10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:  0-21802

N-VIRO INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware                                                                                  34-1741211

(State or other jurisdiction of incorporation or organization)                                            (I.R.S. Employer Identification No.)

2254 Centennial Road    Toledo, Ohio                                         43617

(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  o     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  o     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  o

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  x     No  o

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.  o

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  o     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:   $9,036,000.

The number of shares of Common Stock of the registrant outstanding as of March 27, 2015 was 8,550,411.

DOCUMENTS INCORPORATED BY REFERENCE

None

EXPLANATORY NOTE

The sole purpose of this Amendment No.1 on Form 10-K/A (the “Amendment”) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”) filed with the U.S. Securities and Exchange Commission (“the “Commission”) on April 15, 2015 (the “Filing Date”), is to comply with a request we received from the Commission to resubmit the XBRL files for the 2014 Annual Report so that the Commission can make the files available on its website to the public.  The request arose from these circumstances:  On the Filing Date, the Company’s submission to the Commission for the filing did include six (6) XBRL Data Files (the “Original XBRL Data Files”) for the 2014 Annual Report.  Although the Commission accepted our filing as of April 15, 2015, they have since informed us certain transmission issues affected the Original XBRL Data Files and have prevented the Commission from making the Original XBRL Data Files available to the public on its web site.  As a consequence, the Commission requested the Company electronically resubmit the XBRL Data Files for the 2014 Annual Report in accordance with Rule 405 of Regulation S-T.  Accordingly, in this Amendment to the 2014 Annual Report, the Company has resubmitted the XBRL Data Files such that they will be in form to be posted on the Commission’s website.  Please note: (1)  although the Company has made all of the Original XBRL Data Files available to the public on its site, www.nviro.com, since April 15, 2015, the Company will replace the Original XBRL Data Files with the files submitted to the Commission in this Amendment; (2) except for the replacement of the Original XBRL Data Files by the files attached to this Amendment, there are no other changes to the information in the Company’s 2014 Annual Report submitted as part of this Amendment.

As required by Rule 12b-15, the Company's principal executive officer and principal financial officer are providing Rule 13a-14(a)/15(d)-14(a) certifications.  Accordingly, the Company hereby amends Item 15 in its Annual Report on Form 10-K for the year ended December 31, 2014 to provide those reports as Exhibits, in addition to Exhibit 101 for the XBRL documents.

Except as described above, no other changes have been made to the Form 10-K.  This amendment speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-K.

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.

101.INS

XBRL Instance Document #

101.SCH

XBRL Taxonomy Extension Schema #

101.CAL

XBRL Taxonomy Extension Calculation Linkbase #

101.LAB

XBRL Taxonomy Extension Label Linkbase #

101.PRE

XBRL Taxonomy Extension Presentation Linkbase #

101.DEF

XBRL Taxonomy Definition Linkbase Document #

#

Only included in Form 10-K filed electronically with the Securities and Exchange Commission.

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 29, 2015

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/A (Amendment No. 1), 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 29, 2015

/s/  Timothy R. Kasmoch*

/s/  James K. McHugh

Timothy R. Kasmoch, Chief Executive Officer,

James K. McHugh

President and Director

Chief Financial Officer, Secretary and Treasurer

(Principal Executive Officer)

(Principal Financial Officer)

/s/  James H. Hartung*

/s/  Mark D. Hagans*

James H. Hartung, Director & Chairman of the Board

Mark D. Hagans, Director

/s/  Joseph H. Scheib*

/s/  Thomas L. Kovacik*

Joseph H. Scheib, Director

Thomas L. Kovacik, Director

/s/  Carl Richard*

/s/  Michael Burton-Prateley*

Carl Richard, Director

Michael Burton-Prateley

/s/  Gene K. Richard*

Gene K. Richard, Director

* by James K. McHugh, Attorney-In-Fact

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Timothy R. Kasmoch, certify that:

1.

I have reviewed this annual report on Form 10-K, as amended by Form 10-K/A (Amendment No. 1), of N-Viro International Corporation;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures  and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:   April 29, 2015

/s/  Timothy R. Kasmoch

Timothy R. Kasmoch

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James K. McHugh, certify that:

1.

I have reviewed this annual report on Form 10-K, as amended by Form 10-K/A (Amendment No. 1), of N-Viro International Corporation;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures  and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:   April 29, 2015

/s/  James K. McHugh

James K. McHugh

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Timothy R. Kasmoch, as the Chief Executive Officer of N-Viro International Corporation, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Form 10-K/A (Amendment No. 1) for the year ended December 31, 2014 (the “Form 10-K/A No. 1”) (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K/A No. 1 fairly presents, in all material respects, the financial condition and results of operations of N-Viro International Corporation.

/s/  Timothy R. Kasmoch

Timothy R. Kasmoch, President and Chief Executive Officer

April 29, 2015

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, James K. McHugh, as the Chief Financial Officer of N-Viro International Corporation, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Form 10-K/A (Amendment No. 1) for the year ended December 31, 2014 (the “Form 10-K/A No. 1”) (i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K/A No. 1 fairly presents, in all material respects, the financial condition and results of operations of N-Viro International Corporation.

/s/  James K. McHugh

James K. McHugh, Chief Financial Officer

April 29, 2015

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Note 6. Equity Transactions: Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used

The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model.  The Company uses historical data among other factors to estimate the expected price volatility, the expected term and the expected forfeiture rate of the option.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option.

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Note 1. Operations and Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Depreciation	$ 179,743	$ 178,688

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Note 4. Capital Lease: Schedule of Capital Leased Assets (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Capital Leased Assets

	2014	2013
Leased real property at Bradley, Florida - BGH	$    420,346	$            0
Less accumulated depreciation	49,040	0
Totals	$    371,306	$            0

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Note 6. Equity Transactions: Class of Warrant or Right, Reason for Issuing to Nonemployees (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Proceeds from stock warrant transactions	$ 121,952	$ 123,908

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Note 1. Operations and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Amortization of Intangible Assets	$ 7,941	$ 17,657
Impairment of Intangible Assets (Excluding Goodwill)	$ 42,653

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Note 2. Balance Sheet Data: Schedule of Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Accrued Liabilities

	2014	2013
Accrued payroll and employee benefits	$    157,456	$      35,112
Deferred compensation payable	124,306	84,658
Interest payable	38,445	10,838
Totals	$    320,207	$    130,608

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Note 2. Balance Sheet Data: Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy

For 2013 through the first quarter of 2014, the Company did not take a charge for depreciation on certain assets located at its demo fuel site in Pennsylvania, because these assets were not producing or expected to produce revenue during that time.  We resumed depreciation in the second quarter of 2014 when we received the US EPA approval letter in June which made the equipment available to be used for demonstration and testing.

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Note 9. Income Tax Matters: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Deferred Tax Liabilities, Property, Plant and Equipment	$ (68,700)	$ (64,600)
Deferred Tax Assets, Operating Loss Carryforwards	6,070,100	5,541,800
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Pensions	132,400	137,600
Deferred Tax Liabilities, Parent's Basis in Discontinued Operation	42,800	64,300
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts	34,400	34,400
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Employee Compensation	42,300	28,800
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Legal Settlements	54,500	22,600
Deferred Tax Assets, Other	400	500
Deferred Tax Assets, Valuation Allowance	$ (6,308,200)	$ (5,765,400)

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Note 1. Operations and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,615,231	2,555,981

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Note 6. Equity Transactions: Schedule of Share-based Compensation, Stock Options, Activity (Details) (USD $)	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	377,500	395,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.84	$ 1.27
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	2,500	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 1.90	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Forfeited	70,750	1,090,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 2.33	$ 2.66
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number			2,515,231	2,210,981
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price			$ 1.91	$ 2.10
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options			2,442,731	2,185,981
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Exercise Price			$ 1.92	$ 2.11
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 0.84	$ 1.27
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number			2,515,231	2,210,981

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Note 1. Operations and Summary of Significant Accounting Policies: Equity Method Investments, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Equity Method Investments, Policy

I.             Equity Method Investment – During the year ended December 31, 2014, the Company entered into a subscription agreement with N-Viro Energy Limited representing an approximately 45% interest in the class C voting shares.  The Company’s 2014 loss includes a loss of ($10,000) related to the operations of N-Viro Energy Limited.  The loss reduced the Company’s investment in N-Viro Limited to zero and, as a result, the Company discontinued applying the equity method.  The Company will resume application of the equity method only after its share of future earnings of N-Viro Energy Limited are sufficient to recover its share of unrecognized losses during the period the equity method was suspended.  The Company has no obligation to fund future operations of N-Viro Energy Limited.

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Note 6. Equity Transactions: Schedule of Share-based Compensation, Stock Options, Activity (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Share-based Compensation, Stock Options, Activity

	2014		2013
		Weighted Average ExercisePrice		Weighted Average ExercisePrice
Outstanding, beginning of year	2,210,981	$          2.10	2,905,981	$        2.42
Granted	377,500	$        0.84	395,000	$1.27
Exercised	2,500	$      1.90	0	$        0
Forfeited/expired during the year	70,750	$       2.33	1,090,000	$     2.66
Outstanding, end of year	2,515,231	$       1.91	2,210,981	$     2.10
Eligible for exercise at end of year	2,442,731	$       1.92	2,185,981	$     2.11
Weighted average fair value per option for options granted during the year	$   0.84		$  1.27
Options expected to vest over the life of the Plan	2,515,231		2,210,981

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Note 1. Operations and Summary of Significant Accounting Policies: Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities: Schedule of Other Significant Noncash Transactions (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Other Significant Noncash Transactions

	2014	2013
Deemed dividend on extension of stock warrants	$   502,890	$     178,200
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement	460,700	0
Bowling Green Holdings, LLC - capital lease	420,346	0
Global IR Group - value of stock issued on consulting agreement	165,000	0
Conversions of promissory note debt to common stock	55,000	25,000
Proceeds from sale of property and equipment recorded as Receivable, net – Other	51,889	10,000
Rakgear, Inc. - value of stock and warrants issued on consulting agreement	0	487,900
Oregon Resource Innovations - value of stock issued on consulting agreement	0	70,000
Catalyst Corner, LLC - value of stock issued on consulting agreement	0	3,600
Totals	$1,655,825	$      774,700

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Note 9. Income Tax Matters (Details) (USD $)	Dec. 31, 2014
Details
Operating Loss Carryforwards	$ 17,850,000

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Note 6. Equity Transactions: Share-based Compensation Arrangement by Share-based Payment Award, Description (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Share-based Compensation Arrangement by Share-based Payment Award, Description

In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued.  The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued.  Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant.  Options were granted in 2012 and 2013 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans.

