-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MxG7Cky8mZ5GDWz8dPyFLhlpLjTmn4UbYhr/UBIFQQGhMWg28Gv07OWltlQi57D2 ptorylZwrsxCrfhb4egQmg== 0000950152-99-004543.txt : 19990518 0000950152-99-004543.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950152-99-004543 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: N-VIRO INTERNATIONAL CORP CENTRAL INDEX KEY: 0000904896 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 341741211 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21802 FILM NUMBER: 99625328 BUSINESS ADDRESS: STREET 1: 3450 W CENTRAL AVE STREET 2: STE 328 CITY: TOLEDO STATE: OH ZIP: 43606 BUSINESS PHONE: 4195356374 MAIL ADDRESS: STREET 1: 3450 WEST CENTRAL AVENUE SUITE 328 CITY: TOLEDO STATE: OH ZIP: 43606 10-Q 1 N-VIRO INTERNATIONAL CORPORATION 10-Q 1 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM___________TO_________ COMMISSION FILE NUMBER: 0-21802 ---------- N-VIRO INTERNATIONAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 34-1741211 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 3450 W. CENTRAL AVENUE, SUITE 328 TOLEDO, OHIO 43606 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (419) 535-6374 ---------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes X No . As of May 7, 1999, 2,579,733 shares of N-Viro International Corporation $ .01 par value common stock were outstanding. - -------------------------------------------------------------------------------- -1- 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS N-VIRO INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31 --------------------------- 1999 1998 ----------- ----------- Revenues $ 978,124 $ 1,032,257 Cost of revenues 486,089 462,946 ----------- ----------- Gross profit 492,035 569,311 Selling, general & administrative expenses 462,442 485,076 ----------- ----------- Operating income 29,593 84,235 Nonoperating income (expense): Interest income (expense), net 2,552 (4,751) Equity in losses of joint venture (14,190) (9,522) Miscellaneous expense -- (2,250) ----------- ----------- Income before income tax (credits) 17,955 67,712 Federal and state income tax (credits) -- -- ----------- ----------- Net income $ 17,955 $ 67,712 =========== =========== Basic and diluted earnings per share $ 0.01 $ 0.03 =========== =========== Weighted average common shares outstanding 2,522,483 2,448,483 =========== ===========
See Notes to Consolidated Financial Statements -2- 3 N-VIRO INTERNATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1999 1998 ASSETS (Unaudited) (Audited) ------------ ------------ Current Assets Cash and cash equivalents $ 359,510 $ 322,827 Securities available-for-sale 1,740 1,401 Trade receivables 872,366 802,913 Notes receivable 188,236 197,839 Related party receivables 37,194 46,790 Prepaid expenses and other assets 144,730 81,644 ------------ ------------ Total current assets 1,603,776 1,453,414 Property and Equipment 547,553 577,116 Investment in Florida N-Viro, L.P. 838,320 852,510 Deferred Tax Assets 312,000 312,000 Intangibles and Other Assets 745,500 588,312 ------------ ------------ TOTAL ASSETS $ 4,047,149 $ 3,783,352 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities Current maturities of long-term debt $ 136,723 $ 93,640 Accounts payable 817,439 729,427 Accrued expenses 227,738 226,790 ------------ ------------ Total current liabilities 1,181,900 1,049,857 ------------ ------------ Long-Term Debt, less current maturities 170,029 67,547 ------------ ------------ Stockholders' Equity Common stock, $.01 par value; authorized 7,000,000 shares; issued 2,829,733 28,298 28,298 Additional paid-in capital 13,643,829 13,632,425 Retained earnings (deficit) (9,858,930) (9,876,798) ------------ ------------ 3,813,197 3,783,925 Less treasury stock, at cost, 307,250 shares 1,117,977 1,117,977 ------------ ------------ 2,695,220 2,665,948 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 4,047,149 $ 3,783,352 ============ ============
See Notes to Consolidated Financial Statements -3- 4 N-VIRO INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Quarter Ended March 31, ---------------------- 1999 1998 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 102,765 $ 223,827 CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for intangibles and other assets (171,390) (2,399) Expenditures for property and equipment -- (1,436) --------- --------- NET CASH USED BY INVESTING ACTIVITIES (171,390) (3,835) CASH FLOWS FROM FINANCING ACTIVITIES Net repayments on revolving credit agreement -- (120,000) Borrowings under long-term obligations 135,000 -- Repayments of long-term debt (29,692) (26,741) --------- --------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 105,308 (146,741) --------- --------- NET INCREASE IN CASH 36,683 73,251 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 322,827 31,472 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 359,510 $ 104,723 ========= =========
