-----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, FgRNP+CqYXzz2+AVtOVVqaogDEtJ88SvqUPRcWxGkPnPKTxHHhfnQ94CRoJ8CIoQ EOJsWSCQ9zJIovWQ2vVtEQ== 0000950144-96-001443.txt : 19960402 0000950144-96-001443.hdr.sgml : 19960402 ACCESSION NUMBER: 0000950144-96-001443 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOWASTE INC CENTRAL INDEX KEY: 0000102499 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 362751684 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-09278 FILM NUMBER: 96542452 BUSINESS ADDRESS: STREET 1: 24 CATHEDRAL PLACE SUITE 208 CITY: ST AUGUSTINE STATE: FL ZIP: 32084 BUSINESS PHONE: 9048240201 MAIL ADDRESS: STREET 1: 24 CATHEDRAL PL STREET 2: STE 208 CITY: ST AUGUSTINE STATE: FL ZIP: 32084 FORMER COMPANY: FORMER CONFORMED NAME: UTAH SHALE LAND & MINERALS CORP DATE OF NAME CHANGE: 19920113 10-K405 1 GEOWASTE INC. FORM 10-K405 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 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 0-9278 -------------------------- GEOWASTE INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 36-2751684 (STATE OR OTHER JURISDICTION OF INCORPORATION) (IRS EMPLOYMENT IDENTIFICATION NO.)
SUITE 208, 24 CATHEDRAL PLACE, ST. AUGUSTINE, FL 32084 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) Registrant's telephone number, including area code: (904) 824-0201 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.10 PAR VALUE 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 the past 90 days. Yes [x] No [ ] Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [x] The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $11,155,014 at March 15, 1996. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of management policies of the registrant, or that such person is controlled by or under common control with the registrant. At March 15, 1996 the registrant had issued and outstanding an aggregate of 18,662,605 shares of its common stock. =============================================================================== 2 PART I ITEM 1. BUSINESS GENERAL GeoWaste Incorporated (the "Company" or "GeoWaste") is a holding company which was formed in Delaware under the name Utah Shale Land & Minerals Corporation. The Company, through its subsidiaries, is in the business of owning, operating and acquiring non-hazardous, solid waste collection, transportation, transfer and disposal facilities and related solid waste management operations. On August 2, 1991, Equivest Waste Solutions, Inc. ("Equivest") was merged (the "Merger") into the Company's wholly owned subsidiary, GeoWaste Acquisition Corp. ("Acquisition"). Immediately following the Merger, through a wholly owned subsidiary of Acquisition, the Company purchased a landfill and waste transportation operation located in Valdosta, Lowndes County, Georgia. As of March 15, 1996, GeoWaste's solid waste services operations consist of a solid waste disposal company and a transportation company both located in Valdosta, Georgia and a solid waste transfer station company located in St. Augustine, Florida. Solid waste management and related services accounted for 100% of the Company's total consolidated revenue in 1995. With the exception of David Joseph Company which accounted for approximately 21% of the Company's revenue in 1995, no customer accounted for more than 10% of GeoWaste's revenue in 1995. Fees paid to GeoWaste by its solid waste collection customers (including charges paid by such customers for disposal) accounted for approximately 31% of GeoWaste's revenue during 1995. Transfer and disposal services provided to municipalities, counties and other waste management companies accounted for approximately 69% of such revenue. Prior to August 2, 1991, the Company's principal activities were the management of its cash investments and the ownership of approximately 19,200 acres of land in Uinta Basin, Uinta County, Utah. This land has known deposits of oil shale which may have the potential for development at some future date. Simultaneously with the Merger, this oil shale land was transferred to a newly formed limited partnership in which the Company retained a 75% limited partnership interest. The Company's common stock is traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") under the trading symbol "GEOW". Unless the context indicates to the contrary, all statistical and financial information under Item 1 of this report is given for the period ended December 31, 1995. COLLECTION Through its wholly owned subsidiary company, GeoWaste of GA, Inc. ("GeoWaste of GA"), the Company provides solid waste collection services to over 1,200 commercial and industrial customers in South Georgia and Northern Florida. Collection services are also provided to approximately 5,300 homes and apartment units. Commercial and industrial collection services are generally performed under one to three-year service agreements and fees are determined by such considerations as market factors, collection frequency, type of equipment furnished, the type and volume or weight of the waste collected, the distance to the disposal facility and cost of disposal. Most of the Company's residential solid waste collection services are performed under contracts with municipalities giving the Company exclusive rights to service all or a portion of the 2 3 homes in their respective jurisdictions. Such contracts or franchises usually range in duration from one to five years. The fees received by GeoWaste are based primarily on market factors, frequency and type of service, the distance to the disposal facility and cost of disposal. Residential collection fees are paid by the residential customers receiving the service. On March 21, 1996, the Company completed the acquisition of North Florida Sweeping, Inc. a roll-off collection and street sweeping company based in Jacksonville, Florida. Substantially all of the newly acquired company's street sweeping activities are performed under contracts with city, county or State public works or transportation departments and range in duration from two to five years. The geographic markets presently served include Jacksonville and Ft. Walton Beach, Florida. TRANSFER STATION GeoWaste holds a ten year contract to provide solid waste transfer and transportation services to the City of St. Augustine, Florida. The contract requires the design, permitting, construction, and operation of a transfer station which will allow for the loading, removal, and ultimate disposal at GeoWaste's Pecan Row Landfill of approximately 45 tons per day of municipal solid waste. GeoWaste, through its subsidiary GeoWaste of FL, Inc., began operation of an interim, temporary transfer station in October of 1994 while the Company obtains the permits and approvals necessary for the construction and operation of the permanent facility. DISPOSAL GeoWaste operates, through GeoWaste of GA, Inc., one solid waste disposal facility, the Pecan Row Landfill, in Valdosta, Lowndes County, Georgia. The landfill commenced operation on November 5, 1991. The landfill was constructed and is operated pursuant to a solid waste handling permit issued by the Georgia Environmental Protection Division. The original permit authorized the disposal of nonhazardous waste on 46 acres of the site, with a total permitted volume of approximately 1.8 million tons. On February 2, 1996 the