement proceedings or other
potentially unfavorable developments involving the Company's operations or
facilities, including those in the ordinary course of business, may be expected
to engender publicity which could from time to time have an adverse impact upon
the market price for the Company's common stock.
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ITEM 6. SELECTED FINANCIAL DATA OF THE REGISTRANT
SELECTED FINANCIAL DATA OF THE REGISTRANT
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Data:
Total Revenue . . . . . . $ 8,932,528 $ 6,966,990 $ 4,805,905 $ 2,204,743
Net Income (Loss) . . . . 1,462,310 1,189,823 (217,730) (1,878,453)
Net Income (loss) per
common share . . . . . . .07 .06 (.01) (.10)
Balance Sheet Data:
Cash . . . . . . . . . . 3,985,459 1,633,389 1,209,259 898,414
Working capital . . . . . 3,958,852 1,335,302 1,244,403 816,480
Total assets . . . . . . 15,637,316 14,527,957 11,292,531 10,811,961
Long-term obligations . . 7,036,252 6,722,917 5,917,629 5,354,581
</TABLE>
SELECTED FINANCIAL DATA OF THE REGISTRANT'S GEORGIA AND FLORIDA OPERATIONS
The table below sets forth certain financial data of the Company's collection,
transfer and disposal operations in Georgia and Florida. These operating
results do not include the corporate administrative expenses of the parent,
which are associated with the operation of the Company as a public entity and
the pursuit of the Company's business strategy of acquiring additional disposal
and collection operations. The Company believes that the operating information
set forth below is an accurate representation of the operation results of the
Georgia and Florida operations on a stand- alone basis.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Disposal $5,380,333 $4,222,257 $2,842,926
Collection 2,743,446 2,542,868 1,962,979
Transfer 808,749 201,865 --
---------- ---------- ----------
Total 8,932,528 6,966,990 4,805,905
Operating Expenses (1) 2,169,150 1,854,410 1,259,288
---------- ---------- ----------
Gross Margin before
non cash items 6,763,378 5,112,580 3,546,617
Selling, General, and
Administrative (2) 590,733 496,377 450,349
---------- ---------- ----------
Operating Cash Flow from
disposal, collection and
transfer companies (3) $6,172,645 $4,616,203 $3,096,268
========== ========== ==========
</TABLE>
- ----------------------------
1. Excludes depreciation, amortization and non-cash closure costs of
$3,038,100, $2,321,941, and $1,570,314 in 1995, 1994 and 1993,
respectively.
2. Excludes amortization expenses of $71,192 in 1995 and $31,143 in 1994
and 1993. No corporate overhead has been allocated.
3. Capital expenditures were $1,820,033, $2,953,404, and $1,223,786 in
1995, 1994 and 1993, respectively, which resulted in free cash flow of
$4,352,612, $1,662,799, and $1,872,482 for the related periods.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS OF THE REGISTRANT
1995 Compared with 1994
Net revenues for the year ended December 31, 1995 consisted of
collection revenues of $2,743,000, disposal revenues of $5,380,000, and
transfer station revenues of $809,000. Collection revenues increased 8% and
disposal revenues increased 27% over 1994 results. The increase in collection
revenues are primarily the result of increased sales associated with commercial
and municipal services. Transfer station revenues for 1995 reflected a full
year of operation versus approximately three months in 1994. Higher disposal
revenues principally reflect the increased volumes at the Pecan Row Landfill.
Daily tonnage per day at the landfill increased 31% from 680 in 1994 to 889 in
1995. All intercompany activity has been eliminated.
Operating expenses related to the collection, disposal, and transfer
station activities for 1995, consisted of collection expenses of $1,213,000,
disposal expenses of $3,660,000, and transfer station expenses of $334,000.
Costs and expenses for collection operations increased 14% over 1994 and there
was a 21% increase in disposal operating costs. These increases were
principally related to higher operating levels in 1995.
Selling, general, and administrative expenses for collection,
disposal, and transfer station activities (excluding corporate administrative
expenses) for 1995, were $270,000, $316,000 and $5,000 respectively. Corporate
administrative expenses were $862,000 for the year ended December 31, 1995.
Net income for the year ended December 31, 1995 was $1,462,310
compared to $1,190,000 in 1994. This improvement was principally due to an
increase in average daily volumes at the Pecan Row Landfill. The Company's
working capital was $3,959,000 in 1995 compared to over $1,335,000 in 1994.
The increase in working capital resulted from the Company's improved operating
performance.
1994 Compared with 1993
Net revenues for the year ended December 31, 1994 consisted of
collection revenues of $2,543,000, disposal revenues of $4,222,000, and the
three months of transfer station revenues of $202,000. Collection revenues
increased 30% and disposal revenues increased 49% over 1993 results. Transfer
station revenues were the result of initiation of a new ten year contract with
the City of St. Augustine in October of 1994. The increase in collection
revenues are primarily the result of increased sales associated with commercial
and municipal services. Higher disposal revenues principally reflect the
increased volumes at the Pecan Row Landfill. Daily tonnage per day at the
landfill increased 58% from 431 in 1993 to 680 in 1994. All intercompany
activity has been eliminated.
Operating expenses related to the collection, disposal, and transfer
station activities for 1994, consisted of collection expenses of $1,066,000,
disposal expenses of $3,023,000, and three months of transfer station expenses
of $87,000. Costs and expenses for collection operations increased 36%
11
<PAGE> 12
over 1993 and there was a 48% increase in disposal operating costs. These
increases were principally related to higher operating levels in 1994.
Selling, general, and administrative expenses for collection,
disposal, and transfer station activities (excluding corporate administrative
expenses) for 1994, were $280,000, $229,000 and $1,400 respectively. Corporate
administrative expenses were $1,028,000 for the year ended December 31, 1994.
A portion of the Corporate overhead expense was a non-recurring expense related
to the relocation of the Corporate office from Boston, Massachusetts to St.
Augustine, Florida. With this relocation, the Corporate office is more
centrally located with respect to the Company's operating activities and its
existing and new markets.
Net income for the year ended December 31, 1994 was $1,190,000
compared to $83,000 (excluding the Danella write-off associated with a
terminated acquisition-discussed below) in 1993. This improvement was
principally due to an increase in average daily volumes at the Pecan Row
Landfill. Higher volumes included special waste as well as municipal solid
waste. The Company's working capital was $1,335,000 in 1994 compared to over
$1,244,000 in 1993. The increase in working capital resulted primarily from
the Company's improved operating performance which was partially off-set by the
payment of construction costs incurred in connection with the 9.1 acre
expansion of Pecan Row Landfill.
1993 Compared with 1992
Net revenues for the year ended December 31, 1993 consisted of
collection revenues of $1,963,000 and disposal revenues of $2,843,000.
Collection revenues increased 22% and disposal revenues increased 380% over
1992 results. The increases in collection revenues were primarily attributed
to higher levels of commercial and municipal services. Higher disposal
revenues principally reflected the increased volumes at the Pecan Row Landfill
which included a non-recurring contract for the disposal of contaminated soils
with The Jefferson-Smurfit Corporation located in Northern Florida. All
intercompany activity has been eliminated.
Operating expenses related to the collection and disposal activities
for 1993, consisted of collection expenses of $784,000 and disposal expenses of
$2,045,000. Costs and expenses for collection operations increased 17% over
1992 and there was a 47% increase in disposal operating costs, including
disposal cell amortization after the Company re-estimated Pecan Row's disposal
capacity and total construction costs to complete the disposal site and non
cash closure costs. These increases were principally related to higher
operating levels in 1993.
Selling, general and administrative expenses for collection and
disposal activities (excluding corporate overhead) for 1993, were $271,000 and
$211,000, respectively. Corporate administrative expense was $1,090,000 for
the year ended December 31, 1993. A significant amount of the corporate
overhead expense was associated with the Company's effort to identify
acquisition candidates. In addition, the Company expensed $301,000 related to
the terminated Danella Environmental Technologies, Inc. ("Danella")
transaction, a solid waste collection company located in Wilkes-Barre,
Pennsylvania. These expenses were primarily related to the value of GeoWaste
common stock issued to the shareholders of Danella at zero cost, as well as
legal, environmental and investment banking fees.
Net income for the year ended December 31, 1993, excluding the Danella
write off, was $83,000 as compared to a loss of $1,878,000 during 1992. In
addition, the Company's working capital strengthened by $428,000 in 1993 to
over $1,244,000. These improvements were principally due to a 200% rise in the
average daily volumes and the re-estimate of cell amortization at the Pecan
12
<PAGE> 13
Row Landfill during 1993. Higher volumes included special waste as well as
municipal solid waste.
LIQUIDITY AND CAPITAL RESOURCES OF THE REGISTRANT
The Company is in a service industry and has neither significant
inventory nor seasonal variations in receivables. At December 31, 1995, the
Company had positive working capital of $3,959,000 as compared with $1,335,000
at December 31, 1994. The increase in working capital resulted primarily from
the Company's improved operating performance which was partially off-set by the
payment of construction costs incurred in connection with the expansion of
Pecan Row Landfill.
The Company's operating performance was sufficient to support
corporate overhead and other expenses during 1995. Management believes that
current working capital and internally generated funds will be sufficient to
meet the Company's working capital requirements for fiscal year 1996.
ONGOING CAPITAL REQUIREMENTS AND EXPANSION
Historically, the Company has relied primarily on the private
placement of debt and equity securities and cash generated from operating
activities in order to provide it with the cash required for capital
expenditures, acquisitions, and operating activities. Set forth below is a
discussion of the Company's primary ongoing cash requirements and the means by
which it expects to meet these requirements in the future.
OPERATING ACTIVITIES
The Company anticipates that the cash generated from operating
activities will be sufficient to provide the cash required for these
activities.
CAPITAL EXPENDITURES
The Company expects to make capital expenditures on an ongoing basis
for improvements to, and expansion of, its landfill and for equipment
purchases. The Company estimates that the capital expenditures required for
its existing operations will amount to $2,601,000 almost half of which will be
used for the construction of a new 5 acre disposal cell at the Pecan Row
Landfill in 1996. The Company expects that it will fund such estimated capital
expenditures from existing cash, cash generated from operations, equipment
lease financing, and other financing.
ACQUISITIONS
The Company's business strategy includes the acquisition, on
financially attractive terms, of additional solid waste management companies as
well as related sanitation and infrastructure maintenance businesses. Such
acquisitions may be accomplished through the issuance of the Company's common
stock, cash on hand, or may require cash in excess of the Company's current
cash available. Although GeoWaste's improved operating results and financial
performance are expected to improve its access to any financing which may be
necessary to acquire such businesses, there can be no assurance that such
additional financing can be obtained on terms acceptable to the Company.
The development and permitting of new disposal facilities requires
significant capital expenditures over an extended period. Any growth of the
Company through the permitting of new disposal facilities or the lateral
expansion of its existing disposal facility would require substantial capital
expenditures. The Company intends to pursue the further expansion of the Pecan
Row Landfill
13
<PAGE> 14
through the permitting of a new facility near or adjacent to the existing site.
