UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(MARK ONE)
X ANNUAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
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
[GRAPHIC OMITTED]
N-VIRO INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 34-1741211
(STATE OR OTHER JURISDICTION OF (I.R.S. 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common Stock, par
value $.01 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes No X
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. Yes No X
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 at least the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company X
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter: $9,350,000.
The number of shares of Common Stock of the registrant outstanding as of March
20, 2009 was 4,344,775.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
----------------
The Registrant is filing this Amendment No. 1 on Form 10-K/A to its Annual
Report on Form 10-K for the fiscal year ended December 31, 2008 to include all
of the Part III information required by applicable SEC rules and regulations.
The Registrant intended to satisfy its obligations by incorporating by reference
into Part III of its Annual Report on Form 10-K the Registrant's definitive
proxy statement for its 2009 Annual Meeting of Stockholders. However, the
Registrant will be unable to file its definitive proxy statement within the time
period allotted for incorporation by reference under applicable SEC rules and
regulations. Accordingly, the Registrant hereby amends and replaces in their
entirety Items 10, 11, 12, 13 and 14 in its Annual Report on Form 10-K for the
year ended December 31, 2008.
As required by Rule 12b-15, the Registrant's principal executive officer
and principal financial officers are providing Rule 13a-14(a)/15(d)-14(a)
certifications. Accordingly, the Registrant hereby amends Item 15 in its Annual
Report on Form 10-K for the year ended dateYear2008Day31Month12December 31, 2008
to add such reports as Exhibits.
Except as described above, this amendment does not update or modify in any
way the disclosures in the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 2008, and does not purport to reflect any
information or events subsequent to the filing thereof.
We refer to N-Viro International Corporation as "N-Viro," "us," "we" and
"our" in this report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS OF THE COMPANY
The Board is currently composed of four Class I Directors: R. Francis
DiPrete, Carl Richard, Joseph H. Scheib and Mark D. Hagans; and three Class II
Directors: James H. Hartung, Timothy R. Kasmoch and Thomas L. Kovacik (whose
terms will expire upon the election and qualification of directors at the annual
meetings of stockholders to be held in 2009 and 2010, respectively). At each
annual meeting of stockholders, directors will be elected for a full term of two
years to succeed those directors whose terms are expiring.
R. Francis DiPrete has informed the Board that he will retire from the
Board immediately prior to the 2009 Annual Meeting of Stockholders, and his
service as a director of the Company will end at that time. The Board is
currently pursuing the nomination of a replacement for vacancy caused by Mr.
DiPrete's retirement, and expects to name a nominee in the proxy statement for
the 2009 Annual Meeting of Stockholders to be voted upon by stockholders at the
2009 Annual Meeting.
The following table sets forth the names and ages of our directors.
Name Age Position
------------------ --- --------------------------------------------------------
R. Francis DiPrete 54 Class I Director
Mark D. Hagans 42 Class I Director
James H. Hartung 66 Class II Director
Timothy R. Kasmoch 47 Class II Director, President and Chief Executive Officer
Thomas L. Kovacik 61 Class II Director
Carl Richard 82 Class I Director
Joseph H. Scheib 52 Class I Director
R. FRANCIS DIPRETE is a self-employed attorney and business consultant who has
served as a Director since May 2000. Mr. DiPrete is licensed to practice law in
Rhode Island and Connecticut, and has served as a director or officers of
various corporations, both public and private. Mr. DiPrete graduated from
Rutgers University with a B.A., and received his law degree from Roger Williams
University, School of Law. Mr. DiPrete is a member of the Board's Audit and
Compensation Committees. Mr. DiPrete has informed the Board that he will retire
from the Board immediately prior to the 2009 Annual Meeting of Stockholders, and
his service as a director of the Company will end at that time.
MARK D. HAGANS is an attorney and partner with the law firm of Plassman, Rupp,
Short & Hagans, of Archbold, Ohio, and his practice focuses on corporation,
taxation and banking law. Mr. Hagans serves on numerous Boards of directors,
including the Fulton County Health Center, where he is presently chair of the
Finance Committee. Mr. Hagans earned his law degree from the University of
Toledo. Mr. Hagans has served as our Director since December 2006 and is a
member of the Board's Audit, Finance and Technology Committees.