Company received a final modified permit for the Pecan Row Landfill which modifies the base and height of the facility and adds over 1,467,800 million tons of capacity to the Landfill, resulting in a total available capacity of 2,642,268 tons. The permit modification increases the estimated life of the facility to over ten years based on 1995 average daily tonnage of 889 tons. The permit, as modified, has no termination date and places no restrictions on the daily tonnages nor on the geographical origin of the waste which may be disposed of at the landfill. Suitable sanitary landfill facilities have become increasingly difficult to obtain because of land scarcity, local resident opposition and expanding governmental regulation. As GeoWaste's Pecan Row Landfill or future facilities become filled, the solid waste disposal operations of the Company are and will continue to be materially dependent on its ability to purchase, lease or obtain operating rights for additional sites and obtain the necessary permits from regulatory authorities to operate them. There can be no assurance that additional sites can be obtained or that the Pecan Row Landfill can continue to be expanded or operated. PERMITTING AND CONSTRUCTION PROCESS When appropriate, the Company pursues obtaining permits for expansion and/or modification of the Pecan Row Landfill. Permit expansions and modifications generally take the form of vertical expansions of existing disposal capacity, lateral expansions of permitted disposal acreage or modifications of operating restrictions to allow increased disposal volume or additional waste streams. 3 4 Although the permitting process varies from state to state, the following summary (which is based on Georgia law) sets forth the typical steps in the permitting process. Local Approval. In most instances, some form of local zoning or planning approval, commonly referred to as siting approval, is required to permit a site and may be required to expand or modify a landfill. This process usually requires complying with city or county zoning regulations through a separate application process to a zoning or planning board. An applicant generally files various reports or drawings which describe the project and public hearings are held. In most instances, significant, organized community opposition will be present and many local zoning authorities will consider community opposition in deciding whether to grant zoning approval. Following hearings, a decision is made. Generally, both the applicant and any opposition have the right to appeal such decision. Although not always required, the local zoning approval process is usually completed prior to applying for a state permit. State Approval. Upon receipt of local approval, an applicant must then submit detailed construction and operating plans for state approval. Most states require an applicant to evidence that a new, modified or expanded facility will meet or exceed state regulations regarding disposal facility siting and design specifications. States generally consider the technical merits of an application, particularly such matters as geology, hydrogeology, ecology, archaeology, soil characteristics, surface drainage, the presence of, or location relative to, airports, wetlands and local water supply systems and the adequacy of local road systems. Engineering consultants design the project to meet state regulations and standards. This design is reviewed by state officials, comments are issued and, possibly after negotiations between the applicant and the state officials, revisions are made by the applicant. Once the design is approved, public notice is given and a hearing held. Depending on the issues presented at the hearing, an applicant may wait nine months or more before receiving a decision. Both the applicant and any opposition generally have the right to appeal the decision. REGULATION The Company and the waste services industry in general are subject to extensive, expansive and evolving regulation by federal, state and local authorities. In particular, the regulatory process requires firms in the industry to obtain and retain numerous governmental permits to conduct various aspects of their operations, any of which may be subject to revocation, modification or denial. The continually shifting policies and attitudes of the regulatory agencies relating to the industry may impact the Company's ability to obtain applicable permits from governmental authorities on a timely basis and to retain such permits. The Company is not in a position to assess the extent of any such impact, but it could be significant. State and local governments have also from time to time proposed or adopted other types of laws, regulations or initiatives with respect to the environmental services industry. Included among these are laws, regulations and initiatives to ban or restrict the interstate or inter-county shipment of wastes, impose higher taxes on out-of-state waste shipments than in-state shipments and regulate disposal facilities as public utilities. The Company makes a continuing effort to anticipate regulatory, political and legal developments that might affect operations, but cannot predict the extent to which any legislation or regulation that may be enacted or enforced in the future may affect its operations. Operating permits are generally required at the state and local level for landfills and collection vehicles. Operating permits need to be renewed periodically and may be subject to revocation, 4 5 modification, denial or non-renewal for various reasons, including failure of the Company to satisfy regulatory concerns. In the solid waste collection phase, regulation takes such forms as permitting of transfer stations, licensing of collection vehicles, truck safety requirements, vehicular weight limitations and, in certain localities, limitations on rates, area and time and frequency of collection. In the solid waste disposal phase, regulation covers various matters, including methane gas emission, liquid runoff and rodent, pest, litter and traffic control. Zoning and land use requirements and limitations are encountered in the solid waste collection and disposal phases of the Company's business. In addition, the Company's operations may be subject to water pollution laws and regulations; air and noise pollution laws and regulations; and safety standards under the Occupational Safety and Health Act ("OSHA"). Governmental authorities have the power to enforce compliance with these various laws and regulations and violators are subject to injunctions, fines and revocation of permits. Private individuals may also have the right to sue to enforce compliance. Regulatory or technological developments relating to the environment may require GeoWaste (as well as others in the solid waste management business) to modify, supplement or replace equipment and facilities at costs which may be substantial. Because GeoWaste is engaged in a business intrinsically connected with the protection of the environment and the potential discharge of materials into the environment, a material portion of the Company's capital expenditures are, directly or indirectly, related to such items. The Company does not expect such expenditures, which are incurred in the ordinary course of business, to have a materially