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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
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: 0-21802
---------------
N-VIRO INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 34-1741211
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3450 W. Central Avenue, Suite 328
Toledo, Ohio 43606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 535-6374
---------------
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 the
filing requirements for at least the past 90 days. Yes X No .
As of March 31, 1998, 2,505,733 shares of N-Viro International Corporation
$ .01 par value common stock were outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
N-VIRO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
1998 1997
------------------------------
<S> <C> <C>
Revenues $ 1,032,257 $ 1,068,866
Cost of revenues 462,946 480,931
----------- -----------
Gross profit 569,311 587,935
Selling, general & administrative expenses 485,076 430,228
----------- -----------
Operating income 84,235 157,707
Nonoperating income (expense):
Interest income (expense), net (4,751) (9,650)
Equity in gains (losses) of joint venture (9,522) 18,893
Miscellaneous income (exp.) (2,250) (3,050)
----------- -----------
Income before income tax (credits) 67,712 163,900
Federal and state income tax (credits) -- --
----------- -----------
Net income $ 67,712 $ 163,900
=========== ===========
Basic and diluted earnings per share $ 0.03 $ 0.08
=========== ===========
Weighted average common shares outstanding 2,448,483 2,036,983
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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N-Viro International Corporation
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS (Unaudited) (Audited)
-------------- ----------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 104,723 $ 31,677
Securities available-for-sale 1,401 1,401
Trade receivables 1,284,793 1,493,427
Other receivables 325,830 394,718
Prepaid expenses and other assets 198,017 92,060
------------ ------------
Total current assets 1,914,764 2,013,283
Property and Equipment 537,312 561,229
Investment in joint ventures 903,098 912,620
Deferred Tax Assets 312,000 312,000
Intangibles and Other Assets 613,108 624,237
------------ ------------
TOTAL ASSETS $ 4,280,282 $ 4,423,369
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 107,133 $ 213,545
Accounts payable 1,030,919 1,196,714
Accrued expenses 194,201 183,071
------------ ------------
Total current liabilities 1,332,253 1,593,330
------------ ------------
Long-term Debt, less current maturities 55,735 64,742
------------ ------------
Stockholders' equity
Common stock, $.01 par value; authorized
45,000,000 shares; issued 1998 2,785,733
and 1997 2,755,733 shares 27,858 27,558
Additional paid-in capital 13,418,497 13,359,552
Retained earnings (deficit) (9,436,084) (9,503,796)
------------ ------------
4,010,271 3,883,314
Less treasury stock, at cost, 307,250 shares 1,117,977 1,117,977
------------ ------------
2,892,294 2,765,337
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,280,282 $ 4,423,369
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
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N-Viro International Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
------------------------
1998 1997
--------- ----------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 223,827 $ 75,547
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for intangibles and other assets (2,399) (14,520)
Expenditures for property and equipment (1,436) (3,018)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (3,835) (17,538)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) on revolving credit agreement (120,000) 55,000
Repayments of long-term debt (26,741) (359,154)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (146,741) (304,154)
--------- ---------
NET INCREASE (DECREASE) IN CASH 73,251 (246,145)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,472 282,115
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 104,723 $ 35,970
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
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N-VIRO INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements of N-Viro
International Corporation (the Company) are unaudited but, in management's
opinion, reflect all adjustments (including only normal recurring accruals)
necessary to present fairly such information for the period and at the dates
indicated. The results of operations for the three months ended March 31, 1998
may not be indicative of the results of operations for the year ended December
31, 1998. Since the accompanying consolidated financial statements have been
prepared in accordance with Article 10 of Regulation S-X, they do not contain
all information and footnotes normally contained in annual consolidated
financial statements; accordingly, they should be read in conjunction with the
consolidated and combined financial statements and notes thereto appearing in
the Company's Form 10-K for the period ending December 31, 1997.
N-Viro International Corporation was incorporated in April 1993 and is
the successor to N-Viro Energy Systems, Ltd. (the Partnership) and five Company
Agents. The Company Agents together with the Partnership are the Company
Entities.
On October 19, 1993, the Partnership contributed to the Company all of
its assets (except certain marketable securities and accounts receivable from
certain related parties), subject to all liabilities (except certain retained
liabilities), and the shareholders of the Company Agents contributed to the
Company all of the outstanding capital stock of such entities in exchange for a
total of six million shares of common stock of the Company and organization
notes totaling $5,221,709 (such transactions are collectively referred to as the
Organization). The Organization notes were repaid out of the proceeds from an
initial public offering of two million shares of N-Viro International
Corporation common stock. A total of 2,112,000 new shares were issued in the
IPO, including shares issued in the partial exercise by the Underwriters of an
over-allotment option.
The financial statements are consolidated as of March 31, 1998 and
December 31, 1997 for the Company. Adjustments have been made to eliminate all
intercompany transactions.
2. RELATED PARTY TRANSACTIONS
The Company recognized an expense to Mr. Bobby B. Carroll, a Director of
the Company and a former shareholder of Tennessee-Carolina N-Viro, Inc., of
$30,000 for the three months ended March 31, 1998, and $30,000 for the three
months ended March 31, 1997 under a contract arrangement signed in 1993 for
consulting services. The Company granted Mr. Carroll a security interest in all
present and future receivables and contract rights from licenses in the states
of Tennessee, North Carolina and South Carolina pursuant to the contract
agreement.