On March 21, 1996, the Company completed the acquisition of North
Florida Sweeping, Inc. a roll-off collection and street sweeping company based
in Jacksonville, Florida with annual revenues of $1,750,000. The purchase
price of approximately $1,300,000 was paid in a combination of the Company's
common stock, assumption of debt, cash and warrants.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For information relating to this Item see pages herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
14
<PAGE> 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets for the name, age and position held by each
director and officer of the Company as of December 31, 1995.
<TABLE>
<CAPTION>
NAME AND AGE OFFICER POSITION
- ------------ ----------------
<S> <C>
Amy C. MacF. Burbott (45) Chairman of the Board
Kevin R. Kohn (45) President, Chief Executive
Officer, and Director
Raymond F. Chase (40) Vice President, Chief Financial
Officer, Treasurer and Secretary
Director
Robert J. Cresci (52)
Director
Steven M. Engel (44)
Director
Harve A. Ferrill (62)
Director
Frederick J. Iseman (43)
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS
The following is a summary of the business experience of the officers
and directors.
Amy C. MacF. Burbott. Ms. Burbott joined GeoWaste as President and
Chief Executive Officer and has served as Director since July 1991. Upon the
termination of her employment agreement, Ms. Burbott resigned her post as
President and CEO and was named Chairman of the Board February 1, 1995. From
January 1991 until July 1991 Ms. Burbott was engaged in the development of
various solid waste projects through a corporation she controlled. From
November 1988 until January 1991, Ms. Burbott served as Eastern Region Vice
President and General Counsel of Waste Management of North America, Inc., an
international waste services company. Ms. Burbott was associated in various
positions with Waste Management since 1984 when it acquired SCA Services, Inc.,
a national waste services company.
Kevin R. Kohn. Mr. Kohn joined the Company in 1991 and was named Vice
President/Operations in May of 1992. He was named a Director in December, 1994
and President and Chief Executive Officer on February 1, 1995. Prior to
joining the Company Mr. Kohn was the General Manager of Prince George's County
(Maryland) Landfill. From 1988 to 1990 Mr. Kohn was the manager of Business
Development for Waste Management of North America, Inc.
Raymond F. Chase. Mr. Chase joined the Company as Controller and
Treasurer in July 1991. He was named a Vice President of the Company in April,
1994 and was named Secretary and Chief Financial Officer on February 1, 1995.
From January 1990 through June, 1991 he served as the Controller of a national
solid waste equipment leasing company, Olympic Compactor Rentals. From
15
<PAGE> 16
1987 to 1990 he was the Controller for Waste Management of North America,
Inc.'s collection and transportation subsidiary based in Southeastern
Massachusetts.
Robert J. Cresci. Mr. Cresci is a principal in Peck Management, an
investment advisory firm. Mr. Cresci was elected to the Board of Directors in
March of 1992. Mr. Cresci has served as a managing director of Pecks
Management Partners Ltd., a registered investment adviser, since 1990. From
1985 until 1990, Mr. Cresci served as Vice President of Alliance Capital
Management, LP, also a registered investment advisor. Mr. Cresci has served as
a director of Serv-Tech, Inc. which provides maintenance services to the
refining, gas processing and petrochemical industries since 1983, EIS
International, Inc., a manufacturer of outbound telephone systems, since 1991,
Vestro Foods Inc., a specialty food business, since 1989, Olympic Financial
Ltd., an automobile financing firm, since 1992, Garnet Resources Corporation,
an oil company, since 1993, Hitox, Inc., a specialty chemical company, since
1992, Sepracor Inc., a biotechnology company engaged in the separations and
pharmaceutical industries, since 1990 HarCor Energy, Inc., an oil and gas
company, since 1994, Meris Labs, Inc., a provider of clinical laboratory
services, since 1994, and several privately owned companies.
Steven M. Engel. Mr. Engel was elected to the Company's Board of
Directors in October of 1992 and has been the President of Hambro Resource
Development, Incorporated since 1991. Prior to 1991 Mr. Engel served as the
President of John Hancock Resource Development from 1989 and was Managing
Director in the Corporate Finance Department and Municipal Finance Department
at Drexel Burham Lambert, (an investment banking firm), since 1987.
Harve A. Ferrill. Mr. Ferrill served as Chairman of the Board of the
Company from August, 1991 until February 1, 1995. Mr. Ferrill resigned his
position as Chairman on February 1, 1995 but remains a Director of the Company.
Mr. Ferrill has served as a director of Utah Shale Land & Minerals Corporation
since 1980. Mr. Ferrill has served since November 1992 as Chairman and Chief
Executive Officer of Advance Ross Corporation, the world's leading value-added
tax refund service; he served as Advance Ross' President from November 1990
through June 1993. He has been a director of Gaylord Container Corporation, a
paper and container manufacturer, since 1992. Mr. Ferrill has been President
of Ferrill-Plauche Co., Inc., a private investment company, since 1982.
Frederick J. Iseman. Mr. Iseman was appointed to the Company's Board
of Directors in August 1991. From October 1990, Mr. Iseman was Managing
Partner of Hambro Iseman Capital Partners, an affiliate of the Hambros Bank.
From April 1988 through October of 1990 Mr. Iseman was a principal of Hambro
International Equity Partners. He is a member of the board of directors of
Hambro America, Incorporated. Mr. Iseman is President of Caxton-Iseman
Capital, Inc., an investment firm. He is also a director of: Magnavox
Electronic Systems Corporation Holdings, Inc.; Franklin Hotels Ltd.; and
Electrical Distribution Acquisition Company.
The terms of office of each director expire upon the election and
qualification of successor directors at the next Annual Meeting of the
Company's stockholders.
COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10%
of the Company's Common Stock, to file initial reports of ownership and reports
of change in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16 (a) forms they file. To the Company's knowledge, based solely on review of
copies of such reports furnished to the Company, all of these filing
requirements were satisfied.
16
<PAGE> 17
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth the aggregate remuneration paid or
accrued during the years 1995, 1994, and 1993 for the chief executive officer
and other executive officers of the Company whose total annual salary and bonus
exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Other Annual Securities Underlying
Name and Principal Position Year Salary Bonus Compensation Options (1)
- --------------------------- ---- ------ ----- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Amy C. MacF. Burbott 1995 $ 10,833 $ 0 $ 121,129 (4) 0
Chairman of the Board 1994 $130,000 $ 0 $ 22,083 (2) 0
1993 $114,167 $ 0 $ 0 0
Kevin R. Kohn 1995 $ 90,102 $ 12,000 $ 0 0
President and Chief 1994 $ 79,894 $ 0 $ 45,439 (3) 0
Executive Officer 1993 $ 77,652 $ 0 $ 0 0
</TABLE>
- -----------------------
(1) Please see the second paragraph of "Employment Contracts, Termination
of Employment and Change of Control" below for a description of Ms. Burbott's
options to acquire the Company's Common Stock.
(2) Compensation earned in 1992 and 1993 but paid in 1994.
(3) One-time relocation expense.
(4) Consulting Agreement
17
<PAGE> 18
COMPENSATION OF DIRECTORS
None of the Directors are compensated for their services as such.
With the exception of Messrs Engel, Iseman and Cresci, each of the Directors
holds options to acquire shares of the Company's Common Stock. See Item 12
"Security Ownership of Certain Beneficial Owners and Management" below.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
The Company entered into an employment agreement dated as of August
1, 1991, with Amy C. MacF. Burbott, ("Burbott Employment Agreement"), pursuant
to which Ms. Burbott served as President and Chief Executive Officer of the
Company. Ms. Burbott's agreement expired under its own terms on January 31,
1995 at which time she resigned as President and Chief Executive Officer.
During the term of the Burbott Employment Agreement, Ms. Burbott was paid a
base salary ranging from $95,000 to $130,000 per annum; Ms. Burbott's base
salary for the period ending January 31, 1995 was $10,833 per month.
Ms. Burbott was granted, as of June 28, 1991, an option to acquire
1,000,000 shares of the Company's Common Stock at an exercise price of $.50 per
share if certain performance targets were met on or before August 15, 1994.
("Burbott Option"). These targets were not met and the Burbott Option is
limited and immediately exercisable to the extent of 400,000 shares. At Ms.
Burbott's request, if she exercises any portion of the Burbott Option, the
Company will make an interest-free loan to Ms. Burbott in an amount equal to
the exercise price of the portion of the Burbott Option so exercised.
Effective February 1, 1995, Ms. Burbott became Chairman of the Board
of the Company. On September 1, 1995, in exchange for her continued service in
that capacity, the Company agreed to pay Ms. Burbott a monthly consulting fee
of $10,833 and reimburse medical insurance premium coverage and reasonable
expenses. Ms. Burbott's service as Chairman may be terminated by either the
Company or Ms. Burbott upon thirty (30) days notice and the payment of six (6)
months consulting fees to Ms. Burbott.
The Burbott Employment Agreement contains certain non-competition and
non-solicitation agreements on the part of Ms. Burbott upon the termination of
her employment with the Company. The non-competition covenant requires the
Company to pay Ms. Burbott for each month during the restricted period an
amount equal to 100% of her monthly salary in effect on January 31, 1995. The
Burbott Employment Agreement provides compensation to Ms. Burbott in an amount
equal to the product of (i) $.50 and (ii) the number of shares purchased by Ms.
Burbott pursuant to the Burbott Option. The Company is also required to
reimburse Ms. Burbott for any federal excise taxes incurred in connection with
such payments.
The Company entered into severance agreements (Severance Agreements)
dated December 21, 1995 with Kevin R. Kohn and Raymond F. Chase. The
Severance Agreements provide for payment of one-half of Mr. Kohn and Mr.
Chase's annual base salary at the time of termination if termination is without
cause. In addition, for a period of six months after termination without cause
the Company agrees to pay the premium, capped at the present cost, for any
continuation of health insurance coverage required to be offered to Mr. Kohn
and Mr. Chase by the Company under federal law.
The Severance Agreements also provide for certain non-competition and
non-solicitation covenants by Mr. Kohn and Mr. Chase.
18
<PAGE> 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN OWNERS
The only persons who to the knowledge of the Company on December 31,
1995 owned beneficially more than 5% of the outstanding voting securities of
the Company's Common Stock were as follows:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION> TOTAL
SHARES PERCENT OF
NAME AND ADDRESS OWNED SOLE SHARED CLASS
- ---------------- ------ ---- ------ ----------
<S> <C> <C> <C> <C>
Allen Holding Inc.(1)
711 Fifth Avenue
New York, NY 10022 . . . . . . . 7,510,000 7,510,000 31.0
Robert J. Cresci(2)
Pecks Management
1 Rockefeller Plaza
New York, NY 10020 . . . . . . . 2,784,475 10,000 2,774,475 11.5
Emvest & Co.
c/o Morrissey & Hawkins
One International Place
Boston, MA 02110 . . . . . . . . 2,000,000 2,000,000 8.3
</TABLE>
19
<PAGE> 20
(1) The shares of Common Stock owned by Allen Holding Inc. include 3,573,200
shares issued to Allen Value Partners L.P., 1,510,000 shares issued to Allen &
Company Incorporated and 426,800 shares issued to Allen Value Limited
Incorporated. Allen Holding Inc. may be deemed to beneficially own the shares
of Common Stock held by Allen Value Partners L.P. and Allen Value Limited.