JAMES H. HARTUNG is the former President and Chief Executive Officer of the
Toledo-Lucas County (Ohio) Port Authority, a position he held from 1994 until
2008. Mr. Hartung has served as our Director since January 2006 and is a member
of the Board's Compensation and Nominating Committees. Mr. Hartung's son,
Howard, was our Chief Operating Officer until his resignation in January 2008.
TIMOTHY R. KASMOCH has been our President and Chief Executive Officer since
February 2006 and a Director since January 2006. Until April 1, 2007, Mr.
Kasmoch was also President and CEO of Tri-State Garden Supply, d/b/a
Gardenscape, a bagger and distributor of lawn and garden products, which has
provided trucking services to our Company. Mr. Kasmoch is a graduate of Penn
State University. Mr. Kasmoch is a member of the Board's Finance and Technology
Committees.
THOMAS L. KOVACIK is presently employed as the Executive Director of
Transportation Advocacy Group of Northwest Ohio ("TAGNO"), a strategic planning
organization working with local and Ohio transportation and economic development
officials. Mr. Kovacik was previously employed by us from 1992 to 1995 as
President of Great Lakes N-Viro, at the time one of our divisions. Mr. Kovacik
has also held various positions with local government, utilities and
environmental companies, and earned a masters degree from Bowling Green State
University in Geochemistry. Mr. Kovacik has served as our Director since
December 2006, and is a member of the Board's Compensation and Technology
Committees.
CARL RICHARD is the former Executive Vice-President of P.R. Transportation, a
trucking company located in Toledo, Ohio, and was a consultant to us from
January 2006 to April 2007. Mr. Richard served as Vice-President of C.A.
Transportation from 1988 through 2000 and as Vice-President of R.O.S.S.
Investments, a real estate holding company, from 1980 through 2000. Mr. Richard
has served as our Director since December 2004 and is a member of the Board's
Nominating Committee.
JOSEPH H. SCHEIB is the Chief Financial Officer of Broad Street Software Group,
a comprehensive software technology company located in Edenton, North Carolina,
a position he has held since June 2003. From May 2000 until February 2003, Mr.
Scheib was the Financial Operation Principal/Compliance Officer of Triangle
Securities, LLC of Raleigh, North Carolina, an asset management, brokerage and
investment banking firm. Mr. Scheib is a CPA and a graduate of East Carolina
University with a degree in accounting. Mr. Scheib has served as our Director
since December 2004, and is a member of the Board's Audit, Finance and
Nomination Committees.
KEY RELATIONSHIPS
None.
CORPORATE GOVERNANCE AND BOARD MATTERS
MEETINGS OF THE BOARD OF DIRECTORS
Our business, property and affairs are managed under the direction of our
Board. The Board presently consists of seven members. Our Board held three
formal meetings during 2008, consisting of two regular meetings and one special
meeting. Each director attended 100% of the aggregate number of meetings held
by the Board of Directors and the Committees of the Board of Directors on which
he served. It is the policy of the Company that the members of the Board attend
our annual stockholder meeting. Failure to attend annual meetings without good
reason is a factor the Nominating Committee will consider in determining whether
to renominate a current Board member. All seven members of the Board attended
the 2008 Annual Meeting.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD
We encourage stockholder communications with directors. Stockholders may
communicate with a particular director, all directors or the Chairman of the
Board by mail or courier addressed to him or the entire Board in care of James
K. McHugh, Corporate Secretary, N-Viro International Corporation, 3450 West
Central Avenue, Suite #328, Toledo, OH 43606. All correspondence should be in
a sealed envelope marked "Confidential" and will be forwarded unopened to the
director as appropriate.
BOARD INDEPENDENCE
Although we are not subject to the listing requirements of any stock
exchange, we are committed to a board in which a majority of our members consist
of independent directors, as defined under the NASDAQ rules. The Board has
reviewed the independence of its members, applying the NASDAQ standards and
considering other commercial, legal, accounting and familial relationships
between the Directors and us. The Board has determined that all of the
Directors are independent other than Mr. Kasmoch, who is not an independent
Director by virtue of his current position as our chief executive officer.
CODE OF ETHICS
We have adopted a Code of Ethics which covers the Chief Executive Officer
and Chief Financial Officer, which is administered and monitored by the Audit
Committee of the Board. A copy of the Code of Ethics is attached as Exhibit
14.1 to our Annual Report on Form 10-K for the year ended December 31, 2008, and
is posted on our web site at www.nviro.com.