adverse impact on its earnings or competitive position in the foreseeable future because GeoWaste's business is based upon compliance with environmental laws and regulations and its services are priced accordingly. Although the Company intends to conduct its operations in compliance with applicable laws and regulations, the Company believes that heightened political and citizen sensitivity causes companies in the solid waste management industry to be faced, in the normal course of operating their businesses, with the possibility of expending funds for fines, penalties and expenses incurred as a result of changes to environmental compliance regulations. While the Company has expended no such funds to date, the possibility remains that technological, regulatory or enforcement developments, the results of environmental studies or other factors could materially alter this expectation at any time. In any event, such matters could have a material impact on earnings for a particular fiscal quarter. Resource Conservation and Recovery Act ("RCRA") RCRA regulates the generation, treatment, storage, handling, transportation and disposal of hazardous and solid waste and requires states to develop programs to insure the safe disposal of solid waste in sanitary landfills. RCRA divides solid waste into two groups, hazardous and nonhazardous. Wastes are generally classified as hazardous wastes if they: (i) either (a) are specifically included on a list of hazardous wastes or (b) exhibit certain characteristics; and (ii) are not specifically designated as nonhazardous. Wastes classified as hazardous under RCRA are subject to much stricter regulation than wastes classified as nonhazardous. Among the wastes that are specifically designated as nonhazardous waste are household waste and various types of special waste. These wastes, which will be accepted at the Company's landfills, may contain incidental hazardous substances. On October 9, 1991, the EPA promulgated new regulations pursuant to Subtitle D of RCRA. These new regulations include location standards, facility design standards, operating criteria, closure and post-closure requirements, financial assurance standards and groundwater monitoring requirements as well as corrective action standards, all of which have not previously been uniformly applied at landfills within the fifty states. In addition, the new regulations require new landfills which received municipal solid waste for disposal after April 9, 1994 to have one or more liners (typically high-density polyethylene liners) to keep leachate out of groundwater and have extensive systems to collect leachate for handling and treatment. In addition, by October 9, 1996 groundwater wells must also be installed at virtually all landfills to monitor groundwater quality and the leachate collection system 5 6 operation. The regulations also require (where threshold test levels are met) that methane gas generated at landfills be controlled in a manner that will protect human health and the environment. Because some states have already adopted regulations at least as stringent as the new federal regulations, the new Subtitle D regulations will cause greater changes in the landfill regulation of certain states than of others. The Company's Pecan Row Landfill was designed and constructed in accordance with the requirements of Subtitle D. The Federal Water Pollution Control Act ("Clean Water Act") The Clean Water Act established rules regulating the discharge of pollutants from a variety of sources, including solid waste disposal sites, into waters of the United States. For any discharge, the Clean Water Act would require the Company to apply for and obtain a discharge permit, conduct sampling and monitoring and, under certain circumstances, reduce the quantity of pollutants in those discharges. Also, virtually all landfills are required to comply with the new federal storm water regulations, which are designed to prevent possibly contaminated storm water from flowing into surface waters. Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") CERCLA addresses problems created by the release of any hazardous substance into the environment. CERCLA's primary mechanism for remedying such problems is to impose strict joint and several liability for cleanup of facilities among all past and current owners and operators of the site as well as the generators and the transporters who arranged for disposal and transportation of hazardous substances. The costs of CERCLA cleanup can be very substantial. Liability under CERCLA does not depend upon the existence or disposal of "hazardous waste" but can also be founded upon the existence of even very small amounts of the more than 1,000 "hazardous substances" listed by the EPA. The Clean Air Act, as Amended ("Clean Air Act") The Clean Air Act provides for federal, state and local regulation of the emission of air pollutants and is applicable to landfills. The EPA has proposed new source performance standards regulating overall air emissions from solid waste landfills. The EPA may also issue regulations controlling the emissions of particular air pollutants from solid waste landfills. Moreover, landfills located in areas with air pollution problems may be subject to even more extensive air pollution controls. State and Local Regulations The States of Georgia and Florida, as well as those states in which the Company may operate in the future, have laws and regulations governing the generation, handling, transfer, transportation and disposal of solid waste, water and air pollution and, in most cases, the design, operation, maintenance, closure and post-closure maintenance of landfills. Georgia and Florida, like most other states, have tightened the regulatory requirements on the permitting of new and expanded solid waste facilities and on the continued operation of existing facilities. State regulations are expected to become both more stringent and more uniform nationwide as the dates for the implementation of additional requirements of Subtitle D occur. The increased stringency of state regulations may be expected to benefit the Company, as older landfills are forced to close, thereby further reducing the available landfill capacity. However, the increasing state and local scrutiny of landfills also makes it difficult for the Company to comply with the continually evolving and expansive regulation applicable to the disposal of solid waste. Increasing public opposition to the siting and operation of landfills has led many states, including Georgia and Florida, to enact legislation at the state and/or local level which attempts to prohibit or greatly restrict the interstate and intrastate movement of solid waste. In addition, after two recent decisions by the Supreme Court which recognized that the Commerce Clause of the United States Constitution imposes substantial limits upon the ability of state and local governments to restrict 6 7 the movement of solid waste across state lines, legislation has been introduced in the United States Congress which attempts to restrict interstate waste transportation. For the foreseeable future, the Company, like all others in the solid waste industry, faces uncertainty regarding the circumstances under which it will be able to accept out-of-state waste for disposal at its facility. A