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 September 30, 2009
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 small business issuer 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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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
As of November 4, 2009, 5,139,731 shares of N-Viro International
Corporation $ .01 par value common stock were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
N-VIRO INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
--------------------------- --------------------------
2009 2008 2009 2008
------------ ----------- ------------ -----------
REVENUES $ 1,131,916 $1,456,033 $ 3,874,572 $3,776,623
COST OF REVENUES 958,661 1,255,257 2,972,343 3,222,883
------------ ----------- ------------ -----------
GROSS PROFIT 173,255 200,776 902,229 553,740
OPERATING EXPENSES
Selling, general and administrative 2,073,773 378,913 2,807,089 1,327,315
------------ ----------- ------------ -----------
OPERATING LOSS (1,900,518) (178,137) (1,904,860) (773,575)
OTHER INCOME (EXPENSE)
Interest income 294 739 1,088 2,568
Interest expense (18,407) (16,718) (45,685) (47,343)
Gain on extinguishment of liabilities 65,258 - 79,739 84,158
------------ ----------- ------------ -----------
47,145 (15,979) 35,142 39,383
------------ ----------- ------------ -----------
LOSS BEFORE INCOME TAXES (1,853,373) (194,116) (1,869,718) (734,192)
Federal and state income taxes - - - -
------------ ----------- ------------ -----------
NET LOSS $(1,853,373) $ (194,116) $(1,869,718) $ (734,192)
============ =========== ============ ===========
Basic and diluted loss per share $ (0.35) $ (0.04) $ (0.41) $ (0.17)
============ =========== ============ ===========
Weighted average common shares outstanding - basic and diluted 5,301,274 4,331,854 4,537,207 4,252,025
============ =========== ============ ===========
See Notes to Consolidated Financial Statements
N-VIRO INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
Sept. 30, 2009 (Unaudited) December 31, 2008
--------------------------- -------------------
ASSETS
---------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents:
Unrestricted $ 30,563 $ 14,869
Restricted 139,899 138,812
Trade receivables, net of allowance for doubtful accounts of
35,000 at September 30, 2009 and $50,000 at December 31, 2008 375,954 494,141
Prepaid expenses and other current assets 126,913 64,331
Deferred costs - value of stock on consulting contracts 1,467,708 -
--------------------------- -------------------
Total current assets 2,141,037 712,153
PROPERTY AND EQUIPMENT, NET 1,472,990 1,781,290
INTANGIBLE ASSETS, NET 153,655 181,832
OTHER ASSETS 63,146 7,496
--------------------------- -------------------
$ 3,830,828 $ 2,682,771
=========================== ===================
LIABILITIES AND STOCKHOLDERS' EARNINGS (DEFICIT)
---------------------------------------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 356,202 $ 360,501
Line of credit 370,000 398,000
Accounts payable 898,658 1,047,364
Accrued liabilities 194,109 193,425
--------------------------- -------------------
Total current liabilities 1,818,969 1,999,290
Long-term debt, less current maturities 569,761 1,135,364
Long-term debt - convertible debentures, net of discount of $96,225 418,775 -
--------------------------- -------------------
Total liabilities 2,807,505 3,134,654
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EARNINGS (DEFICIT)
Common stock, $.01 par value; authorized 25,000,000 shares; issued
5,252,357 in 2009 and 4,468,025 in 2008 52,524 44,680
Additional paid-in capital 21,159,824 17,822,744
Accumulated deficit (19,504,135) (17,634,417)
--------------------------- -------------------
1,708,213 233,007
Less treasury stock, at cost, 123,500 shares 684,890 684,890
--------------------------- -------------------
Total stockholders' earnings (deficit) 1,023,323 (451,883)
--------------------------- -------------------
$ 3,830,828 $ 2,682,771
=========================== ===================
See Notes to Consolidated Financial Statements
N-VIRO INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended Sept. 30
2009 2008
---------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 124,676 $ (229,702)
CASH FLOWS FROM INVESTING ACTIVITIES
Net change to restricted cash and cash equivalents (1,087) (2,568)
Increase in investments - (125)
Proceeds from the sale of property and equipment - 293,773
Purchases of property and equipment (17,360) (1,013,811)
---------- ------------
Net cash used in investing activities (18,447) (722,731)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock warrants exercised 19,589 245,912
Net borrowings (repayments) on line of credit (28,000) 11,000
Principal payments on long-term obligations (689,713) (204,124)
Stock options exercised 20,445 172,892
Proceeds from convertible debentures issued, net of issuance costs 467,333 -
Borrowings under long-term obligations 119,811 801,108
---------- ------------
Net cash (used) provided by financing activities (90,535) 1,026,788
---------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 15,694 74,355
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 14,869 62,321
---------- ------------
CASH AND CASH EQUIVALENTS - ENDING OF PERIOD $ 30,563 $ 136,676
========== ============
Supplemental disclosure of cash flows information:
Cash paid during the nine months ended for interest $ 97,226 $ 88,828
========= ============
See Notes to Consolidated Financial Statements
N-VIRO INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 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 normal recurring accruals) necessary to present
fairly such information for the period and at the dates indicated. The results
of operations for the nine months ended September 30, 2009 may not be indicative
of the results of operations for the year ending December 31, 2009. 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 financial
statements and notes thereto appearing in the Company's Form 10-K for the period
ending December 31, 2008.
The financial statements are consolidated as of September 30, 2009,
December 31, 2008 and September 30, 2008 for the Company. All intercompany
transactions were eliminated.
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. There have
been no changes in the selection and application of critical accounting policies
and estimates disclosed in "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations" of our Annual Report on Form 10-K
for the year ended December 31, 2008.