-------------
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has the following standing committees: the Audit Committee, the
Compensation Committee, the Finance Committee, the Nominating Committee and the
Technology Committee. The composition and function of each Committee is set
forth below:
DIRECTOR AUDIT COMPENSATION NOMINATING FINANCE TECHNOLOGY
R. Francis DiPrete X X
Mark D. Hagans X X* X
James H. Hartung X X
Timothy R. Kasmoch X X*
Thomas L. Kovacik X* X
Carl Richard X
Joseph H. Scheib X* X* X
* Committee Chair
AUDIT COMMITTEE
Our Audit Committee consists of Messrs. Scheib, DiPrete and Hagans. In
accordance with our Audit Committee Charter, each of the Audit Committee members
must be "independent" as determined under the NASDAQ rules. The Audit Committee
currently is not subject to, and does not follow, the independence criteria set
forth in Section 10A of the Securities Exchange Act 1934, as amended. The Board
has determined that each of the directors who serve on the Audit Committee are
"independent" under the NASDAQ rules, meaning that none of them has a
relationship with us that may interfere with their independence from us and our
management. Further, the Board has determined that Mr. Scheib qualifies as a
"financial expert" as defined by the Securities and Exchange Commission (the
"SEC").
The Audit Committee recommends the appointment of the outside auditor,
oversees our accounting and internal audit functions and reviews and approves
the terms of transactions between us and related party entities. During 2008,
the Audit Committee met three times. The Audit Committee has retained UHY LLP
to conduct the audit for the year ended December 31, 2009. The Audit committee
is governed by a written charter, a copy of which was attached to the Proxy
Statement for our annual meeting held on June 8, 2007.
COMPENSATION COMMITTEE
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options pursuant to our stock option plans. The
Compensation Committee does not have a written charter. The Compensation
Committee currently consists of Messrs. Kovacik, DiPrete and Hartung. The
Compensation Committee met two times during 2008.
The Board has determined that a majority of the members of the committee
are "independent" as determined under the NASDAQ standards. Prior to January
2008, Mr. Hartung was not deemed to be "independent" due to his son, Howard
Hartung, serving as one of our executive officers. Despite his lack of
"independence," the Board determined that Mr. Hartung's exercise of independent
judgment was not affected by this relationship. In January 2008, Mr. Hartung's
son resigned from employment with us, and Mr. Hartung is considered to be an
"independent" director.
FINANCE COMMITTEE
The Finance Committee, consisting of Messrs. Hagans, Kasmoch and Scheib,
assists in monitoring our cash flow requirements and approves any internal or
external financing or leasing arrangements. The Finance Committee does not have
a written charter. This committee met once during 2008.
NOMINATING COMMITTEE
The Nominating Committee, consisting of Messrs. Scheib, Richard and
Hartung, considers and recommends to the Board qualified candidates for election
as Board members, and establishes and periodically reviews criteria for
selection of directors. The Nominating Committee does not have a written
charter. The committee met one time during 2008.
The Board has determined that a majority of the members of the committee
are "independent" as determined under the NASDAQ standards. Prior to January
2008, Mr. Hartung was not deemed to be "independent" due to his son, Howard
Hartung, serving as one of our executive officers. Despite his lack of
"independence," the Board determined that Mr. Hartung's exercise of independent
judgment was not affected by this relationship. In January 2008, Mr. Hartung's
son resigned from employment with us, and Mr. Hartung is considered to be an
"independent" director.
The Nominating Committee will consider candidates recommended by
stockholders, directors, officers, third-party search firms and other sources
for nomination as a director. The Committee considers the needs of the Board
and evaluates each director candidate in light of, among other things, the
candidate's qualifications. Recommended candidates must be of the highest
character and integrity, free of any conflicts of interest and possess the
ability to work collaboratively with others, and have the time to devote to
Board activities. All candidates will be reviewed in the same manner,
regardless of the source of the recommendation.
It is generally the policy of the Board to consider the stockholder
recommendations of proposed director nominees, if such recommendations are
seriously made and timely received under applicable SEC regulations. To be
considered "timely received," recommendations must be received in writing at our
principal executive offices, at N-Viro International Corporation, 3450 W.