significant portion of the solid waste volume disposed of at the Company's Pecan Row Landfill is generated from outside the State of Georgia. COMPETITION GeoWaste encounters competition, primarily in the pricing and rendering of services, from various sources in all phases of its operations. In the solid waste collection phase, competition is encountered, for the most part, from national, regional and local collection companies as well as from municipalities and counties (which, through use of tax revenues, may be able to provide such services at lower direct charges to the customer than can third parties) and some large commercial and industrial companies which handle their own waste collection. In the solid waste disposal operations, competition is encountered primarily from municipalities, counties, local governmental agencies, and other national or regional waste management companies. INSURANCE The Company currently maintains liability insurance coverage for occurrences under various environmental impairment, primary casualty and excess liability insurance policies. The Company has secured Environmental Impairment Liability Insurance (EIL) in amounts believed to be sufficient to offset an unforeseen occurrences. The Company currently maintains $1,000,000 of loss coverage. However, in the event an environmental impairment exceeds the loss coverage, the Company's financial condition could be adversely affected. In 1991, as required by law, the Company established a trust fund for the benefit of the State of Georgia securing the closure and post-closure care of the Pecan Row Landfill which, as of December 31, 1995, held a balance of $685,535. In December 1995, the Company was successful in obtaining a surety bond which can be used as an alternative to the trust account for the cost associated with the closure and post-closure care of the Landfill. The surety bonds requirement of depositing $300,000 as collateral was met in December 1995 and the trust fund will be terminated and the Company expects to receive the trust fund balance during the second quarter of 1996. Operating expenses include the estimated costs of closure and post-closure care for the Pecan Row Landfill. Charges in each operating period are based upon actual landfill capacity utilized. From time to time, the Company may be required to post performance bonds, financial assurances or bank letters of credit issued by surety companies which act as a financial guarantee of the Company's performance. EMPLOYEES At March 15, 1996, GeoWaste and its subsidiaries employ a total of 37 persons in its operations. None of GeoWaste's employees are represented by labor unions under collective bargaining agreements. 7 8 ITEM 2. PROPERTIES The Company leases office space at 24 Cathedral Place, St. Augustine, Florida 32084. The principal fixed assets of the Company consist of land which is owned, land improvements and heavy equipment at the Pecan Row Landfill, the collection and transportation company in Valdosta, Georgia, and the transfer station company in St. Augustine, Florida. The heavy equipment, which is owned or leased, includes collection vehicles, refuse compactors, bulldozers, scrapers, backhoes, transfer trailers, and miscellaneous other equipment used in disposal operations. A portion of land owned by the Company is represented by its interest in the Uintah Basin Limited Partnership. The Company's principal real estate interest is its landfill in Valdosta, Georgia. As of December 31, 1995, aggregate annual rental payments on real estate leased by the Company and its subsidiaries was $45,285. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings against the Company. The business in which the Company is engaged is intrinsically connected with the protection of the environment and the potential discharge of materials into the environment. In the ordinary course of conducting its business activities, the Company may become involved in judicial and administrative proceedings involving governmental authorities at the federal, state and local level including, in certain instances, proceedings instituted by citizens or local governmental authorities seeking to overturn governmental action where governmental officials or agencies are named as defendants together with the Company or one or more of its subsidiaries, or both. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is traded on the over-the-counter market. The stock is quoted in NASDAQ (trading symbol GEOW). The quarterly price ranges (as reported on NASDAQ) for 1995 and 1994 were:
Low Bid High Bid 1995 Prices Prices ------ ------ First Quarter $0.44 $0.63 Second Quarter 0.50 0.69 Third Quarter 0.66 2.00 Fourth Quarter 0.75 1.31 1994 First Quarter $0.63 $0.63 Second Quarter 0.41 0.63 Third Quarter 0.41 0.56 Fourth Quarter 0.38 0.75
8 9 As of March 19, 1996 there were 4,949 stockholders of record owning the outstanding common stock. The Company did not pay any dividends in 1995, 1994 or 1993 nor does the Company expect to pay any dividends in the foreseeable future. Pursuant to the terms of a Purchase Agreement dated March 5, 1992, the Company is prohibited, until March 1997 (with certain limited exceptions), from paying dividends on its common stock if the aggregate amount of all such payments from and after March 5, 1992 exceeds (i) 50% of the net after tax income of the Company, plus (ii) 100% of any amounts received by the Company from the issuance of its equity securities or certain subordinated debt securities, less (iii) 100% of all losses. Due in part to the high level of public awareness of the business in which the Company is engaged, regulatory enforcement proceedings or other potentially unfavorable developments involving the Company's operations or facilities, including those in the ordinary course of business, may be expected to engender publicity which could from time to time have an adverse impact upon the market price for the Company's common stock. 9 10 ITEM 6. SELECTED FINANCIAL DATA OF THE REGISTRANT SELECTED FINANCIAL DATA OF THE REGISTRANT
Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 1995 1994 1993 1992 ---- ---- ---- ---- Operating Data: Total Revenue . . . . . . $ 8,932,528 $ 6,966,990 $ 4,805,905 $ 2,204,743 Net Income (Loss) . . . . 1,462,310 1,189,823 (217,730) (1,878,453) Net Income (loss) per common share . . . . . . .07 .06 (.01) (.10) Balance Sheet Data: Cash . . . . . . . . . . 3,985,459 1,633,389 1,209,259 898,414 Working capital . . . . . 3,958,852 1,335,302 1,244,403 816,480 Total assets . . . . . . 15,637,316 14,527,957 11,292,531 10,811,961 Long-term obligations . . 7,036,252 6,722,917 5,917,629 5,354,581
SELECTED FINANCIAL DATA OF THE REGISTRANT'S GEORGIA AND FLORIDA OPERATIONS The table below sets forth certain financial data of the Company's collection, transfer and disposal operations in Georgia and Florida. These operating results do not include the corporate administrative expenses of the parent, which are associated with the operation of the Company as a public entity and the pursuit of the Company's business strategy of acquiring additional disposal and collection operations. The Company believes that the operating information set forth below is an accurate representation of the operation results of the Georgia and Florida operations on a stand- alone basis.