NOTE 2. LONG-TERM DEBT AND LINE OF CREDIT
During the third quarter of 2009, the Company had a line of credit up to
$400,000 at the prime rate (3.25% at September 30, 2009) plus 1.5% and secured
by a first lien on all assets of the Company, with Monroe Bank + Trust, or the
Bank, with a maturity date of October 15, 2009. Two certificates of deposit
totaling $139,899 from the Bank are held as a condition of maintaining the line
of credit. In October, 2009, the line of credit was renewed through October
2010. At September 30, 2009, the Company had $30,000 of borrowing capacity
under the credit facility.
On December 28, 2006, the Company purchased the remaining ownership
interest in Florida N-Viro for $500,000 and financed $400,000 of it by
delivering a note (the "Note") to the seller, VFL Technology Corporation. The
Note was at 8% interest for 10 years, to be paid in annual installments,
including interest, of $59,612, subject to an offset for royalties due the
Company under a patent license agreement from the same party. On September 28,
2009, the Company remitted payment in full satisfaction of the Note, as
announced in a Form 8-K filing in October, 2009.
On May 18, 2009, the Company's approved an offering of up to $1,000,000 of
Convertible Debentures (the "Debentures"), convertible at any time into
unregistered common stock of the Company at $2.00 per share. The Debentures
mature at June 30, 2011. Between May 26, 2009 and September 30, 2009, as a part
of the Company's continuing offering of the Debentures, the Company issued
$515,000 of Debentures to a total of twenty (20) accredited investors. The
Debentures are issuable in $5,000 denominations, are unsecured and have a stated
interest rate of 8%, payable quarterly to holders of record. In July and
October 2009, the Company timely paid accrued interest to all Debenture holders
of record as of the quarter-end dates. At any time, the Company may redeem all
or a part of the Debentures at face value plus unpaid interest. As announced in
a Form 8-K filed in October, 2009, the Company extended the offering period to
issue any new debentures to November 15, 2009.
NOTE 3. COMMITMENTS AND CONTINGENCIES
In June 2009, the Company began to maintain an office in West Unity, Ohio
under a lease with D&B Colon Leasing, LLC, for one year. The total minimum
rental commitment for the years ending December 31, 2009 and 2010 is $17,500 and
$12,500, respectively. The total rental expense included in the statements of
operations for the nine months ended September 30, 2009 and 2008 is $10,000 and
$-0-, respectively.
The Company maintains an office in Daytona Beach under a lease with the
County of Volusia, Florida, which was renewed in March, 2009 for five years.
The total minimum rental commitment for the years ending December 31, 2009
through 2013 is $48,000 each year, and for 2014 is $12,000. The total rental
expense included in the statements of operations for the nine months ended
September 30, 2009 and 2008 is $36,000.
The Company leases processing equipment at its Florida location, which
began in 2006 under a four year contract. The total minimum rental commitment
for the years ended December 31, 2009 and 2010 is $31,000 and $3,000,
respectively. The total rental expense included in the statements of operations
for each of the nine months ended September 30, 2009 and 2008 is approximately
$23,100.
The Company also leases other processing equipment at its Florida location
which began in February 2008 under a three-year lease. The total minimum rental
commitment for the following years ended December 31 are as follows: 2009 -
$46,200; 2010 - $46,200; 2011 - 4,000. The total rental expense included in the
statements of operations for the nine months ended September 30, 2009 and 2008
is approximately $35,000 and $31,000, respectively.
The Company's facility in Toledo, Ohio, utilizes patented technologies to
stabilize and disinfect municipal biosolids pursuant to a permit to install from
the Ohio EPA that requires emissions be vented to a scrubber. In July 2008, an
inspection of the facility by local regulatory officials revealed that the
scrubber was not in operation. In February 2009, the Company agreed to enter
into an administrative consent decree with the Ohio Environmental Protection
Agency ("Ohio EPA") that resolved, without any admission of fact, violation, or
liability, Ohio EPA's claims that the Company operated the scrubber, an air
contaminant source, in violation of its permit to install. Pursuant to the
terms of the consent decree, the Company agreed to pay a civil penalty in the
amount of $20,000. Payment of the penalty will be made in quarterly
installments of $4,000 over a 15-month period. The first three installments
were paid on time in April, July and October 2009.
From time to time the Company is involved in legal proceedings and subject
to claims which may arise in the ordinary course of business. The Company is
not aware of any legal proceedings or material claims at this time.
NOTE 4. NEW ACCOUNTING STANDARDS
In June 2009, the Financial Accounting Standards Board (FASB) issued its
final Statement of Financial Accounting Standards (SFAS) No. 168 - The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles a replacement of FASB Statement No. 162. SFAS No. 168
made the FASB Accounting Standards Codification (the Codification) the single
source of U.S. GAAP used by nongovernmental entities in the preparation of
financial statements, except for rules and interpretive releases of the SEC
under authority of federal securities laws, which are sources of authoritative
accounting guidance for SEC registrants. The Codification is meant to simplify
user access to all authoritative accounting guidance by reorganizing U.S. GAAP
pronouncements into roughly 90 accounting topics within a consistent structure;
its purpose is not to create new accounting and reporting guidance. The
Codification supersedes all existing non-SEC accounting and reporting standards
and was effective for the company beginning July 1, 2009. Following SFAS No.
168, the FASB will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead, it will issue
Accounting Standards Updates. The FASB will not consider Accounting Standards
Updates as authoritative in their own right; these updates will serve only to
update the Codification, provide background information about the guidance, and
provide the bases for conclusions on the change(s) in the Codification. In the
description of Accounting Standards Updates that follows, references in
"italics" relate to Codification Topics and Subtopics, and their descriptive
titles, as appropriate.