However, Allen Holding Inc. disclaims beneficial ownership except to the extent
represented by Allen Holding Inc.'s equity interest and profit participation in
such entities. Also includes Allen Warrants to purchase 2,000,000 shares of
Common Stock held by Allen & Company Incorporated which are immediately
exercisable.
(2) Mr. Cresci owns 10,000 shares of Common Stock directly. Includes
Convertible Subordinated Debentures purchased by three clients of Pecks
Management Ltd. (of which Mr. Cresci is a principal) which are currently
convertible into 2,774,475 shares of Common Stock as to which Pecks Management
Ltd. has sole voting power but disclaims any beneficial interest.
(b) SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
TOTAL
SHARES PERCENT OF
NAME OF BENEFICIAL OWNER OWNED SOLE SHARED CLASS
- ------------------------ ------ ---- ------ ----------
<S> <C> <C> <C> <C>
Amy C. MacF. Burbott(1) 400,000 400,000 1.7
Kevin R. Kohn(2) 100,971 100,971 0.4
Raymond F. Chase(3) 104,920 104,920 0.4
Robert J. Cresci(4) 2,784,475 10,000 2,774,475 11.5
Steven M. Engel 40,000 40,000 0.2
Harve A. Ferrill(5) 1,196,856 118,080 1,078,776 4.9
Frederick J. Iseman(6) 1,163,766 1,163,766 4.8
Directors and Officers,
as a group(7) 5,790,988 1,937,737 3,853,251 23.9
</TABLE>
_____________________
(1) Ms. Burbott does not own any shares of Common Stock outright.
Includes Management Options to purchase 400,000 shares of Common Stock for $.50
per share which are immediately exercisable.
20
<PAGE> 21
(2) Mr. Kohn owns 621 shares of Common Stock outright and Management
Options to purchase 93,750 shares for $.50 per share and 6,600 shares for $1.19
per share which are immediately exercisable.
(3) Mr. Chase owns 4,570 shares of Common Stock outright and Management
Options to purchase 93,750 shares for $.50 per share and 6,600 shares for $1.19
per share which are immediately exercisable.
(4) See footnote 2, Item 12(a) above.
(5) Includes 26,080 shares of Common Stock beneficially owned by Mr.
Ferrill, 18,080 shares of which he has sole voting and investment power and
8,000 shares of which he shares voting and investment power. Also includes
1,070,776 shares of Common Stock owned by Advance Ross (where Mr. Ferrill
serves as Chief Executive Officer), of which Mr. Ferrill disclaims any
beneficial interest. Also includes Management options to acquire 100,000
shares of Common Stock for $.50 per share which are immediately exercisable.
(6) Represents the shares owned by Savannah Holdings, which is wholly
owned by Mr. Iseman.
(7) Includes options issued to Ms. Burbott and Messrs. Ferrill, Kohn,
and Chase to purchase an aggregate of 687,500 shares of Common Stock at $.50
per share and 13,200 shares of common stock at $1.19 per share. Also includes
1,070,776 shares issued to Advance Ross, of which Mr. Ferrill is Chairman and
Chief Executive Officer but over which Mr. Ferrill disclaims any beneficial
interest and the Convertible Subordinated Debentures purchased by three clients
of Pecks Management Ltd. which are currently convertible into 2,774,475 shares
as to which Pecks Management Ltd. has sole voting power but disclaims any
beneficial interest.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 2, 1991, the Company issued to Allen & Company Incorporated
warrants to acquire 2,000,000 shares of the Company's Common Stock at a price
of $.55 per share, which warrants must be exercised on or prior to July 31,
1996. The warrants were issued as partial consideration to Allen & Company
Incorporated for certain investment banking and financial advisory services and
capital raising services provided to the Company in connection with the Merger
and the simultaneous private placement of 11,000,000 shares of the Company's
Common Stock. The warrants were also issued pursuant to a letter agreement
dated August 2, 1991 by which Allen & Company Incorporated was retained by the
Company to provide investment banking and financial advisory services for a
three-year period following the date of the letter agreement. Allen & Company
Incorporated will receive separate transaction fees for future services
rendered pursuant to the letter agreement.
21
<PAGE> 22
PART IV
ITEM 14. FINANCIAL STATEMENT, EXHIBITS AND REPORTS ON FORM 8K
(a) Financial Statements
(i) Report of Independent Accountants.
(ii) Consolidated Balance Sheets as of December 31, 1995 and 1994.
(iii) Consolidated Statements of Operations for the years ended
December 31, 1995, 1994 and 1993.
(iv) Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993.
(v) Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993.
(vi) Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
None.
(c) Exhibits. Each Exhibit is listed according to the number assigned to it
in the Exhibit Table of Item 601 of Regulation S-K.
22
<PAGE> 23
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Agreement and Plan of Reorganization, dated August 2, 1991, by
and between GeoWaste Incorporated, Utah Acquisition
Subsidiary, Inc., Equivest Waste Solutions, Inc.,
Frederick J. Iseman and James Swistock (Incorporated by
reference from Exhibit 2(A) to the Current Report on Form 8-K
filed August 19, 1991 (File No. 0-9278)).
3.1 Certificate of Incorporation of GeoWaste Incorporated, as
amended and restated (Incorporated by reference from Exhibit A
to the Proxy filed November 25, 1991) (File No. 0-9278)).
3.2 Certificate of Designation of Preferred Stock of GeoWaste
Incorporated, filed November 25, 1991. (File No. 0-9278).
3.3 Bylaws of GeoWaste Incorporated, as amended (Incorporated by
reference from Exhibit 3(b) to the Annual Report on Form 10-K
for the year ended December 31, 1987 (File No. 0-9278)).
3.4 Amendment to Amended and Restated Certificate of Incorporation
of GeoWaste Incorporated (Incorporated by reference
from Exhibit 3.4 to the Annual Report on Form 10-K for the
year ended December 31, 1992 (File No. 0-9278)).
4.1 Purchase Agreement, dated March 5, 1992, between GeoWaste
Incorporated, the Delaware State Employees' Retirement Fund
and the Trust for Defined Benefit Plan of ICI American
Holdings Inc. (Incorporated by reference from Exhibit 4.1 to
the Current Report on Form 8-K filed March 13, 1992 (File No.
0-9278)).
4.2 Form of Debenture (Incorporated by reference from Exhibit 4.2
to the Current Report on Form 8-K filed March 13, 1992 (File
No. 0-9278)).
4.3 Registration Rights Agreement, dated March 5, 1992, by and
between GeoWaste Incorporated, the Delaware State Employees'
Retirement Fund and the Trust for Defined Benefit Plan of ICI
American Holdings Inc. (Incorporated by reference from Exhibit
4.3 to the Current Report on Form 8-K filed March 13, 1992
(File No. 0-9278)).
4.4 Registration Rights Agreement, dated August 2, 1991, by and
between GeoWaste Incorporated and each of the entities listed
on Exhibit A thereto (Incorporated by reference from Exhibit
4(D) to the Current Report on Form 8-K filed August 19, 1991
(File No. 0-9278)).
4.5 First Escrow Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated, Frederick J. Iseman, James Swistock,
Matthew Fulton, Brian Russell, James R. Jones, Paul Thomas
Cohen, William vanden Heuvel, Balis & Zohn, Inc. and IBJ
Schroder Bank & Trust Company (Incorporated by reference from
Exhibit 4(B) to the Current Report on Form 8-K filed August
19, 1991 (File No. 0-9278)).
23
<PAGE> 24
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.6 Second Escrow Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated, the parties listed on Schedule A
thereto, Kurt Wilkening and IBJ Schroder Bank & Trust Company
(Incorporated by reference from Exhibit 4(C) to the Current
Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.7 Equivest First Convertible Debt Exchange Agreement, dated
August 2, 1991, by and between GeoWaste Incorporated the
parties listed on Schedule A thereto (Incorporated by
reference from Exhibit 2(B) to the Current Report on Form 8-K
filed August 19, 1991 (File No. 0-9278)).
4.8 Equivest Second Convertible Debt Exchange Agreement, dated
August 2, 1991, by and between GeoWaste Incorporated the
parties listed on Schedule A thereto (Incorporated by
reference from Exhibit 2(C) to the Current Report on Form 8-K
filed August 19, 1991 (File No. 0-9278)).
4.9 Stockholders' Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated, Advance Ross Corporation,
Allen & Company Incorporated, Frederick J.
Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening, their
persons or entities listed on Schedule A thereto and the
persons or entities listed on Schedule B thereto
(Incorporated by reference from Exhibit 4(A) to the Current
Report on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.10 Voting Agreement, dated March 5 ,1992, by and between GeoWaste
Incorporated, the Delaware State Employees' Retirement Fund
and the Trust for Defined Benefit Plan of ICI American
Holdings Inc., Frederick J. Iseman, Gian Caterine, Amy C.
MacF. Burbott, Harve Ferrill, James Swistock, Advance Ross
Corporation and Allen & Company Incorporated (Incorporated by
reference from Exhibit 4.4 to the Current Report on Form 8-K
filed March 13, 1992 (File No. 0-9278)).
10.1 Warrant Purchase Agreement by and between GeoWaste
Incorporated and Allen & Company Incorporated and Amy C.
MacF. Burbott (Incorporated by reference from Exhibit 10.1 to
the Annual Report on Form 10-K for the year ended December 31,
1991 (File No. 0-9278)).
10.2 Form of Employment Agreement, dated as of August 1, 1991, by
and between GeoWaste Incorporated and Amy C. MacF. Burbott
(Incorporated by reference from Exhibit 10.1 to the Quarterly
Report on Form 10-Q for the period ended September 30, 1992
(File No. 0-9278)).
10.3 Form of Employment Agreement dated as of June 1, 1992, by and
between GeoWaste Incorporated and Richard J. Sherman
(Incorporated by reference from Exhibit 10.2 to the Quarterly
Report on Form 10-Q for the period ended September 20, 1992
(File No. 0-9278)).
10.4 Form of Employment Agreement, dated as of August 1, 1991, by
and between GeoWaste Incorporated and James W. Swistock
(Incorporated by reference from Exhibit 10.4 to the Annual
Report on Form 10-K for the year ended December 31, 1992
(File No. 0-9278)).
24
<PAGE> 25
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.5 Form of Severance Agreement, dated as of December 21, 1995, by
and between GeoWaste Incorporated and Kevin R. Kohn.
10.6 Form of Severance Agreement, dated as of December 21, 1995, by
and between GeoWaste Incorporated and Raymond F. Chase.
10.7 Form of Consulting Agreement dated, August 31, 1995, by and
between GeoWaste Incorporated and Amy C. MacF. Burbott.
10.8 Form of Amendment, dated as of January 9, 1995, to Form of
Employment Agreement, dated as of August 1, 1991, by and
between GeoWaste Incorporated and Amy C. MacF. Burbott.