See Notes to Consolidated Financial Statements -4- 5 N-VIRO INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. ORGANIZATION AND BASIS OF PRESENTATION The accompanying consolidated financial statements of N-Viro International Corporation (the "Company") are unaudited but, in management's opinion, reflect all adjustments (including only normal recurring accruals) necessary to present fairly such information for the period and at the dates indicated. The results of operations for the three months ended March 31, 1999 may not be indicative of the results of operations for the year ended December 31, 1999. Since the accompanying consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X, they do not contain all information and footnotes normally contained in annual consolidated financial statements; accordingly, they should be read in conjunction with the consolidated and combined financial statements and notes thereto appearing in the Company's Form 10-K for the period ending December 31, 1998. N-Viro International Corporation was incorporated in April 1993 and is the successor to N-Viro Energy Systems, Ltd. (the "Partnership") and five Company agents (the "Company Agents"). On October 19, 1993, the Partnership contributed to the Company all of its assets (except certain marketable securities and accounts receivable from certain related parties), subject to all liabilities (except certain retained liabilities), and the shareholders of the Company Agents contributed to the Company all of the outstanding capital stock of such entities in exchange for a total of six million shares of Common Stock of the Company and organization notes totaling $5,221,709 (such transactions are collectively referred to as the "Organization"). The Organization notes were repaid out of the proceeds from an initial public offering of two million shares of Company Common Stock. A total of 2,112,000 new shares were issued in the initial public offering including shares issued in the partial exercise by the Underwriters of an over-allotment option. The financial statements are consolidated as of March 31, 1999 and December 31, 1998 for the Company. Adjustments have been made to eliminate all intercompany transactions. 2. RELATED PARTY TRANSACTIONS The Company recognized an expense to Mr. Bobby B. Carroll, a Director of the Company and a former shareholder of Tennessee-Carolina N-Viro, Inc., of $15,000 for the three months ended March 31, 1999, and $30,000 for the three months ended March 31, 1998 under a contract arrangement signed in 1993 and amended in 1998 for consulting services. The Company granted Mr. Carroll a security interest in all present and future receivables and contract rights from licenses in the states of Tennessee, North Carolina and South Carolina pursuant to the contract agreement. 3. CONTINGENCIES The Company leases office space under an agreement which requires monthly payments of $4,812. The lease expires in December 2002. The total minimum rental commitment at March 31, 1999 is $217,000. The total rental expense included in the statements of operations for the periods ended March 31, 1999 and 1998 is approximately $14,435 and $14,000, respectively. During 1994, the Company reacquired territory rights from a former agent and issued 66,250 shares of unregistered common stock. The former agreement stated that if the former agent elected to sell these shares, the Company has guaranteed the former agent $6 per common share. -5- 6 In 1999 the Company reached a settlement agreement to modify its royalty agreement with the former agent and the stock price guarantee agreement. As part of this agreement, the former agent is required to pay royalties owed and shall not sell any common stock issued in connection with the original agreement until September 2000 at which time the former agent may sell up to 10,000 shares per month. The former agent has the right to offset future royalties owing against the difference between the $6 per share guarantee and the fair market value of the stock at the time the shares are sold. The Company is involved in legal proceedings and subject to claims which have arisen in the ordinary course of business. These actions, when concluded and determined, will not, in the opinion of management, have a material adverse effect upon the financial position of the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company was incorporated in April, 1993, and became a public company on October 12, 1993. The Company's business strategy is to market the N-Viro Process, which produces an "exceptional quality" sludge product as defined in the Section 503 Sludge Regulations under the Clean Water Act of 1987, with multiple commercial uses. To date, the Company's revenues primarily have been derived from the licensing of the N-Viro Process to treat and recycle wastewater sludge generated by municipal wastewater treatment plants and from the sale to licensees of the alkaline admixture used in the N-Viro Process. The Company has also operated N-Viro facilities for third parties on a start-up basis and currently operates one N-Viro facility on a contract management basis. Total revenues were $978,000 for the quarter ended March 31, 1999 compared to $1,032,000 for the same period of 1998. The net decrease in revenue is due primarily to a decrease in territorial and site license revenue, partially offset by an increase in facility management and research and development revenue. The Company increased its cost of revenues for the same period of 1999. The increase in cost of revenues was due primarily to the increase in costs in generating facility management revenue. As a result, the gross profit percentage decreased to 50% from 55% for the quarters ended March 31, 1999 and 1998. Selling, general and administrative costs decreased for the comparative period, and losses in the equity of a joint venture increased for the same period of 1999. These changes collectively resulted in net income of $18,000 for the quarter ended March 31, 1999 compared to $68,000 for the quarter ended March 31, 1998. On June 1, 1998, the Company filed a registration statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission for the registration of certain shares of Common Stock of the Company then held by Heartland Limited Partnership I ("Heartland"). These shares were subsequently assigned to an affiliate of Heartland. The