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Note 9. Income Tax Matters: Schedule of Deferred Tax Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Deferred Tax Assets and Liabilities

	2014	2013
Gross deferred tax liabilities:
Property and equipment and intangible assets	(68,700)	(64,600)
Gross deferred tax assets:
Loss carryforwards	6,070,100	5,541,800
Pension plan withdrawal exp in excess of payments	132,400	137,600
Subsidiary acquisition basis step up	42,800	64,300
Allowance for doubtful accounts	34,400	34,400
Deferred compensation	42,300	28,800
Litigation settlement - non-cash portion	54,500	22,600
Other	400	500
Less valuation allowance	(6,308,200)	(5,765,400)
Totals	$                    -	$                   -

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Note 4. Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Capital Leases, Future Minimum Payments Due, Next Twelve Months	$ 160,000
Capital Leases, Future Minimum Payments, Due in Rolling Year Two	120,000
Capital Leases, Future Minimum Payments, Due in Rolling Year Three	120,000
Capital Leases, Future Minimum Payments, Due in Rolling Year Four	120,000
Capital Leases, Future Minimum Payments, Due in Rolling Year Five	50,000
Capital Leases, Future Minimum Payments Due	570,000
Capital Leases, Future Minimum Payments, Interest Included in Payments	(164,070)
Capital Lease Obligations	405,930
Capital Lease Obligations, Current	86,652
Capital lease liability - long-term, less current maturities, in default	$ 319,278	$ 0

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Note 2. Balance Sheet Data: Schedule of Finite-Lived Intangible Assets (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Deposit Assets	$ 27,319	$ 17,698
Finite-Lived Patents, Gross	0	42,143
Finite-Lived Customer Lists, Gross	0	8,453
Intangible Assets, Net (Excluding Goodwill)	$ 27,319	$ 68,294

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Note 3. Pledged Assets, Line of Credit and Long-term Debt: Schedule of Debt (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Debt

	2014	2013
Notes payable - banks	$     36,550	$     31,632
Notes payable - equipment vendors	32,818	93,435
Pension plan withdrawal liability	389,389	404,672
Notes payable - related parties and stockholders, net of discount (2013 - $27,000)	244,480	228,000
Convertible debentures	455,000	455,000
Total Long-Term Debt	1,158,237	1,212,739
Less current maturities	(831,583)	(1,179,921)
Totals	$   326,654	$     32,818

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Note 3. Pledged Assets, Line of Credit and Long-term Debt

12 Months Ended

Dec. 31, 2014

Notes

Note 3. Pledged Assets, Line of Credit and Long-term Debt

Note 3.               Pledged Assets, Line of Credit and Long-Term Debt

Until August 2013, the Company had a Commercial Line of Credit Agreement, or the Line, with Monroe Bank + Trust, or the Bank, up to $400,000 bearing interest at the Wall Street Journal Prime Rate plus 0.75%, but in no event less than 5.00%, and secured by a first lien on substantially all assets (except equipment) of the Company.  Two certificates of deposit totaling approximately $142,000 from the Bank were held as a condition of maintaining the Line.  In August 2013, the Line was renewed with a new maturity date of October 2013 and a borrowing limit of $233,067.  The Bank cashed in the two certificates of deposit held totaling approximately $142,000 and used them to pay down the Line, effectively reducing the borrowing capacity by $25,000.  In October 2013, the Line was renewed again with a new maturity date of December 2013 and a borrowing limit of $218,067, further reducing the borrowing capacity by $15,000.  In December 2013 the Company defaulted on the Line, and in April 2014 the Company signed a forbearance agreement with the Bank, temporarily restricting them from exercising certain rights and remedies available after the Company’s default.  In addition to retaining certain rights and remedies, the Bank agreed to allow the Company to repay the Line over six months, with an immediate payment of approximately $39,000 including accrued interest, and successive monthly payments of $36,784 plus accrued interest at 5%, up to and including September 7, 2014 until a total of $218,000 in principal was repaid.  On December 3, 2014, the Company paid the remaining balance owed the Bank on the Line, totaling nearly $99,000 with accrued interest.  All agreements with the Bank have been satisfied in full, and all existing liens and security held in accordance with the agreements were immediately released.

In August 2011, the Company borrowed $200,000 with a Promissory Note payable to David and Edna Kasmoch, the parents of Timothy Kasmoch, the Company’s President and Chief Executive Officer, at 12% interest and prepaid for a period of three months, renewable for an additional three months by the prepayment of additional interest and secured by certain equipment.  Timothy Kasmoch has personally guaranteed the repayment of this Note.  The Company extended the Note on all four due dates during 2012 and 2013, and the January and April due dates in 2014, and as of December 31, 2014 the Note was due July 30, 2014, and the Company is in default.  As of the date of this filing, the Company has made one additional payment of $6,000, moving the due date to October 30, 2014, but remaining in default.  The Company expects to extend the Note in the near future and pay it in full in 2015, although there can be no assurance the Company will have adequate cash flow to allow for any additional payments or that the maturity date will be extended.

In December 2013, the Company borrowed a total of $28,000, net of debt discount of $27,000, from two existing stockholders to provide operating capital.  Both notes payable were for a term of three months at an interest rate of 12%, and included warrants to purchase common stock of the Company.  In the second quarter of 2014, both stockholders converted their respective note to common stock of the Company at the fair market value of the stock at the time of conversion.

During 2014, the Company borrowed a total of $128,055 from three lenders to purchase insurance policies for equipment, Florida workers compensation and directors & officers’ insurance coverage during the year.  A total of three unsecured term notes were issued, ranging from 7% to 9.9% interest for terms ranging from six to ten months and monthly payments totaling $15,009.  The total amount owed on these notes as of December 31, 2014 was approximately $35,900 and all notes are expected to be paid in full on the applicable maturity date, ranging from February to August 2015.

From the beginning of 2006 through 2014, the Company borrowed a total of $1,677,100 from ten lenders to purchase processing and automotive equipment.  As of December 31, 2014, a total of two term notes are outstanding, ranging from 6.2% to 7.1% interest for terms ranging four to five years, monthly payments totaling approximately $5,100 and all secured by equipment.  The total amount owed on all equipment-secured notes as of December 31, 2014 was approximately $33,500 and all notes are expected to be paid in full on the applicable maturity date, ranging from January 2015 to March 2016.

In November 2012, the Company received a Notice and Demand of Payment Withdrawal Liability from Central States Southeast and Southwest Areas Pension Fund (the “Notice”), the pension trustee that was funded by the Company for the benefit of its former employees at its City of Toledo operation.  The Notice demanded a payment of $412,576, payable monthly over 20 years at $2,250 per month, or approximately $27,000 per year.  Payments at the end of the 20 year period would total $540,065.  In December 2013, the Company received a Notice of Default from Central States, and subsequently the Fund’s trustee served the Company with a summons in a civil matter, and together with the Notice demanded all amounts owed in withdrawal liability plus interest and penalties.  In September 30 2014, the Company agreed to pay Central States a total of $415,000 on a financed settlement over 19 months, with principal and interest payments of $6,000 per month for the first twelve months and principal and interest payments of $10,000 per month for the following six months, with a balloon payment of approximately $312,000 due on or before February 1, 2016.  Interest is charged at the PRIME rate plus 2% (effective rate of 5.25% at December 31, 2014).  Concurrently a separate security agreement was agreed on, effectively securing all of the Company’s assets and future rights to assets.  As of the date of this filing, the Company is in compliance with the new settlement agreement.

In 2009 the Company 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 were issuable in $5,000 denominations, are unsecured and have a stated interest rate of 8%, payable quarterly to holders of record.  The Company has timely paid all accrued interest due to all Debenture holders of record as of each quarter-end date starting in July 2009.  At any time, the Company may redeem all or a part of the Debentures at face value plus unpaid interest.

As of June 30, 2013, the Company held $455,000 of Debentures, but defaulted and did not pay the holders the principal amount due, all of which currently remain outstanding.  The Company continues to accrue interest on the principal amount at the rate set forth in the Debentures until the principal amount is paid in full.  The Company expects to pay all accrued interest due and the principal amount to all outstanding holders of the Debentures after completing substitute financial arrangements, though there can be no assurance of the timing of receipt of these funds and amounts available from these substitute arrangements.

For periods subsequent to the second quarter of 2011, the Company is required under GAAP to record a discount for certain Debentures replaced, which totaled $32,737 and was recorded as a gain on debt modification during the quarter ended June 30, 2011.  The discount was required to be amortized as a period expense over the next eight quarters the Debentures were scheduled to be outstanding.

  Amortization expense for the years ended December 31, 2014 and 2013 was $-0- and $8,184, respectively.

Approximate aggregate maturities of long-term debt for the years ending December 31 are as follows:  2015 - $831,600;  2016 - $326,600;  2017 - $-0-;  2018 - $-0-;  2019 - $-0-.

Long-term debt at December 31, 2014 and 2013 is as follows:

	2014	2013
Notes payable - banks	$     36,550	$     31,632
Notes payable - equipment vendors	32,818	93,435
Pension plan withdrawal liability	389,389	404,672
Notes payable - related parties and stockholders, net of discount (2013 - $27,000)	244,480	228,000
Convertible debentures	455,000	455,000
Total Long-Term Debt	1,158,237	1,212,739
Less current maturities	(831,583)	(1,179,921)
Totals	$   326,654	$     32,818

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Note 2. Balance Sheet Data: Schedule of Accrued Liabilities (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Accrued Salaries, Current	$ 157,456	$ 35,112
Deferred Compensation Liability, Current	124,306	84,658
Interest Payable, Current	38,445	10,838
Accrued Liabilities, Current	$ 320,207	$ 130,608

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Note 2. Balance Sheet Data: Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Property, Plant and Equipment

	2014	2013
Buildings and leasehold improvements	$        452,362	$        119,445
Equipment	2,280,636	2,118,863
Equipment - idle	0	722,559
Furniture, fixtures and computers	57,503	59,896
	2,790,501	3,020,763
Less accumulated depreciation	1,791,649	2,147,221
Totals	$        998,852	$        873,542

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Note 1. Operations and Summary of Significant Accounting Policies: New Accounting Standards, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

New Accounting Standards, Policy

M.           New Accounting Standards – There are no Accounting Standards Updates expected to have a significant effect on the Company’s consolidated financial position or results of operations.

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Note 1. Operations and Summary of Significant Accounting Policies: Share-based Compensation, Option and Incentive Plans Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Share-based Compensation, Option and Incentive Plans Policy

L.            Stock Options – The Company records share-based compensation expense using a fair-value based method of measurement that results in compensation costs for essentially all awards of stock-based compensation.  Compensation costs are recognized over the requisite period or periods that services are rendered.

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Note 1. Operations and Summary of Significant Accounting Policies: Equity Method Investments, Policy (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Loss from Equity Method Investments	$ (10,000)

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Note 2. Balance Sheet Data: Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure

	2014	2013
Deferred costs - Rakgear, Inc., less accumulated amortization (2014 - $487,900;  2013 - $365,925)	$             0	$  121,975
Deferred costs - SAMI, less accumulated amortization (2014 - $886,249;  2013 - $749,611)	125,251	261,889
Deferred costs - Dynasty Wealth, Inc., less accumulated amortization (2014 - $134,371)	326,329	0
Deferred costs - Global IR Group, Inc., less accumulated amortization (2014 - $18,792)	146,208	0
Totals	$  597,788	$  383,864

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Note 1. Operations and Summary of Significant Accounting Policies: Income Tax, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Income Tax, Policy

N.            Income Taxes – Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. 

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the current period plus or minus the change during the period in deferred tax assets and liabilities.

The accounting for uncertain tax positions requires the Company to evaluate each income tax position using a two step process which includes a determination as to whether it is more likely than not that the income tax position will be sustained, based upon technical merit and upon examination by the taxing authorities.