In January of 1998, the Company reached agreements with a trade
creditor to eliminate $60,000 of the Company's short-term debt in exchange for
the Company's issuance and delivery to such creditor of 30,000 shares of Common
Stock. The number of shares of Common Stock issued to, and the corresponding
amount of short-term debt forgiven by is set forth in the table below:
<TABLE>
<CAPTION>
============================================================================================
Creditor Amount of Canceled Debt No. of Shares Issued in Exchange
========================== =========================== =====================================
<S> <C> <C>
Morgan, Lewis & Bockius $60,000 30,000
========================== =========================== =====================================
</TABLE>
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All such shares of Common Stock were issued to the Company's creditor pursuant
to appropriate exemptions from registration under federal and state securities
laws. The exchange was evidenced by a written Share Exchange Agreement between
the Company and the creditor. A copy of such Share Exchange Agreement is filed
as an Exhibit to this Form 10-Q. The shares are undelivered as of the date of
this filing, but it is anticipated they will be delivered in the immediate
future.
3. CONTINGENCIES
The Company leases office space under an agreement which requires
monthly payments of $4,664. The lease expires in December 2002. The total
minimum rental commitment at March 31, 1998 is $266,000. The total rental
expense included in the statements of operations for each of the periods ended
March 31, 1998 and 1997 is approximately $14,000.
During 1994, the Company reacquired territory rights from a former
agent and issued 66,250 shares of unregistered common stock with a designated
value of $6 per share. In the event the former agent elects to sell all these
shares, the Company has guaranteed the former agent $6 per share. This guarantee
expires December 30, 1999.
The Company is involved in legal proceedings and subject to claims which
have arisen in the ordinary course of business. These actions, when concluded
and determined, will not, in the opinion of management, have a material adverse
effect upon the financial position of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
N-Viro International Corporation was incorporated in April, 1993, and
became a public company on October 12, 1993. The Company's business strategy is
to market the N-Viro Process that produces an "exceptional quality" sludge
product, as defined in the Section 503 Sludge Regulations under the Clean Water
Act of 1987, with multiple commercial uses. To date, the Company's revenues
primarily have been derived from the licensing of the N-Viro Process to treat
and recycle wastewater sludge generated by municipal wastewater treatment plants
and from the sale to licensees of the alkaline admixture used in the N-Viro
Process. The Company has also operated N-Viro facilities for third parties on a
start-up basis and currently operates one N-Viro facility on a contract
management basis. There are currently 38 N-Viro facilities operating throughout
the world using the N-Viro Process. The Company estimates that these operating
N-Viro facilities are treating and recycling sludge at an annualized rate of
approximately 140,000 dry tons per year.
Total revenues were $1,032,000 for the quarter ended March 31, 1998
compared to $1,069,000 for the same period of 1997. The net decrease in revenue
is due primarily to a decrease in royalty and alkaline admixture sales, most of
which was offset by an increase in license and territory fee revenues. The
Company decreased its cost of revenues for the same period of 1997. The decrease
in cost of revenues was due primarily to the costs associated with the decrease
in alkaline admixture revenue. As a result, the gross profit percentage remained
at 55% for the quarters ended March 31, 1998 and 1997. Selling, general and
administrative costs increased for the same period of 1998. These changes
collectively resulted in a net profit of $68,000 for the quarter ended March 31,
1998 compared to a net profit of $164,000 for the quarter ended March 31, 1997.
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COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 WITH THREE MONTHS ENDED MARCH
31, 1997
Overall revenue decreased $37,000, or 3%, to $1,032,000 for the three
months ended March 31, 1998 from $1,069,000 for the three months ended March 31,
1997. The net decrease in revenue was due primarily to the following:
a) Licensing of the N-Viro process, including territory fees, earned the
Company $159,000 for the quarter, an increase of $79,000 from the same period in
1997;
b) The Company's processing revenue, including facility management
revenue, showed a net decrease of $29,000 over the same period ended March 31,
1998;
c) Sales of alkaline admixture decreased $60,000 from the same period
ended March 31, 1997. Approximately $40,000 of this decrease was a delay in
reporting 1996 sales into 1997 from one of its licensees; and,
d) Testing income decreased $20,000 from the same period ended March 31,
1997.
Gross profit decreased $19,000, or 3%, to $569,000 for the three months
ended March 31, 1998 from $588,000 for the three months ended March 31, 1997.
This decrease in gross profit was primarily a result of the decrease in alkaline
admixture sales. The gross profit margin did not change at 55% for the same
three month comparison.
Selling, general and administrative expenses increased $55,000, or 13%,
to $485,000 for the three months ended March 31, 1998 from $430,000 for the
three months ended March 31, 1997. The increase was primarily due to an increase
in salaries and related costs of $45,000, as well as an increase in research and
development costs of almost $10,000.
As a result of the foregoing factors, the Company recorded operating
income of $84,000 for the three months ended March 31, 1998 compared to
operating income of $158,000 for the three months ended March 31, 1997.
For the quarters ended March 31, 1998 and 1997, the Company has not
fully recognized the tax benefit of the losses incurred in prior periods.
Accordingly, the effective tax rate for each period was zero.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $583,000 at March 31, 1998, compared
to working capital of $420,000 at December 31, 1997. Current assets at March 31,
1998 included cash and investments of $106,000, which is an increase of $73,000
from December 31, 1997. The increase in working capital was principally due to
the operating income for the period and the restructuring of debt to equity.
In 1997 the Company obtained a working capital line of credit of
$200,000. Borrowings against the line bear interest at prime plus 1.75%, and are
collateralized by accounts receivable, inventories and equipment, and assignment
of the wastewater treatment contract with the City of Toledo, Ohio, and are due
on demand. Their is no balance owed on the line of credit at March 31, 1998.
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The Company believes that its working capital together with the line of
credit, will provide sufficient cash to meet the Company's cash requirements
through 1998.
The Company cautions that words used in this document such as
"expects," "anticipates," "believes" and "may," as well as similar words and
expressions used herein, identify and refer to statements describing events that
may or may not occur in the future. These forward-looking statements and the
matters to which they refer are subject to considerable uncertainty that may
cause actual results to be materially different from those described herein.