Company's audited financial statements were not available as of the deadline for filing the Company's Form 10-K for the year ended December 31, 1998, and the Form 10-K was correspondingly not filed in a timely manner. As a result of such untimely filing, the Company may not currently use Form S-3 to register its shares of Common Stock, and the Company is thus engaged in the process of withdrawing the Registration Statement. COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 WITH THREE MONTHS ENDED MARCH 31, 1998 Overall revenue decreased $54,000, or 5.2%, to $978,000 for the three months ended March 31, 1999 from $1,032,000 for the three months ended March 31, 1998. The net decrease in revenue was due primarily to the following: -6- 7 a) Licensing of the N-Viro Process, including territory fees, earned the Company $-0- for the quarter, a decrease of $150,000 from the same period in 1998; b) The Company's processing revenue, including facility management revenue, showed a net increase of $72,000 over the same period ended in 1998; c) Research and development revenue increased $22,000 from the same period ended in 1998; d) Testing income increased $11,000 from the same period ended in 1998; and, e) Commission income decreased $9,000 from the same period ended March 31, 1998. Gross profit decreased $77,000, or 13%, to $492,000 for the three months ended March 31, 1999 from $569,000 for the three months ended March 31, 1998. This decrease in gross profit was primarily a result of the decrease in territory and license fee revenue, which have no associated cost of revenue, and an increase in alkaline admixture and direct payroll costs in generating the processing and facility management revenue. The gross profit margin decreased to 50% from 55% for the same three month comparison. Selling, general and administrative expenses decreased $23,000, or 5%, to $462,000 for the three months ended March 31, 1999 from $485,000 for the three months ended March 31, 1998. The decrease was primarily due to a decrease in administrative overhead and outside professional fees of $23,000. As a result of the foregoing factors, the Company recorded operating income of $30,000 for the three months ended March 31, 1999 compared to $84,000 for the three months ended March 31, 1998. For the quarters ended March 31, 1999 and 1998, the Company has not fully recognized the tax benefit of the losses incurred in prior periods. Accordingly, the effective tax rate for each period was zero. LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $422,000 at March 31, 1999, compared to working capital of $404,000 at December 31, 1998. Current assets at March 31, 1999 included cash and investments of $360,000, which is an increase of $37,000 from December 31, 1998. The increase in working capital was principally due to the income from operations for the quarter. In 1999 the Company's operating cash flow continued to be positive, and the Company improved its payments to unsecured trade vendors. The Company maintains a $250,000 certificate of deposit with a bank and held as collateral on the Company's working capital line of credit. In 1997 the Company obtained a working capital line of credit of $200,000. In the third quarter of 1998 the line was increased to $500,000. Borrowings against the line bear interest at prime minus .50% for amounts borrowed up to $250,000, and prime plus 1% on the excess amount borrowed over $250,000. This debt is collateralized by a certificate of deposit with the lender of $250,000, accounts receivable, inventories and equipment, and are due on demand. Also, the Company must maintain certain financial covenants. In April, 1999, the bank waived a violation of a financial covenant in light of the Company's net loss for the year ended December 31, 1998. In exchange, the Company has agreed to not borrow more than $350,000 outstanding at any one time, until further notice. The Company expects this borrowing limitation to be lifted during the second quarter of 1999. The balance owed on the line of credit at March 31, 1999 was $-0-. -7- 8 The Company believes that its working capital together with the line of credit, will provide sufficient cash to meet the Company's cash requirements through 1999. SEGMENT INFORMATION EARNINGS VARIATION DUE TO BUSINESS CYCLES AND SEASONAL FACTORS. Our operating results can experience quarterly or annual variations due to business cycles, seasonality and other factors. The market price for our common stock may decrease if our operating results do not meet the expectations of the market. Sales of the N-Viro technology are affected by general fluctuations in the business cycles in the United States and worldwide, instability of economic conditions and interest rates, as well as other factors. In addition, operating results of some of our business segments are influenced, along with other factors such as interest rates, by particular business cycles and seasonality. COMPETITION. We compete against companies in a highly competitive market and we have fewer resources than most of those companies. Our business competes within and outside the United States principally on the basis of price, product quality, custom design, technical support, reputation, equipment financing assistance and reliability. Competitive pressures and other factors could cause us to lose market share or could result in decreases in prices, either of which could have a material adverse effect on our financial position and results of operations. RISKS OF DOING BUSINESS IN OTHER COUNTRIES. We conduct business in markets outside the United States, and we expect to continue to do so. In addition