11.1 Computation of Net Earnings Per Share for the year ended
December 31, 1995
11.2 Computation of Net Earnings Per Share for the year ended
December 31, 1994
11.3 Computation of Net Loss Per Share for the year ended December
31, 1993
21 Subsidiaries of the Registrant.
27 Financial Data Schedule (for SEC use only)
(d) Financial Statement Schedule
<TABLE>
<CAPTION>
Description Page
----------- ----
<S> <C> <C>
II. Valuation and Qualifying Accounts 41
</TABLE>
All other schedules have been omitted since the information is not
applicable, is not required or is included in the Consolidated Financial
Statements listed under section (a) of this Item 14.
25
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of GeoWaste Incorporated:
We have audited the consolidated financial statements and the
financial statement schedule of GeoWaste Incorporated and Subsidiaries listed
in Items 14(a) of this Form 10-K. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
GeoWaste Incorporated and Subsidiaries as of December 31, 1995 and 1994 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Jacksonville, Florida
March 29, 1996
26
<PAGE> 27
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,985,459 $ 1,633,398
Accounts receivable, net of allowance of
$17,897 in 1995 and $16,356 in 1994 871,968 1,013,228
Prepaid expenses 182,132 119,894
Deferred tax asset 134,000 525,000
----------- -----------
Total current assets 5,173,559 3,291,520
----------- -----------
Property and equipment:
Land, primarily disposal site 11,337,667 10,663,213
Building and improvements 150,793 149,372
Vehicles and equipment 3,105,178 2,551,785
----------- -----------
14,593,638 13,364,370
Less - accumulated depreciation 6,224,889 3,914,197
----------- -----------
Net property and equipment 8,368,749 9,450,173
----------- -----------
Other assets:
Cost in excess of net assets of acquired
businesses, net of accumulated amortization of
$177,545 in 1995 and $106,365 in 1994 1,067,701 1,138,881
Investments held in escrow 985,535 588,971
Other 41,772 58,412
----------- -----------
Total other assets 2,095,008 1,786,264
----------- -----------
Total assets $15,637,316 $14,527,957
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE> 28
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 151,019 $ 167,971
Accounts payable 137,308 849,104
Accrued payroll 79,235 80,700
Accrued fees 143,582 154,459
Accrued income taxes 149,318 90,000
Accrued other 113,045 49,772
Deferred revenue 441,200 564,212
---------- -----------
Total current liabilities 1,214,707 1,956,218
Long-term debt, less current maturities 4,094,450 4,080,117
Accrued Royalties 1,207,591 1,459,078
Closure and post closure obligations 1,511,647 891,175
Deferred tax liability 161,000 229,000
Minority Interest 61,564 63,547
----------- -----------
Total liabilities 8,250,959 8,679,135
----------- -----------
Commitments and contingencies (Notes 2, 9 and 13)
Stockholders' Equity:
Preferred stock, authorized 5,000,000 shares,
$.01 par value; none issued or outstanding - -
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and outstanding
18,662,605 shares in 1995 and 1994 1,866,260 1,866,260
Additional paid-in capital 6,191,110 6,191,110
Net unrealized gains (losses) on investments 67,046 (8,179
Deficit (738,059) (2,200,369)
----------- -----------
Total stockholders' equity 7,386,357 5,848,822
----------- -----------
Total liabilities and stockholders' equity $15,637,316 $14,527,957
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE> 29
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net revenues $ 8,932,528 $ 6,966,990 $ 4,805,905
Costs and expenses:
Operating 5,207,250 4,176,351 2,829,602
Selling, general and administrative 1,530,377 1,538,485 1,571,739
Write off of acquisition costs - - 300,543
----------- ----------- -------------
2,194,901 1,252,154 104,021
Income from operations
Other income (expense):
Other income, primarily interest 182,747 112,720 19,723
Interest expense (368,338) (381,051) (341,474)
----------- ---------- -------------
Income (loss) from operations
before income taxes 2,009,310 983,823 (217,730)
Income tax (provision) benefit (547,000) 206,000 -0-
----------- ----------- -------------
Net income (loss) $ 1,462,310 $ 1,189,823 $ (217,730)
=========== =========== =============
Earnings (loss) per common and
common equivalent share $ .07 $ .06 $ (.01)
=========== =========== =============
Average number of common and common
equivalent shares outstanding 19,526,415 18,851,170 18,637,626
=========== =========== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE> 30
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
ADDITIONAL NET UNREALIZED TOTAL
NUMBER OF $.01 PAR PAID IN GAINS (LOSSES) STOCKHOLDERS'
SHARES VALUE CAPITAL ON INVESTMENTS DEFICIT EQUITY
------ ----- ------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1993 22,529,641 $2,252,964 $5,631,606 $ - $(3,172,462) $ 4,712,108
Shares issued in canceled
acquisition 120,000 12,000 160,800 - - 172,800
Net loss - - - - (217,730) (217,730)
---------- ---------- ---------- -------------- ----------- -----------
Balance at December 31,
1993 22,649,641 2,264,964 5,792,406 - (3,390,192) 4,667,178
Shares returned from
escrow (3,987,036) (398,704) 398,704 - - -
Change in net
unrealized losses - - - (8,179) - (8,179)
Net income - - - - 1,189,823 1,189,823
---------- ---------- ---------- -------------- ----------- -----------
Balance at December 31,
1994 18,662,605 1,866,260 6,191,110 (8,179) (2,200,369) 5,848,822
Change in net
unrealized gains - - - 75,225 - 75,225
Net income - - - - 1,462,310 1,462,310
---------- ---------- ---------- -------------- ----------- -----------
Balance at December 31,
1995 18,662,605 $1,866,260 $6,191,110 $ 67,046 $ (738,059) $ 7,386,357
========== ========== ========== ============== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30
<PAGE> 31
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 1,462,310 $ 1,189,823 $ (217,730)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 2,505,103 1,893,602 1,315,907
Deferred income taxes 323,000 (296,000) -
Non cash interest expense 80,823 306,821 282,070
Provision for closure and post closure costs 620,472 476,593 303,398
Gain on sale of equipment (7,092) (2,246) -
Write off of acquisition costs - - 48,184
Changes in assets and liabilities
Accounts receivable 141,261 (346,932) (263,455)
Prepaid expenses (62,238) (43,323) 1,181
Accounts payable and accrued liabilities (35,711) 357,388 11,556
Deferred revenue (123,012) 357,752 108,889
----------- ----------- -----------
Net cash provided by operating activities 4,904,916 3,893,478 1,790,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,820,033) (2,953,404) (1,223,786)
Proceeds from the sale of equipment 19,670 90,484 -
Purchase of investments placed in escrow and
other (313,445) (208,180) (77,592)
----------- ----------- -----------
Net cash used in investing activities (2,113,808) (3,071,100) (1,301,378)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt - - 125,000
Payment of debt, capital lease obligations,
and accrued royalties (439,047) (398,239) (302,777)
----------- ----------- -----------
Net cash used in financing activities (439,047) (398,239) (177,777)
----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 2,352,061 424,139 310,845
Cash and cash equivalents, beginning of year 1,633,398 1,209,259 898,414
----------- ----------- -----------
Cash and cash equivalents, end of year $ 3,985,459 $ 1,633,398 $ 1,209,259
=========== =========== ===========
</TABLE>
See note 3 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated
financial statements.
31
<PAGE> 32
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
GeoWaste Incorporated (the "Company") is in the business of owning,
operating and acquiring non-hazardous, solid waste disposal facilities and
solid waste collection operations. The Company currently operates a landfill
in southern Georgia and its customers are primarily commercial and are based in
southern Georgia and northern Florida. The Company also operates a collection
company in southern Georgia whose customers include commercial and residential
accounts. In addition, the Company operates a transfer station in northern
Florida for a municipality.
Revenue Recognition
Collection revenues are recognized as services are performed. Certain
commercial and residential customers are billed in advance, and these revenues
are deferred and recorded as income in the period in which the related service
is rendered. Disposal and transfer revenues are recognized with the
performance of the service. One customer accounted for approximately 21% and
20% of the Company's revenue in 1995 and 1994. Two customers accounted for
approximately 23% of the Company's revenue in 1993.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and Uintah Basin Limited Partnership,
its majority-owned subsidiary. All significant intercompany transactions and
balances have been eliminated.
Cash and Cash Equivalents
Cash equivalents consist of money market funds primarily invested in
short-term debt securities and other highly liquid investments with original
maturities of three months or less. These securities are stated at cost which
approximates market value.
Property and Equipment
Property and equipment are recorded at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives,
ranging from 5 to 10 years for buildings and improvements and 2 to 8 years for
vehicles and equipment using the straight-line method.
Disposal sites are carried at cost. To the extent cost exceeds
estimated net realizable value upon closure of the disposal site such excess is
amortized over the estimated life of the disposal site based on the ratio of
tons of solid waste placed in the landfill over the estimated total capacity of
the disposal site. Disposal site improvements are capitalized and charged to
operations based on the estimated remaining capacity of the site; operating
costs are expensed as incurred.
Property and equipment includes vehicles and equipment acquired under
capital leases of $288,358 and $183,108 at December 31, 1995 and 1994.
Depreciation and amortization expense includes $32,473, $34,019 and $56,536 in
1995, 1994 and 1993 respectively for amortization of
32
<PAGE> 33
such assets.
Cost in Excess of Net Assets of Acquired Businesses
The cost in excess of net assets of acquired businesses is being
amortized on a straight-line basis over twenty years.
Investments Held in Escrow
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("SFAS No. 115"), "Accounting for Certain
Investments in Debt and Equity Securities" to account for its investments held
in escrow. These investments have been deposited as specified under regulatory
requirements based on estimated costs related to landfill closure and post
closure care. The cumulative effect as of January 1, 1994 of adopting SFAS
No. 115 was immaterial.
At December 31, 1995 and December 31, 1994, these investments were
categorized as available for sale and are stated at fair value. Unrealized
gains and losses are included as a direct component of stockholders' equity
until realized.
Income Taxes
Deferred income tax liabilities and assets are determined using
currently enacted tax rates applicable to the period in which deferred tax
liability or assets are expected to be settled or realized. The deferred tax
liability or asset is determined based on the difference between the financial
statement and tax bases of assets and liabilities. The tax benefits recognized
must be reduced by a valuation allowance to the extent it is more likely than
not the benefits may not be realized.
Earnings (Loss) Per Common Share
Earnings (loss) per common share is computed using the weighted
average number of common and common equivalent shares (stock options and
warrants) outstanding during the year. For the fiscal year 1993, common
equivalent shares are not included in the Company's computation of net loss per
share as the inclusion of these shares would be anti-dilutive.
Reclassification
Certain items in prior years' financial statements have been
reclassified to conform with the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities (such as
closure and post closure reserves and certain other accounts) and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
33
<PAGE> 34
2. CLOSURE AND POST-CLOSURE RESERVES
The company will have material financial obligations with respect to
the closure and post closure of its landfill. Disposal site closure and
post-closure costs, which includes final capping of the site, site inspections,
ground-water monitoring, leachate management, methane gas control and recovery,
and operation and maintenance costs to be incurred during the thirty year
post-closure period, are accrued and charged to expense over the estimated
useful life of the landfill. Requirements for closure and post-closure are
established by Subtitle D of the EPA.