Some, but not all, of the factors that could cause actual results to be
different than those anticipated or predicted by the Company include: (i) a
deterioration in economic conditions in general; (ii) a decrease in demand for
the Company's products or services in particular; (iii) the Company's loss of a
key employee or employees; (iv) regulatory changes, including changes in
environmental regulations, that may have an adverse affect on the demand for the
Company's products or services; (v) increases in the Company's operating
expenses resulting from increased costs of labor and/or consulting services; and
(vi) a failure to collect upon or otherwise secure the benefits of existing
contractual commitments with third parties, including customers of the Company.
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PART II - OTHER INFORMATION
Item 5. Other Information.
(a) None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4 Amended and Restated N-Viro International Corporation
Stock Option Plan
27 Financial Data Schedule
99 Press release dated May 13, 1998
(b) No reports were filed on Form 8-K during the quarter.
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N-VIRO INTERNATIONAL CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
N-VIRO INTERNATIONAL CORPORATION
Date: May 15, 1998 /s/ J. Patrick Nicholson
------------ ------------------------------------------------
J. Patrick Nicholson
Chairman , President and Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 1998 /s/ James K. McHugh
------------ -----------------------------------------------
James K. McHugh
Chief Financial Officer
(Principal Financial & Accounting Officer)
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EXHIBIT 4
AMENDED AND RESTATED
N-VIRO INTERNATIONAL CORPORATION
STOCK OPTION PLAN
I. PURPOSE.
The purpose of this N-Viro International Corporation Stock
Option Plan is to enable N-Viro International Corporation (the "Corporation") to
attract and retain qualified officers, other key employees and non-employee
directors, and to provide an incentive for such officers, key employers and
directors of the Corporation to expand and improve the profits and prosperity of
the Corporation.
The Stock Option Plan was approved by the Board of Directors
on May 10, 1993, and was approved by the Corporation's stockholders on May 13,
1994. The Board of Directors has approved this amendment and restatement of the
Stock Option Plan on February 13, 1998.
II. DEFINITIONS.
The following terms shall have the meanings shown:
2.1 "Board of Directors" shall mean the Board of Directors of the
Corporation.
2.2 "Change of Control" shall mean any event described in Section 6.1.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as the same
shall be amended from time to time.
2.4 " Committee" shall mean the Compensation Committee of the Board of
Directors, or such other Committee as the Board may appoint to administer this
Plan. To the extent grants to Named Executive Officers are to be approved, all
members of the Committee shall be directors who qualify as "Non-Employee
Directors" within the meaning of Rule 16b-3 and as "outside directors" within
the meaning of Treasury Regulation 1.162-27(e)(3).
2.5 "Common Stock" shall mean the common stock, par value $.01 per
share, of the Corporation, except as provided in Section 7.2 of the Plan.
2.6 "Consultant" shall mean any individual engaged to perform services
for the Corporation or its Subsidiaries on a regular and on-going basis who is
not an employee of the Corporation.
2.7 "Date of Grant" shall mean the date specified by the Committee on
which a grant of Options, or a grant or sale of Restricted Shares, shall become
effective, which shall not be earlier than the date on which the Committee takes
action with respect thereto.
2.8 "Fair Market Value" shall mean the fair market value of a share of
Common Stock of the Corporation as determined by the Committee. For periods when
the Common Stock is publicly traded, this shall be determined by reference to
the mean between the closing dealer bid and asked prices for the Common Stock
reported on the NASDAQ Smallcaps stock market or to the closing price quoted on
any other stock exchange on which the Common Stock is then traded, on the
preceding business day on which such prices were quoted. For periods in which no
trades or quotations have been reported for at least ten (10) business days, the
Fair Market Value may be determined by reference to an average of the
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trading prices reported during the prior month or in such other manner as the
Committee may deem to be an appropriate method of estimating the current market
value.
2.9 "ISOs" shall mean stock options granted by the Corporation which
are intended to qualify as incentive stock options under Section 422 of the
Code.
2.10 "Named Executive Officer" shall mean the Company's Chief Executive
Officer and the four highest compensated officers (other than the Chief
Executive Officer), as determined pursuant to the executive compensation
disclosure rules under the Securities Exchange Act of 1934.
2.11 "Nonemployee Director" shall mean a member of the Board of
Directors who is not an employee or Consultant of the Corporation or any
Subsidiary.
2.12 "Nonstatutory Options" shall mean stock options which are not
intended to qualify as ISOs.
2.13 "Option Agreement" shall mean a written agreement between the
Corporation and a Participant who has been granted Options under this Plan.
2.14 "Option Price" shall mean, with respect to any Option, the amount
designated in a Participant's Option Agreement as the price per share he or she
will be required to pay to exercise the Option and acquire the shares subject to
such Option.
2.15 "Options" shall mean any rights to purchase shares of Common Stock
granted pursuant to Article IV of this Plan, including both ISOs and
Nonstatutory Options.
2.16 "Participant" shall mean any current or former employee,
Consultant or director of the Corporation who has been granted Options or
Restricted Stock under the terms of this Plan.
2.17 "Plan" shall mean this N-Viro International Corporation Stock
Option Plan, as the same may be amended from time to time.
2.18 "Restricted Stock" shall mean shares of Common Stock that are
issued to eligible officers, key employees or Consultants and made subject to
restrictions in accordance with Article V of the Plan.
2.19 "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under Section 16 of the Securities Exchange Act of 1934,
as amended from time to time.
2.20 "Subsidiary" shall mean any corporation which, on the date of
determination, qualifies as a subsidiary corporation of the Corporation under
Section 425(f) of the Code.
2.21 "Ten Percent Shareholder" shall mean any Participant who at the
time an ISO is granted owns (within the meaning of Section 425(d) of the Code)
more than ten percent of the voting power of all classes of stock of the
Corporation.