Central Avenue, Suite 328, Toledo, Ohio 43606, Attention: Chairman, Nominating
Committee, c/o James K. McHugh, Corporate Secretary, no later than February 18,
2009.
All stockholder recommended candidates should be independent and possess
substantial and significant experience which would be of value to us in the
performance of the duties of a director. In addition, any stockholder director
nominee recommendation must include, at a minimum, the following information:
the stockholder's name; address; the number and class of shares owned; the
candidate's biographical information, including name, residential and business
address, telephone number, age, education, accomplishments, employment history
(including positions held and current position), and current and former
directorships; and the stockholder's opinion as to whether the stockholder
recommended candidate meets the definitions of "independent" under the NASDAQ
standards. In addition, the recommendation letter must provide the information
that would be required to be disclosed in the solicitation of proxies for
election of directors under federal securities laws. The stockholder must
include the candidate's statement that he/she meets these requirements; is
willing to promptly complete the Questionnaire required of all officers,
directors and candidates for nomination to the Board; will provide such other
information as the Committee may reasonably request; consents to serve on the
Board if elected; and acknowledges that such candidate will comply with the
Board's policy of tendering a resignation that will become effective
automatically only in the event that that candidate fails to receive a majority
of the votes cast in an election of directors subject to majority voting.
COMPENSATION OF DIRECTORS
Our Board of Directors has approved the payment of cash compensation to
non-employee directors in exchange for their service on the Board. The amount
of cash compensation to be received by each non-employee director is $1,000 per
regular meeting attended during each calendar year, and $500 per special meeting
attended. Our Board of Directors generally has four regular meetings per
calendar year. The Directors are reimbursed for out-of-pocket expenses incurred
in attending meetings of the Board of Directors or any committees thereof.
Under our current stock option plan, approved by the stockholders in May
2004 and amended by the stockholders in June 2008, each non-employee Director
automatically receives a grant of options to purchase 2,500 shares of Common
Stock for each regular meeting attended, and an option to purchase 1,250 shares
of Common Stock for each special meeting attended, subject to a maximum of
options to purchase 15,000 in any year.
Directors who are our employees do not receive any additional compensation
for serving as Directors. Directors who are our consultants do not receive any
additional cash compensation for serving as Directors, but do receive stock
options per the provisions of the N-Viro International Corporation Amended and
Restated 2004 Stock Option Plan.
DIRECTOR COMPENSATION
Fees Non-Equity Non-Qualified Non-Qualified
Earned or Incentive Incentive Deferred All
Paid in Stock Option Plan Plan Compensation Other
Name Cash Awards Awards Compensation Compensation Earnings Compensation (1) TOTAL
------------------ ---------- ------- ------- ------------- -------------- -------------- ----------------- --------
R. Francis DiPrete $ 4,000 - $13,525 - - - 2,500 $ 20,025
Joseph H. Scheib $ 4,000 - $13,525 - - - - $ 17,525
Carl Richard $ 4,000 - $13,525 - - - - $ 17,525
James H. Hartung $ 4,000 - $13,525 - - - - $ 17,525
Mark D. Hagans $ 4,000 - $13,525 - - - - $ 17,525
Thomas L. Kovacik $ 4,000 - $13,525 - - - - $ 17,525
Timothy R. Kasmoch - - - - - - - $ 0
---------- ------- ------- ------------- -------------- -------------- ----------------- --------
$ 24,000 $ 0 $81,150 $ 0 $ 0 $ 0 $ 2,500 $107,650
========== ======= ======= ============= ============== ============== ================= ========
(1) Represents consulting fees paid to Mr. DiPrete as approved by the Board of Directors.
EXECUTIVE OFFICERS OF THE COMPANY
Executive officers of the Company are appointed by the Board of Directors
and hold office at the pleasure of the Board. Set forth below is biographical
and other information on the current executive officers of the Company. Mr.
Kasmoch also serves as a member of the Board and his biographical information is
set forth above under the caption "Directors of the Company."
Name Age Position
------------------ --- ------------------------------------------------
Timothy R. Kasmoch 47 President and Chief Executive Officer
Robert W. Bohmer 39 V.P. Business Development and General Counsel
James K. McHugh 50 Chief Financial Officer, Secretary and Treasurer
ROBERT W. BOHMER has been our Vice-President for Business Development and
General Counsel since July 2007. Since 1996, Mr. Bohmer has been with the law
firm of Watkins, Bates and Carey, LLP, Toledo, Ohio. Since 2005, Mr. Bohmer
served as general outside counsel to the Company.