Year Ended Year Ended Year Ended December 31, December 31, December 31, 1995 1994 1993 ---- ---- ---- Revenues: Disposal $5,380,333 $4,222,257 $2,842,926 Collection 2,743,446 2,542,868 1,962,979 Transfer 808,749 201,865 -- ---------- ---------- ---------- Total 8,932,528 6,966,990 4,805,905 Operating Expenses (1) 2,169,150 1,854,410 1,259,288 ---------- ---------- ---------- Gross Margin before non cash items 6,763,378 5,112,580 3,546,617 Selling, General, and Administrative (2) 590,733 496,377 450,349 ---------- ---------- ---------- Operating Cash Flow from disposal, collection and transfer companies (3) $6,172,645 $4,616,203 $3,096,268 ========== ========== ==========
- ---------------------------- 1. Excludes depreciation, amortization and non-cash closure costs of $3,038,100, $2,321,941, and $1,570,314 in 1995, 1994 and 1993, respectively. 2. Excludes amortization expenses of $71,192 in 1995 and $31,143 in 1994 and 1993. No corporate overhead has been allocated. 3. Capital expenditures were $1,820,033, $2,953,404, and $1,223,786 in 1995, 1994 and 1993, respectively, which resulted in free cash flow of $4,352,612, $1,662,799, and $1,872,482 for the related periods. 10 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OF THE REGISTRANT 1995 Compared with 1994 Net revenues for the year ended December 31, 1995 consisted of collection revenues of $2,743,000, disposal revenues of $5,380,000, and transfer station revenues of $809,000. Collection revenues increased 8% and disposal revenues increased 27% over 1994 results. The increase in collection revenues are primarily the result of increased sales associated with commercial and municipal services. Transfer station revenues for 1995 reflected a full year of operation versus approximately three months in 1994. Higher disposal revenues principally reflect the increased volumes at the Pecan Row Landfill. Daily tonnage per day at the landfill increased 31% from 680 in 1994 to 889 in 1995. All intercompany activity has been eliminated. Operating expenses related to the collection, disposal, and transfer station activities for 1995, consisted of collection expenses of $1,213,000, disposal expenses of $3,660,000, and transfer station expenses of $334,000. Costs and expenses for collection operations increased 14% over 1994 and there was a 21% increase in disposal operating costs. These increases were principally related to higher operating levels in 1995. Selling, general, and administrative expenses for collection, disposal, and transfer station activities (excluding corporate administrative expenses) for 1995, were $270,000, $316,000 and $5,000 respectively. Corporate administrative expenses were $862,000 for the year ended December 31, 1995. Net income for the year ended December 31, 1995 was $1,462,310 compared to $1,190,000 in 1994. This improvement was principally due to an increase in average daily volumes at the Pecan Row Landfill. The Company's working capital was $3,959,000 in 1995 compared to over $1,335,000 in 1994. The increase in working capital resulted from the Company's improved operating performance. 1994 Compared with 1993 Net revenues for the year ended December 31, 1994 consisted of collection revenues of $2,543,000, disposal revenues of $4,222,000, and the three months of transfer station revenues of $202,000. Collection revenues increased 30% and disposal revenues increased 49% over 1993 results. Transfer station revenues were the result of initiation of a new ten year contract with the City of St. Augustine in October of 1994. The increase in collection revenues are primarily the result of increased sales associated with commercial and municipal services. Higher disposal revenues principally reflect the increased volumes at the Pecan Row Landfill. Daily tonnage per day at the landfill increased 58% from 431 in 1993 to 680 in 1994. All intercompany activity has been eliminated. Operating expenses related to the collection, disposal, and transfer station activities for 1994, consisted of collection expenses of $1,066,000, disposal expenses of $3,023,000, and three months of transfer station expenses of $87,000. Costs and expenses for collection operations increased 36% 11 12 over 1993 and there was a 48% increase in disposal operating costs. These increases were principally related to higher operating levels in 1994. Selling, general, and administrative expenses for collection, disposal, and transfer station activities (excluding corporate administrative expenses) for 1994, were $280,000, $229,000 and $1,400 respectively. Corporate administrative expenses were $1,028,000 for the year ended December 31, 1994. A portion of the Corporate overhead expense was a non-recurring expense related to the relocation of the Corporate office from Boston, Massachusetts to St. Augustine, Florida. With this relocation, the Corporate office is more centrally located with respect to the Company's operating activities and its existing and new markets. Net income for the year ended December 31, 1994 was $1,190,000 compared to $83,000 (excluding the Danella write-off associated with a terminated acquisition-discussed below) in 1993. This improvement was principally due to an increase in average daily volumes at the Pecan Row Landfill. Higher volumes included special waste as well as municipal solid waste. The Company's working capital was $1,335,000 in 1994 compared to over $1,244,000 in 1993. The increase in working capital resulted primarily from the Company's improved operating performance which was partially off-set by the payment of construction costs incurred in connection with the 9.1 acre expansion of Pecan Row Landfill. 