III. ELIGIBILITY.
3.1 Key Employees. The Committee may grant Options and/or awards of
Restricted Stock under this Plan to any officer, key employee or Consultant of
the Corporation. In granting such awards and determining their form and amount,
the Committee shall give consideration to the functions and
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responsibilities of the individual, his or her potential contributions to
profitability and sound growth of the Corporation and such other factors as the
Committee may, in its discretion, deem relevant.
3.2 Named Executive Officers. Notwithstanding Section 3.1, any officer
who is a Named Executive Officer shall not be granted Options or awards of
Restricted Stock unless the grant has been approved by a Compensation Committee
of the Board of Directors satisfying the requirements stated in Section 2.4.
3.3 Directors. Members of the Board of Directors who are officers of
the Corporation shall be eligible for Options or other awards under this Plan on
the same terms as other officers. Other members of the Board of Directors shall
be eligible for Options only to the extent specified in this Section 3.3, as it
may be amended from time to time by the Board of Directors.
Each year, on the first business day following the Annual Meeting of
the Company's Stockholders, each Non-Employee Director shall automatically be
granted Nonstatutory Options to purchase 500 shares of Common Stock for each
meeting of the Board attended during the prior year. The Option Price for those
Options shall be equal to the Fair Market Value of the Common Stock on the
preceding business day. These Options shall first become exercisable six (6)
months after the Date of Grant.
IV. OPTIONS.
4.1 Terms and Conditions. The Committee may, in its sole discretion,
from time to time grant Options to any officer, key employee or Consultant of
the Corporation. The grant of an Option to an eligible officer, employee or
Consultant shall be evidenced by a written Option Agreement in substantially the
form approved by the Committee. Such Option shall be subject to the following
express terms and conditions and to such other terms and conditions, not
inconsistent with the terms of this Plan, as the Committee (or, in the case of a
Named Executive Officer, the Compensation Committee) may deem appropriate.
(a) Shares Covered. The Committee shall, in its discretion,
determine the number of shares of Common Stock to be covered by the Options
granted to any Participant. The maximum number of shares of Common Stock with
respect to which Options may be granted to any employee during any one calendar
year is 250,000 shares.
(b) Exercise Period. The term of each Option shall be for such
period as the Committee shall determine, but for not more than ten years from
the Date of Grant thereof. The Committee shall also have the discretion to
determine when each Option granted hereunder shall become exercisable, and to
prescribe any vesting schedule limiting the exercisability of such Options as it
may deem appropriate. If no other vesting schedule is specified by the
Committee, a grant of Options shall vest and become exercisable in five (5)
equal annual installments, with successive installments vesting, on the Date of
Grant and the first four anniversaries of the Date of Grant.
(c) Option Price. The Option Price payable for the shares of
Common Stock covered by any Option shall in no event be less than the Fair
Market Value of a share of Common Stock on the Date of Grant.
(d) Exercise of Options. A Participant may exercise his or her
Options from time to time by written notice to the Corporation of his or her
intent to exercise the Options with respect to a specified number of shares. The
specified number of shares will be issued and transferred to the Participant
upon receipt by the Corporation of (i) such notice and (ii) payment in full for
such shares, and
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(iii) receipt of any payments required to satisfy the Corporation's tax
withholding obligations pursuant to Article VI.
(e) Payment of Option Price Upon Exercise. Each Option
Agreement shall provide that the Option Price for the shares with respect to
which an Option is exercised may be paid to the Corporation at the time of
exercise. This payment generally must be made in the form of cash.
Alternatively, the Corporation may accept as payment of the Option Price:
(1) delivery of stock certificates for whole shares of Common Stock
already owned by the Participant for at least six months (at the time of
exercise), valued at their Fair Market Value on the business day immediately
preceding the date of exercise;
(2) delivery of a signed, irrevocable notice of exercise, accompanied
by payment in full of the Option Price by the Participant's stockbroker and an
irrevocable instruction to the Corporation to deliver the shares of Common Stock
issuable upon exercise of the Option promptly to the Participant's stockbroker
for the Participant's account; or
(3) an instruction to withhold as payment of the Option Price a portion
of the shares of Common Stock issuable under the Option with a Fair Market Value
(valued as of the business day immediately preceding the date of exercise) equal
to the Option Price (provided that the amount paid in cash shall not be less
than the par value of the shares issuable upon such exercise).
4.2 Effect of Termination of Employment, Retirement, Disability
or Death.
(a) If a Participant's employment (or other relationship, in
the case of a Consultant or director) with the Corporation is involuntarily
terminated, or is terminated by the Participant without the Corporation's
express consent, for any reason other than retirement, disability or death, his
or her unvested Options shall terminate upon the date of the termination of
employment, unless the Committee decides, in its sole discretion, to waive this
termination and amend the Participant's Option Agreement to so provide. Any
Option Agreement may include such provisions as the Committee deems advisable
with respect to the Participant's right to exercise his or her vested Options
subsequent to termination of employment, provided that if the Participant's
Option Agreement contains no other provision on this point, the Participant's
right to exercise the vested Options shall terminate ninety (90) days after the
date of termination of the Participant's employment. No ISO shall be exercisable
at any time more than ninety (90) days after the date of termination of
employment, except as provided in Section 4.2(b) or (c).
(b) Option Agreements may provide for an extended period of
continued exercisability following the Participant's retirement or other
termination with the consent of the Corporation, or subsequent to termination of
the Participant's employment by reason of total and permanent disability (within
the meaning of Section 22(e)(3) of the Code); provided, that, in no event shall
any Option be exercisable after the fixed termination date set forth in the
Participant's Option Agreement pursuant to Section 4.1(b). No ISO shall be
exercisable at any time subsequent to the expiration of the period of ninety
(90) days from the date of termination of employment, or the period of twelve
(12) months from the date of termination of the Participant's employment (or
other relationship with the Corporation) by reason of total and permanent
disability, as the case may be.