JAMES K. MCHUGH has served as our Chief Financial Officer, Secretary and
Treasurer since January 1997. Prior to that date, Mr. McHugh served the Company
and our predecessor company in various financial positions since April 1992.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own beneficially more than
ten percent (10%) of the shares of our Common Stock, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission,
or SEC. Copies of all filed reports are required to be furnished to us pursuant
to Section 16(a). Based solely on the reports received by us and on written
representations from reporting persons, we believe that the current directors
and executive officers complied with all applicable filing requirements during
the fiscal year ended December 31, 2008, with the following exceptions:
R. Francis DiPrete was late filing the following Form 4's (Statement of Changes
of Beneficial Ownership of Securities) during 2008: (i) a Form 4 was filed on
August 4, 2008, reporting late one sale of Common Stock on July 31, 2008, (ii) a
Form 4 was filed on August 6, 2008, reporting late two sales of Common Stock on
July 31, 2008 and one sale of Common Stock on August 1, 2008, (iii) a Form 4 was
filed on September 17, 2008, reporting late one sale of Common Stock on
September 12, 2008.
Timothy R. Kasmoch was late filing a Form 4 on January 5, 2009, reporting late
one purchase of Common Stock on December 30, 2008.
ITEM 11. EXECUTIVE COMPENSATION
The following table presents the total compensation paid to our Chief
Executive Officer, V.P. Business Development and Chief Financial Officer during
2008. There were no other executive officers who were serving at the end of
2008 and whose total compensation exceeded $100,000.
Non-Equity Nonqualified
Incentive Deferred
Name and Principal Stock Option Plan Compensation All Other
Position Year Salary Bonus Awards Awards Compensation Earnings Compensation TOTAL
------------------------- ---- -------- ----- ------- ------- ------------ ------------ ------------- --------
TIMOTHY R. KASMOCH 2008 $150,000 - - - - - $ 0 $150,000
President and Chief 2007 $139,788 - $ 7,875 $ 0 - - $ 0 $147,663
Executive Officer (1)
ROBERT W. BOHMER 2008 $150,000 - - $93,333 - - $ 0 $243,333
V.P. Business Develop. + 2007 $ 75,000 - - $70,000 - - $ 0 $145,000
General Counsel (2)
JAMES K. MCHUGH 2008 $100,044 - - - - - $ 552 $100,596
Chief Financial Officer, 2007 $ 93,945 - - - - - $ 360 $ 94,305
Secretary + Treasurer (3)
(1) Mr. Kasmoch was appointed CEO on dateYear2006Day14Month2February 14,
2006, effective with his employment date. Mr. Kasmoch received $7,875 for the
value of unregistered shares of Common Stock in 2007, pursuant to the terms of
his Employment Agreement signed February 14, 2006.
(2) Mr. Bohmer was appointed V.P. Business Development and General Counsel and
started his employment on July 1, 2007. He was granted 100,000 stock options
pursuant to our Amended and Restated 2004 Stock Option Plan, in accordance with
his Employment Agreement dated June 12, 2007. In June 2008, his employment
agreement was extended for two (2) additional years. These options were valued
at $70,000 for 2007, revalued at $93,333 for 2008 and $280,000 over the
four-year life of his employment agreement.