While the precise amount of these future obligations cannot be
determined, it is estimated that the total cost for final closure and
post-closure will approximate $4,200,000 when the landfill reaches its
capacity. These amounts are based on estimates obtained from an independent
engineering firm. Amounts accrued for closure and post-closure costs are
$1,511,647and $891,175 as of December 31, 1995 and 1994, respectively and are
accrued based on capacity used. Actual, ultimate costs could differ from these
estimates.
3. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash paid for interest $201,822 $ 48,470 $ 51,500
Cash paid for taxes $ 62,000 - -
Significant non-cash transactions
- Purchase of equipment
financed by capital lease $104,118 - -
- Purchase of vehicles
and equipment financed
by notes payable - $140,010 -
- Purchased land in
exchange for a note
payable - $ 24,000 -
- Capital expenditures included
in year end accounts payable
but not yet paid - $565,836 -
- Retirement of common stock
held in escrow - $398,704 -
</TABLE>
4. ACQUISITION COSTS
The Company expensed $301,000 of acquisition related expenses during
1993 related to a proposed business acquisition that was not consummated.
34
<PAGE> 35
5. STOCKHOLDERS' EQUITY
The Company is prohibited, under the terms of subordinated
debentures (see note 6), until March 1997 (with certain limited exceptions),
from paying dividends on its common stock if the aggregate amount of all such
payments from and after March 5, 1992 exceeds (i) 50% of the net after tax
income of the Company, plus (ii) 100% of any amounts received by the Company
from the issuance of its equity securities or certain subordinated debt
securities, less (iii) 100% of all losses.
6. LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994 consists of the
following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
8.5% convertible subordinated debentures, due 1997. . . . . . . $3,884,265 $3,803,442
Notes payable to Bank at interest rates from 8.5%
to 9.5%, due 1996, through 1999, collateralized by
vehicles and equipment . . . . . . . . . . . . . . . . . . . . 249,470 365,996
14% note payable to original seller of landfill
site, due 1995, collateralized by mortgage on land . . . . . . - 15,291
Note payable to an individual due 2000,
collaterized by mortgage on land . . . . . . . . . . . . . . . 20,059 24,000
Capitalized lease obligations . . . . . . . . . . . . . . . . . 91,675 39,359
---------- ----------
4,245,469 4,248,088
Less current portion . . . . . . . . . . . . . . . . . . . . . (151,019) (167,971)
---------- ----------
$4,094,450 $4,080,117
========== ==========
</TABLE>
Aggregate maturities of long-term debt including capital leases at
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 151,019
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,975,831
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,163
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,485
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,971
----------
$4,245,469
==========
</TABLE>
The carrying amount for assets pledged as collateral for all debt was
$527,725 and $739,408 at December 31, 1995 and 1994, respectively.
On March 5, 1992, the Company completed a private placement of
$3,000,000 in Convertible Subordinated Debentures. The Debentures have a term
of five years and bear interest at the rate of 8.5% per annum. The interest is
payable in either cash or may be added to the principal amount of the
debentures at the Company's option. In the first quarter of 1995 the Company
added accrued
35
<PAGE> 36
interest to the principal of $80,823. During the subsequent quarters of 1995
the Company elected to pay interest currently. In 1994 and 1993 accrued
interest of $306,821 and $282,070, respectively, was added to the principal.
The Debentures are convertible into the Company's common stock at $1.40 per
share. In connection with the issuance of the Notes, the Company is obligated
to subordinate certain subsequent issuances of debt to the rights of the
holders of the Notes, is prohibited from increasing the size of its Board of
Directors, is subject to certain prepayment and conversion obligations under
the terms of the Notes, and is subject to certain restrictions with respect to
the declaration and payment of dividends.
7. ACCRUED ROYALTIES
Royalty obligations, payable to the former stockholder of an acquired
company, amounting to $1,207,591 and $1,459,078 at December 31, 1995 and 1994,
respectively, are included as long-term liabilities. The current portion of
such obligations is not currently estimable.
8. MANAGEMENT OPTIONS AND COMMON STOCK WARRANTS
In 1991, the Company granted to certain key management personnel
options to acquire an aggregate of 1,854,945 shares of common stock at a
purchase prices ranging from $.50 to $1.37 per share. The Company has also
adopted a Stock Option Plan (the Plan), which provided for the granting of
803,000 shares to key employees. The options must be exercised on or prior to
the tenth anniversary of the grant. The options vest to employees over a three
year period based upon length of service with the Company.
Transactions involving the stock options for 1995, 1994 and 1993 are summarized
as follows:
<TABLE>
<CAPTION>
OPTION PRICE NUMBER OF
STOCK OPTIONS PER SHARE OPTIONS
- ------------- --------- -------
<S> <C> <C>
Balance at January 31, 1993 $.50 - $1.37 2,331,945
Granted $1.16 5,000
Canceled $1.00 (2,000)
------------ ----------
Balance at December 31, 1993 $.50 - $1.37 2,334,945
Granted $.50 210,000
Canceled $.50 - $1.37 (1,009,945)
------------ ----------
Balance at December 31, 1994 $.50 1,535,000
Granted $1.19 61,500
------------ ----------
Balance at December 31, 1995 $.50 - $1.19 1,596,500
============ ==========
</TABLE>
All of the options issued in 1995, 1994 or 1993 were non compensatory.
No options were exercised in 1995, 1994 or 1993. 752,795 options are
exercisable at December 31, 1995.
There are options granted to a former executive pursuant to which the
Company will make an interest free loan of $200,000 to the executive in the
event options are exercised.
In addition, warrants to acquire up to 2,000,000 shares of the
Company's common stock at $.55 a share at any time or from time to time on or
prior to the fifth anniversary of the merger were granted to an
36
<PAGE> 37
investment advisory firm for services rendered to the Company in connection
with the merger and the private placement. The warrants, which must be
exercised on or before July 31, 1996, are subject to anti-dilution rights and
are adjustable for stock splits, stock dividends and similar events.
9. LEASES
The Company leases its office facilities and certain equipment under
various operating lease agreements some of which contain renewal options.
Certain equipment and vehicles are leased under various capital lease
agreements containing various purchase options.
Future minimum commitments at December 31, 1995 under various
noncancelable operating and capital leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, OPERATING CAPITAL
------------ --------- -------
<S> <C> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,075 $ 34,319
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,107 31,989
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,950 31,989
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 7,997
-------- --------
Total Minimum lease payments . . . . . . . . . . . . . . . . . . . $352,673 106,294
========
Interest portion on capital lease obligations . . . . . . . . . . . 14,619
--------
Present value of future minimum lease payments . . . . . . . . . . $ 91,675
========
</TABLE>
Rental expense for all operating leases amounted to $243,359,
$459,594, and $165,622 for the years ended December 31, 1995, 1994, and 1993,
respectively.
10. INVESTMENTS HELD IN ESCROW
Investments held in escrow at December 31, 1995 and 1994 consists of
the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
Fair value Cost Fair value Cost
---------- ---- ---------- ----
<S> <C> <C> <C> <C>
U.S. Government Securities $ 40,688 $ 40,038 $ 38,744 $ 40,075
Corporate Bonds 124,800 123,170 111,863 123,170
Equity Funds 204,533 138,396 163,218 146,575
Cash equivalents 615,514 616,885 275,146 287,330
--------- --------- --------- --------
$ 985,535 $ 918,489 $ 588,971 $597,150
========= ========= ========= ========
</TABLE>
The contractual maturities of debt securities available for sale
included in escrow at December 31, 1995, is as follows:
<TABLE>
<CAPTION>
Fair value Cost
---------- ----
<S> <C> <C>
Due within one year $ 0 $ 0
Due after one year through five years 115,913 113,808
Due after five years through ten years 49,575 49,400
Due after ten years 0 0
---------- --------
$ 165,488 $163,208
========== ========
</TABLE>
Gross unrealized holding gains and losses at December 31, 1995, were
$70,642 and $3,596, respectively. Gross unrealized holding gains and losses at
December 31, 1994 were $4,459 and $12,638, respectively. Gross
37
<PAGE> 38
realized gains from the sale of securities classified as available for sale for
the years ended December 31, 1995 and 1994, were $12,149 and $9,802
respectively. For the purpose of determining gross realized gains and losses,
the cost of securities sold is based upon specific identification.
The Company was able to obtain a surety bond for the closure/post
closure care costs associated with its landfill. This bond required a
collateral escrow of $300,000 which was made in December 1995. This will allow
the Company to terminate the trust fund which was established in 1991 for
closure/post closure care costs. It is expected that these funds will be
returned to the Company in the second quarter of 1996. At December 31, 1995
the fair value of these funds were $685,535.
11. INCOME TAXES
There was no provision for income taxes in 1993. The provision for
income taxes for 1995 and 1994 consists of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current:
Federal $ 130,000 $ 0
State 94,000 90,000
----------- ---------
224,000 90,000
----------- ---------
Deferred:
Federal 293,000 (266,000)
State 30,000 (30,000)
----------- ---------
323,000 (296,000)
----------- ---------
Income tax provision (benefit) $ 547,000 $(206,000)
=========== =========
</TABLE>
The difference between the actual income tax provision and the tax
provision computed by applying the statutory federal income tax rate to income
before taxes is attributable to the following:
<TABLE>
<CAPTION>
1995 1994
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Tax computed using federal
statutory rate $ 703,000 35 $ 344,000 35
Utilization of operating
loss carryforward (195,000) (10) (640,000) (65)
State income taxes, net of
federal income tax effect 80,000 4 90,000 9
Other (41,000) (2) -
--------- --- --------- ---
$ 547,000 27 $ 206,000 (21)
========= === ========= ===
</TABLE>
The provision for income taxes differed from the amount obtained by
applying the federal statutory income tax rate to income (loss) before taxes
due to carryforward of net operating losses from prior years and an adjustment
of the valuation reserve for expected future tax benefits.
38
<PAGE> 39
The components of deferred tax assets and liabilities, as of December 31, 1995
and 1994, were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Alternative minimum tax credit $ 128,000 $ -
Net operating loss carryforwards - 525,000
Closure reserves and reserve for bad debts 6,000 318,000
Valuation allowance - (318,000)
---------- -----------
Total deferred tax assets 134,000 525,000
---------- -----------
Deferred tax liability:
Depreciation (161,000) (229,000)
---------- -----------
Net deferred tax asset (liability) $ (27,000) $ 296,000
========== ===========
</TABLE>
The Company has recorded a current deferred tax asset of $134,000 for
which realization is dependent on generating sufficient taxable income.
Although realization is not assured, management believes it is more likely than
not that all of the deferred tax asset will be realized.
During the third quarter of 1995 the Company elected to adopt Section
468 of the Internal Revenue Code which allows current deductions for future
closure costs with respect to the Company's landfill (subject to limitations).
These deductions were previously deferred for income tax purposes while being
expensed currently for financial statement purposes.
12. FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash investments and accounts receivable.
The Company places its cash investments with what management believes to be
high-credit-quality financial institutions and currently invests primarily in
commercial paper of industrial companies with a rating of A-1/P-1 or better.