to the risk of currency fluctuations, the risks associated with conducting business outside the United States include: social, political and economic instability; slower payment of invoices; underdeveloped infrastructure; underdeveloped legal systems; and nationalization. The Company has not entered into any currency swap agreements which may reduce these risks. The Company may enter into such agreements in the future if it is deemed necessary to do so. The Company has determined that its reportable segments are those that are based on the Company's method of internal reporting, which segregates its business by product category and service lines. Fixed assets generating specific revenue are identified with their respective segments as they are accounted for as such in the internal accounting records. All other assets, including cash and other current assets and all long-term assets, other than fixed assets, are identified with the Corporate segment. The Company does not allocate any selling, general, and administrative expenses to any specific segments. All of the other income (expense) costs or income are non-apportionable and not allocated to a specific segment. The Company accounts and analyzes the operating data for its segments generally by geographic location, with the exception of the Management segment, as this revenue accounts for over 10% of the total revenue of the Company. This segment represents both a significant amount of business generated as well as a specific location and unique type of revenue. The other two segments are divided between domestic and foreign sources, as these segments differ in terms of environment and municipal legal issues, nature of the waste disposal infrastructure, political climate, and availability of funds for investing in the Company's technology. These factors have not changed significantly over the past two years and are not expected to do so in the near term. -8- 9 The table below presents information about the segment profits and segment identifiable assets used by the chief operating decision makers of the Company for the quarters ended March 31, 1999 and 1998 (dollars in thousands).
Management Domestic Foreign Operations Operations Operations Total -------------- -------------- ------------ ------------- 1999 -------------------------------------------------------- Revenues $ 420 $ 521 $ 37 $ 978 Cost of revenues 229 257 -0- 486 Segment profits 191 264 37 492 Identifiable assets 75 261 -0- 336 Depreciation 3 12 -0- 15 1998 --------------------------------------------------------- Revenues $ 353 $ 592 $ 87 $ 1,032 Cost of revenues 221 245 (3) 463 Segment profits 132 347 90 569 Identifiable assets 83 220 -0- 303 Depreciation 3 11 -0- 14
A reconciliation of total segment revenues, cost of revenues, and segment profits sales to consolidated revenues, cost of revenues, and segment information to the consolidated financial statements for the quarters ended March 31, 1999 and 1998 is as follows (dollars in thousands):
1999 1998 ------- ------- Revenues Total revenues for reportable segments $ 978 $ 1,032 ======= ======= Cost of revenues: Total cost of revenues for reportable segments $ 486 $ 463 Other -0- -0- ------- ------- Consolidated cost of revenues $ 486 $ 463 ======= ======= Segment profits: Segment profits for reportable segments $ 492 $ 569 Corporate selling, general, and adminis- trative expenses (462) (485) Other income (expense) (12) (16) ------- ------- Consolidated EBIT $ 18 $ 68 ======= ======= Depreciation and amortization: Depreciation for reportable segments $ 15 $ 14 Corporate depreciation and amortization 29 25 ------- ------- Consolidated depreciation $ 44 $ 39 ======= =======
-9- 10 EFFECT OF YEAR 2000 ISSUE ON THE COMPANY'S MANAGEMENT AND INFORMATION SYSTEMS The Company has prepared its systems and applications to operate properly after the year 2000 (Y2K). The issue is whether computer systems will properly recognize date-sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause a system to fail. The potential for failures and errors affects all aspects of our business, including computers and their backup systems, office equipment and building components. We are also addressing our interdependencies with our customers and suppliers, all of whom must address the same problem. N-Viro's Y2K Program is focused on four inter-related categories which are crucial to maintaining uninterrupted service to our customers: the Company local area network (LAN) and wide-area network (WAN), software applications, and the external hardware that supports the applications. Additionally, the Company will include an assessment of its non-computer based equipment and office infrastructure, which is less significant to serving the needs of the Company's customers. The milestones within each category are: assessment, repair, testing and approval. The Company has a target of September 30, 1999 for the completion of all phases for all systems affecting the Company. CURRENT STATUS The Company has approximately 20 computers in use or available for use, all connected via a LAN. Of these, all but four are run under Macintosh operating systems, which do not have a Y2K problem. The other four are Windows 95 operating systems, and support the financial accounting and financial administration of the Company. All are important to the administration and maintenance related to our direct N-Viro product support activities, and support our sales and marketing department and other company services and internal administrative functions. As of March 31, 1999, the Company has completed 100% of the assessment, 100% of the repair and 100% of the