(3) Mr. McHugh is taxed on the imputed benefit of a life insurance policy
that benefits his personal beneficiary for one-half the face value and N-Viro
International Corporation for one-half the face value of the policy.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS STOCK AWARDS
---------------------------------------------------------------------- --------------------------
Equity
Incentive
Plan Market
# of # of Awards: # of Value of
Securities Securities # Securities Shares or Shares or
Underlying Underlying Underlying Units of Units of
Unexercised Unexercised Unexercised Option Option Stock That Stock That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not
Name Exercisable Unexercisable Options (#) Price (#) Date Vested (#) Vested ($)
------------------ -------------- -------------- ------------- ---------- ---------- ------------- -----------
Timothy R. Kasmoch 2,500 - - $ 1.70 2/15/16 - -
Timothy R. Kasmoch 250,000 - - $ 2.00 12/31/16 - -
Robert W. Bohmer 100,000 - - $ 2.80 6/13/17 - -
James K. McHugh 6,000 - - $ 5.00 5/12/10 - -
James K. McHugh 5,000 - - $ 1.50 12/15/10 - -
James K. McHugh 10,000 - - $ 1.50 12/7/11 - -
James K. McHugh 12,000 - - $ 2.10 11/11/14 - -
James K. McHugh 50,000 - - $ 2.00 12/31/16 - -
---------------------------------------------------
Equity Equity
Incentive Incentive
Plan Awards: Plan Awards:
# Unearned Market or
Shares, Payout Value
Units or of Unearned
Other Rights Shares, Units
That Have or Other Rights
Not That Have
Name Vested (#) Not Vested (#)
------------------ ------------- ----------------
Timothy R. Kasmoch - -
Timothy R. Kasmoch - -
Robert W. Bohmer - -
James K. McHugh - -
James K. McHugh - -
James K. McHugh - -
James K. McHugh - -
James K. McHugh - -
All options awards were made granted under the Company's current stock
option plan described under the caption "Equity Compensation Plan Information."
EMPLOYMENT AGREEMENTS
On February 13, 2007, we entered into a new employment agreement with Mr.
Timothy R. Kasmoch as our President and Chief Executive Officer. Mr. Kasmoch's
employment agreement is for a two-year term commencing on February 13, 2007 and
provides for automatic renewal of successive one-year terms unless notice is
provided ninety (90) days prior to the expiration of the then current term. The
agreement provides that Mr. Kasmoch is to receive an annual base salary of
$150,000, subject to an annual increase at the discretion of the Board. In
addition, Mr. Kasmoch is eligible for an annual cash bonus in an amount to be
determined, and otherwise subject to the discretion of, the Board. Under the
agreement, this determination is to be based upon the Board's complete review of
Mr. Kasmoch's performance, including the growth and profitability of the
Company.
Generally, Mr. Kasmoch's employment agreement may be terminated by us with or
without cause or by the Employee for any reason. If the agreement is terminated
by us without cause (other than by reason of the death or disability of Mr.
Kasmoch), Mr. Kasmoch will continue to receive his base salary then in effect
for the period between the termination date and the expiration date of the
agreement. If the agreement is terminated for any other reason by either party,
Mr. Kasmoch is entitled to receive his base salary through the effective date of
the termination plus any bonus or incentive compensation which has been earned
or payable through the termination date, as provided for in the agreement. A
copy of Mr. Kasmoch's Employment Agreement was attached to a Form 8-K as Exhibit
10.1, filed by us on March 12, 2007.
Effective April 2, 2008, we entered into a First Amendment to the Employment
Agreement (the "Amendment") with Mr. Kasmoch. The Amendment extends the term of
Mr. Kasmoch's Employment Agreement for an additional two years. As a result,
the term of Mr. Kasmoch's Employment Agreement will expire on February 12, 2011,
instead of February 12, 2009 as provided for in the original Employment
Agreement. Except for the extension of the term, there were no other changes to
Mr. Kasmoch's Employment Agreement. The Amendment was approved by our Board of
Directors at a regular meeting held on April 2, 2008.
In June 2007, we executed an Employment Agreement with Robert W. Bohmer as our
Vice-President of Business Development and General Counsel, which commenced July
1, 2007. Mr. Bohmer's agreement is for a two-year term at $150,000 per year
plus a stock option grant of 100,000 shares. In addition, Mr. Bohmer is
eligible for an annual cash bonus in an amount to be determined. Generally, the
Agreement may be terminated by us with or without cause or by the Employee for
any reason.
Effective June 19, 2008, we entered into a First Amendment to the Employment
Agreement (the "Amendment") with Mr. Bohmer. The Amendment extends the term of
Mr. Bohmer's Employment Agreement for an additional two years. As a result, the
term of Mr. Bohmer's Employment Agreement will expire on July 1, 2011, instead
of July 1, 2009 as provided for in the original Employment Agreement. Except
for the extension of the term, there were no other changes to Mr. Bohmer's
Employment Agreement. The Amendment was approved by our Board of Directors at a
regular meeting held on June 16, 2008.