Accounts receivable represents amounts from commercial and residential
customers in southern Georgia and northern Florida.
At December 31, 1995, in management's opinion, the Company had no
significant concentration of credit risk.
At December 31, 1995, the market value of the Company's long term
debit was estimated to be $3,671,688.
13. COMMITMENTS
The Chairman of the Board has an Employment Agreement (Agreement)
containing certain non-competition and non-solicitation agreements upon the
termination of their employment with the Company. The non-competition covenant
requires the Company to pay the chairman $10,833 monthly until canceled by
either party. The Agreement also provides an amount to be paid to the chairman
equal to the product of (i) $.50 and (ii) the number of shares purchased by the
Chairman pursuant to options granted to the Chairman. The Company is also
required to reimburse the Chairman for any federal excise taxes incurred in
connection with such payments.
The Company entered into severance agreements (Severance Agreements)
which includes certain non-competition and non-solicitation covenants in
December 1995 with the President and Vice President which provides for payment
of one-half their annual base salary at the time of termination if termination
is without cause. In addition, for a period of six months after termination
without cause the Company agrees to pay the premium, capped at the present
cost, for any continuation of health insurance coverage required to be offered
to the President and Vice President.
39
<PAGE> 40
14. SUBSEQUENT EVENTS
In March 1996, the Company acquired all the common stock of a street
sweeping and roll-off solid waste collection company located in Jacksonville,
Florida. The purchase price of $1,255,000 consisted of 233,947 shares of the
Company's common stock, valued in the purchase agreement at $1.197 per share,
$355,000 cash, $620,000 assumption of debt and 75,000 of common stock warrants
that are exercisable at $1.25 per share. For the year ended December 31, 1995,
the unaudited revenues and net income of the street sweeping and roll-off solid
waste collection company were $1,771,000 and $80,000, respectively.
In February 1996 the Company was granted a modification to its permit
for the Company's landfill by the Georgia Environmental Protection Division
which increases the total capacity of the landfill by 1,467,800 tons of solid
waste. As a result of the increase in capacity of the landfill the
amortization of the disposal site and the accrual of closure and post closure
reserves will be adjusted in 1996 as a change in estimate. Had these
adjustments been made in 1995, net income, net of taxes would have increased
approximately $500,000.
40
<PAGE> 41
GEOWASTE INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Additions
Balance at Charged To Balance At
Beginning Of Costs And End Of
Description Year Expenses Deductions(1) Year
----------- ---- -------- ------------- ----
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Allowance for doubtful
accounts deducted from asset
account . . . . . . . . . . . . $16,356 $28,400 $(26,859) $17,897
======= ======= ======== =======
Year ended December 31, 1994:
Allowance for doubtful
accounts deducted from asset
account . . . . . . . . . . . . $17,064 $ 5,500 $ (6,208) $16,356
======= ======= ======== =======
Year ended December 31, 1993:
Allowance for doubtful
accounts deducted from asset
account . . . . . . . . . . . . $18,652 $23,000 $(24,588) $17,064
======= ======= ======== =======
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
41
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized in St.
Augustine, Florida on the 29th day of March, 1996.
GEOWASTE INCORPORATED
By: /s/ KEVIN R. KOHN
-----------------------------------------
Kevin R. Kohn
President, Chief Executive Officer & Director
Principal Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ AMY C. MACF. BURBOTT Chairman of the Board March 14, 1996
- ---------------------------------------------------- & Director
Amy C. MacF. Burbott
/s/ RAYMOND F. CHASE Vice President, March 29, 1996
- --------------------------------------------------- Chief Financial Officer,
Raymond F. Chase Treasurer, & Secretary
/s/ ROBERT J. CRESCI Director March 28, 1996
- ----------------------------------------------------
Robert J. Cresci
/s/ STEVEN M. ENGEL Director March 28, 1996
- ----------------------------------------------------
Steven M. Engel
/s/ HARVE A. FERRILL Director March 26, 1996
- -----------------------------------------------------
Harve A. Ferrill
/s/ FREDERICK J. ISEMAN Director March 27, 1996
- ----------------------------------------------------
Frederick J. Iseman
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization, dated August 2, 1991, by and between
GeoWaste Incorporated, Utah Acquisition Subsidiary, Inc., Equivest Waste
Solutions, Inc., Frederick J. Iseman and James Swistock (Incorporated by
reference from Exhibit 2(A) to the Current Report on Form 8-K filed August
19, 1991 (File No. 0-9278)). *
3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and
restated (Incorporated by reference from Exhibit A to the Proxy filed
November 25, 1991) (File No. 0-9278)). *
3.2 Certificate of Designation of Preferred Stock of GeoWaste Incorporated,
filed November 25, 1991. (File No. 0-9278). *
3.3 Bylaws of GeoWaste Incorporated, as amended (Incorporated by reference from
Exhibit 3(b) to the Annual Report on Form 10-K for the year ended December
31, 1987 (File No. 0-9278)). *
3.4 Amendment to Amended and Restated Certificate of Incorporation of GeoWaste
Incorporated (Incorporated by reference from Exhibit 3.4 to the Annual
Report on Form 10-K for the year ended December 31, 1992 (File No. 0-9278)). *
4.1 Purchase Agreement, dated March 5, 1992, between GeoWaste Incorporated, the
Delaware State Employees' Retirement Fund and the Trust for Defined Benefit
Plan of ICI American Holdings Inc. (Incorporated by reference from Exhibit
4.1 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-
9278)). *
4.2 Form of Debenture (Incorporated by reference from Exhibit 4.2 to the Current
Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). *
4.3 Registration Rights Agreement, dated March 5, 1992, by and between GeoWaste
Incorporated, the Delaware State Employees' Retirement Fund and the Trust
for Defined Benefit Plan of ICI American Holdings Inc. (Incorporated by
reference from Exhibit 4.3 to the Current Report on Form 8-K filed March 13,
1992 (File No. 0-9278)). *
4.4 Registration Rights Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated and each of the entities listed on Exhibit A thereto
(Incorporated by reference from Exhibit 4(D) to the Current Report on Form
8-K filed August 19, 1991 (File No. 0-9278)). *
</TABLE>
- ------------
* Incorporated by reference
43
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
4.5 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton, Brian
Russell, James R. Jones, Paul Thomas Cohen, William vanden Heuvel, Balis &
Zohn, Inc. and IBJ Schroder Bank & Trust Company (Incorporated by reference
from Exhibit 4(B) to the Current Report on Form 8-K filed August 19, 1991
(File No. 0-9278)). *
4.6 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening and
IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit
4(C) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-
9278)). *
4.7 Equivest First Convertible Debt Exchange Agreement, dated August 2, 1991, by
and between GeoWaste Incorporated the parties listed on Schedule A thereto
(Incorporated by reference from Exhibit 2(B) to the Current Report on Form
8-K filed August 19, 1991 (File No. 0-9278)). *
4.8 Equivest Second Convertible Debt Exchange Agreement, dated August 2, 1991,
by and between GeoWaste Incorporated the parties listed on Schedule A
thereto (Incorporated by reference from Exhibit 2(C) to the Current Report
on Form 8-K filed August 19, 1991 (File No. 0-9278)). *
4.9 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Advance Ross Corporation, Allen & Company Incorporated,
Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening, their
persons or entities listed on Schedule A thereto and the persons or entities
listed on Schedule B thereto (Incorporated by reference from Exhibit 4(A) to
the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). *
4.10 Voting Agreement, dated March 5 ,1992, by and between GeoWaste Incorporated,
the Delaware State Employees' Retirement Fund and the Trust for Defined
Benefit Plan of ICI American Holdings Inc., Frederick J. Iseman, Gian
Caterine, Amy C. MacF. Burbott, Harve Ferrill, James Swistock, Advance Ross
Corporation and Allen & Company Incorporated (Incorporated by reference from
Exhibit 4.4 to the Current Report on Form 8-K filed March 13, 1992 (File No.
0-9278)). *
</TABLE>
- -----------
* Incorporated by reference
44
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
10.1 Warrant Purchase Agreement by and between GeoWaste Incorporated and Allen &
Company Incorporated and Amy C. MacF. Burbott (Incorporated by reference
from Exhibit 10.1 to the Annual Report on Form 10-K for the year ended
December 31, 1991 (File No. 0-9278)). *
10.2 Form of Employment Agreement, dated as of August 1, 1991, by and between
GeoWaste Incorporated and Amy C. MacF. Burbott (Incorporated by reference
from Exhibit 10.1 to the Quarterly Report on Form 10-Q for the period ended
September 30, 1992 (File No. 0-9278)). *
10.3 Form of Employment Agreement dated as of June 1, 1992, by and between
GeoWaste Incorporated and Richard J. Sherman (Incorporated by reference from
Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended
September 20, 1992 (File No. 0-9278)). *
10.4 Form of Employment Agreement, dated as of August 1, 1991, by and between
GeoWaste Incorporated and James W. Swistock (Incorporated by reference from
Exhibit 10.4 to the Annual Report on Form 10-K for the year ended December
31, 1992 (File No. 0-9278)). *
10.5 Form of Severance Agreement, dated as of December 21, 1995, by and between
GeoWaste Incorporated and Kevin R. Kohn. 46
10.6 Form of Severance Agreement, dated as of December 21, 1995, by and between
GeoWaste Incorporated and Raymond F. Chase. 49
10.7 Form of Consulting Agreement dated, August 31, 1995, by and between GeoWaste
Incorporated and Amy C. MacF. Burbott. 52
10.8 Form of Amendment, dated as of January 9, 1995, to Form of Employment Agreement,
dated as of August 1, 1991, by and between GeoWaste Incorporated and Amy C.
MacF. Burbott. 53
11.1 Computation of Net Income Per Share for the year ended December 31, 1995 55
11.2 Computation of Net Income Per Share for the year ended December 31, 1994 56
11.3 Computation of Net Loss Per Share for the year ended December 31, 1993. 57
21 Subsidiaries of the Registrant. 58
27 Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
*Incorporated by reference
45
<PAGE> 1
EXHIBIT 10.5
December 21, 1995
Kevin R. Kohn
217 Marshside Drive
St. Augustine, FL 32084
Re: Severance Agreement
Kevin:
This letter is to confirm our understanding and agreement regarding severance
terms. In consideration of your increase in salary, as well as the 9 other
mutual promises and covenants contained herein, you and GeoWaste agree as
follows:
1. Effective Date. The Effective Date of this Agreement is January 1,
1996.
2. Severance Pay. In the event that the Company terminates your
employment without Cause within two (2) years of the Effective Date.
(a) the Company will pay you in a lump sum or in installments over
six (6) months, as selected by the Company, one-half of the
greater of $94,500 or your annual base salary rate in effect
at the date of your termination.
(b) for a period of six (6) months following your termination
date, the Company will pay the premium for any continuation
health insurance coverage required to be offered to you by the
Company under federal law; and
(c) the Company will continue to reimburse you for the premium you
pay to continue life insurance on your life during the six (6)
month period following your termination date, to the extent
reimbursement for such premium was not made prior to your
termination and the amount of the reimbursement for such six
(6) month period does not exceed $750.00.