(c) Any Option Agreement may, in the Board of Director's sole
discretion, provide that, in the event the Participant dies while in the employ
of the Corporation (or while serving as an active Consultant), or while he or
she has the right to exercise his or her Options under the preceding Section
4.2(b), the Options may be exercised (to the extent it had become exercisable
prior to the time of the Participant's death), during such period of up to one
year after date of the Participant's death as the
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<PAGE> 5
Board of Directors deems to be appropriate, by the personal representative of
the Participant's estate, or by the person or persons to whom the Options shall
have been transferred by will or by the laws of descent and distribution.
(d) For purposes of this Section 4.2, a Participant's
employment with the Corporation shall be considered to terminate on the last day
for which the Participant is paid through the Corporation's payroll, unless the
Committee expressly determines that another date should be used as the date of
termination of employment. A termination of employment shall be considered
retirement if the Participant has reached normal retirement age under the
Corporation's retirement, or as otherwise mutually agreed by the Participant and
the Committee. Subject to applicable law, the Committee shall have the
discretion to determine whether and when a layoff or a leave of absence shall
constitute a termination of employment. Any such determination of the Committee
shall be final and conclusive, unless overruled by the Board.
4.3 Designation of Options as Incentive Stock Options. The Committee
may, in its discretion, specify that any Options granted to a Participant who is
an employee of the Corporation or any Subsidiary shall be ISOs qualifying under
Code Section 422. Each Option Agreement which provides for the grant of ISOs
shall designate that such Options are intended to qualify as ISOs. Each
provision of the Plan and of each Option Agreement relating to an Option
designated as an ISO shall be construed so that such Option qualifies as an ISO,
and any provision that cannot be so construed shall be disregarded.
Any Options granted under this Plan which are designated as
ISOs shall comply with the following additional requirements:
(a) The aggregate Fair Market Value (determined at the time an
ISO is granted) of the shares of Common Stock (together with all other stock of
the Corporation and all stock of any Subsidiary) with respect to which the ISOs
may first become exercisable by an individual Participant during any calendar
year, under all stock option plans of the Corporation (or any Subsidiaries)
shall not exceed $100,000. To the extent this limitation would otherwise be
exceeded, the Option shall be deemed to consist of an ISO for the maximum number
of shares which may be covered by ISOs pursuant to the preceding sentence, and a
Nonstatutory Option for the remaining shares subject to the Option.
(b) The Option Price payable upon the exercise of an ISO shall
not be less than the Fair Market Value of a share of Common Stock on the Date of
Grant.
(c) In the case of an ISO granted to a Participant who is a
Ten Percent Shareholder, the period of the Option shall not exceed five years
from the Date of Grant, and the Option Price shall not be less than 110 percent
of the Fair Market Value of Common Stock on the Date of Grant.
(d) No ISO granted under this Plan shall be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution. During the life of the Participant, any ISO shall be exercisable
only by the Participant.
4.4 Authority to Waive Restrictions on Exercisability. The Committee
may, in its discretion, determine at any time that all or any portion of the
Options granted to one or more Participants under the Plan shall,
notwithstanding any restrictions on exercisability imposed pursuant to Section
4.1(b), become immediately exercisable in full. The Committee may make such
further adjustments to the terms of such Options as it may deem necessary or
appropriate in connection therewith, including amending the Option Agreement to
recognize that all or a portion of the Options no longer qualify as ISOs under
Section 4.3.
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<PAGE> 6
4.5 Non-Assignability. Options granted under this Plan shall generally
not be assignable or transferable by the Participant, except by will or by the
laws of descent and distribution, or as described in the next paragraph.
Notwithstanding the foregoing, the Committee may, in its
discretion, permit a Participant to transfer all or a portion of his or her
Options to members of his or her immediate family, to trusts for the benefit of
members of his immediate family, or to family partnerships in which immediate
family members are the only partners, provided that the Participant may receive
no consideration for such transfers, and that such Options shall still be
subject to termination in accordance with Section 4.2 above in the hands of the
transferee.
V. RESTRICTED STOCK.
5.1 Rights As A Shareholder. Subject to Sections 3.2 and 3.3, the
Committee may, in its discretion, grant a Participant an award consisting of
shares of Restricted Stock. At the time of the award, the Committee shall cause
the Corporation to deliver to the Participant, or to a custodian or an escrow
agent designated by the Committee, a stock certificate or certificates for such
shares of Restricted Stock, registered in the name of the Participant. The
Participant shall have all the rights of a stockholder with respect to such
Restricted Stock, subject to the terms and conditions, including forfeiture or
resale to such Corporation, if any, as the Committee may determine to be
desirable pursuant to Section 5.3 of the Plan. The Committee may designate the
Corporation or one or more of its executive officers to act as custodian or
escrow agent for the certificates.
5.2 Awards and Certificates.
(a) A Participant granted an award of Restricted Stock shall
not be deemed to have become a stockholder of the Corporation, or to have any
rights with respect to such shares of Restricted Stock, until and unless such
Participant shall have executed a restricted stock agreement or other instrument
evidencing the award and delivered a fully executed copy thereof to the
Corporation and otherwise complied with the then applicable terms and conditions
of such award.
(b) When a Participant is granted shares of Restricted Stock,
the Corporation shall issue a stock certificate or certificates in respect of
shares of Restricted Stock. Such certificates shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such award substantially in the
following form:
"The transferability of the shares of stock
represented by this Certificate are subject to the terms and conditions
(including forfeiture) of a Restricted Stock Agreement entered into between the
registered owner and N-Viro International Corporation. A copy of such Agreement
is on file in the offices of the Secretary of the Company, 3450 W. Central
Avenue, Suite 328, Toledo, Ohio.
(c) Except as may be otherwise determined by the Committee (or
as required in order to satisfy the tax withholding obligations imposed under
Article VI of this Plan), Participants granted awards of Restricted Stock under
this Plan will not be required to make any payment or provide consideration to
the Corporation other than the rendering of services.