EQUITY COMPENSATION PLAN INFORMATION
We maintain two stock option plans for directors, executive officers and
key employees. The current plan was approved by the stockholders in May 2004,
and amended by the stockholders in June 2008. The plan, as amended, authorizes
the Board of Directors or a committee thereof, to grant awards of incentive
stock options and non-qualified stock options for up to a maximum of 1,500,000
shares of Common Stock. The total number of options granted and outstanding as
of December 31, 2008 was 746,025, and the number of options available for future
issuance was 626,375. Currently, the plan is administered by the Compensation
Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
We had outstanding 4,347,707 shares of Common Stock, $.01 par value per
share, or the Common Stock, on April 27, 2009, which constitutes the only class
of our outstanding voting securities.
FIVE PERCENT STOCKHOLDERS
At April 27, 2009, the following were the only persons known to us to own
beneficially more than 5% of the outstanding shares of Common Stock:
Name Amount and Percentage of
Title of and Address of Nature of Outstanding Shares
Class Beneficial Owner Beneficial Ownership of Common Stock
------------ ----------------------------------------------------- -------------------- -------------------
Cooke Family Trust (1)
90 Grande Brook Circle, #1526
Common Stock Wakefield, Rhode Island 02879 753,887 17.16%
------------ ----------------------------------------------------- -------------------- -------------------
1. The shares attributed to the Cooke Family Trust include 708,887 shares owned
beneficially and 45,000 in Common Stock warrants exercisable to purchase an equal number of
shares of Common Stock. This information was derived from the Schedule 13D Amendment #4 filed
on June 13, 2008.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 27, 2009, unless otherwise
specified, certain information with respect to the beneficial ownership of our
shares of Common Stock by each person who is our director, a nominee for the
Board, each of the Named Executive Officers, and by our directors and executive
officers as a group. Unless otherwise noted, each person has voting and
investment power, with respect to all such shares, based on 4,347,707 shares of
Common Stock outstanding on the record date. Pursuant to the rules of the SEC,
shares of Common Stock which a person has the right to acquire within 60 days of
the date hereof pursuant to the exercise of stock options are deemed to be
outstanding for the purpose of computing the percentage ownership of such person
but are not deemed outstanding for the purpose of computing the percentage
ownership of any other person.
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership 1 Percent of Class
-------------- ------------------------------------- -------------------- -----------------
Common Stock R. Francis DiPrete 144,690 2 3.23%
Common Stock Mark D. Hagans 14,150 3 0.32%
Common Stock James H. Hartung 32,250 4 0.74%
Common Stock Timothy R. Kasmoch 410,500 5 8.83%
Common Stock Thomas L. Kovacik 12,500 6 0.29%
Common Stock Carl Richard 139,019 7 3.13%
Common Stock Joseph H. Scheib 194,888 8 4.39%
Common Stock Robert W. Bohmer 102,600 9 2.31%
Common Stock James K. McHugh 91,920 10 2.07%
All directors and executive officers
Common Stock as a group (9 persons) 1,142,517 11 22.00%
1. Except as otherwise indicated, all shares are directly owned with voting
and investment power held by the person named.
2. Represents 14,390 shares of Common Stock owned by Mr. DiPrete, 66,600
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $0.70 to $3.90 per share and 63,700 unregistered shares
issuable upon exercise of warrants which are currently exercisable at $2.00 per
share.
3. Represents 2,900 shares of Common Stock owned by Mr. Hagans and 11,250
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $2.00 to $3.90 per share.
4. Represents 2,500 shares of Common Stock owned by Mr. Hartung, 18,750
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $0.70 to $3.90 per share and 11,000 unregistered shares
issuable upon exercise of warrants which are currently exercisable at $2.00 per
share.
5. Represents 100,000 unregistered shares and 8,000 registered shares of
Common Stock owned by Mr. Kasmoch, 50,000 unregistered shares issuable upon
exercise of warrants which are currently exercisable at $1.85 per share and
252,500 shares issuable upon exercise of options which are currently exercisable
at prices ranging from $1.70 to $2.00 per share.
6. Represents 1,000 shares of Common Stock owned by Mr. Kovacik and 11,500
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $2.00 to $3.90 per share.
7. Represents 51,000 shares of Common Stock owned by Mr. Richard, 30,000
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $0.70 to $3.90 per share and 58,019 unregistered shares
issuable upon exercise of warrants which are currently exercisable at prices
ranging from $1.85 to $2.00 per share.