ACCOUNTING STANDARDS UPDATES NOT YET EFFECTIVE
In June 2009, the FASB amended its guidance on determining whether an
entity's variable interests constitute controlling financial interests in a
variable interest entity. Among other things, the updated guidance replaces the
calculation for determining which entities, if any, have a controlling financial
interest in a variable interest entity (VIE) from a quantitative based risks and
rewards calculation, to a qualitative approach that focuses on identifying which
entities have the power to direct the activities that most significantly impact
the VIE's economic performance and the obligation to absorb losses of the VIE or
the right to receive benefits from the VIE. The update also requires ongoing
assessments as to whether an entity is the primary beneficiary of a VIE
(previously, reconsideration was only required upon the occurrence of specific
events), modifies the presentation of consolidated VIE assets and liabilities,
and requires additional disclosures about a company's involvement in VIEs. This
update will be effective for the company beginning January 1, 2010. Management
is currently evaluating the effect that adoption of this update will have, if
any, on the company's financial position and results of operations when it
becomes effective in 2010.
In October 2009 the FASB issued an update to its revenue recognition
standards that (1) removes the objective-and-reliable-evidence-of-fair-value
criterion from the separation criteria used to determine whether an arrangement
involving multiple deliverables contains more than one unit of accounting, (2)
replaces references to "fair value" with "selling price" to distinguish from
other fair value measurement guidance, (3) provides a hierarchy that entities
must use to estimate the selling price, (4) eliminates the use of the residual
method for allocation, and (5) expands the ongoing disclosure requirements. The
new standard is effective for the company beginning January 1, 2011 and can be
applied prospectively or retrospectively. Management is currently evaluating the
effect that adoption of this update will have, if any, on the company's
financial position and results of operations when it becomes effective in 2011.
Other Accounting Standards Updates not effective until after September 30,
2009, are not expected to have a significant effect on the company's
consolidated financial position or results of operations.
NOTE 5. SEGMENT INFORMATION
The Company has determined that its reportable segments are those that are
based on the Company's method of internal reporting, which segregates its
business by product category and service lines. The Company's reportable
segments are as follows:
Management Operations - This segment provides employee and management
services to operate the Toledo Ohio Wastewater Treatment Facility and the
Daytona/Volusia County Florida Treatment Facility.
Other Domestic Operations - Sales of alkaline admixtures, territory or
site licenses and royalty fees to use N-Viro technology in the United States.
Foreign Operations - Sales of alkaline admixtures, territory or site
licenses and royalty fees to use N-Viro technology in foreign operations.
Research and Development - This segment contracts with federal and
state agencies to perform or assist in research and development on the Company's
technology.
The accounting policies of the segments are the same as those described in
Note 1 to the Company's consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2008.
Fixed assets generating specific revenue are identified with their respective
segments and are accounted for as such in the internal accounting records. All
other assets, including cash and other current assets and all long-term assets,
other than fixed assets, are not identified with any segments, but rather the
Company's administrative functions. All of the net nonoperating income
(expense) are non-apportionable and not allocated to a specific segment. The
Company accounts for and analyzes the operating data for its segments generally
by geographic location, with the exception of the Management Operations and
Research and Development segments.
The Other Domestic and Foreign Operations segments differ in terms of
environmental and municipal legal issues, nature of the waste disposal
infrastructure, political climate and availability of funds for investing in the
Company's technology. These factors have not changed significantly over the
past several years and are not expected to change in the near term.
The Research and Development segment is unlike any other revenue segment in
that it is generated as a result of a specific project to conduct initial or
additional ongoing research into the Company's emerging technologies. The
Company has not recorded any revenue from this source since 2006.
For the third quarter of 2009, approximately 95% of the Company's revenue
was from Management Operations and 5% from Other Domestic Operations. Since the
second quarter of 2006, the percentage of the Company's revenue from Management
Operations has grown from 45% to as high as 96%, primarily the result of the
acquisition of the Florida operations at the end of 2006. Revenues for the
quarter ended September 30, 2009 include revenues from one major customer, the
City of Toledo, Ohio, which represented approximately 25% of total consolidated
revenue. Of the Company's customers billed through Florida N-Viro, two
represent consolidated revenue in excess of 10% and in total, the three
represent approximately 60% of the consolidated revenue for the Company.
The table below presents information about the segment profits and segment
identifiable assets used by the chief operating decision makers of the Company
for the periods ended September 30, 2009 and 2008 (dollars in thousands):
Management Domestic Foreign Research &
Operations Operations Operations Development Total
------------------------------------ ----------- ---------- ----------- -----
Quarter Ended September 30, 2009
---------------------------------------------------------------------------------
Revenues 1,079 53 - - 1,132
Cost of revenues 921 38 - - 959
------------------------------------ ----------- ---------- ----------- -----
Segment profits 158 15 - - 173
==================================== =========== ========== =========== =====
Quarter Ended September 30, 2008
---------------------------------------------------------------------------------
Revenues 1,403 53 - - 1,456
Cost of revenues 1,201 54 - - 1,255
------------------------------------ ----------- ---------- ----------- -----
Segment profits 202 (1) - - 201
==================================== =========== ========== =========== =====
Nine Months Ended September 30, 2009
---------------------------------------------------------------------------------
Revenues 3,682 163 30 - 3,875
Cost of revenues 2,835 138 - - 2,973
------------------------------------ ----------- ---------- ----------- -----
Segment profits 847 25 30 - 902
==================================== =========== ========== =========== =====
Nine Months Ended September 30, 2008
---------------------------------------------------------------------------------
Revenues 3,513 264 - - 3,777
Cost of revenues 2,974 249 - - 3,223
------------------------------------ ----------- ---------- ----------- -----
Segment profits 539 15 - - 554
==================================== =========== ========== =========== =====
A reconciliation of total segment profits to Consolidated income (loss)
before taxes for the periods ended September 30, 2009 and 2008 is as follows
(dollars in thousands):
Qtr. Ended Nine Months Ended
Sept. 30 Sept. 30
---------------- ------------------
2009 2008 2009 2008
-------- ------ -------- --------
Segment profits:
Segment profits for reportable segments $ 173 $ 201 $ 902 $ 554
Corporate selling, general and administrative expenses (2,073) (379) (2,807) (1,327)
Other income (expense) 47 (16) 35 39
-------- ------ -------- --------
Consolidated loss before taxes $(1,853) $(194) $(1,870) $ (734)
======== ====== ======== ========
NOTE 6. - BASIC AND DILUTED INCOME (LOSS) PER SHARE
Basic and diluted loss per share is computed using the treasury stock
method for outstanding stock options and warrants and the if-converted method
for convertible debt. For both the quarter and nine months ended September 30,
2009 and 2008, the Company incurred a net loss. Accordingly, no common stock
equivalents for outstanding stock options, warrants and convertible debt have
been included in the computation of diluted loss per share for these periods, as
the impact would be anti-dilutive.