5.3 Restrictions and Forfeitures. Restricted Stock awarded to a
Participant pursuant to this Article V shall be subject to the following
restrictions and conditions:
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<PAGE> 7
(a) During a period set by the Committee of not less than six
(6) months, but not more than eight (8) years, commencing with the date of an
award (the "Restriction Period"), the Participant will not be permitted to sell,
transfer, pledge or assign the shares of Restricted Stock awarded to him or her.
Within these limits, the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate, or for the lapse of such
restrictions upon the achievement of such corporate or personal performance
targets as may be designated by the Committee.
(b) Except as provided in Section 5.3(a), the Participant
shall have with respect to the Restricted Stock all of the rights of a
stockholder of the Corporation, including the right to vote the shares and
receive dividends and other distributions.
(c) Subject to the provisions of Section 5.3(d), upon
termination of the Participant's employment with the Corporation (or status as a
Consultant) during the Restriction Period for any reason, all shares of
Restricted Stock with respect to which the restrictions have not yet expired
shall be forfeited to or repurchased by the Corporation.
(d) In the event of a Participant's retirement, permanent
total disability, or death, or in cases of special circumstances, the Committee
may, in its sole discretion, when it finds that a waiver would be in the best
interests of the Corporation, waive in whole or in part any or all remaining
restrictions with respect to such Participant's Restricted Stock.
(e) Any attempt to dispose of shares of Restricted Stock in a
manner contrary to the restrictions set forth herein shall be ineffective.
(f) Nothing in this Section 5.3 shall preclude a Participant
from exchanging any Restricted Stock for any other shares of the Common Stock
that are similarly restricted.
VI. TAX WITHHOLDING.
6.1 Withholding Taxes. The Corporation shall have the right to require
Participant who are employees to remit to the Corporation an amount sufficient
to satisfy any federal, state and local withholding tax requirements prior to
the delivery of any shares of Common Stock under the Plan. If a Participant
sells, transfers, assigns or otherwise disposes of shares of Common Stock
acquired upon the exercise of an ISO within two (2) years after the date on
which the ISO was granted or within one (1) year after the receipt of the shares
of Common Stock by the Participant, the Participant shall promptly notify the
Corporation of such disposition and the Corporation shall have the right to
require the Participant to remit to the Corporation the amount necessary to
satisfy any federal, state and local tax withholding requirements imposed on the
Corporation by reason of such disposition.
6.2 Methods of Withholding. Amounts which the Corporation is entitled
to withhold pursuant to Section 6.1, may, at the election of the Participant and
with the approval of the Committee, be (i) paid in cash by the Participant, (ii)
withheld from the Participant's salary or other compensation payable by the
Corporation, or (iii) withheld in the form of shares of Common Stock otherwise
issuable to the Participant upon exercise of an Option, that have a Fair Market
Value on the date on which the amount of tax to be withheld is determined (the
"Tax Date") not less than the minimum amount of tax the Corporation is required
to withhold. A Participant's election to have shares of Common Stock withheld
that are otherwise issuable shall be in writing, shall be irrevocable upon
approval by the Committee, and shall be delivered to the Corporation prior to
the Tax Date with respect to the exercise of an Option.
6.3 Tax Loans. In the discretion of the Committee, the Corporation may
make a loan to a Participant who is an employee (i) in connection with the
exercise of an Option in an amount not to
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<PAGE> 8
exceed the grossed up amount of any Federal and state taxes the Corporation is
required to withhold in connection with such exercise, for the purpose of
assisting such Participant to exercise such Option, or (ii) in connection with
the vesting of Restricted Stock in an amount equal to the grossed up amount of
any Federal and state taxes the Corporation is required to withhold as a result
of such vesting. Any such loan may be secured by the related shares of Common
Stock or other collateral deemed adequate by the Committee and will comply in
all respects with all applicable laws and regulations. The Committee may adopt
policies regarding eligibility for such loans, the maximum amounts thereof and
any terms and conditions not specified in the Plan upon which such loans will be
made. In no event will the interest rate be lower than the minimum rate at which
the Internal Revenue Service would not impute additional taxable income to the
Participant.
VII. AGGREGATE LIMITATION ON SHARES OF COMMON STOCK.
7.1 Number of Shares of Common Stock. Shares of Common Stock which may
be issued pursuant to Options or Restricted Stock awards granted under the Plan
may be either authorized and unissued shares of Common Stock or of Common Stock
held by the Corporation as treasury stock. The number of shares of Common Stock
which may be issued under this Plan shall not exceed 600,000 shares of Common
Stock, subject to such adjustments as may be made pursuant to Section 7.2.
For purposes of this Section 7.1(a), upon the exercise of an
Option, the number of shares of Common Stock available for future issuance under
the Plan shall be reduced by the number of shares actually issued to the
Participant, exclusive of any shares surrendered to the Company as payment of
the Option Price or withheld for payment of taxes.
Any shares of Common Stock subject to an Option which for any
reason is cancelled, terminates unexercised or expires shall again be available
for issuance under the Plan. In the event that any award of Restricted Stock is
forfeited, cancelled or surrendered for any reason, the shares of Common Stock
constituting such Restricted Stock award shall again be available for issuance
under the Plan.
7.2 Adjustments of Stock. The Committee shall proportionately adjust
the number of shares of Common Stock which may be issued under this Plan, the
number of shares of Common Stock subject to Options theretofore granted under
this Plan, the Option Price of such Options, the number of shares of Restricted
Stock in the event of any change or changes in the outstanding Common Stock of
the Corporation by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or any similar
transaction, and make any and all other adjustments deemed appropriate by the
Committee or the Board of Directors to prevent substantial dilution or
enlargement of the rights granted to any Participant.