1993 Compared with 1992 Net revenues for the year ended December 31, 1993 consisted of collection revenues of $1,963,000 and disposal revenues of $2,843,000. Collection revenues increased 22% and disposal revenues increased 380% over 1992 results. The increases in collection revenues were primarily attributed to higher levels of commercial and municipal services. Higher disposal revenues principally reflected the increased volumes at the Pecan Row Landfill which included a non-recurring contract for the disposal of contaminated soils with The Jefferson-Smurfit Corporation located in Northern Florida. All intercompany activity has been eliminated. Operating expenses related to the collection and disposal activities for 1993, consisted of collection expenses of $784,000 and disposal expenses of $2,045,000. Costs and expenses for collection operations increased 17% over 1992 and there was a 47% increase in disposal operating costs, including disposal cell amortization after the Company re-estimated Pecan Row's disposal capacity and total construction costs to complete the disposal site and non cash closure costs. These increases were principally related to higher operating levels in 1993. Selling, general and administrative expenses for collection and disposal activities (excluding corporate overhead) for 1993, were $271,000 and $211,000, respectively. Corporate administrative expense was $1,090,000 for the year ended December 31, 1993. A significant amount of the corporate overhead expense was associated with the Company's effort to identify acquisition candidates. In addition, the Company expensed $301,000 related to the terminated Danella Environmental Technologies, Inc. ("Danella") transaction, a solid waste collection company located in Wilkes-Barre, Pennsylvania. These expenses were primarily related to the value of GeoWaste common stock issued to the shareholders of Danella at zero cost, as well as legal, environmental and investment banking fees. Net income for the year ended December 31, 1993, excluding the Danella write off, was $83,000 as compared to a loss of $1,878,000 during 1992. In addition, the Company's working capital strengthened by $428,000 in 1993 to over $1,244,000. These improvements were principally due to a 200% rise in the average daily volumes and the re-estimate of cell amortization at the Pecan 12 13 Row Landfill during 1993. Higher volumes included special waste as well as municipal solid waste. LIQUIDITY AND CAPITAL RESOURCES OF THE REGISTRANT The Company is in a service industry and has neither significant inventory nor seasonal variations in receivables. At December 31, 1995, the Company had positive working capital of $3,959,000 as compared with $1,335,000 at December 31, 1994. The increase in working capital resulted primarily from the Company's improved operating performance which was partially off-set by the payment of construction costs incurred in connection with the expansion of Pecan Row Landfill. The Company's operating performance was sufficient to support corporate overhead and other expenses during 1995. Management believes that current working capital and internally generated funds will be sufficient to meet the Company's working capital requirements for fiscal year 1996. ONGOING CAPITAL REQUIREMENTS AND EXPANSION Historically, the Company has relied primarily on the private placement of debt and equity securities and cash generated from operating activities in order to provide it with the cash required for capital expenditures, acquisitions, and operating activities. Set forth below is a discussion of the Company's primary ongoing cash requirements and the means by which it expects to meet these requirements in the future. OPERATING ACTIVITIES The Company anticipates that the cash generated from operating activities will be sufficient to provide the cash required for these activities. CAPITAL EXPENDITURES The Company expects to make capital expenditures on an ongoing basis for improvements to, and expansion of, its landfill and for equipment purchases. The Company estimates that the capital expenditures required for its existing operations will amount to $2,601,000 almost half of which will be used for the construction of a new 5 acre disposal cell at the Pecan Row Landfill in 1996. The Company expects that it will fund such estimated capital expenditures from existing cash, cash generated from operations, equipment lease financing, and other financing. ACQUISITIONS The Company's business strategy includes the acquisition, on financially attractive terms, of additional solid waste management companies as well as related sanitation and infrastructure maintenance businesses. Such acquisitions may be accomplished through the issuance of the Company's common stock, cash on hand, or may require cash in excess of the Company's current cash available. Although GeoWaste's improved operating results and financial performance are expected to improve its access to any financing which may be necessary to acquire such businesses, there can be no assurance that such additional financing can be obtained on terms acceptable to the Company. The development and permitting of new disposal facilities requires significant capital expenditures over an extended period. Any growth of the Company through the permitting of new disposal facilities or the lateral expansion of its existing disposal facility would require substantial capital expenditures. The Company intends to pursue the further expansion of the Pecan Row Landfill 13 14 through the permitting of a new facility near or adjacent to the existing site. On March 21, 1996, the Company completed the acquisition of North Florida Sweeping, Inc. a roll-off collection and street sweeping company based in Jacksonville, Florida with annual revenues of $1,750,000. The purchase price of approximately $1,300,000 was paid in a combination of the Company's common stock, assumption of debt, cash and warrants. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA For information relating to this Item see pages herein. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 14 15 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets for the name, age and position held by each director and officer of the Company as of December 31, 1995.