 At December 31, 2014 and 2013, there were no uncertain tax positions that required accrual.  None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities.  However, fiscal years 2011 and later remain subject to examination by the IRS and respective states.

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Note 1. Operations and Summary of Significant Accounting Policies: Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities

O.            Supplemental Disclosure of Non-Cash Operating, Investing and Financing Activities:

	2014	2013
Deemed dividend on extension of stock warrants	$   502,890	$     178,200
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement	460,700	0
Bowling Green Holdings, LLC - capital lease	420,346	0
Global IR Group - value of stock issued on consulting agreement	165,000	0
Conversions of promissory note debt to common stock	55,000	25,000
Proceeds from sale of property and equipment recorded as Receivable, net – Other	51,889	10,000
Rakgear, Inc. - value of stock and warrants issued on consulting agreement	0	487,900
Oregon Resource Innovations - value of stock issued on consulting agreement	0	70,000
Catalyst Corner, LLC - value of stock issued on consulting agreement	0	3,600
Totals	$1,655,825	$      774,700

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Note 2. Balance Sheet Data

12 Months Ended

Dec. 31, 2014

Notes

Note 2. Balance Sheet Data

Note 2.               Balance Sheet Data

For 2013 through the first quarter of 2014, the Company did not take a charge for depreciation on certain assets located at its demo fuel site in Pennsylvania, because these assets were not producing or expected to produce revenue during that time.  We resumed depreciation in the second quarter of 2014 when we received the US EPA approval letter in June which made the equipment available to be used for demonstration and testing.

Property and equipment (at cost):

	2014	2013
Buildings and leasehold improvements	$        452,362	$        119,445
Equipment	2,280,636	2,118,863
Equipment - idle	0	722,559
Furniture, fixtures and computers	57,503	59,896
	2,790,501	3,020,763
Less accumulated depreciation	1,791,649	2,147,221
Totals	$        998,852	$        873,542

Deferred costs:

In December 2010, the Company executed a Financial Public Relations Agreement with Strategic Asset Management, Inc., or SAMI.  The Company engaged SAMI as its non-exclusive financial public relations counsel for a term of three years.  For its services, the Company issued SAMI 150,000 shares of the Company's unregistered common stock.  The Company recorded a non-cash charge to earnings of approximately $305,000 ratably over a 36-month period starting in December 2010.  For the years ended December 31, 2014 and 2013, the charge to earnings was $-0- and $97,271, respectively.

In August 2011, the Company issued 100,000 shares of common stock and granted 100,000 fully vested stock warrants to SAMI for additional services performed in connection with the December 2010 Financial Public Relations Agreement.  To reflect the entire value of the stock and warrants issued, the Company took a non-cash charge to earnings of $285,700 through December 2013, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $91,300, respectively.

In August 2012, the Company issued 60,000 shares of unregistered common stock to Equiti-trend Advisors LLC/JT Trading, LLC for public relations and corporate communication services.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $75,000 ratably through January 2013, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $14,500, respectively.

In October 2012, the Company issued 300,000 shares of common stock and granted 150,000 fully vested stock warrants to SAMI to extend the period of services performed in connection with the December 2010 Financial Public Relations Agreement for an additional two years, through December 2015.  To reflect the entire value of the stock and warrants issued, the Company is taking a non-cash charge to earnings of $421,300 starting in 2013, over a 36 month period.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $136,600 and $125,300, respectively.

In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services to be performed over a six month period.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $70,000 ratably through July 2013, the ending date of the agreement.  For the years December 31, 2014 and 2013 the charge to earnings was $-0- and $70,000, respectively.

In April 2013, the Company executed a Consulting Agreement with Rakgear, Inc.  The Company engaged Rakgear to provide financial consulting services for a term of one year.  For its services, the Company issued Rakgear 150,000 shares of the Company's unregistered common stock and 150,000 fully vested warrants to purchase unregistered shares of common stock at a price of $1.49 per warrant.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $487,900 ratably through March 2014, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $122,000 and $365,900, respectively.

In September 2014, the Company executed a Financial Public Relations Agreement with Dynasty Wealth, Inc., for a one year term.  For its services, the Company issued Dynasty Wealth 350,000 warrants to purchase the Company's unregistered common stock at an exercise price of $1.50 per share, and $10,000 per month, to be paid in either cash or shares of the Company’s unregistered common stock at the Company’s discretion.  To reflect the entire value of the warrants issued, the Company is recording a non-cash charge to earnings of $460,700 ratably through September 14, 2015, the ending date of the agreement.  For the year ended December 31, 2014 the charge to earnings for the entire agreement was approximately $169,400, of which the non-cash portion of the agreement was approximately $134,400.

In November 2014, the Company executed a Public Relations Agreement with Global IR Group, Inc., for a one year term.  For its services, the Company issued Global IR 100,000 shares of the Company’s unregistered common stock.  To reflect the entire value of the stock issued, the Company is recording a non-cash charge to earnings of $165,000 ratably through November 19, 2015, the ending date of the agreement.  For the year ended December 31, 2014 the charge to earnings was approximately $18,800.

The following is a summary of Deferred costs – stock and warrants issued for services as of December 31:

	2014	2013
Deferred costs - Rakgear, Inc., less accumulated amortization (2014 - $487,900;  2013 - $365,925)	$             0	$  121,975
Deferred costs - SAMI, less accumulated amortization (2014 - $886,249;  2013 - $749,611)	125,251	261,889
Deferred costs - Dynasty Wealth, Inc., less accumulated amortization (2014 - $134,371)	326,329	0
Deferred costs - Global IR Group, Inc., less accumulated amortization (2014 - $18,792)	146,208	0
Totals	$  597,788	$  383,864

Intangible and Other Assets, Net:

The following is a summary of Intangible and Other Assets, Net as of December 31:

	2014	2013
Deposits	$    27,319	$    17,698
Patents and related intangibles, less accumulated amortization (2014 - $-0-;  2013 - $126,346)	0	42,143
Customer list, less accumulated amortization (2014 - $-0-;  2013 - $61,803)	0	8,453
Totals	$    27,319	$    68,294

Accrued liabilities:

	2014	2013
Accrued payroll and employee benefits	$    157,456	$      35,112
Deferred compensation payable	124,306	84,658
Interest payable	38,445	10,838
Totals	$    320,207	$    130,608

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Note 1. Operations and Summary of Significant Accounting Policies: Segment Reporting, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Segment Reporting, Policy

P.             Segment Information – During 2014, the Company determined that it currently operates in one segment based on the financial information upon which the chief operating decision maker regularly assesses performance and allocates resources.  The chief operating decision maker is the Chief Executive Officer.

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Note 7. Revenue and Major Customers: Major Customers, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Major Customers, Policy

A substantial portion of the Company's revenue is derived from services provided under contracts and agreements with existing licensees.  Some of these contracts, especially those contracts with large municipalities, provide for termination of the contract by the customer after giving relatively short notice (in some cases as little as ten days).  In addition, some of these contracts contain liquidated damages clauses, which may or may not be enforceable in the event of early termination of the contracts.  If one or more of these contracts are terminated prior to the expiration of its term, and the Company is not able to replace revenues from the terminated contract or receive liquidated damages pursuant to the terms of the contract, the lost revenue could have a material and adverse effect on its business and financial condition.

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Note 9. Income Tax Matters: Schedule of Components of Income Tax Expense (Benefit) (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Components of Income Tax Expense (Benefit)

	2014	2013
Provision at statutory rate	(598,500)	(560,000)
(Decrease) increase in income taxes resulting from:
Change in valuation allowance	542,800	1,134,800
Nondeductible (return of) stock options and warrants	44,700	(582,700)
Other	11,000	7,900
Totals	$               0	$               0

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Note 6. Equity Transactions: Fair Value, Option, Quantitative Disclosures (Details)	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Fair Value Assumptions, Expected Dividend Rate	0.00%	0.00%
Fair Value Assumptions, Weighted Average Volatility Rate	287.00%	267.60%
Fair Value Assumptions, Risk Free Interest Rate	2.20%	1.80%
Fair Value Assumptions, Expected Term	7 years	7 years

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CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash and Cash Equivalents - Unrestricted	$ 81,854	$ 14,344
Cash and Cash Equivalents - Restricted	65,529	66,592
Accounts Receivable, net	140,070	299,992
Other Receivable, net	51,912	10,918
Prepaid expenses and other assets	79,719	57,571
Deferred costs - stock and warrants issued for services	597,789	258,613
Total current assets	1,016,873	708,030
Property and equipment, net	998,852	873,542
Deferred costs - stock and warrants issued for services, long-term	597,788	125,251
Intangible and other assets, net	27,319	68,294
TOTAL ASSETS	2,043,044	1,775,117
CURRENT LIABILITIES
Accounts Payable	716,680	850,702
Line of Credit		218,000
Current maturities of long-term debt	63,186	92,249
Capital Lease Obligations, Current	86,652
Notes Payable, Related Parties, Current	244,480	228,000
Convertible debentures, net of discount, in default	455,000	455,000
Pension plan withdrawal liability, current	68,917	404,672
Accrued liabilities	320,207	130,608
Total current liabilities	1,955,122	2,379,231
Long-term debt, less currrent maturities	6,182	32,818
Capital lease liability - long-term, less current maturities, in default	319,278	0
Pension plan withdrawal liability, long-term, in default	320,472	0
TOTAL LIABILITIES	2,601,054	2,412,049
STOCKHOLDERS' DEFICIT
Common stock, value	81,668	70,475
Additional paid in capital	32,103,596	29,864,113
Accumulated Deficit	(32,565,813)	(29,886,630)
Total Stockholders' equity before treasury stock	(380,549)	47,958
Treasury stock, at cost	177,461	684,890
Total Stockholders' Deficit	(558,010)	(636,932)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 2,043,044	$ 1,775,117

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Note 2. Balance Sheet Data: Schedule of Finite-Lived Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Finite-Lived Intangible Assets

	2014	2013
Deposits	$    27,319	$    17,698
Patents and related intangibles, less accumulated amortization (2014 - $-0-;  2013 - $126,346)	0	42,143
Customer list, less accumulated amortization (2014 - $-0-;  2013 - $61,803)	0	8,453
Totals	$    27,319	$    68,294