New option rights may be substituted for the Options granted
under the Plan, or the Corporation's duties as to Options outstanding under the
Plan may be assumed by another corporation or by a parent or subsidiary (within
the meaning of Section 425 of the Code) of such other corporation, in connection
with any merger, consolidation, acquisition, separation, reorganization,
liquidation or like occurrence in which the Corporation is involved. In the
event of such substitution or assumption, the term Common Stock shall thereafter
include the stock of the corporation granting such new option rights or assuming
the Corporation's duties as to such Option.
7.3 Dissolution or Merger. Upon dissolution or liquidation of the
Corporation, or upon a merger or consolidation in which the Corporation is not
the surviving corporation, all Options outstanding under the Plan shall
terminate; provided, however, that each Participant (and each other person
entitled under this Plan to exercise an Option) shall have the right,
immediately prior to such
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<PAGE> 9
dissolution or liquidation, or such merger or consolidation, to exercise such
Participant's Options in whole or in part, but only to the extent that such
Options are otherwise exercisable under the terms of the Plan.
VIII. CHANGE IN CONTROL TRANSACTIONS.
8.1 Change in Control. For purposes of this Plan, a "Change in Control"
shall include any of the events described below:
(a) The acquisition in one or more transactions of more than
thirty percent (30.0%) of the Corporation's outstanding Common Stock, or the
equivalent in voting power of any classes or classes of securities of the
Corporation entitled to vote in elections of directors by any corporation, or
other person or group (within the meaning of Section 14(d)(3) of the Securities
Exchange Act of 1934, as amended) other than N-Viro Energy Systems, Ltd.;
(b) Any merger or consolidation of the Corporation into or
with another corporation in which the Corporation is not the surviving entity,
or any merger or consolidation of the Corporation into or with another
corporation in which the Corporation is the surviving entity in connection with
such merger or consolidation if at least thirty percent of the outstanding
shares of Common Stock outstanding immediately after the merger is completed is
held by persons who were not stock holders of the Corporation prior to the
merger;
(c) Any transfer or sale of substantially all of the assets
of the Corporation;
(d) Any person, or group of persons, announces a tender offer
for at least thirty percent (30%) of the Corporation's Common Stock.
provided that, no acquisition shares of Common Stock by any person in a public
offering or private placement of the Common Stock or other transaction approved
by the Board of Directors shall be considered a Change in Corporate Control.
8.2 Effect of Change in Control. In the event of a pending or
threatened Change in Control, the Committee may, in its sole discretion, take
any one or more of the following actions with respect to all Participants.
(i) Accelerate the exercise dates of any
outstanding Options, make all outstanding Options fully vested and exercisable;
(ii) Determine that all or any portion of
conditions associated with a Restricted Stock Award have been met;
(iii) Grant a cash bonus award to any of the holders
of outstanding Options;
(iv) Pay cash to any or all Option holders in
exchange for the cancellation of their outstanding Nonstatutory Options;
(v) Make any other adjustments or amendments
to the Plan and outstanding Options, Restricted Stock and/or substitute new
Options or other awards.
With respect to any Named Executive Officer, any such action shall be effective
only if it is approved by the Compensation Committee.
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<PAGE> 10
IX. MISCELLANEOUS.
9.1 General Restriction. Any Option or Restricted Stock award granted
under this Plan shall be subject to the requirement that, if at any time the
Board of Directors shall determine that any registration of the shares of Common
Stock, or any consent or approval of any governmental body, or any other
agreement or consent, is necessary as a condition of the granting of an Option
or other award, or the issuance of Common Stock in satisfaction thereof, such
Common Stock will not be issued or delivered until such requirement is satisfied
in a manner acceptable to the Committee.
9.2 Investment Representation. If the Committee determines that a
written representation is necessary in order to secure an exemption from
registration under the Securities Act of 1933, the Committee may demand that the
Participant deliver to the Corporation at the time of any exercise of any
Option, or at time of the transfer of shares of Restricted Stock, any written
representation that Committee of Directors determines to be necessary or
appropriate for such purpose, including but not limited to a representation that
the shares to be issued are to be acquired for investment and not for resale or
with a view to the distribution thereof. If the Committee makes such a demand,
delivery of a written representation satisfactory to the Committee shall be a
condition precedent to the right of the Participant to acquire such shares of
Common Stock.
9.3 No Right to Employment. Nothing in this Plan or in any agreement
entered into pursuant to it shall confer upon any participating employee the
right to continue in the employment of the Corporation or affect any right which
the Corporation may have to terminate the employment of such participating
employee.
9.4 Non-Uniform Determinations. The Committee's determinations under
this Plan (including, without limitation, its determinations of the persons to
receive Options, or awards of Restricted Stock, the form, amount and timing of
such awards and the terms and provisions of such awards) need not be uniform and
may be made by it selectively among Participants who receive, or are eligible to
receive, awards under this Plan, whether or not such Participants are similarly
situated.
9.5 No Rights as Shareholders. Participants granted Options under this
Plan shall have no rights as shareholders of the Corporation as applicable with
respect thereto unless and until certificates for shares of Common Stock are
issued to them.
9.6 Transfer Restrictions. The Committee's may determine that any
Common Stock to be issued by the Corporation upon the exercise of Options shall
be subject to such further restrictions upon transfer as the Committee
determines to be appropriate.
9.7 Fractional Shares. The Corporation shall not be required to issue
any fractional Common Shares pursuant to this Plan. The Committee may provide
for the elimination of fractions or for the settlement thereof in cash.
X. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
unless the Board has delegated its authority to a Committee consisting of such
members as may be appointed by the Board of Directors from time to time.
Notwithstanding the preceding sentence, the Board of Directors may delegate its
authority with respect to Named Executive Officers only to the Compensation
Committee. With respect to other Participants, the members of the Committee need
not be members of the Board of Directors, and shall serve at the pleasure of the
Board of Directors.