NOTE 7. - COMMON STOCK
On July 23, 2009, the Company executed a Consulting Agreement, or the
Agreement, effective July 14, 2009, with Investor Relations Services, Inc. of
New Smyrna Beach, FL, or IRSI. The Company has appointed IRSI as its
non-exclusive stock promotion and strategic communications counsel for a term of
one year from the date of the Agreement. For its services, the Company issued
IRSI 500,000 shares of the Company's unregistered common stock. The shares were
issued in a private transaction pursuant to an exemption under Section 4(2) of
the Securities Act of 1933. Pursuant to the Agreement, the Company entered into
a Designation and Appointment agreement with Summit Trading Limited of New
Smyrna Beach, FL, to designate Summit Trading as the third party appointee to be
paid the shares of stock under the Consulting Agreement with IRSI. The Company
accounted for this transaction by recording a deferred current asset of
$1,212,500 that is amortized ratably over the 12 month period the services are
to be rendered. $675,000 of this cost associated with the 250,000 shares that
are not vested, is variable and could change according to price fluctuations in
the Company's common stock at the end of each reportable period the Agreement is
outstanding. The cost amortized for the quarter ended September 30, 2009 was
$253,000. The amount deferred at September 30, 2009 was $959,500.
On July 23, 2009, the Company executed a Finder's Fee and Non-Circumvention
Agreement with Summit Trading to locate possible merger and acquisition
candidates as well as sources of financing for the Company for a period of one
year, effective July 20, 2009. For its services, the Company issued Summit
Trading 250,000 shares of the Company's unregistered common stock. The shares
were issued in a private transaction pursuant to an exemption under Section 4(2)
of the Securities Act of 1933. The Company accounted for this transaction by
recording a deferred current asset of $625,000 that is amortized ratably over
the 12 month period the services are to be rendered. The cost amortized for the
quarter ended September 30, 2009 was $117,200. The amount deferred at September
30, 2009 was $507,800.
NOTE 8. - SUBSEQUENT EVENTS
The Company has performed a review of events subsequent to the balance
sheet date through November 16, 2009 and no matters required disclosure.
NOTE 9. - FAIR VALUE OF FINANCIAL INSTRUMENTS
As of September 30, 2009, the Company's financial instruments consist of
accounts receivable, accounts payable, long-term debt and convertible
debentures. The carrying values of accounts receivable and accounts payable
approximate their fair values due to their short maturity periods. The carrying
value of the Company's long-term debt and convertible debentures approximate
their fair values based on current market rates available to the Company.
NOTE 10. - STOCK OPTIONS
During the quarter ended September 30, 2009, the Company granted stock
options totaling 610,250 shares: 56,250 options to directors and 554,000 options
to officers. The options granted to the directors vested over a 6-month period
and were priced, pursuant to the Amended and Restated 2004 Stock Options Plan,
at a weighted average price of $2.08 for a total expense of $116,800. The
options granted to the officers vested immediately and were priced, pursuant to
the Amended and Restated 2004 Stock Options Plan, at a weighted average price of
$2.11 for a total expense of $1,168,800.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
This 10-Q contains statements that are forward-looking. We caution that
words used in this document such as "expects," "anticipates," "believes," "may,"
and "optimistic," 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 differ
materially from the results described in those statements. There are numerous
factors that could cause actual results to be different than those anticipated
or predicted by us, including: (i) a deterioration in economic conditions in
general; (ii) a decrease in demand for our products or services in particular;
(iii) our 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 our products or services; (v) increases in our operating
expenses resulting from increased costs of fuel, labor and/or consulting
services; (vi) our inability to exploit existing or secure additional sources of
revenues or capital to fund operations; (vii) a failure to collect upon or
otherwise secure the benefits of existing contractual commitments with third
parties, including our customers; and (viii) other factors and risks identified
in this Form 10-Q, or, as filed in Form 10-K for the year ending December 31,
2008 under the caption "Risk Factors." This list provides examples of factors
that could affect the results described by forward-looking statements contained
in this Form 10-Q; however, this list is not exhaustive and many other factors
could impact our business and it is impossible to predict with any accuracy
which factors could result in negative impacts. Although we believe that the
forward-looking statements contained in this Form 10-Q are reasonable, we cannot
provide you with any guarantee that the anticipated results will not be adverse
and that the anticipated results will be achieved. All forward-looking
statements in this Form 10-Q are expressly qualified in their entirety by the
cautionary statements contained in this section and you are cautioned not to
place undue reliance on the forward-looking statements contained in this Form
10-Q. In addition to the risks listed above, other risks may arise in the
future, and we disclaim any obligation to update information contained in any
forward-looking statement.