8. Represents 104,538 shares of Common Stock owned by Mr. Scheib, 33,750
shares issuable upon exercise of options which are currently exercisable at
prices ranging from $0.70 to $3.90 per share, 600 shares owned by a family
member over which Mr. Scheib acts as custodian and 56,000 unregistered shares
issuable upon exercise of warrants which are currently exercisable at prices
ranging from $1.85 to $2.00 per share.
9. Represents 2,600 shares of Common Stock owned by Mr. Bohmer and 100,000
shares issuable upon exercise of options which are currently exercisable at
$2.80 per share.
10. Represents 8,920 shares of Common Stock owned by Mr. McHugh and a total
of 83,000 shares issuable upon exercise of options which are currently
exercisable at prices ranging from $1.50 to $5.00 per share.
11. Represents 295,848 shares of Common Stock owned by the Directors and
Officers, 600 shares owned indirectly, 607,350 shares issuable upon exercise of
options which are currently exercisable at prices ranging from $0.70 to $5.00
per share and a total of 238,719 unregistered shares issuable upon exercise of
warrants which are currently exercisable at prices ranging from $1.85 to $2.00
per share.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
During the month of January, 2008, Howard Hartung, the son of James H.
Hartung, one of our directors, was employed as our Chief Operating Officer, an
executive officer position. Howard Hartung received a salary of $2,917 and no
options to purchase shares of Common Stock. Howard Hartung resigned as an
employee and officer of the Company in January, 2008.
DIRECTOR INDEPENDENCE
Although we are not subject to the listing requirements of any stock
exchange, we are committed to a board in which a majority of our members consist
of independent directors, as defined under the NASDAQ rules. Consequently, the
Board has reviewed the independence of its members, applying the NASDAQ
standards and considering other commercial, legal, accounting and familial
relationships between the Directors and us. The Board has determined that all
of the Directors are independent other than Mr. Kasmoch, who is not an
independent Director by virtue of his current position as our chief executive
officer, and Mr. Hartung, who was not independent during the beginning of 2008
by virtue of his son, Howard Hartung, serving as one of our executive officers.
Howard Hartung resigned as our employee in January 2008.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
Audit services of UHY LLP ("UHY") included the audit of our annual
financial statements for 2008 and 2007, and services related to quarterly
filings with the SEC through the reporting period ended September 30 in each of
those years. Fees for these services totaled approximately $67,000 for 2008 and
$58,000 for 2007.
AUDIT RELATED FEES
There were no fees billed for the years ended December 31, 2008 and
December 31, 2007 for assurance and related services by UHY that are reasonably
related to the performance of the audit or review of our financial statements.
TAX FEES
There were no fees billed for the years ended December 31, 2008 and
December 31, 2007 for professional services rendered by UHY for tax compliance,
tax advice, and tax planning.
ALL OTHER FEES
UHY provided assistance on accounting related matters totaling $-0- for the
year ended December 31, 2008 and $9,000 for the year ended December 31, 2007.
Although the Audit Committee Charter does not explicitly require it, the
Audit Committee approves all engagements of outside auditors before any work is
begun on the engagement.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
------------ -----------
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
N-VIRO INTERNATIONAL CORPORATION
Dated: April 30, 2009
By: /s/ Timothy R. Kasmoch
---------------------------
Timothy R. Kasmoch, Chief Executive Officer and President
(Principal Executive Officer)
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature
appears below constitutes and appoints James K. McHugh his attorney-in-fact,
each with the power of substitution, for him in any and all capacities, to sign
any amendments to this Form 10-K, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
Dated: April 30, 2009
/s/ Timothy R. Kasmoch* /s/ James K. McHugh
-------------------------- ----------------------
Timothy R. Kasmoch, James K. McHugh
Chief Executive Officer Chief Financial Officer,
President and Director Secretary and Treasurer
(Principal Executive Officer) (Principal Financial Officer)
/s/ James H. Hartung * /s/ R. Francis DiPrete *
---------------------- ----------------------------
James H. Hartung, Director R. Francis DiPrete, Director
and Chairman of the Board
/s/ Joseph H. Scheib * /s/ Mark D. Hagans *
--------------------------------- ----------------------
Joseph H. Scheib, Director Mark D. Hagans, Director
/s/ Carl Richard * /s/ Thomas L. Kovacik *
------------------- -------------------------
Carl Richard, Director Thomas L. Kovacik, Director
* by James K. McHugh, Attorney-In-Fact