-20-
<PAGE> 11
(b) Except as provided in Section 3.2, the Committee shall
have the authority, in its sole discretion, from time to time: (i) to grant
Options, shares of Restricted Stock to officers, key employees, and Consultants
of the Company, as provided for in this Plan; (ii) to prescribe such
limitations, restrictions and conditions upon any such awards as the Committee
shall deem appropriate; (iii) to determine the periods during which Options may
be exercised and to accelerate the exercisability of outstanding Options, or the
vesting of Restricted Stock, as it may deem appropriate; (iv) to modify, cancel,
or replace any prior Options or other awards and to amend the relevant Option
Agreements or Restricted Stock Agreements with the consent of the affected
Participants, including amending such agreements to amend vesting schedules,
extend exercise periods or increase or decrease the Option Price for Options, as
it may deem to be necessary; and (v) to interpret the Plan, to adopt, amend and
rescind rules and regulations relating to the Plan, and to make all other
determinations and to take all other action necessary or advisable for the
implementation and administration of the Plan. With respect to any Named
Executive Officer, this authority shall be transferred to the Compensation
Committee, or may be exercised by the Board of Directors subject to the
condition that the express approval of the Compensation Committee must be
obtained.
(c) All actions taken by the Board of Directors shall be
final, conclusive and binding upon any eligible employee. No member of the Board
of Directors shall be liable for any action taken or decision made in good faith
relating to the Plan or any award thereunder.
(d) Each member of the Committee shall be entitled, in good
faith, to rely or act upon any report or other information furnished to him or
her by any officer or other employee of the Corporation or any Subsidiary, the
Corporation's independent certified public accountants, or any executive
compensation consultant, counsel, or other professional retained by the
Corporation to assist in the administration of the Plan. No member of the Board
of Directors or the Committee shall be liable for any action or determination
made by him or her in good faith.
XI. AMENDMENT AND TERMINATION.
11.1 Amendment or Termination of the Plan. The Board of Directors may
at any time terminate this Plan or any part thereof and may from time to time
amend this Plan as it may deem advisable; provided, however the Board of
Directors shall obtain stockholder approval of any amendment for which
stockholder approval is required under Section 422 of the Code, or the
stockholder approval requirements imposed on the Corporation by the Listing
Rules of any stock exchange on which the Common Stock is listed. The termination
or amendment of this Plan shall not, without the consent of the employee, affect
such employee's rights under an award previously granted.
11.2 Term of Plan. Unless previously terminated pursuant to Section
11.1, the Plan shall terminate on May 10, 2003, the tenth anniversary of the
date on which the Plan became effective, and no Options or awards of Restricted
Stock may be granted on or after such date.
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR QUARTER ENDING 3/31/98 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 104,723
<SECURITIES> 0
<RECEIVABLES> 1,284,793
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,914,764
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,280,282
<CURRENT-LIABILITIES> 1,332,253
<BONDS> 0
0
0
<COMMON> 27,858
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,280,282
<SALES> 0
<TOTAL-REVENUES> 1,032,257
<CGS> 0
<TOTAL-COSTS> 462,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,712
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,712
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99
-----------
NEWS RELEASE FOR IMMEDIATE RELEASE
For More Information Contact:
J. Patrick Nicholson
Chief Executive Officer
or
James K. McHugh
Chief Financial Officer
(419) 535-6374
N-VIRO INTERNATIONAL CORPORATION
REPORTS PROFITABLE FIRST QUARTER
Toledo, Ohio, May 14, 1998 -- N-Viro International Corporation [Nasdaq:
NVIC] reported net income of $68,000, or $.03 per share, for the first quarter
ended March 31, 1998, compared to net income of $164,000, or $.08 per share, for
the same period of 1997.
Total revenues of $1.03 million for 1998 were down 3 percent over the
same period for 1997, primarily due to decreased alkaline admixture billings.
James K. McHugh, CFO, said: "Although revenues were down slightly from a year
ago, we are very encouraged by continued improvement in our current ratio to
1.44 from 1.26 at December 31, 1997. Cash flow is improved, and our new domestic
and international license sales and contractual commitments have increased. We
believe these sales and commitments will translate into additional sources of
revenue in the future and, at the same time, demonstrate to other potential
sites how successful the N-Viro process can be."
J. Patrick Nicholson, Chairman and CEO, stated: "We are proud to have
achieved our fifth consecutive quarter of net profits. Moreover, we met targeted
objectives while additional resources were committed to research, international
sales and domestic marketing efforts.
"Recent federal action on nonpoint-source water pollution, animal
manure contamination and global warming reduction are efforts that have been
strongly encouraged by N-Viro. Bio-mineral technology, such as N-Viro Soil(TM),
is a powerful and economic solution to the problems created by widespread
organic waste mismanagement. The methane generated from unnecessary organic
disposal is clearly the largest single source of unregulated global warming
gases. These national, organic disposal practices can not be allowed if the
United States is to remain credible as a worldwide leader in environmental
protection," Nicholson concluded.
The Company cautions that words used in this document such as
"expects," "anticipates," "believes" and "may," as well as similar words and
expressions used herein, identify and refer to statements describing events that
may or may not occur in the future. These forward-looking statements and the
matters to which they refer are subject to considerable uncertainty that may
cause actual results to be materially different from those described herein.
Some, but not all, of the factors that could cause actual results to be
different than those anticipated or predicted by the Company include: (i) a
deterioration in economic conditions in general; (ii) a decrease in demand for
the Company's products or services in particular; (iii) the Company's loss of a
key employee or employees; (iv) regulatory changes, including changes in
environmental regulations, that may have an adverse affect on the demand for the
Company's products or services; (v) increases in the Company's operating
expenses resulting from increased costs of labor and/or consulting services; and
(vi) a failure to collect upon or otherwise secure the benefits of existing
contractual commitments with third parties, including customers of the Company.
- Tables to Follow -
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