NAME AND AGE OFFICER POSITION - ------------ ---------------- Amy C. MacF. Burbott (45) Chairman of the Board Kevin R. Kohn (45) President, Chief Executive Officer, and Director Raymond F. Chase (40) Vice President, Chief Financial Officer, Treasurer and Secretary Director Robert J. Cresci (52) Director Steven M. Engel (44) Director Harve A. Ferrill (62) Director Frederick J. Iseman (43)
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS The following is a summary of the business experience of the officers and directors. Amy C. MacF. Burbott. Ms. Burbott joined GeoWaste as President and Chief Executive Officer and has served as Director since July 1991. Upon the termination of her employment agreement, Ms. Burbott resigned her post as President and CEO and was named Chairman of the Board February 1, 1995. From January 1991 until July 1991 Ms. Burbott was engaged in the development of various solid waste projects through a corporation she controlled. From November 1988 until January 1991, Ms. Burbott served as Eastern Region Vice President and General Counsel of Waste Management of North America, Inc., an international waste services company. Ms. Burbott was associated in various positions with Waste Management since 1984 when it acquired SCA Services, Inc., a national waste services company. Kevin R. Kohn. Mr. Kohn joined the Company in 1991 and was named Vice President/Operations in May of 1992. He was named a Director in December, 1994 and President and Chief Executive Officer on February 1, 1995. Prior to joining the Company Mr. Kohn was the General Manager of Prince George's County (Maryland) Landfill. From 1988 to 1990 Mr. Kohn was the manager of Business Development for Waste Management of North America, Inc. Raymond F. Chase. Mr. Chase joined the Company as Controller and Treasurer in July 1991. He was named a Vice President of the Company in April, 1994 and was named Secretary and Chief Financial Officer on February 1, 1995. From January 1990 through June, 1991 he served as the Controller of a national solid waste equipment leasing company, Olympic Compactor Rentals. From 15 16 1987 to 1990 he was the Controller for Waste Management of North America, Inc.'s collection and transportation subsidiary based in Southeastern Massachusetts. Robert J. Cresci. Mr. Cresci is a principal in Peck Management, an investment advisory firm. Mr. Cresci was elected to the Board of Directors in March of 1992. Mr. Cresci has served as a managing director of Pecks Management Partners Ltd., a registered investment adviser, since 1990. From 1985 until 1990, Mr. Cresci served as Vice President of Alliance Capital Management, LP, also a registered investment advisor. Mr. Cresci has served as a director of Serv-Tech, Inc. which provides maintenance services to the refining, gas processing and petrochemical industries since 1983, EIS International, Inc., a manufacturer of outbound telephone systems, since 1991, Vestro Foods Inc., a specialty food business, since 1989, Olympic Financial Ltd., an automobile financing firm, since 1992, Garnet Resources Corporation, an oil company, since 1993, Hitox, Inc., a specialty chemical company, since 1992, Sepracor Inc., a biotechnology company engaged in the separations and pharmaceutical industries, since 1990 HarCor Energy, Inc., an oil and gas company, since 1994, Meris Labs, Inc., a provider of clinical laboratory services, since 1994, and several privately owned companies. Steven M. Engel. Mr. Engel was elected to the Company's Board of Directors in October of 1992 and has been the President of Hambro Resource Development, Incorporated since 1991. Prior to 1991 Mr. Engel served as the President of John Hancock Resource Development from 1989 and was Managing Director in the Corporate Finance Department and Municipal Finance Department at Drexel Burham Lambert, (an investment banking firm), since 1987. Harve A. Ferrill. Mr. Ferrill served as Chairman of the Board of the Company from August, 1991 until February 1, 1995. Mr. Ferrill resigned his position as Chairman on February 1, 1995 but remains a Director of the Company. Mr. Ferrill has served as a director of Utah Shale Land & Minerals Corporation since 1980. Mr. Ferrill has served since November 1992 as Chairman and Chief Executive Officer of Advance Ross Corporation, the world's leading value-added tax refund service; he served as Advance Ross' President from November 1990 through June 1993. He has been a director of Gaylord Container Corporation, a paper and container manufacturer, since 1992. Mr. Ferrill has been President of Ferrill-Plauche Co., Inc., a private investment company, since 1982. Frederick J. Iseman. Mr. Iseman was appointed to the Company's Board of Directors in August 1991. From October 1990, Mr. Iseman was Managing Partner of Hambro Iseman Capital Partners, an affiliate of the Hambros Bank. From April 1988 through October of 1990 Mr. Iseman was a principal of Hambro International Equity Partners. He is a member of the board of directors of Hambro America, Incorporated. Mr. Iseman is President of Caxton-Iseman Capital, Inc., an investment firm. He is also a director of: Magnavox Electronic Systems Corporation Holdings, Inc.; Franklin Hotels Ltd.; and Electrical Distribution Acquisition Company. The terms of office of each director expire upon the election and qualification of successor directors at the next Annual Meeting of the Company's stockholders. COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who own more than 10% of the Company's Common Stock, to file initial reports of ownership and reports of change in ownership with the Securities and Exchange Commission ("SEC"). Executive officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16 (a) forms they file. To the Company's knowledge, based solely on review of copies of such reports furnished to the Company, all of these filing requirements were satisfied. 16 17 ITEM 11. EXECUTIVE COMPENSATION SUMMARY OF COMPENSATION The following table sets forth the aggregate remuneration paid or accrued during the years 1995, 1994, and 1993 for the chief executive officer and other executive officers of the Company whose total annual salary and bonus exceeded $100,000. SUMMARY COMPENSATION TABLE
Long Term Compensation Other Annual Securities Underlying Name and Principal Position Year Salary Bonus Compensation Options (1) - --------------------------- ---- ------ ----- ------------ --------------------- Amy C. MacF. Burbott 1995 $ 10,833 $ 0 $ 121,129 (4) 0 Chairman of the Board 1994 $130,000 $ 0 $ 22,083 (2) 0 1993 $114,167 $ 0 $ 0 0 Kevin R. Kohn 1995 $ 90,102 $ 12,000 $ 0 0 President and Chief 1994 $ 79,894 $ 0 $ 45,439 (3) 0 Executive Officer 1993 $ 77,652 $ 0 $ 0 0