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash Flows From Operating Activities
Net Loss	$ (1,760,364)	$ (1,646,977)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization	187,686	193,125
Amortization of debenture stock discount		8,184
Issuance of stock, stock options and warrants for sevices	696,628	1,118,492
Loss on equity investment in affiliate	10,000
Provision for bad debts		26,260
Intangible assets impairment writedown	42,653
Gain on the sale of fixed assets	(141,197)	(28,599)
Changes in Operating Assets and Liabilities
Decrease (increase) in trade receivables	170,708	(27,872)
Decrease (increase) in prepaid expenses and other assets	22,975	(32,117)
Increase (decrease) in accounts payable and accrued liabilities	121,430	302,591
Increase (decrease) in pension withdrawal liability	(15,284)	(6,622)
Net cash used in operating activities	(664,765)	(93,535)
Cash Flows From Investing Activities
Purchases of property and equipment	(41,375)	(4,628)
Proceeds from sale of Property and Equipment	182,446	20,000
Decrease (increase) from restricted cash	1,063	142,589
Decrease (increase) to notes receivable, net	895	1,264
Net cash provided by investing activities	143,029	159,225
Cash Flows From Financing Activities
Net advances (repayments) on line of credit	(218,000)	(152,000)
Borrowngs under long-term debt	128,054	67,387
Principal payments on long-term obligations	(188,020)	(198,236)
Borrowings from related parties - short-term	44,480	55,000
Net cost from issuance of common stock in private placement	696,030	(30)
Proceeds from stock options exercised	4,750
Proceeds from stock warrant transactions	121,952	123,908
Net cash used in financing activities	589,246	(103,971)
Net (Decrease) Increase in Cash and Cash Equivalents	67,510	(38,281)
Cash and Cash Equivalents - Beginning	14,344	52,625
Cash and Cash Equivalents - Ending	81,854	14,344
Supplemental disclosure of cash flows information:
Cash paid during the year for interest	$ 106,546	$ 93,246

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Note 2. Balance Sheet Data: Deferred Costs (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014
Oregon Resource Innovations
Stock Issued During Period, Shares, Share-based Compensation, Gross	70,000
Rakgear, Inc
Stock Issued During Period, Shares, Share-based Compensation, Gross	150,000
Dynasty Wealth, Inc
Share-based Nonemployee Services Transaction, Quantity of Securities Issued		350,000
Global IR Group, Inc
Stock Issued During Period, Shares, Share-based Compensation, Gross		100,000

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Note 3. Pledged Assets, Line of Credit and Long-term Debt: Derivatives, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Derivatives, Policy

For periods subsequent to the second quarter of 2011, the Company is required under GAAP to record a discount for certain Debentures replaced, which totaled $32,737 and was recorded as a gain on debt modification during the quarter ended June 30, 2011.  The discount was required to be amortized as a period expense over the next eight quarters the Debentures were scheduled to be outstanding.

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Note 4. Capital Lease (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Capital Leases, Interest Expense	$ 35,508	$ 0
Bowling Green Holdings LLC
Capital Lease Obligations Incurred	$ 420,346

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Note 1. Operations and Summary of Significant Accounting Policies: Trade and Other Accounts Receivable, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Trade and Other Accounts Receivable, Policy

F.             Accounts Receivable – The Company extends unsecured credit to customers under normal trade agreements, which require payment within 30 days.  Accounts greater than 90 days past due amounted to $99,179 and $104,025 of receivables for the years ended December 31, 2014 and 2013, respectively.  The Company's policy is not to accrue and record interest income on past due trade receivables.  The Company does bill the customer finance charges on past due accounts and records the interest income when collected.

Credit is generally granted on an unsecured basis.  Periodic credit evaluations of customers are conducted and appropriate allowances are established.

Management estimates an allowance for doubtful accounts, which was $101,260 at both December 31, 2014 and 2013.  The estimate is based upon management’s review of delinquent accounts and an assessment of the Company’s historical evidence of collections.

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Note 4. Capital Lease: Lease, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Lease, Policy

The economic substance of the lease is the Company is financing the acquisition of the asset through the lease, and accordingly, it is recorded in the Company’s assets and liabilities.  Assets and liabilities under capital leases initially are recorded at the lower of present value of the minimum lease payments or the fair value of the assets.  The assets are depreciated over the shorter of the lease term or their estimated useful lives.

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Note 1. Operations and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Intangible Assets, Finite-Lived, Policy

H.            Intangible Assets – Intangible assets are comprised of patent costs, territory rights and customer licenses/contracts amortized on a straight line basis over their estimated useful lives (ranging from 18 months to 17 years).  Weighted average amortization periods for patents/related intangibles and territory rights were 14.1 years at December 31, 2013.  Amortization expense amounted to $7,941 in 2014 and $17,657 in 2013.

During the third quarter of 2014, the Company determined the fair value of the intangible assets were less than the amount reflected in the balance sheet, and recorded a non-cash impairment charge of $42,653 to reduce the carrying value of these assets to their estimated fair value of zero.  The reason for the impairment of intangible assets in the third quarter of 2014 was primarily due to declines in revenue associated with these assets.  The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

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Note 5. Related Party Transactions (Details) (Gardenscape, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Gardenscape
Proceeds from Sale of Other Property, Plant, and Equipment	$ 81,275	$ 30,000
Direct Costs of Leased and Rented Property or Equipment	$ 27,000

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Note 1. Operations and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Notes

Note 1. Operations and Summary of Significant Accounting Policies

Note 1.               Operations and Summary of Significant Accounting Policies

The following is a summary of certain accounting policies followed in the preparation of these financial statements.  The policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements:

A.            Nature of Business – The Company owns and licenses the N-Viro Process, a patented technology to treat and recycle wastewater sludges and other bio-organic wastes, utilizing certain alkaline by-products produced by the cement, lime, electric utilities and other industries.  Revenue and the related accounts receivable are due from companies acting as independent agents or licensees, principally municipalities.

B.            Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

C.            Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.

D.            Going Concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has negative working capital of approximately $938,000 at December 31, 2014, and has incurred recurring losses and negative cash flow from operations for the years ended December 31, 2014 and 2013.  Moreover, while the Company expects to arrange for financing with lending institutions, there is no borrowing availability and no line of credit at December 31, 2014.

The Company has borrowed money from third parties and related parties and expects to be able to generate future cash from the exercise of common stock warrants and new equity issuances, though there can be no assurance given that such issuances or exercises will be realized.  The Company has slowed payments to trade vendors, and has renegotiated payment terms with several existing and prior vendors to lengthen the time and/or reduce the amount of cash to repay these trade payables.  In 2013 and again in 2014 the Company modified all outstanding warrants to enhance their exercisability and realized approximately $122,000 and $124,000 in exercises in 2014 and 2013, respectively.  Beginning in March 2014, the Company’s operations in Volusia County, Florida, which at the time represented substantially all revenue, were voluntarily delayed while the Company employed additional personnel and moved assets to the Company’s new site in Bradley, Florida.  The Company considers its relationship with the landlord in Volusia County to be satisfactory overall as they work to finalize the termination of operations on their site.  While operations resumed in Bradley in June 2014, this reduction in revenue materially reduced available cash to fund current or prior expenses incurred.  These factors raise substantial doubt as to the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

E.            Cash and Cash Equivalents – The Company has cash on deposit primarily in one financial institution which, at times, may be in excess of FDIC insurance limits.

For purposes of the statements of cash flows, the Company considers all certificates of deposit with initial maturities of 90 days or less to be cash equivalents.

Restricted cash consists of:  one certificate of deposit and corresponding accrued interest which was held as collateral on behalf of the Florida Department of Agriculture for the Company’s soil distribution license at December 31, 2013;  one certificate of deposit and corresponding accrued interest which is held as collateral with a performance bond on behalf of one of the Company’s licensees at both December 31, 2014 and 2013.

F.             Accounts Receivable – The Company extends unsecured credit to customers under normal trade agreements, which require payment within 30 days.  Accounts greater than 90 days past due amounted to $99,179 and $104,025 of receivables for the years ended December 31, 2014 and 2013, respectively.  The Company's policy is not to accrue and record interest income on past due trade receivables.  The Company does bill the customer finance charges on past due accounts and records the interest income when collected.

Credit is generally granted on an unsecured basis.  Periodic credit evaluations of customers are conducted and appropriate allowances are established.

Management estimates an allowance for doubtful accounts, which was $101,260 at both December 31, 2014 and 2013.  The estimate is based upon management’s review of delinquent accounts and an assessment of the Company’s historical evidence of collections.

G.            Property and Equipment – Property, machinery and equipment are stated at cost less accumulated depreciation.  Depreciation has been computed primarily by the straight-line method over the estimated useful lives of the assets.  Generally, useful lives are five to fifteen years.  Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the estimated useful life of the asset.  Depreciation expense amounted to $179,743 and $178,688 in 2014 and 2013, respectively.  Management has reviewed property and equipment for impairment when events and circumstances indicate that the assets might be impaired and the carrying values of those assets may not be recoverable.  Management believes the carrying amount is not impaired based upon estimated undiscounted future cash flows.

H.            Intangible Assets – Intangible assets are comprised of patent costs, territory rights and customer licenses/contracts amortized on a straight line basis over their estimated useful lives (ranging from 18 months to 17 years).  Weighted average amortization periods for patents/related intangibles and territory rights were 14.1 years at December 31, 2013.  Amortization expense amounted to $7,941 in 2014 and $17,657 in 2013.

During the third quarter of 2014, the Company determined the fair value of the intangible assets were less than the amount reflected in the balance sheet, and recorded a non-cash impairment charge of $42,653 to reduce the carrying value of these assets to their estimated fair value of zero.  The reason for the impairment of intangible assets in the third quarter of 2014 was primarily due to declines in revenue associated with these assets.  The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

I.             Equity Method Investment – During the year ended December 31, 2014, the Company entered into a subscription agreement with N-Viro Energy Limited representing an approximately 45% interest in the class C voting shares.  The Company’s 2014 loss includes a loss of ($10,000) related to the operations of N-Viro Energy Limited.  The loss reduced the Company’s investment in N-Viro Limited to zero and, as a result, the Company discontinued applying the equity method.  The Company will resume application of the equity method only after its share of future earnings of N-Viro Energy Limited are sufficient to recover its share of unrecognized losses during the period the equity method was suspended.  The Company has no obligation to fund future operations of N-Viro Energy Limited.

J.             Revenue Recognition – Facility management revenue and royalty fees are recognized under contracts where the Company or licensees utilize the N Viro Process to treat sludge, either pursuant to a fixed-price contract or based on volumes of sludge processed.  Revenue is recognized as services are performed.

Alkaline admixture sales, alkaline admixture management service revenue and N-Viro Soil^TM revenue are recognized upon shipment.

License and territory fees are generated by selling the right to market or use the N-Viro Process in a specified territory.  The Company's policy is to record revenue for the license agreements when all material services relating to the revenue have been substantially performed, conditions related to the contract have been met and no material contingencies exist.  Research and development revenue is recognized as work is performed to the contracting entity in accordance with the contract.

K.            Loss Per Common Share – Loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during each period presented.  For the years ended December 31, 2014 and 2013, the effects of 2,615,231 and 2,555,981 stock options outstanding, respectively, 2,649,142 and 1,849,585 warrants to purchase common stock, respectively, and, debentures that are convertible to 227,500 shares of common stock are excluded from the diluted per share calculation because they would be antidilutive.

L.            Stock Options – The Company records share-based compensation expense using a fair-value based method of measurement that results in compensation costs for essentially all awards of stock-based compensation.  Compensation costs are recognized over the requisite period or periods that services are rendered.

M.           New Accounting Standards – There are no Accounting Standards Updates expected to have a significant effect on the Company’s consolidated financial position or results of operations.

N.            Income Taxes – Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. 

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the current period plus or minus the change during the period in deferred tax assets and liabilities.

The accounting for uncertain tax positions requires the Company to evaluate each income tax position using a two step process which includes a determination as to whether it is more likely than not that the income tax position will be sustained, based upon technical merit and upon examination by the taxing authorities.