The term "Cause" means that:
(i) you use for personal gain or disclose to an unauthorized
person any confidential or proprietary information or trade
secrets of the Company or its subsidiaries;
(ii) you act in a manner which materially and detrimentally affects
the Company or its subsidiaries; or
(iii) your conduct violates any applicable civil or criminal law or
violates any written rules of ethical corporate conduct of or
fiduciary obligation to the Company or its subsidiaries.
3. Non-Competition and Non-Solicitation Covenants. You hereby agree that:
(a) for the period of one (1) year following the date your
employment with the Company is terminated at the request of
the Company, you will not, without the prior written consent
of the Company's Board of Directors, own, manage, operate,
join, be employed in an executive or managerial capacity by,
control or otherwise render, directly or indirectly, any
executive or managerial Services to any person or organization
which is engaged in the solid waste management business in
competition with the Company within a 50-mile territorial
radius from any facility owned or operated by the Company.
For purposes of this Paragraph 3(a), the term "Services" shall mean
any services of a business, commercial or professional nature and shall
include, without limitation, the following: engaging in, working with, having
an interest in, acting as an officer or director or consultant to, advising,
lending money to, guaranteeing the debts or obligations of, or permitting one's
name or any part thereof to be used in connection with an enterprise or
endeavor that conducts a business of the type and in the area referred to
above, either individually, in partnership, or in conjunction with any person
or persons, firm, association, company or corporation, whether as principal,
agent, five percent or more shareholder, executive, or in any other similar
manner whatsoever, provided, however, that you may
46
<PAGE> 2
own less than five percent (5%) of the outstanding capital stock of any
publicly-held corporation; and
(b) in the event your employment with the Company is terminated
for any reason, then for period of one (1) year after the
date of your termination, you will not, without the prior
written consent of the Company's Board of Directors,
render any services or advice to, solicit, service the account
of, or otherwise engage in any business relationship (as an
employee or otherwise) with any Customer (as defined below) of
the Company in connection with the solid waste management
business, or solicit or hire any person in connection with the
solid waste management business, or solicit or hire any person
in connection with the solid waste management business who was
an employee of the Company at any time within the six (6)
month period ending the date your employment terminates.
For purposes of this Paragraph 3(b), a "Customer" means any
corporation, association, partnership, organization, business, individual or
governmental agency (a "Person") within a 50-mile territorial radius from any
facility owned or operated by the Company that is subject to a contract with
the Company whereby the Company provides solid waste management services to
such Customer, or is otherwise actively involved in a business relationship
with the Company in connection with such solid waste management services,
including, without limitation, any person that the Company is actively
soliciting at any time within the six (6) month period ending on the date your
employment terminates.
(c) you acknowledge that the Company will suffer substantial
damages not readily ascertainable or compensable in terms of
money in the event of the breach of any of your obligations
under this Paragraph 3. You therefore agree that the Company
will be entitled (without limitation or any other rights or
remedies otherwise available to the Company) to obtain an
injunction from any court of competent jurisdiction
prohibiting the continuance or recurrence of any such breach
of this Paragraph 3 the stated period, scope or area is held
to be unreasonable, the parties agree that the maximum period,
scope or area reasonable under the circumstances will be
substituted for the state period, scope or area.
(d) the running of each of the covenants in this Paragraph 3 will
be tolled and suspended for such period of time as you are in
violation of the particular covenant, but none of the
covenants will be so tolled and suspended for longer than one
hundred eighty (180) days in the aggregate as to that
covenant.
4. Confidential Information. You understand and acknowledge that:
(a) in order to enable you to properly perform your duties, the
Company has entrusted and will continue to entrust you with
trade secrets and confidential information, including, without
limitation, trade secrets and confidential information
relating to merchandising methods, engineering and production
methods, accounting or financial methods,
processes, strategies and technique, know-how, pricing
policies, inventory, market studies and strategy,
customer lists, special needs and characteristics of the
Company's customers, debt and equity financing sources,
scientific, technical and management information and other
aspects of the Company's business ("Confidential
Information"); and
(b) the development or acquisition of this Confidential
Information is critical to the success and survival of the
Company and the disclosure or use of this Confidential
Information would cause the Company irreparable harm and that
you are fully aware of the Company's need to protect this
Confidential Information.
Accordingly, you hereby agree that, from the Effective Date and
thereafter as to trade secrets, and from the Effective Date and thereafter
until the end of one (1) year period following your termination of employment,
as to other Confidential Information, you will not disclose to third persons
any Confidential Information of the Company, its officers, directors, agents or
representatives, except to the extent that such Confidential Information:
(i) is authorized in writing by the Company to be disclosed;
was in or has become part of the public domain (otherwise than
through your breach hereof);
47
<PAGE> 3
(ii) was known to the recipient prior to the disclosure;
(iii) was known to you prior to performing services for the Company
or any predecessor company; or
(iv) is required to be disclosed by a court or governmental agency
and, in this regard, you will execute such additional
documents as the Company may reasonably require to protect the
confidentiality of the Confidential Information required to be
disclosed.
5. Stock Options. This Agreement in no way affects your rights under the
NonQualified Stock Option Agreement granted to you effective as of July 3,
1991, or stock options granted to you pursuant to the 1992 Stock Option Plan.
6. Severability. In the event any provision of this Agreement should be held
to be unenforceable, each and all of the other provisions of this Agreement
shall remain in full force and effect.
7. Applicable Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
8. Waiver. The waiver by any party to this Agreement of a breach of any of
the provisions of this Agreement shall not operate or be construed as a waiver
of any subsequent or simultaneous breach.
9. Modification. This Agreement may be modified or amended only in writing
signed by the parties.
10. Entire Agreement. This Agreement constitutes a single integrated contract
expressing the entire agreement of the parties hereto. There are no
agreements, written or oral, express or implied, between the parties hereto,
concerning the subject matter hereof, except the agreements set forth in this
Agreement. All other agreements, whether written or oral, between the parties,
other than the stock options granted to you effective as of July 3, 1991 as
well as those granted to you under the 1992 Stock Option Plan, are superseded
by this Letter.
11. Binding Effect. This Agreement shall be binding on the parties and their
respective directors, officers, employees, heirs, executors, administrators and
successors.
12. Understanding. You hereby covenant and agree that you have read and fully
understand the contents and the effect of this Agreement. You warrant and
agree that you have had a reasonable opportunity and been advised to seek the
advice of an attorney as to such content and effect. You accept each and all
of the terms, provisions, and conditions of this Agreement, and do so
voluntarily and with full knowledge and understanding of the contents, nature,
and effect of this Agreement.
Assuming the foregoing accurately reflects our understanding and agreement,
please evidence the same by affixing your signature on the line provided below.
Sincerely,
GEOWASTE INCORPORATED
/s/ AMY C. MACF. BURBOTT
- ------------------------
Amy C. MacF. Burbott
Chairman of the Board
Accepted and agreed to this 21st day of December, 1995
/s/ KEVIN R. KOHN
- ------------------------
Kevin R. Kohn
48
<PAGE> 1
EXHIBIT 10.6
December 21, 1995
Raymond F. Chase
1250 Hollywood Avenue
Jacksonville, FL 32205
Re: Severance Agreement
Ray:
This letter is to confirm our understanding and agreement regarding severance
terms. In consideration of your increase in salary, as well as the 9 other
mutual promises and covenants contained herein, you and GeoWaste agree as
follows:
1. Effective Date. The Effective Date of this Agreement is January 1,
1996.
2. Severance Pay. In the event that the Company terminates your
employment without Cause within two (2) years of the Effective Date.
(a) the Company will pay you in a lump sum or in installments over
six (6) months, as selected by the Company, one-half of the
greater of $76,000 or your annual base salary rate in effect
at the date of your termination.
(b) for a period of six (6) months following your termination
date, the Company will pay the premium for any continuation
health insurance coverage required to be offered to you by the
Company under federal law; and
(c) the Company will continue to reimburse you for the premium you
pay to continue life insurance on your life during the six (6)
month period following your termination date, to the extent
reimbursement for such premium was not made prior to your
termination and the amount of the reimbursement for such six
(6) month period does not exceed $750.00.
The term "Cause" means that:
(i) you use for personal gain or disclose to an unauthorized
person any confidential or proprietary information or trade
secrets of the Company or its subsidiaries;
(ii) you act in a manner which materially and detrimentally affects
the Company or its subsidiaries; or
(iii) your conduct violates any applicable civil or criminal law
or violates any written rules of ethical corporate conduct
of or fiduciary obligation to the Company or its subsidiaries.
3. Non-Competition and Non-Solicitation Covenants. You hereby agree that:
(a) for the period of one (1) year following the date your
employment with the Company is terminated at the request of
the Company, you will not, without the prior written
consent of the Company's Board of Directors, own, manage,
operate, join, be employed in an executive or managerial
capacity by, control or otherwise render, directly
or indirectly, any executive or managerial Services to any
person or organization which is engaged in the solid waste
management business in competition with the Company within
a 50-mile territorial radius from any facility owned or
operated by the Company.
For purposes of this Paragraph 3(a), the term "Services" shall mean
any services of a business, commercial or professional nature and shall
include, without limitation, the following: engaging in, working with, having
an interest in, acting as an officer or director or consultant to, advising,
lending money to, guaranteeing the debts or obligations of, or permitting one's
name or any part thereof to be used in connection with an enterprise or
endeavor that conducts a business of the type and in the area referred to
above, either individually, in partnership, or in conjunction with any person
or persons, firm, association, company or corporation, whether as principal,
agent, five percent or more
49
<PAGE> 2
shareholder, executive, or in any other similar manner whatsoever, provided,
however, that you may own less than five percent (5%) of the outstanding
capital stock of any publicly-held corporation; and
(b) in the event your employment with the Company is terminated
for any reason, then for a period of one (1) year after the
date of your termination, you will not, without the prior
written consent of the Company's Board of Directors, render
any services or advice to, solicit, service the account of, or
otherwise engage in any business relationship (as an employee
or otherwise) with any Customer (as defined below) of the
Company in connection with the solid waste management
business, or solicit or hire any person in connection with the
solid waste management business, or solicit or hire any person
in connection with the solid waste management business who was
an employee of the Company at any time within the six (6)
month period ending the date your employment terminates.
For purposes of this Paragraph 3(b), a "Customer" means any
corporation, association, partnership, organization, business, individual or
governmental agency (a "Person") within a 50-mile territorial radius from any
facility owned or operated by the Company that is subject to a contract with
the Company whereby the Company provides solid waste management services to
such Customer, or is otherwise actively involved in a business relationship
with the Company in connection with such solid waste management services,
including, without limitation, any person that the Company is actively
soliciting at any time within the six (6) month period ending on the date your
employment terminates.