OVERVIEW
We were incorporated in Delaware in April 1993, and became a public company
in October 1993. We own and sometimes license various N-Viro processes and
patented technologies to treat and recycle wastewater and other bio-organic
wastes, utilizing certain alkaline and mineral by-products produced by the
cement, lime, electric utilities and other industries. To date, the N-Viro
Process has been commercially utilized for the recycling of wastewater sludge
from municipal wastewater treatment facilities. N-Viro SoilTM, produced
according to the N-Viro Process specifications, is an "exceptional quality"
sludge product under the 40 CFR Part 503 Sludge Regulations under the Clean
Water Act of 1987 (the "Part 503 Regs").
Our business strategy is to market our N-Viro technologies, which produces
an "exceptional quality" sludge product, as defined in the Part 503 Regs, with
multiple commercial uses. In this strategy, the primary focus is to identify
allies, public and private, who will allow the opportunity for N-Viro to build,
own and operate N-Viro facilities. Currently the company operates two biosolids
process facilities located in Toledo, Ohio and Daytona, Florida. Our goal is to
continue to operate these facilities and aggressively market our N-Viro BioDry
and N-Viro Fuel technologies. These patented processes are best suited for
current and future demands of both waste treatment as well as domestic and
international pressures for clean, renewable alternative fuel sources.
RESULTS OF OPERATIONS
The dollar amounts in the following sections are stated as approximations,
rounded to the nearest $1,000.
Total revenues were $1,132,000 for the quarter ended September 30, 2009
compared to $1,456,000 for the same period of 2008. The net decrease in revenue
is due primarily to a decrease in both product and facility management revenue.
Our cost of revenues decreased to $959,000 in 2009 from $1,255,000 for the same
period in 2008, but the gross profit margin increased to 15% for the quarter
ended September 30, 2009, from 14% for the same period in 2008. This increase
in gross profit margin is due primarily to the increase in the overall
percentage of revenue derived from facility management fees, and secondarily the
decrease in the overall percentage of revenue derived from product (N-Viro Soil
) sales, which decreased in the third quarter of 2009 compared to a year earlier
and which provide lower margins than our facility management fees. Operating
expenses increased substantially for the quarter ended September 30, 2009 over
the comparative prior year period, and was the single biggest factor for the
increased loss for 2009 compared to 2008. These changes collectively resulted
in a net loss of $1,853,000 for the quarter ended September 30, 2009 compared to
a net loss of $194,000 for the same period in 2008, an increase in the loss of
$1,659,000.
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2009 WITH THREE MONTHS ENDED
SEPTEMBER 30, 2008
Our overall revenue decreased $324,000, or 22%, to $1,132,000 for the
quarter ended September 30, 2009 from $1,456,000 for the quarter ended September
30, 2008. The net decrease in revenue was due primarily to the following:
a) Sales of alkaline admixture decreased $7,000 from the same period ended
in 2008 - this decrease was primarily the result of a decrease in demand with
our Ohio-area customers;
b) Revenue from the service fees for the management of alkaline admixture
decreased $34,000 from the same period ended in 2008 - this decrease was
attributed primarily to the Ohio-area customers, which decreased $32,000
compared to the same period in 2008; and
c) Our processing revenue, including facility management revenue, showed a
net decrease of $283,000 over the same period ended in 2008. Of this decrease,
facility management revenue of $125,000 is attributed to the Florida facility
and $13,000 to the Toledo facility, and, N-Viro Soil sales decreased by a total
of $145,000, which is all attributable to the Toledo facility.
Our gross profit decreased $28,000, or 14%, to $173,000 for the quarter
ended September 30, 2009 from $201,000 for the quarter ended September 30, 2008,
and the gross profit margin increased to 15% from 14% for the same periods. The
increase in gross profit margin is primarily due to the increase in the overall
percentage of revenue derived from facility management fees, and secondarily the
decrease in the overall percentage of revenue derived from product (N-Viro Soil
) sales, which decreased in the third quarter of 2009 compared to a year
earlier. The Toledo operation contributed $127,000 of gross profit on overall
revenue of $365,000, which was a decrease of $37,000 of gross profit over the
same period in 2008. The Florida operation contributed $30,000 of gross profit
on overall revenue of $714,000, which was a decrease of $8,000 of gross profit
over the same period in 2008.
Our operating expenses increased $1,695,000, or 447%, to $2,074,000 for the
quarter ended September 30, 2009 from $379,000 for the quarter ended September
30, 2008. The increase was primarily due to increases of $1,130,000 in payroll
and related costs, $337,000 in consulting fees and expenses, $111,000 in
director fees and expenses, $27,000 in amortization cost, $19,000 in travel and
office expenses, $18,000 in stockholder relations expense and $20,000 in
professional fees. Of the total increase of $1,578,000 in payroll, consulting
and director costs, $1,530,000 were non-cash costs relating to the issuances of
stock and stock options. Actual cash outlays in these categories increased for
the third quarter 2009 by a total of $48,000 over the same period in 2008.
As a result of the foregoing factors, we recorded an operating loss of
$1,900,000 for the quarter ended September 30, 2009 compared to an operating
loss of $178,000 for the quarter ended September 30, 2008, an increase in the
loss of $1,722,000.
Our net nonoperating income (expense) increased by $63,000 to net
nonoperating income of $47,000 for the quarter ended September 30, 2009 from net
nonoperating expense of $16,000 for the quarter ended September 30, 2008. The
increase in net nonoperating income was primarily due to the reversal of $65,000
of certain payables no longer due during the quarter in 2009.