 At December 31, 2014 and 2013, there were no uncertain tax positions that required accrual.  None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities.  However, fiscal years 2011 and later remain subject to examination by the IRS and respective states.

O.            Supplemental Disclosure of Non-Cash Operating, Investing and Financing Activities:

	2014	2013
Deemed dividend on extension of stock warrants	$   502,890	$     178,200
Dynasty Wealth, Inc. - value of warrants issued on consulting agreement	460,700	0
Bowling Green Holdings, LLC - capital lease	420,346	0
Global IR Group - value of stock issued on consulting agreement	165,000	0
Conversions of promissory note debt to common stock	55,000	25,000
Proceeds from sale of property and equipment recorded as Receivable, net – Other	51,889	10,000
Rakgear, Inc. - value of stock and warrants issued on consulting agreement	0	487,900
Oregon Resource Innovations - value of stock issued on consulting agreement	0	70,000
Catalyst Corner, LLC - value of stock issued on consulting agreement	0	3,600
Totals	$1,655,825	$      774,700

P.             Segment Information – During 2014, the Company determined that it currently operates in one segment based on the financial information upon which the chief operating decision maker regularly assesses performance and allocates resources.  The chief operating decision maker is the Chief Executive Officer.

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CONSOLIDATED BALANCE SHEETS - Parenthetical (USD $)	Dec. 31, 2014	Dec. 31, 2013
Consolidated Balance Sheets
Preferred Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	2,000,000	2,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par Value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	35,000,000	35,000,000
Common Stock, Shares Issued	8,166,789	7,047,521
Treasury Stock, at cost - Shares	32,000	123,500

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Note 1. Operations and Summary of Significant Accounting Policies: Nature of Operations, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Nature of Operations, Policy

A.            Nature of Business – The Company owns and licenses the N-Viro Process, a patented technology to treat and recycle wastewater sludges and other bio-organic wastes, utilizing certain alkaline by-products produced by the cement, lime, electric utilities and other industries.  Revenue and the related accounts receivable are due from companies acting as independent agents or licensees, principally municipalities.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 27, 2015	Jun. 30, 2014
Document and Entity Information:
Entity Registrant Name	N-Viro International Corporation
Document Type	10-K
Document Period End Date	Dec. 31, 2014
Amendment Flag	true
Amendment Description	re-transmit XBRL Data Files
Entity Central Index Key	0000904896
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		8,550,411
Entity Public Float			$ 9,036,000
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

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Note 1. Operations and Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Use of Estimates, Policy

B.            Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Consolidated Statements of Operations
REVENUES	$ 1,330,583	$ 3,379,602
COST OF REVENUE	1,566,018	2,990,995
GROSS PROFIT (LOSS)	(235,435)	388,607
OPERATING EXPENSES
Selling, General and Administrative	1,474,082	2,073,710
Impairment of intangible assets	42,653
Gain on disposal of assets	(141,197)	(28,599)
Total Operating Expenses	1,375,538	2,045,111
Operating Loss	(1,610,973)	(1,656,504)
OTHER INCOME (EXPENSE)
Gain on extinguishment of liabilities	15,478	115,202
Interest income	190	894
Amortization of discount on convertible debentures		(8,184)
Loss from Equity Method Investments	(10,000)
Interest expense	(155,059)	(98,385)
TOTAL OTHER INCOME	(149,391)	9,527
LOSS BEFORE INCOME TAXES	(1,760,364)	(1,646,977)
NET LOSS	$ (1,760,364)	$ (1,646,977)
Basic and diluted loss per share	$ (0.24)	$ (0.24)
Weighted average common shares outstanding - basic and diluted	7,318,480	6,840,060

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Note 6. Equity Transactions

12 Months Ended

Dec. 31, 2014

Notes

Note 6. Equity Transactions

Note 6.             Equity Transactions

In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services.  More details of this agreement are contained in Note 2.

In April 2013, the Company issued 150,000 shares of unregistered common stock and 150,000 warrants to purchase unregistered shares of common stock to Rakgear, Inc., for financial consulting services.  More details of this agreement are contained in Note 2.

In September 2014, the Company issued 350,000 warrants to purchase unregistered shares of common stock to Dynasty Wealth, Inc., for financial consulting services.  Additional payments owed Dynasty Wealth can be paid in either cash or shares of the Company’s unregistered common stock.  For the year ended December 31, 2014 the Company did not issue any shares of stock in additional payment owed per the agreement.  More details of this agreement are contained in Note 2.

In November 2014, the Company issued 100,000 shares of unregistered common stock to Global Group, Inc., for public relations services.  More details of this agreement are contained in Note 2.

In May 2013, the Company issued a total of 3,845 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the second quarter of 2013.

In December 2013, the Company issued a total of 3,290 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the fourth quarter of 2013.

In April 2014, the Company issued a total of 6,175 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the second quarter of 2014.

In June 2014, the Company issued a total of 9,212 shares of unregistered common stock, valued at a total of $7,000, to seven independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $7,000 in the second quarter of 2014.

In August 2014, the Company issued a total of 4,760 shares of unregistered common stock, valued at a total of $7,000, to seven independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $7,000 in the third quarter of 2014.

In October 2014, the Company issued a total of 2,065 shares of unregistered common stock, valued at a total of $2,500, to five independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $2,500 in the fourth quarter of 2014.

In November 2014, the Company issued a total of 3,145 shares of unregistered common stock, valued at a total of $5,000, to five independent directors in lieu of cash owed for a board meeting attended.  To reflect the value of the stock issued, the Company recorded a charge to earnings totaling $5,000 in the fourth quarter of 2014.

In August 2014 the Company issued Deerpoint Development Company Ltd., the landlord of its administrative office, 16,200 shares of unregistered common stock at a price of $0.71 per share in exchange for three months rent, resulting in net additional expense of approximately $1,300 above the contracted amount, but saving us approximately $10,200 of cash.  The stock price was calculated using the Black-Scholes valuation model, explained in further detail below.

In December 2013, the Company borrowed a total of $55,000 from one of the Company’s board members and an existing stockholder to provide operating capital.  Both Notes Payable were for a term of three months at an interest rate of 12% and included warrants to purchase unregistered common stock of the Company.  During the second quarter of 2014, both individuals converted their respective Note to common stock at the fair market value of the stock at the time of each conversion, and each received warrants to purchase unregistered common stock of the Company.

In April 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 71,429 shares of its common stock (the “Shares”) to the Purchaser for $50,000, or a purchase price of $0.70 per Share, and 71,429 warrants to purchase common stock.  The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

In April 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 25,000 shares of its common stock (the “Shares”) to the Purchaser for $17,500, or a purchase price of $0.70 per Share, and 25,000 warrants to purchase common stock.  The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

In May 2014, the Company entered into a share purchase agreement with one of the Company’s board members (“Purchaser”), pursuant to which the Company sold 37,313 shares of its common stock (the “Shares”) to the Purchaser for $25,000, or a purchase price of $0.67 per Share, and 37,313 warrants to purchase common stock.  The Shares are restricted and the transaction was exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

During June through December 2014, the Company entered into share purchase agreements with a total of sixteen Purchasers pursuant to which the Company sold 604,650 shares of its common stock (the “Shares”) to the Purchasers for a total of $604,650, or a purchase price of $1.00 per share.  All but 91,500 shares were restricted and have limited “piggy-back” registration rights in connection with certain registration statement filings of the Company under the Securities Act of 1933 as amended (the “Securities Act”).  The Company sold 91,500 shares it held in its treasury, but the shares were not issued until early 2015.  All of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

In addition to its first stock option plan approved in 1993, the Company has a stock option plan approved in May 2004, amended in June 2008 and again in August 2009 (the “2004 Plan”), for directors and key employees under which 2,500,000 shares of common stock may be issued.  The Company also has a stock option plan approved in July 2010 (the “2010 Plan”), for directors and key employees under which 5,000,000 shares of common stock may be issued.  Unless otherwise stated in the stock option agreement, options are 20% vested on the date of grant, with the balance vesting 20% per year over the next four years, except for directors whose options vest six months from the date of grant.  Options were granted in 2012 and 2013 from both the 2004 and 2010 Plans at the approximate market value of the stock at date of grant, as defined in each of the plans.

Pursuant to their respective five-year employment agreements, in March 2010 a total of 890,000 stock options were granted to the three executive officers of the Company.  Twenty percent of the options vested immediately on the date of grant, with the balance of the options to vest in equal annual installments over the next four years on the anniversary date of the original grant.  These options were granted pursuant to the 2004 Plan, are for a period of ten years and are intended as Incentive Stock Options.  To reflect the value of the stock options granted for the employment services provided, the Company was taking a charge to earnings totaling approximately $2,358,000.  For the years ended December 31, 2014 and 2013, this charge was $-0- and $176,800, respectively.

In May 2013, in connection and effective with their respective Amendment to Employment Agreement, the Board approved both a return of previously granted options and a new grant of stock options to Messrs. Kasmoch, Bohmer and McHugh, which are immediately exercisable for shares of the Company's common stock.  The grants were made pursuant to both the 2004 Plan and the 2010 Plan.

All grants awarded were priced at $1.25, in accordance with both the 2004 Plan and 2010 Plan.  Future grants required under each officer’s Amendment will be priced at the time of grant.  The Company took a non-cash charge to earnings of approximately $6,500 in the second quarter of 2013 to reflect the grant awarded to Mr. McHugh only, to reflect the net increase to him of 5,000 options granted currently.  More information on these equity transactions is contained in this Form 10-K under Item 11, “Executive Compensation”.

During the year ended December 31, 2014, the Company granted stock options totaling 132,500 shares, for board meetings attended by outside directors in April, June, August, October and November of 2014.  All options granted were for a period of ten years.  The options became fully vested six months after the date of grant, and were priced, pursuant to the 2010 Plan, at ranges between $0.76 and $1.59, for a total expense of approximately $156,100, expensed ratably in 2014 and 2015 over each subsequent six-month period.  More information on these equity transactions is contained in this Form 10-K under Item 10, “Directors, Executive Officers and Corporate Governance”.

During the year ended December 31, 2013, the Company granted stock options totaling 50,000 shares, for 25,000 shares each in May and December, exclusive of the officers, to all outside directors.  All options granted are for a period of ten years.  The options became fully vested six months after the date of grant, and were priced, pursuant to the 2010 Plan, at $1.30 and $1.52, respectively, for a total expense of approximately $70,000, expensed ratably in 2013 and 2014 over each subsequent six-month period.  More information on these equity transactions is contained in this Form 10-K under Item 10, “Directors, Executive Officers and Corporate Governance”.

In May 2013, the Company appointed Michael Burton-Prateley as a special advisor to the Board of Directors for a term of one year.  For his services, the Company issued Mr. Burton-Prateley 25,000 stock options under the Company’s 2004 Plan at a price of $1.28 per option that vested immediately.  To reflect the entire value of the options issued, the Company recorded a non-cash charge to earnings of $31,240 during the second quarter of 2013.

Also in May 2013, the Company granted 25,000 stock options to one employee.  The options granted were for a period of ten years, are exercisable at $1.28 per share and vested immediately at the date of grant.  These options were granted pursuant to the 2004 Plan and were intended as Incentive Stock Options.  To reflect the entire value of the stock options granted, the Company recorded a charge to earnings of approximately $32,500 in the second quarter of 2013.