(c) you acknowledge that the Company will suffer substantial
damages not readily ascertainable or compensable in terms of
money in the event of the breach of any of your obligations
under this Paragraph 3. You therefore agree that the Company
will be entitled (without limitation or any other rights or
remedies otherwise available to the Company) to obtain an
injunction from any court of competent jurisdiction
prohibiting the continuance or recurrence of any such breach
of this Paragraph 3 the stated period, scope or area is held
to be unreasonable, the parties agree that the maximum period,
scope or area reasonable under the circumstances will be
substituted for the state period, scope or area.
(d) the running of each of the covenants in this Paragraph 3 will
be tolled and suspended for such period of time as you are in
violation of the particular covenant, but none of the
covenants will be so tolled and suspended for longer than one
hundred eighty (180) days in the aggregate as to that
covenant.
4. Confidential Information. You understand and acknowledge that:
(a) in order to enable you to properly perform your duties, the
Company has entrusted and will continue to entrust you with
trade secrets and confidential information, including, without
limitation, trade secrets and confidential information
relating to merchandising methods, engineering and production
methods, accounting or financial methods, processes,
strategies and technique, know-how, pricing policies,
inventory, market studies and strategy, customer lists,
special needs and characteristics of the Company's customers,
debt and equity financing sources, scientific, technical and
management information and other aspects of the Company's
business ("Confidential Information"); and
(b) the development or acquisition of this Confidential
Information is critical to the success and survival of the
Company and the disclosure or use of this Confidential
Information would cause the Company irreparable harm and that
you are fully aware of the Company's need to protect this
Confidential Information.
Accordingly, you hereby agree that, from the Effective Date and
thereafter as to trade secrets, and from the Effective Date and thereafter
until the end of one (1) year period following your termination of employment,
as to other Confidential Information, you will not disclose to third persons
any Confidential Information of the Company, its officers, directors, agents or
representatives, except to the extent that such Confidential Information:
(i) is authorized in writing by the Company to be disclosed;
was in or has become part of the public domain (otherwise than
through your breach
50
<PAGE> 3
hereof);
(ii) was known to the recipient prior to the disclosure;
(iii) was known to you prior to performing services for the Company
or any predecessor company; or
(iv) is required to be disclosed by a court or governmental agency
and, in this regard, you will execute such additional
documents as the Company may reasonably require to protect the
confidentiality of the Confidential Information required to be
disclosed.
5. Stock Options. This Agreement in no way affects your rights under the
NonQualified Stock Option Agreement granted to you effective as of July 3,
1991, or stock options granted to you pursuant to the 1992 Stock Option Plan.
6. Severability. In the event any provision of this Agreement should be held
to be unenforceable, each and all of the other provisions of this Agreement
shall remain in full force and effect.
7. Applicable Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware.
8. Waiver. The waiver by any party to this Agreement of a breach of any of
the provisions of this Agreement shall not operate or be construed as a waiver
of any subsequent or simultaneous breach.
9. Modification. This Agreement may be modified or amended only in writing
signed by the parties.
10. Entire Agreement. This Agreement constitutes a single integrated contract
expressing the entire agreement of the parties hereto. There are no
agreements, written or oral, express or implied, between the parties hereto,
concerning the subject matter hereof, except the agreements set forth in this
Agreement. All other agreements, whether written or oral, between the parties,
other than the stock options granted to you effective as of July 3, 1991 as
well as those granted to you under the 1992 Stock Option Plan, are superseded
by this Letter.
11. Binding Effect. This Agreement shall be binding on the parties and their
respective directors, officers, employees, heirs, executors, administrators and
successors.
12. Understanding. You hereby covenant and agree that you have read and fully
understand the contents and the effect of this Agreement. You warrant and
agree that you have had a reasonable opportunity and been advised to seek the
advice of an attorney as to such content and effect. You accept each and all
of the terms, provisions, and conditions of this Agreement, and do so
voluntarily and with full knowledge and understanding of the contents, nature,
and effect of this Agreement.
Assuming the foregoing accurately reflects our understanding and agreement,
please evidence the same by affixing your signature on the line provided below.
Sincerely,
GEOWASTE INCORPORATED
/s/ AMY C. MACF. BURBOTT
- ------------------------
Amy C. MacF. Burbott
Chairman of the Board
Accepted and agreed to this 21st day of December, 1995
/s/ RAYMOND F. CHASE
- ------------------------
Raymond F. Chase
51
<PAGE> 1
EXHIBIT 10.7
August 31, 1995
Amy C. MacF. Burbott
5 Woodholm Road
Manchester-by-the-Sea, MA 01944-1041
Ms. Burbott:
This letter is to confirm the understanding and agreement reached between you
and GeoWaste Incorporated concerning your position as Chairman of the Board and
work for the Company.
Effective September 1, 1995, you have agreed to remain as Chairman of the Board
until such time as either: (a) you furnish the Company with 30 days notice of
your resignation as Chairman; or (b) the Company furnishes you with 30 days
notice that it seeks your resignation (which you hereby agree to provide) as
Chairman of the Company.
During your tenure as Chairman, and for the six calendar months following your
resignation or termination thereof, GeoWaste will pay you the sum of $10,833.33
per month as well as reimburse your medical coverage premium costs and
reasonable expenses incurred in connection with work for the Company.
Please evidence your agreement with the foregoing by affixing your signature on
the line provided below.
<TABLE>
<S> <C>
Sincerely,
/s/ KEVIN R. KOHN /s/ HARVE A. FERRILL
- --------------------------------------------- -------------------------
Kevin R. Kohn Harve A. Ferrill
President, Chief Executive Officer & Director Director
/s/ FREDERICK J. ISEMAN
-------------------------
Frederick J. Iseman
Director
</TABLE>
Acknowledged, Accepted & Agreed
As Of The Date First Written Above:
/s/ AMY C. MACF. BURBOTT
- --------------------------------
Amy C. MacF. Burbott
52
<PAGE> 1
EXHIBIT 10.8
January 9, 1995
Amy C. MacF. Burbott
President and Chief Executive Officer
GeoWaste Incorporated
5 Woodholm Road
Manchester-by-the-Sea, MA 01944
Re: Employment Agreement
Amy:
Pursuant to Section IX.A. of your employment agreement dated August 1, 1991
("Agreement"), this letter will confirm our agreement to amend Section II.B of
that Agreement to provide for payment of the severance payment described in
that section within sixty (60) days of the date you exercise your stock options
without regard to when you terminate your employment with GeoWaste.
Accordingly, Section II.B is hereby amended to read as follows:
"B. Severance Payment. In the event that the Executive's
employment hereunder terminates, with or without Cause (as hereafter
defined), the Company shall be obligated to make a severance payment
to the executive, in cash, equal to the product of (A) $.50 and (B)
the number of shares of common stock of the Company purchased by the
Executive pursuant to options during the Employment Term or after the
end of the Employment Term if the option so permits. Such payment
shall be made by the Company within sixty (60) days after the date of
such exercise. The Company's obligation to make such payment shall be
absolute and unconditional and shall not be affected by any other
provision of this Agreement. In the event the Executive determines
that she is liable for any excise tax pursuant to Section 4999 of the
Internal revenue Code of 1986, as amended, in connection with any
payments made by the Company to the Executive herunder, she shall
notify the Company and shall be entitled to a payment pursuant to this
Section II.B. the payment pursuant to this Section shall be equal to
the amount necessary to compensate Executive for the excise tax
payable by Executive with respect to any payments made to her by the
Company including any payments under this Section II.B."
Except as expressly amended herein, all other terms and conditions of the
Agreement shall remain in full force and effect.
<PAGE> 2
Furthermore, this letter will confirm our understanding that if your employment
is terminated as a result of the expiration of the Agreement on January 31,
1995, the stock option granted to you under the Non-Qualified Stock Option
Agreement dated August 1, 1991 will expire on June 28, 2001, unless exercised
earlier. However, nothing in this letter is intended to modify the
Non-Qualified Stock Option Agreement.
Assuming the foregoing accurately reflects our understanding and agreement,
please evidence the same by affixing your signature on the line provided below.
Sincerely,
GEOWASTE INCORPORATED
/s/ Harve A. Ferrill
- ---------------------
Harve A. Ferrill
Chairman of the Board
I hereby covenant and agree that I have read and fully understand the contents
and the effect of this letter. I warrant and agree that I have had a
reasonable opportunity and been advised to seek the advise of an attorney as to
such content and effect. I accept each and all of the terms, provisions and
conditions of this letter, and do so voluntarily and with full knowledge and
understanding of the contents, nature and effect of this letter.
/s/ Amy C. MacF. Burbott
- -----------------------------
Amy C. MacF. Burbott
Date: January 13, 1995
<PAGE> 1
EXHIBIT 11.1
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605
Stock options and warrants outstanding . . . . . . . . . . 63,810 1,042,119
----------- -----------
Weighted average shares of common stock
outstanding . . . . . . . . . . . . . . . . . . . . . . . 19,526,415 19,704,724
=========== ===========
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,462,310 $ 1,462,310
=========== ===========
Income per share . . . . . . . . . . . . . . . . . . . . . $ .07 $ .07
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 11.2
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605
Stock options and warrants outstanding . . . . . . . . . . 188,565 222,613
----------- ------------
Weighted average shares of common stock
outstanding . . . . . . . . . . . . . . . . . . . . . . . 18,851,170 18,885,218
=========== ============
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,189,823 $ 1,189,823
=========== ============
Income per share . . . . . . . . . . . . . . . . . . . . . $ .06 $ .06
=========== ============
</TABLE>
<PAGE> 1
EXHIBIT 11.3
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Weighted average common shares
outstanding (1) . . . . . . . . . . . . . . . . . . . . . 18,637,626 18,637,626
Escrow shares . . . . . . . . . . . . . . . . . . . . . . . - 3,987,036
Stock options and warrants outstanding . . . . . . . . . . 1,269,790 529,144
------------- --------------
Weighted average shares of common stock
outstanding . . . . . . . . . . . . . . . . . . . . . . . 19,907,416 23,153,806
============= ==============
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (217,730) $ 64,340
============= ==============
Loss per share . . . . . . . . . . . . . . . . . . . . . . $ (.01) $ -
============= ==============
</TABLE>
(1) Includes weighted average shares available for release from
Escrow (254,087 shares).
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
GeoWaste Acquisition Corp. (Delaware)
GeoWaste of FL, Inc. (Delaware)
GeoWaste of GA, Inc. (Georgia)
Low Brook Development, Inc. (Delaware)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 3,485,459
<SECURITIES> 0
<RECEIVABLES> 889,865
<ALLOWANCES> 17,897
<INVENTORY> 0
<CURRENT-ASSETS> 5,173,559
<PP&E> 14,593,638
<DEPRECIATION> 6,224,889
<TOTAL-ASSETS> 15,637,316
<CURRENT-LIABILITIES> 1,214,707
<BONDS> 0
0
0
<COMMON> 1,866,260
<OTHER-SE> 5,520,097
<TOTAL-LIABILITY-AND-EQUITY> 15,637,316
<SALES> 8,932,528
<TOTAL-REVENUES> 8,932,528
<CGS> 5,207,250
<TOTAL-COSTS> 5,207,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 368,338
<INCOME-PRETAX> 2,009,310
<INCOME-TAX> 547,000
<INCOME-CONTINUING> 1,462,310
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,462,310
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