We recorded net loss of $1,853,000 for the quarter ended September 30, 2009
compared to a net loss of $194,000 for the same period ended in 2008, an
increase in the loss of $1,659,000. Adding back non-cash expenses for
depreciation, amortization, stock and stock options charges and subtracting cash
out on capitalized assets and debt repayments, resulted in a cash operating loss
of $198,000 for the quarter ended in 2009. Similar non-cash expenses, cash out
and debt repayments for the same period in 2008 resulted in a cash operating
loss of $115,000, a decrease in cash operating income of $83,000 in the third
quarter 2009 versus 2008.
For the quarters ended September 30, 2009 and 2008, we have not recognized
the future tax benefit of current or prior period losses due to the Company's
historical operating losses. Accordingly, our effective tax rate for each
period was zero.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2009 WITH NINE MONTHS ENDED
SEPTEMBER 30, 2008
Our overall revenue increased $98,000, or 3%, to $3,875,000 for the nine
months ended September 30, 2009 from $3,777,000 for the nine months ended
September 30, 2008. The net increase in revenue was due primarily to the
following:
a) Sales of alkaline admixture decreased $71,000 from the same period
ended in 2008 - this decrease was primarily the result of the loss of revenue of
various customers in the Ohio area;
b) Revenue from the service fees for the management of alkaline admixture
decreased $11,000 from the same period ended in 2008 - this decrease was
attributed to the Ohio-area customers, which decreased $86,000 compared to the
same period in 2008, offset by an increase of $75,000 from our Florida
customers;
c) Our processing revenue, including facility management revenue, showed a
net increase of $149,000 over the same period ended in 2008. Of this increase,
facility management revenue of $217,000 was contributed by the Florida operation
and $7,000 from the Toledo facility, offset by a decrease in N-Viro Soil sales
by a combined total of $72,000, primarily attributable to the Toledo facility.
d) Our license fee revenue showed a net increase of $30,000 over the same
period ended in 2008, due to the receipt of contracted progress installment
payments from our Israeli licensee.
Our gross profit increased $348,000, or 63%, to $902,000 for the nine
months ended September 30, 2009 from $554,000 for the nine months ended
September 30, 2008, and the gross profit margin increased to 23% from 15% for
the same periods. The increase in gross profit margin is primarily due to the
increase in the overall percentage of revenue derived from facility management
fees. The Toledo operation contributed $458,000 of gross profit on overall
revenue of $1,292,000, which was an increase of $34,000 of gross profit over the
same period in 2008. The Florida operation contributed $388,000 of gross profit
on overall revenue of $2,389,000, which was an increase of $272,000 of gross
profit over the same period in 2008.
Our operating expenses increased $1,480,000, or 111%, to $2,807,000 for the
nine months ended September 30, 2009 from $1,327,000 for the nine months ended
September 30, 2008. The increase was primarily due to increases of $1,111,000
in payroll and related costs, $206,000 in consulting fees and expenses, $58,000
in director fees and expenses, $29,000 in travel and office expenses, $23,000 in
amortization cost and $10,000 in an increase to the allowance for bad debts. Of
the total increase of $1,375,000 in payroll, consulting and director costs,
$1,322,000 were non-cash costs relating to the issuances of stock and stock
options. Actual cash outlays in these categories increased for the nine months
ended in 2009 by a total of $53,000 over the same period in 2008.
As a result of the foregoing factors, we recorded an operating loss of
$1,905,000 for the nine months ended September 30, 2009 compared to an operating
loss of $773,000 for the nine months ended September 30, 2008, an increase in
the operating loss of $1,131,000.
Our net nonoperating income (expense) decreased by $4,000 to net
nonoperating income of $35,000 for the nine months ended September 30, 2009 from
net nonoperating income of $39,000 for the nine months ended September 30, 2008.
The decrease in net nonoperating income was primarily due to the reversal of
$80,000 of certain payables no longer due during the quarter in 2009, compared
to a gain on the extinguishment of a liability of $84,000 recorded in 2008,
resulting in a net decrease in the gain of $4,000.
We recorded a net loss of $1,870,000 for the nine months ended September
30, 2009 compared to a net loss of $734,000 for the same period ended in 2008,
an increase in the loss of $1,136,000. Adding back non-cash expenses for
depreciation, amortization, stock and stock options charges and subtracting cash
out on capitalized assets and debt repayments, resulted in a cash operating loss
of $145,000 for the nine months ended in 2009. Similar non-cash expenses, cash
out and debt repayments for the same period in 2008 resulted in a cash operating
loss of $332,000, a decrease in cash operating loss of $187,000 in the nine
months ended September 30, 2009 versus 2008.
For the nine month periods ended September 30, 2009 and 2008, we have not
recognized the future tax benefit of current or prior period losses due to the
Company's historical operating losses. Accordingly, our effective tax rate for
each period was zero.
LIQUIDITY AND CAPITAL RESOURCES
We had working capital of $322,000 at September 30, 2009, compared to a
working capital deficit of $1,287,000 at December 31, 2008, resulting in an
increase in working capital of $1,609,000. Current assets at September 30, 2009
included cash and cash equivalents of $170,000 (including restricted cash of
$140,000), which is an increase of $17,000 from December 31, 2008. The net
positive change in working capital from December 31, 2008 was primarily from an
increase to the deferred current asset of $1,468,000 for common stock given
pursuant to consulting contracts entered into during the quarter, an increase in
cash provided by operating activities of $125,000 for the nine months ended
September 30, 2009, further increased by the application of $467,000 of cash
from debentures (net of issuance costs), offset negatively by an increase in
payments over advances from short and long-term debt obligations of $575,000.