During the year ended December 31, 2014, the Board of Directors approved a plan to offer to all Company warrants holders a 25% discount on the exercise price to any warrant holder who exercises warrants, and a second 25% discount on any subsequent warrant exercise, but within a specific “discount period” and only on a temporary basis.  Any warrant holder who exercised within the discount period also received a “replacement warrant” on a 1.5 to 1 basis.  All other terms and conditions of all outstanding warrants remain unchanged, and the discount offer was temporary.  During the discount period, five warrant holders exercised a total of 250,009 warrants at various exercise prices and were issued a total of 250,009 shares of restricted common stock and 375,014 replacement warrants.  As a condition of exercise, all of the $122,177 in cash proceeds from the exercises were restricted for future payment to specific creditors as agreed upon with the warrant holders, and subsequently used to pay these creditors.  In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering.

During the year ended December 31, 2013, a total of 127,264 warrants were exercised and shares of unregistered restricted stock were issued to one insider and four non-insider owners for total net cash proceeds of $127,264.  These proceeds were all used for operating expenses.  Simultaneously and subject to the same terms and conditions and as further inducement to exercise the warrants, the Company issued a total of 127,264 warrants to these same owners as “replacement warrants” to acquire shares of our common stock at $1.00 per share, a price which was below the closing price of the stock on the date of each transaction.  In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering.

For the 2014 and 2013 replacement warrants, the incremental fair value associated with these transactions has been determined using the Black-Scholes model and has been recorded as a deemed dividend to common stockholders in the accompanying Statement of Stockholders’ Equity (Deficit).  For the years ended December 31, 2014 and 2013, the deemed dividend was $502,890 and $178,200, respectively.

The following summarizes the stock options activity for the years ended December 31, 2014 and 2013:

	2014		2013
		Weighted Average ExercisePrice		Weighted Average ExercisePrice
Outstanding, beginning of year	2,210,981	$          2.10	2,905,981	$        2.42
Granted	377,500	$        0.84	395,000	$1.27
Exercised	2,500	$      1.90	0	$        0
Forfeited/expired during the year	70,750	$       2.33	1,090,000	$     2.66
Outstanding, end of year	2,515,231	$       1.91	2,210,981	$     2.10
Eligible for exercise at end of year	2,442,731	$       1.92	2,185,981	$     2.11
Weighted average fair value per option for options granted during the year	$   0.84		$  1.27
Options expected to vest over the life of the Plan	2,515,231		2,210,981

The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes valuation model.  The Company uses historical data among other factors to estimate the expected price volatility, the expected term and the expected forfeiture rate of the option.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of grant for the expected term of the option.

The following assumptions were used to estimate the fair value of options granted:

	Year Ended December 31,
	2014	2013
Expected dividend yield	0.0%	0.0%
Weighted average volatility	287.0%	267.6%
Risk free interest rate	2.2 - 2.8%	1.8 - 2.9%
Expected term (in years)	7	7

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Note 5. Related Party Transactions

12 Months Ended

Dec. 31, 2014

Notes

Note 5. Related Party Transactions

Note 5.               Related Party Transactions

In August 2011, the Company borrowed $200,000 with a Promissory Note payable to David and Edna Kasmoch, the parents of Timothy Kasmoch, the Company’s President and Chief Executive Officer.  More details can be found in Note 3.

During 2012 the Company paid Terri Kasmoch, the spouse of Timothy Kasmoch, as an employee for business development, web site and company media marketing and stock promotion efforts for the Company, and she participated with the executives of the Company in reducing the salary paid to her by 10% and deferring this to a future date.  Effective November 2012, Ms. Kasmoch resigned from employment from the Company, and her deferred salary of approximately $3,900 remains unpaid as of December 31, 2014.

During 2013, the Company sold used equipment to Tri-State Garden Supply dba Gardenscape, a company owned and managed by the extended family of the Company’s Chief Executive Officer, Timothy Kasmoch.  Cash proceeds realized totaled $30,000 on the sale, of which $10,000 was classified as an Other Receivable at December 31, 2013.

During 2014, the Company also sold used equipment to Tri-State Garden Supply dba Gardenscape, and realized cash proceeds of $81,275 on the sale, of which $6,281 was classified as an Other Receivable at December 31, 2014.

During 2014, the Company leased two trucks from Tri-State Garden Supply dba Gardenscape, and in lieu of lease payments agreed to repair and maintain both trucks, reimburse Gardenscape for insurance, annual taxes and license fees.  During 2014, this totaled of approximately $27,000.

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Note 1. Operations and Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Property, Plant and Equipment, Policy

G.            Property and Equipment – Property, machinery and equipment are stated at cost less accumulated depreciation.  Depreciation has been computed primarily by the straight-line method over the estimated useful lives of the assets.  Generally, useful lives are five to fifteen years.  Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the estimated useful life of the asset.  Depreciation expense amounted to $179,743 and $178,688 in 2014 and 2013, respectively.  Management has reviewed property and equipment for impairment when events and circumstances indicate that the assets might be impaired and the carrying values of those assets may not be recoverable.  Management believes the carrying amount is not impaired based upon estimated undiscounted future cash flows.

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Note 1. Operations and Summary of Significant Accounting Policies: Principles of Consolidation, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Principles of Consolidation, Policy

C.            Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.

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Note 9. Income Tax Matters

12 Months Ended

Dec. 31, 2014

Notes

Note 9. Income Tax Matters

Note 9.             Income Tax Matters

The composition of the deferred tax assets and liabilities at December 31, 2014 and 2013 is as follows:

	2014	2013
Gross deferred tax liabilities:
Property and equipment and intangible assets	(68,700)	(64,600)
Gross deferred tax assets:
Loss carryforwards	6,070,100	5,541,800
Pension plan withdrawal exp in excess of payments	132,400	137,600
Subsidiary acquisition basis step up	42,800	64,300
Allowance for doubtful accounts	34,400	34,400
Deferred compensation	42,300	28,800
Litigation settlement - non-cash portion	54,500	22,600
Other	400	500
Less valuation allowance	(6,308,200)	(5,765,400)
Totals	$                    -	$                   -

The income tax provisions differ from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income from continuing operations for the years ended December 31, 2014 and 2013 and are as follows:

	2014	2013
Provision at statutory rate	(598,500)	(560,000)
(Decrease) increase in income taxes resulting from:
Change in valuation allowance	542,800	1,134,800
Nondeductible (return of) stock options and warrants	44,700	(582,700)
Other	11,000	7,900
Totals	$               0	$               0

The net operating losses available at December 31, 2014 to offset future taxable income total approximately $17,850,000 and expire principally in years 2018 - 2034.

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Note 2. Balance Sheet Data: Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Deferred costs - stock and warrants issued for services, long-term	$ 597,788	$ 125,251

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Note 7. Revenue and Major Customers

12 Months Ended

Dec. 31, 2014

Notes

Note 7. Revenue and Major Customers

Note 7.           Revenue and Major Customers

For the years ended December 31, 2014 and 2013, the Company’s largest customer accounted for approximately 22% and 41% of our revenues, respectively.  Our sludge processing agreement with Toho Water Authority, which was also our largest customer for the years 2011 through 2013, was not renewed at the beginning of 2014.  Our failure to renew that agreement has had a material adverse effect on our business, financial conditions and results of operations.  For the years ended December 31, 2014 and 2013, the top three customers accounted for approximately 50% and 68%, respectively, of the Company’s revenues.  Florida operations accounted for approximately 96% and 97% of consolidated revenue during the years ended December 31, 2014 and 2013, respectively.  The accounts receivable balance due (which are unsecured) for these three Florida customers at December 31, 2014 and 2013 was approximately $99,000 and $211,000, respectively.  Beginning in March 2014, the Company’s operations in Florida were voluntarily delayed for a short time while the Company moved assets and personnel to a new site in Bradley, Florida.  While operations resumed in Bradley in June 2014, this reduction in revenue, while temporary, has materially reduced available cash to fund current or prior expenses incurred.

The sludge processing agreement with the City of Toledo, Ohio, who was the Company’s largest customer for many years through 2010 and represented approximately 17% of the consolidated revenues in 2011, was not renewed at the end of 2011.  The City of Toledo’s failure to renew that agreement has continued to have a material adverse effect on the Company’s business, financial conditions and results of operations.

Additionally, economic considerations have made the supply of admixtures used in our processes more difficult to acquire due to coal-burning facilities operating less or not at all, primarily from the decrease in natural gas prices in the commercial marketplace.

A substantial portion of the Company's revenue is derived from services provided under contracts and agreements with existing licensees.  Some of these contracts, especially those contracts with large municipalities, provide for termination of the contract by the customer after giving relatively short notice (in some cases as little as ten days).  In addition, some of these contracts contain liquidated damages clauses, which may or may not be enforceable in the event of early termination of the contracts.  If one or more of these contracts are terminated prior to the expiration of its term, and the Company is not able to replace revenues from the terminated contract or receive liquidated damages pursuant to the terms of the contract, the lost revenue could have a material and adverse effect on its business and financial condition.

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Note 8. Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Notes

Note 8. Commitments and Contingencies

Note 8.             Commitments and Contingencies

In 2010, the Company and Timothy R. Kasmoch, the President and Chief Executive Officer, entered into an Employment Agreement for a five-year term.  Mr. Kasmoch is to receive an annual base salary of $150,000, subject to an annual discretionary increase.  In addition, Mr. Kasmoch is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan.  Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason.  In March 2015, Mr. Kasmoch’s Employment Agreement automatically renewed for a one-year term.

In 2010, the Company and Robert W. Bohmer, the Executive Vice President and General Counsel, entered into an Employment Agreement for a five-year term.  Mr. Bohmer is to receive an annual base salary of $150,000, subject to an annual discretionary increase.  In addition, Mr. Bohmer is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan.  Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason.  In March 2015, Mr. Bohmer’s Employment Agreement automatically renewed for a one-year term.

In May 2014, the Company and Mr. Bohmer agreed to an adjustment to his employment contract, making him a part-time employee and adjusting his salary to $57,200.  Additional information is available in “Item 11 Executive Compensation” in this Form 10-K.

In 2010, the Company and James K. McHugh, the Chief Financial Officer, Secretary and Treasurer, entered into an Employment Agreement for a five-year term.  Mr. McHugh is to receive an annual base salary of $125,000, subject to an annual discretionary increase.  In addition, Mr. McHugh is eligible for an annual cash bonus and was granted stock options from the Company’s Second Amended and Restated 2004 Stock Option Plan.  Generally, the Agreement may be terminated by the Company with or without cause or by the Employee for any reason.  In March 2015, Mr. McHugh’s Employment Agreement automatically renewed for a one-year term.

In May 2013, the Company’s Board of Directors approved an amendment to each of the Company’s executive officer’s respective employment agreement only as it applied to the stock option grant.  Additional information is available in “Item 11 Executive Compensation” in this Form 10-K.