application testing. All are Y2K compliant. The Company WAN helps provide quality service to the Company's customers. All of the boxes, switches, routers and network control points have been assessed: 100% are Y2K compliant. Additional Y2K testing will be conducted to independently verify supplier claims of compliance. At March 31, 1999, the assessment of the supplier applications was 15% complete. The Company expects to complete all phases of network certification by July 31, 1999. With respect to customer and supplier (third party) assessment, letters have been sent to about 400 companies to request information on their Y2K plans and targets for compliance. The Company has identified no existing types of third party interfaces. At March 31, 1999, the Company received approximately 13% of third party requests and approximately 100% of these indicated they were or expected to be Y2K compliant. The Company expects to complete Y2K certification for third parties by August 31, 1999, with 100% expected to be complete by Fall 1999. The non-information technology infrastructure focuses on the utilities-based systems (e.g., electric) that support the computer systems, as well as the need to continue security and operations. The effort to date for Y2K compliance within the non-IT infrastructure is in inventory and assessment. At March 31, 1999, approximately 25% of all sites completed inventory, 25% completed assessment and 25% are Y2K compliant. The Company expects to complete the remaining sites by mid-year 1999. COSTS The Company has expended approximately $7,000 since inception in late 1997 on the Y2K project. Total costs for the quarter ended March 31, 1999 were $-0-. The Company anticipates the total cost of the project to be approximately $10,000 through December of 1999, which includes approximately $7,000 of capitalized fixed assets and $3,000 of additional assessment and compliance costs. -10- 11 CONTINGENCY PLANS The Company is in the process of establishing Y2K contingency plans, which include the following: - - Data retention and recovery procedures to be in place for customer and business data to provide pre-millennium backups with on-site (primary backup) and off-site (2nd backup) data copies. - - Alternative processes to be developed to support all customer functions in the event information systems or mechanical processes experience disruptions. - - Alternative suppliers and plans to be in place for third-party products/services that do not meet Y2K compliance commitment schedules. RISK ASSESSMENT The Company has assessed our business exposure that would result from a failure of our Y2K Program, as well as those of our suppliers and customers. Such failures would result in business consequences that could include failure to be able to serve customers, loss of network functionality, inability to render accurate bills, lost revenue, harm to the Company trademark, legal exposure and failure of management controls. Although the Company believes that internal Y2K compliance will be achieved by December 31, 1999, there can be no assurance that the Y2K problem will not have a material adverse affect on the Company's business, financial condition and results of operations. The Company cautions that words used in this document such as "expects," "anticipates," "believes," "may," and "optimistic," as well as similar words and expressions used herein, identify and refer to statements describing events that may or may not occur in the future. These forward-looking statements and the matters to which they refer are subject to considerable uncertainty that may cause actual results to be materially different from those described herein. Some, but not all, of the factors that could cause actual results to be different than those anticipated or predicted by the Company include: (i) a deterioration in economic conditions in general; (ii) a decrease in demand for the Company's products or services in particular; (iii) the Company's loss of a key employee or employees; (iv) regulatory changes, including changes in environmental regulations, that may have an adverse affect on the demand for the Company's products or services; (v) increases in the Company's operating expenses resulting from increased costs of labor and/or consulting services; and (vi) a failure to collect upon or otherwise secure the benefits of existing contractual commitments with third parties, including customers of the Company. -11- 12 PART II - OTHER INFORMATION Item 5. Other Information (a) None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27 Financial Data Schedule (b) Reports on Form 8-K: A Form 8-K was filed on January 19, 1999, regarding the employment agreements with J. Patrick Nicholson and Terry J. Logan. -12- 13 N-VIRO INTERNATIONAL CORPORATION Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. N-VIRO INTERNATIONAL CORPORATION Date: May 14, 1999 /s/ J. Patrick Nicholson ---------------- ----------------------------------------------- J. Patrick Nicholson Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: May 14, 1999 /s/ James K. McHugh ---------------- ------------------------------------------ James K. McHugh Chief Financial Officer (Principal Financial & Accounting Officer) -13- EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FIRST QUARTER AND 1999 (3/31/99) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000904896 N-VIRO INTERNATIONAL CORP. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 359,510 1,740 0 0 0 1,603,776 0 0 4,047,149 1,181,900 0 0 0 28,298 0 4,047,149 0 978,124 0 486,089 0 0 0 17,955 0 0 0 0 0 17,955 0 $.01
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