In the nine months ended September 30, 2009 our cash flow provided by
operating activities was $125,000, an increase of $354,000 over the same period
in 2008. The components of the increase in cash flow provided by operating
activities from 2008 was principally due to a $1,322,000 increase in stock
warrants and stock options issued for fees and services., a decrease of $254,000
in trade accounts receivable and an increase in other non-cash items of $52,000,
offset by a decrease of $137,000 in trade accounts payable, increase of $40,000
in prepaid and other assets and, an increase in the net loss of $1,097,000.
We have modified our business model and have been evolving away from sales
of alkaline admixture and royalty-based revenue agreements that typically
generate a higher gross profit margin, to long-term and sustainable revenue
based on integrated N-Viro technology and operations, but typically generating a
lower gross profit margin. From 2006 to the third quarter of 2009, the
percentage of combined revenues generated from our owned and operated facilities
in Toledo and Volusia County was: 2006 - 46%; 2007 - 77%; 2008 - 94%; through
third quarter 2009 - 95%. We believe this shift will allow us to enhance future
revenue and profits through growth, efficiency and revenue optimization.
The normal collection period for accounts receivable is approximately 30-60
days for the majority of customers. This is a result of the nature of the
license contracts, type of customer and the amount of time required to obtain
the information to prepare the billing. For 2008 and continuing into 2009, our
customers slowed the overall payment rate on our outstanding receivables, which
in turn contributed to us extending payment times to our vendors on our
payables. We make no assurances that payments from our customer or payments to
our vendors will become shorter and this may have an adverse impact on our
continuing operations.
During the third quarter of 2009, we had a line of credit up to $400,000 at
the prime rate (3.25% at September 30, 2009) plus 1.5% and secured by a first
lien on all of our assets, with Monroe Bank + Trust, or the Bank, with a
maturity date of October 15, 2009. Two certificates of deposit totaling
$139,899 from the Bank are held as a condition of maintaining the line of
credit. In October, 2009, the line of credit was renewed through October 2010.
At September 30, 2009, we had $30,000 of borrowing capacity under the credit
facility.
On December 28, 2006, we purchased the remaining ownership interest in
Florida N-Viro for $500,000 and financed $400,000 of it by delivering a note
(the "Note") to the seller, VFL Technology Corporation. The Note was at 8%
interest for 10 years, to be paid in annual installments, including interest, of
$59,612, subject to an offset for royalties due us under a patent license
agreement from the same party. On September 28, 2009, we remitted payment in
full satisfaction of the Note, as announced in a Form 8-K filing in October,
2009.
On May 18, 2009, we approved an offering of up to $1,000,000 of Convertible
Debentures (the "Debentures"), convertible at any time into our unregistered
common stock at $2.00 per share. The Debentures mature at June 30, 2011.
Between May 26, 2009 and September 30, 2009, as a part of our continuing
offering of the Debentures, we issued $515,000 of Debentures to a total of
twenty (20) accredited investors. The Debentures are issuable in $5,000
denominations, are unsecured and have a stated interest rate of 8%, payable
quarterly to holders of record. In July and October, 2009, we timely paid
accrued interest to all Debenture holders of record as of the quarter-end dates.
At any time we may redeem all or a part of the Debentures at face value plus
unpaid interest. As announced in a Form 8-K filed in October, 2009, we extended
the offering period to issue any new debentures to November 15, 2009.
For the remainder of 2009 and into 2010, we expect to improve operating
results and have adequate cash or access to cash to adequately fund operations
by focusing on existing and expected new sources of revenue, especially from our
N-Viro Fuel technology, and cash generated from equity issuances and exercises
of outstanding warrants and options. We expect that market developments
favoring cleaner burning renewable energy sources and ongoing discussions with
companies in the fuel and wastewater industries could provide enhanced liquidity
and have a positive impact on future operations. We continue to pursue
opportunities with strategic partners for the development and commercialization
of the patented N-Viro Fuel technology. In addition, we are focusing on the
development of regional biosolids processing facilities, and are currently in
negotiations with potential partners to permit and develop independent, regional
facilities.
There can be no assurance these discussions will be successful or result in
new revenue or cash funding sources for the company. Our failure to achieve
improvements in operating results, including through these potential sources of
revenue, or in our ability to adequately finance or secure additional sources of
funds would likely have a material adverse effect on our continuing operations.
OFF-BALANCE SHEET ARRANGEMENTS
At September 30, 2009, we did not have any material commercial commitments,
including guarantees or standby repurchase obligations, or any relationships
with unconsolidated entities or financial partnerships, including entities often
referred to as structured finance or special purpose entities or variable
interest entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.