In February 2013, the Company received a letter from counsel on behalf of one of our stockholders (“Counsel letter”), demanding a review by the Board of option plan issuances in 2010 and 2011 to members of management.  In response, the Board formed a Special Committee to evaluate the 2004 and 2010 Stock Option Plans for the issuances in 2010 pursuant to the multi-year employment agreements with Messrs. Kasmoch, Bohmer and McHugh under the 2004 Option Plan, and the 2011 award to Mr. Kasmoch under the 2010 Option Plan.  In May 2013, the Special Committee and the Board finished reviewing the awards and sent a letter in reply to the Counsel letter.  The Board also approved an amendment to each the executive officer’s respective employment agreement, and renegotiated their option grants such that (i) no grant in any single year exceeds the Plan Limits, and, (ii) each employee return to respective Option Plan the number of options by which his annual grant exceeded the Plan Limits for any single year.  Additional information is available in Item 11 “Executive Compensation” of this Form 10-K.

As a result of these actions, and after additional negotiations, on July 14, 2014 the Company and the stockholder entered into a Confidential Settlement Agreement and General Release with the following terms: Without admitting liability in connection with any of the claims asserted but in order to avoid the expenses and uncertainty of potential litigation the Company agreed: (i) the Company will adopt certain procedures to monitor future issuances of options to management; (ii) the Company will make an installment payment of $20,000 ratably over ten months to counsel for the stockholder who asserted the claim, but none of these funds will be paid to the stockholder; (iii) the Company will issue warrants to counsel for the stockholder exercisable at a predetermined price.  In exchange for the foregoing the parties exchanged general releases and this matter is resolved completely.  Based on the terms of the settlement, the Company accrued an estimated expense of $86,500, recorded as a trade account payable, at December 31, 2013 and, due to an increase in the underlying valuation of the warrants, an additional accrual of $93,900 for the quarter ended March 31, 2014, for a total expense of $180,400 to recognize the cost of the final settlement.  All but $20,000 of this expense is for the non-cash component.  Certain of the settlement payments due under the settlement are in default, and as of December 31, 2014 the Company owed approximately $16,000 in cash installment payments.

The Company’s executive and administrative offices are located in Toledo, Ohio.  In April 2011, the Company signed a 68 month lease with Deerpoint Development Co., Ltd.  The total minimum rental commitment for the years 2014 through 2016 is $40,800 each year.  The total rental expense included in the statements of operations for the year ended December 31, 2014 and 2013 is approximately $40,800 and $30,600, respectively.  Additional information is available in “Item 2 Properties” in this Form 10-K.

In October 2010, the Company began to lease property in Emlenton, Pennsylvania under a lease with A-C Valley Industrial Park, for one year.  After September 2011, the Company operated under a month-to-month lease agreement, for a reduced rate.  The total rental expense included in the statements of operations for each of the years ended December 31, 2014 and 2013 is $12,000.

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.  In June 2010, the Company renewed the lease for an additional year through May 2011, and operated under a month-to-month lease until the Company closed the office in September 2014.  The total rental expense included in the statements of operations for the year ended December 31, 2014 and 2013 is approximately $22,500 and $30,000, respectively.

The Company maintained an office in Daytona Beach under a lease with the County of Volusia, Florida, from March 2009 through March 2014.  Effective and subsequent to April 2014, the Company briefly operated on a month to month lease with Volusia County, to allow the removal of certain owned assets and finished product from the site as approved by the County.  The total rental expense included in the statements of operations for each of the years ended December 31, 2014 and 2013 is $15,000 and $48,000, respectively.

In June 2014, Mulberry Processing, LLC, a wholly owned subsidiary of the Company, entered into a contract to lease certain real property and buildings in Bradley, Florida from Bowling Green Holdings, LLC, for a five year lease term beginning June 1, 2014 and a monthly payment of $10,000.  More details can be found in Note 4 Capital Lease.

For the year ended December 31, 2014, the Company paid a total of $19,800 recorded as rent in selling, general and administrative expense on behalf of the Chief Executive Officer.  No future commitment exists as the residential building lease is not in the name of the Company, however the Company expects to pay $22,000 in 2015 through the lease term maturing October 31, 2015.

In September 2014, the Company entered into an operating lease with Caterpillar Financial for operating equipment at its Bradley, Florida location.  The lease term is for three years beginning October 2014 and a monthly payment of approximately $3,200.  The total minimum rental commitment for each of the years ending December 31, 2015 through 2016 is $37,900 and for the year ending December 31, 2017 is $28,400.

Management believes that all of the Company’s properties are adequately covered by insurance.

The Company operates in an environment with many financial risks, including, but not limited to, major customer concentrations, customer contract termination provisions, competing technologies, infringement and/or misappropriation of intellectual property rights, the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions.  Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the business activities of the Company.  The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company.

From time to time the Company is involved in legal proceedings and subject to claims which may arise in the ordinary course of business.  Certain unsecured creditors have brought civil action against the Company related to nonpayment.  The Company has not accrued any additional amount related to these charges, but continue to negotiate payment plans to satisfy these creditors.

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Note 10. Subsequent Events

12 Months Ended

Dec. 31, 2014

Notes

Note 10. Subsequent Events

Note 10.           Subsequent Events

During the first quarter of 2015, the Company entered into share purchase agreements with a total of eleven Purchasers pursuant to which the Company sold 395,000 shares of its common stock (the “Shares”) to the Purchasers for a total of $395,000, or a purchase price of $1.00 per share, to provide operating capital.  All but 30,000 shares were restricted and have limited “piggy-back” registration rights in connection with certain registration statement filings of the Company under the Securities Act of 1933 as amended (the “Securities Act”).  The Company issued 121,500 shares in 2015 it held in its treasury, 91,500 of these were sold under agreements dated in late 2014.  All of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

In February 2015, the Company extended the $200,000 Promissory Note payable to David and Edna Kasmoch for an additional three months, now due October 30, 2014, and is currently still in default.  Additional details of this Note are provided in Note 3, Pledged Assets, Line of Credit and Long-Term Debt.

In March and April 2015, two of the Company’s debenture holders converted a total of $91,260 in debt including accrued interest to 45,630 restricted shares of the Company’s common stock.  Both of the transactions were exempt from the registration requirements under the Securities Act pursuant to section 4(a)(2) as a transaction by an issuer not involving a public offering.

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Note 3. Pledged Assets, Line of Credit and Long-term Debt: Schedule of Debt (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Notes Payable to Bank	$ 36,550	$ 31,632
Other Notes Payable	32,818	93,435
Pension and Other Postretirement and Postemployment Benefit Plans, Liabilities	389,389	404,672
Notes Payable, Related Parties, Current	244,480	228,000
Convertible debentures, net of discount, in default	455,000	455,000
Long-term Debt	1,158,237	1,212,739
Current maturities of long-term debt	63,186	92,249
Notes Payable, Noncurrent	$ 326,654	$ 32,818

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Note 4. Capital Lease: Schedule of Capital Leased Assets (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Capital Leased Assets, Gross	$ 420,346	$ 0
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Property, Plant, and Equipment Other, Accumulated Depreciation	49,040	0
Ground Leases, Net	$ 371,306	$ 0

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Note 3. Pledged Assets, Line of Credit and Long-term Debt (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Notes Payable, Related Parties, Current	$ 244,480	$ 228,000
Repayments of Unsecured Debt	15,009
Unsecured Debt	35,900
Repayments of Secured Debt	5,100
Secured Debt, Other	33,500
Debt Instrument, Convertible, Conversion Price	$ 2.00
Debt Instrument, Convertible, Effective Interest Rate	8.00%
Convertible debentures, net of discount, in default	455,000	455,000
David And Edna Kasmoch
Notes Payable, Related Parties, Current	$ 200,000
Debt Instrument, Interest Rate, Stated Percentage	12.00%

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Note 2. Balance Sheet Data: Deferred Costs (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Deferred Costs:

Deferred costs:

In December 2010, the Company executed a Financial Public Relations Agreement with Strategic Asset Management, Inc., or SAMI.  The Company engaged SAMI as its non-exclusive financial public relations counsel for a term of three years.  For its services, the Company issued SAMI 150,000 shares of the Company's unregistered common stock.  The Company recorded a non-cash charge to earnings of approximately $305,000 ratably over a 36-month period starting in December 2010.  For the years ended December 31, 2014 and 2013, the charge to earnings was $-0- and $97,271, respectively.

In August 2011, the Company issued 100,000 shares of common stock and granted 100,000 fully vested stock warrants to SAMI for additional services performed in connection with the December 2010 Financial Public Relations Agreement.  To reflect the entire value of the stock and warrants issued, the Company took a non-cash charge to earnings of $285,700 through December 2013, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $91,300, respectively.

In August 2012, the Company issued 60,000 shares of unregistered common stock to Equiti-trend Advisors LLC/JT Trading, LLC for public relations and corporate communication services.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $75,000 ratably through January 2013, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $-0- and $14,500, respectively.

In October 2012, the Company issued 300,000 shares of common stock and granted 150,000 fully vested stock warrants to SAMI to extend the period of services performed in connection with the December 2010 Financial Public Relations Agreement for an additional two years, through December 2015.  To reflect the entire value of the stock and warrants issued, the Company is taking a non-cash charge to earnings of $421,300 starting in 2013, over a 36 month period.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $136,600 and $125,300, respectively.

In January 2013, the Company issued 70,000 shares of unregistered common stock to Webracadabra Internet Works, LLC, dba Oregon Resource Innovations, for financial consulting services to be performed over a six month period.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $70,000 ratably through July 2013, the ending date of the agreement.  For the years December 31, 2014 and 2013 the charge to earnings was $-0- and $70,000, respectively.

In April 2013, the Company executed a Consulting Agreement with Rakgear, Inc.  The Company engaged Rakgear to provide financial consulting services for a term of one year.  For its services, the Company issued Rakgear 150,000 shares of the Company's unregistered common stock and 150,000 fully vested warrants to purchase unregistered shares of common stock at a price of $1.49 per warrant.  To reflect the entire value of the stock issued, the Company recorded a non-cash charge to earnings of $487,900 ratably through March 2014, the ending date of the agreement.  For the years ended December 31, 2014 and 2013, the charge to earnings was approximately $122,000 and $365,900, respectively.

In September 2014, the Company executed a Financial Public Relations Agreement with Dynasty Wealth, Inc., for a one year term.  For its services, the Company issued Dynasty Wealth 350,000 warrants to purchase the Company's unregistered common stock at an exercise price of $1.50 per share, and $10,000 per month, to be paid in either cash or shares of the Company’s unregistered common stock at the Company’s discretion.  To reflect the entire value of the warrants issued, the Company is recording a non-cash charge to earnings of $460,700 ratably through September 14, 2015, the ending date of the agreement.  For the year ended December 31, 2014 the charge to earnings for the entire agreement was approximately $169,400, of which the non-cash portion of the agreement was approximately $134,400.

In November 2014, the Company executed a Public Relations Agreement with Global IR Group, Inc., for a one year term.  For its services, the Company issued Global IR 100,000 shares of the Company’s unregistered common stock.  To reflect the entire value of the stock issued, the Company is recording a non-cash charge to earnings of $165,000 ratably through November 19, 2015, the ending date of the agreement.  For the year ended December 31, 2014 the charge to earnings was approximately $18,800.

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Note 6. Equity Transactions: Fair Value, Option, Quantitative Disclosures (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Fair Value, Option, Quantitative Disclosures

	Year Ended December 31,
	2014	2013
Expected dividend yield	0.0%	0.0%
Weighted average volatility	287.0%	267.6%
Risk free interest rate	2.2 - 2.8%	1.8 - 2.9%
Expected term (in years)	7	7

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Note 1. Operations and Summary of Significant Accounting Policies: E. Cash and Cash Equivalents Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

E. Cash and Cash Equivalents Policy

E.            Cash and Cash Equivalents – The Company has cash on deposit primarily in one financial institution which, at times, may be in excess of FDIC insurance limits.

For purposes of the statements of cash flows, the Company considers all certificates of deposit with initial maturities of 90 days or less to be cash equivalents.

Restricted cash consists of:  one certificate of deposit and corresponding accrued interest which was held as collateral on behalf of the Florida Department of Agriculture for the Company’s soil distribution license at December 31, 2013;  one certificate of deposit and corresponding accrued interest which is held as collateral with a performance bond on behalf of one of the Company’s licensees at both December 31, 2014 and 2013.

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Note 1. Operations and Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Revenue Recognition, Policy

J.             Revenue Recognition – Facility management revenue and royalty fees are recognized under contracts where the Company or licensees utilize the N Viro Process to treat sludge, either pursuant to a fixed-price contract or based on volumes of sludge processed.  Revenue is recognized as services are performed.

Alkaline admixture sales, alkaline admixture management service revenue and N-Viro Soil^TM revenue are recognized upon shipment.

License and territory fees are generated by selling the right to market or use the N-Viro Process in a specified territory.  The Company's policy is to record revenue for the license agreements when all material services relating to the revenue have been substantially performed, conditions related to the contract have been met and no material contingencies exist.  Research and development revenue is recognized as work is performed to the contracting entity in accordance with the contract.

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Note 4. Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Tables)

12 Months Ended

Dec. 31, 2014

Tables/Schedules

Schedule of Future Minimum Lease Payments for Capital Leases

	amount
2015	$     160,000
2016	120,000
2017	120,000
2018	120,000
2019	50,000
Total minimum lease payments	570,000
Less amount representing interest	(164,070)
Present value of lease payments	$ 405,930
Current maturities	$    86,652
Non-current maturities	$ 319,278

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Note 8. Commitments and Contingencies: Commitments and Contingencies, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Commitments and Contingencies, Policy

The Company operates in an environment with many financial risks, including, but not limited to, major customer concentrations, customer contract termination provisions, competing technologies, infringement and/or misappropriation of intellectual property rights, the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions.  Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the business activities of the Company.  The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company.

From time to time the Company is involved in legal proceedings and subject to claims which may arise in the ordinary course of business.  Certain unsecured creditors have brought civil action against the Company related to nonpayment.  The Company has not accrued any additional amount related to these charges, but continue to negotiate payment plans to satisfy these creditors.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $)	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Total
Stockholders' Equity (Deficit) at Dec. 31, 2012	$ 66,641	$ 28,630,416	$ (28,061,453)	$ (684,890)	$ (49,286)
Shares, Outstanding at Dec. 31, 2012	6,664,087
Issuance of common stock, Value	248	24,942			25,190
Issuance of common stock, Shares	24,760
Share-based compensation expense, Value	2,301	875,502			877,803
Share-based compensatione expense, Shares	230,135
Exercise of stock warrants, Value	1,285	122,653			123,938
Exercise of stock warrants, Shares	128,539
Deemed dividend on extension of stock warrants		178,200	(178,200)
Warrants issued on loans		32,400			32,400
Net Loss			(1,646,977)		(1,646,977)
Stockholders' Equity (Deficit) at Dec. 31, 2013	70,475	29,864,113	(29,886,630)	(684,890)	(636,932)
Shares, Outstanding at Dec. 31, 2013	7,047,521
Issuance of common stock, Value	7,439	663,368			670,807
Issuance of common stock, Shares	743,902
Share-based compensation expense, Value	1,254	948,798			950,052
Share-based compensatione expense, Shares	125,357
Exercise of stock warrants, Value	2,500	119,677			122,177
Exercise of stock warrants, Shares	250,009
Deemed dividend on extension of stock warrants		502,890	(502,890)
Sale of treasury stock			(415,929)	507,429	91,500
Exercise of stock options, Value		4,750			4,750
Net Loss			(1,760,364)		(1,760,364)
Stockholders' Equity (Deficit) at Dec. 31, 2014	$ 81,668	$ 32,103,596	$ (32,565,813)	$ (177,461)	$ (558,010)
Shares, Outstanding at Dec. 31, 2014	8,166,789

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Note 4. Capital Lease

12 Months Ended

Dec. 31, 2014

Notes

Note 4. Capital Lease

Note 4.               Capital Lease

In June 2014, Mulberry Processing, LLC, a wholly owned subsidiary of the Company, entered into a contract to lease certain real property and buildings in Bradley, Florida from Bowling Green Holdings, LLC (“BGH”), a company owned by David Kasmoch, the father of Timothy R. Kasmoch, the Company’s President and Chief Executive Officer.  The lease term is for five years beginning June 1, 2014 and a monthly payment of $10,000.  This lease is for the Company’s new operating facility which commenced operations in June 2014, and has been determined to be a capital lease. 

The economic substance of the lease is the Company is financing the acquisition of the asset through the lease, and accordingly, it is recorded in the Company’s assets and liabilities.  Assets and liabilities under capital leases initially are recorded at the lower of present value of the minimum lease payments or the fair value of the assets.  The assets are depreciated over the shorter of the lease term or their estimated useful lives.

  A liability and related asset of $420,346 was recorded in June 2014 concurrent with the start of the lease agreement.

The following is a summary of property held under capital leases at December 31, 2014 and 2013:

	2014	2013
Leased real property at Bradley, Florida - BGH	$    420,346	$            0
Less accumulated depreciation	49,040	0
Totals	$    371,306	$            0

Depreciation on assets under capital leases charged to expense for the years ended December 31, 2014 and 2013 was $49,040 and $-0-, respectively, recorded as cost of sales.  Interest charged related to capital lease liabilities for the years ended December 31, 2014 and 2013 was $35,508 and $-0-, respectively, recorded as interest expense.  At December 31, 2014, the Company was in default of its payments.

The following is a schedule by years of future minimum payments required under the lease together with their present value as of December 31, 2014:

	amount
2015	$     160,000
2016	120,000
2017	120,000
2018	120,000
2019	50,000
Total minimum lease payments	570,000
Less amount representing interest	(164,070)
Present value of lease payments	$ 405,930
Current maturities	$    86,652
Non-current maturities	$ 319,278

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Note 2. Balance Sheet Data: Property, Plant and Equipment (Details) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Details
Buildings and Improvements, Gross	$ 452,362	$ 119,445
Machinery and Equipment, Gross	2,280,636	2,118,863
Property, Plant and Equipment, Other, Gross	0	722,559
Furniture and Fixtures, Gross	57,503	59,896
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,791,649	2,147,221
Property, Plant and Equipment, Net	$ 998,852	$ 873,542

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Note 6. Equity Transactions (Details) (USD $)	12 Months Ended
	Dec. 31, 2014
Details
Stock Issued, Shares, Issued for Cash	604,650
Sale of Stock, Price Per Share	$ 1.00

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Note 1. Operations and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Earnings Per Share, Policy

K.            Loss Per Common Share – Loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during each period presented.  For the years ended December 31, 2014 and 2013, the effects of 2,615,231 and 2,555,981 stock options outstanding, respectively, 2,649,142 and 1,849,585 warrants to purchase common stock, respectively, and, debentures that are convertible to 227,500 shares of common stock are excluded from the diluted per share calculation because they would be antidilutive.

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Note 9. Income Tax Matters: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $)	0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Details
Current Federal Tax Expense (Benefit)	$ (598,500)	$ (560,000)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	542,800	1,134,800
Income Tax Effects Allocated Directly to Equity, Employee Stock Options	44,700	(582,700)
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Other, Amount	11,000	7,900
Current Income Tax Expense (Benefit)	$ 0	$ 0

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Note 6. Equity Transactions: Class of Warrant or Right, Reason for Issuing to Nonemployees (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Class of Warrant or Right, Reason for Issuing to Nonemployees

During the year ended December 31, 2014, the Board of Directors approved a plan to offer to all Company warrants holders a 25% discount on the exercise price to any warrant holder who exercises warrants, and a second 25% discount on any subsequent warrant exercise, but within a specific “discount period” and only on a temporary basis.  Any warrant holder who exercised within the discount period also received a “replacement warrant” on a 1.5 to 1 basis.  All other terms and conditions of all outstanding warrants remain unchanged, and the discount offer was temporary.  During the discount period, five warrant holders exercised a total of 250,009 warrants at various exercise prices and were issued a total of 250,009 shares of restricted common stock and 375,014 replacement warrants.  As a condition of exercise, all of the $122,177 in cash proceeds from the exercises were restricted for future payment to specific creditors as agreed upon with the warrant holders, and subsequently used to pay these creditors.  In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering.

During the year ended December 31, 2013, a total of 127,264 warrants were exercised and shares of unregistered restricted stock were issued to one insider and four non-insider owners for total net cash proceeds of $127,264.  These proceeds were all used for operating expenses.  Simultaneously and subject to the same terms and conditions and as further inducement to exercise the warrants, the Company issued a total of 127,264 warrants to these same owners as “replacement warrants” to acquire shares of our common stock at $1.00 per share, a price which was below the closing price of the stock on the date of each transaction.  In all instances the shares and the warrants issued and sold were in a private offering transaction pursuant to an exemption under Section 4(2) of the Securities Act of 1933 for transactions by an issuer not involving a public offering.

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Note 1. Operations and Summary of Significant Accounting Policies: Liquidity Disclosure, Policy (Policies)

12 Months Ended

Dec. 31, 2014

Policies

Liquidity Disclosure, Policy

D.            Going Concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has negative working capital of approximately $938,000 at December 31, 2014, and has incurred recurring losses and negative cash flow from operations for the years ended December 31, 2014 and 2013.  Moreover, while the Company expects to arrange for financing with lending institutions, there is no borrowing availability and no line of credit at December 31, 2014.

The Company has borrowed money from third parties and related parties and expects to be able to generate future cash from the exercise of common stock warrants and new equity issuances, though there can be no assurance given that such issuances or exercises will be realized.  The Company has slowed payments to trade vendors, and has renegotiated payment terms with several existing and prior vendors to lengthen the time and/or reduce the amount of cash to repay these trade payables.  In 2013 and again in 2014 the Company modified all outstanding warrants to enhance their exercisability and realized approximately $122,000 and $124,000 in exercises in 2014 and 2013, respectively.  Beginning in March 2014, the Company’s operations in Volusia County, Florida, which at the time represented substantially all revenue, were voluntarily delayed while the Company employed additional personnel and moved assets to the Company’s new site in Bradley, Florida.  The Company considers its relationship with the landlord in Volusia County to be satisfactory overall as they work to finalize the termination of operations on their site.  While operations resumed in Bradley in June 2014, this reduction in revenue materially reduced available cash to fund current or prior expenses incurred.  These factors raise substantial doubt as to the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.