From time to time, during the normal course of business, we may make
certain indemnities, commitments and guarantees under which we may be required
to make payments in relation to certain transactions. These include: (i)
indemnities to vendors and service providers pertaining to claims based on our
negligence or willful misconduct and (ii) indemnities involving the accuracy of
representations and warranties in certain contracts. Pursuant to Delaware law,
we may indemnify certain officers and directors for certain events or
occurrences while the officer or director is, or was, serving at our request in
such capacity. We also have director and officer insurance coverage that limits
our exposure and enables us to recover a portion of any future amounts that we
may pay for indemnification purposes. We believe the applicable insurance
coverage is generally adequate to cover any estimated potential liability for
which we may provide indemnification. The majority of these indemnities,
commitments and guarantees do not provide for any limitation of the maximum
potential for future payments we could be obligated to make. We have not
recorded any liability for these indemnities, commitments and other guarantees
in the accompanying Consolidated Balance Sheets.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual cash obligations at
September 30, 2009, and the effect these obligations are expected to have on
liquidity and cash flow in future periods:
Payments Due By Period
Note # Total Less than 1 year 2 - 4 years 5 - 6 years after 6 years
------- ---------- ----------------- ------------ ------------ -------------
Purchase obligations (1) 54,600 54,600 - - -
Long-term debt obligations and related interest (2) 1,551,936 416,205 1,134,884 847 -
Operating leases (3) 324,610 132,590 168,020 24,000 -
Capital lease obligations - - - - -
Line of Credit obligation 370,000 370,000 - - -
Other long-term debt obligations - - - - -
---------- ----------------- ------------ ------------ -------------
Total contractual cash obligations $2,301,146 $ 973,395 $ 1,302,904 $ 24,847 $ -
========== ================= ============ ============ =============
(1) Purchase obligations include agreements to purchase services that are enforceable and legally
binding on the Company and that specify all significant terms and the approximate timing of the
transaction. Purchase obligations exclude agreements that are cancelable without penalty.
(2) Amounts represent the expected cash payments of our long-term obligations.
(3) Amounts represent the expected cash payments of our operating lease obligations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) that are
designed to ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Commission's rules and forms, and that such information is
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As stated in our Form 10-K for the year ended December 31, 2008, we
reported that, based on the assessment of our principal executive officer and
principal financial officer, our internal controls over financial reporting were
not effective as of December 31, 2008, and we identified a material weakness.
We continue to develop and implement a remediation plan to address the
material weakness. To date, our remediation efforts have included adoption of
an expense reimbursement policy and the hiring of an employee to assist in the
financial area of our business. However, due to our continuing lack of
financial resources to hire and train accounting and financial personnel, we
have not yet fully remedied this material weakness.
Other than the remedial measures described above, there were no other
changes in our internal control over financial reporting that have materially
affected, or are likely to materially affect our internal control over financial
reporting during the quarter ended September 30, 2009.
While we are not aware of any material errors to date, our inability to
maintain the adequate internal controls may result in a material error in our
financial statements. Further, because of its inherent limitations, internal
controls over financial reporting may not prevent or detect misstatements. It
should be noted that any system of controls, however well designed and operated,
can provide only reasonable, and not absolute, assurance that the objectives of
the system will be met. In addition, the design of any control system is based
in part upon certain assumptions about the likelihood of future events. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Our facility in Toledo, Ohio, utilizes patented technologies to stabilize
and disinfect municipal biosolids pursuant to a permit to install from the Ohio
EPA that requires emissions be vented to a scrubber. In July 2008, an
inspection of the facility by local regulatory officials revealed that the
scrubber was not in operation. In February 2009, we agreed to enter into an
administrative consent decree with the Ohio Environmental Protection Agency
("Ohio EPA") that resolved, without any admission of fact, violation, or
liability, Ohio EPA's claims that we operated the scrubber, an air contaminant
source, in violation of its permit to install. Pursuant to the terms of the
consent decree, we agreed to pay a civil penalty in the amount of $20,000.
Payment of the penalty will be made in quarterly installments of $4,000 over a
15-month period. The first three installments were paid on time in April, July
and October 2009.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 23, 2009, the Company executed a Consulting Agreement, or the
Agreement, effective July 14, 2009, with Investor Relations Services, Inc. of
New Smyrna Beach, FL., or IRSI. The Company has appointed IRSI as its
non-exclusive stock promotion and strategic communications adviser for a term of
one year from the date of the Agreement. For its services, the Company issued
IRSI 500,000 shares of the Company's unregistered common stock. The shares were
issued in a private transaction pursuant to an exemption under Section 4(2) of
the Securities Act of 1933. Pursuant to the Agreement, the Company entered into
a Designation and Appointment agreement with Summit Trading Limited of New
Smyrna Beach, FL., to designate Summit Trading as the third party appointee to
be paid the shares of stock under the Consulting Agreement with IRSI.
On July 23, 2009, the Company executed a Finder's Fee and Non-Circumvention
Agreement with Summit Trading to locate possible merger and acquisition
candidates as well as sources of financing for the Company for a period of one
year, effective July 20, 2009. For its services, the Company issued Summit
Trading 250,000 shares of the Company's unregistered common stock. The shares
were issued in a private transaction pursuant to an exemption under Section 4(2)
of the Securities Act of 1933.
In addition to the preceding, in the third quarter of 2009 we issued a
total of 13,500 shares of unregistered stock to four individuals. A board
member, Joseph Scheib, was issued 7,000 shares pursuant to partial exercises of
a warrant in September 2009 realizing total gross cash proceeds of $14,000.
These proceeds were used for operating expenses. And, two stockholders were
issued a total of 6,250 shares pursuant to their finder's fee agreements for a
total of $125,000 of debentures sold. We also issued 250 shares to David
Mercer, one of our employees, pursuant to his employment arrangement.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
This item is incorporated by reference to Items 7.01 and 8.01 as filed in
Form 8-K on August 11, 2009, dated August 5, 2009.
ITEM 5. OTHER INFORMATION
(a) None
(b) None
ITEM 6. EXHIBITS
Exhibits:
See Exhibit Index below.
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: November 16, 2009 /s/ Timothy R. Kasmoch
----------------- ----------------------
Timothy R. Kasmoch
Chief Executive Officer and President
(Principal Executive Officer)
Date: November 16, 2009 /s/ James K. McHugh
----------------- --------------------
James K. McHugh
Chief Financial Officer, Secretary and Treasurer
(Principal Financial & Accounting Officer)
EXHIBIT INDEX
=============
Exhibit No. Document
---------- --------
31.1 Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.
31.2 Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes -
Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.