- ----------------------- (1) Please see the second paragraph of "Employment Contracts, Termination of Employment and Change of Control" below for a description of Ms. Burbott's options to acquire the Company's Common Stock. (2) Compensation earned in 1992 and 1993 but paid in 1994. (3) One-time relocation expense. (4) Consulting Agreement 17 18 COMPENSATION OF DIRECTORS None of the Directors are compensated for their services as such. With the exception of Messrs Engel, Iseman and Cresci, each of the Directors holds options to acquire shares of the Company's Common Stock. See Item 12 "Security Ownership of Certain Beneficial Owners and Management" below. EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL The Company entered into an employment agreement dated as of August 1, 1991, with Amy C. MacF. Burbott, ("Burbott Employment Agreement"), pursuant to which Ms. Burbott served as President and Chief Executive Officer of the Company. Ms. Burbott's agreement expired under its own terms on January 31, 1995 at which time she resigned as President and Chief Executive Officer. During the term of the Burbott Employment Agreement, Ms. Burbott was paid a base salary ranging from $95,000 to $130,000 per annum; Ms. Burbott's base salary for the period ending January 31, 1995 was $10,833 per month. Ms. Burbott was granted, as of June 28, 1991, an option to acquire 1,000,000 shares of the Company's Common Stock at an exercise price of $.50 per share if certain performance targets were met on or before August 15, 1994. ("Burbott Option"). These targets were not met and the Burbott Option is limited and immediately exercisable to the extent of 400,000 shares. At Ms. Burbott's request, if she exercises any portion of the Burbott Option, the Company will make an interest-free loan to Ms. Burbott in an amount equal to the exercise price of the portion of the Burbott Option so exercised. Effective February 1, 1995, Ms. Burbott became Chairman of the Board of the Company. On September 1, 1995, in exchange for her continued service in that capacity, the Company agreed to pay Ms. Burbott a monthly consulting fee of $10,833 and reimburse medical insurance premium coverage and reasonable expenses. Ms. Burbott's service as Chairman may be terminated by either the Company or Ms. Burbott upon thirty (30) days notice and the payment of six (6) months consulting fees to Ms. Burbott. The Burbott Employment Agreement contains certain non-competition and non-solicitation agreements on the part of Ms. Burbott upon the termination of her employment with the Company. The non-competition covenant requires the Company to pay Ms. Burbott for each month during the restricted period an amount equal to 100% of her monthly salary in effect on January 31, 1995. The Burbott Employment Agreement provides compensation to Ms. Burbott in an amount equal to the product of (i) $.50 and (ii) the number of shares purchased by Ms. Burbott pursuant to the Burbott Option. The Company is also required to reimburse Ms. Burbott for any federal excise taxes incurred in connection with such payments. The Company entered into severance agreements (Severance Agreements) dated December 21, 1995 with Kevin R. Kohn and Raymond F. Chase. The Severance Agreements provide for payment of one-half of Mr. Kohn and Mr. Chase's annual base salary at the time of termination if termination is without cause. In addition, for a period of six months after termination without cause the Company agrees to pay the premium, capped at the present cost, for any continuation of health insurance coverage required to be offered to Mr. Kohn and Mr. Chase by the Company under federal law. The Severance Agreements also provide for certain non-competition and non-solicitation covenants by Mr. Kohn and Mr. Chase. 18 19 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (A) SECURITY OWNERSHIP OF CERTAIN OWNERS The only persons who to the knowledge of the Company on December 31, 1995 owned beneficially more than 5% of the outstanding voting securities of the Company's Common Stock were as follows: AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
TOTAL SHARES PERCENT OF NAME AND ADDRESS OWNED SOLE SHARED CLASS - ---------------- ------ ---- ------ ---------- Allen Holding Inc.(1) 711 Fifth Avenue New York, NY 10022 . . . . . . . 7,510,000 7,510,000 31.0 Robert J. Cresci(2) Pecks Management 1 Rockefeller Plaza New York, NY 10020 . . . . . . . 2,784,475 10,000 2,774,475 11.5 Emvest & Co. c/o Morrissey & Hawkins One International Place Boston, MA 02110 . . . . . . . . 2,000,000 2,000,000 8.3
19 20 (1) The shares of Common Stock owned by Allen Holding Inc. include 3,573,200 shares issued to Allen Value Partners L.P., 1,510,000 shares issued to Allen & Company Incorporated and 426,800 shares issued to Allen Value Limited Incorporated. Allen Holding Inc. may be deemed to beneficially own the shares of Common Stock held by Allen Value Partners L.P. and Allen Value Limited. However, Allen Holding Inc. disclaims beneficial ownership except to the extent represented by Allen Holding Inc.'s equity interest and profit participation in such entities. Also includes Allen Warrants to purchase 2,000,000 shares of Common Stock held by Allen & Company Incorporated which are immediately exercisable. (2) Mr. Cresci owns 10,000 shares of Common Stock directly. Includes Convertible Subordinated Debentures purchased by three clients of Pecks Management Ltd. (of which Mr. Cresci is a principal) which are currently convertible into 2,774,475 shares of Common Stock as to which Pecks Management Ltd. has sole voting power but disclaims any beneficial interest. (b) SECURITY OWNERSHIP OF MANAGEMENT
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP ----------------------------------------- TOTAL SHARES PERCENT OF NAME OF BENEFICIAL OWNER OWNED SOLE SHARED CLASS - ------------------------ ------ ---- ------ ---------- Amy C. MacF. Burbott(1) 400,000 400,000 1.7 Kevin R. Kohn(2) 100,971 100,971 0.4 Raymond F. Chase(3) 104,920 104,920 0.4 Robert J. Cresci(4) 2,784,475 10,000 2,774,475 11.5 Steven M. Engel 40,000 40,000 0.2 Harve A. Ferrill(5) 1,196,856 118,080 1,078,776 4.9 Frederick J. Iseman(6) 1,163,766 1,163,766 4.8 Directors and Officers, as a group(7) 5,790,988 1,937,737 3,853,251 23.9
_____________________ (1) Ms. Burbott does not own any shares of Common Stock outright. Includes Management Options to purchase 400,000 shares of Common Stock for $.50 per share which are immediately exercisable. 20 21 (2) Mr. Kohn owns 621 shares of Common Stock outright and Management Options to purchase 93,750 shares for $.50 per share and 6,600 shares for $1.19 per share which are immediately exercisable. (3) Mr. Chase owns 4,570 shares of Common Stock outright and Management Options to purchase 93,750 shares for $.50 per share and 6,600 shares for $1.19 per share which are immediately exercisable. (4) See footnote 2, Item 12(a) above. (5) Includes 26,080 shares of Common Stock beneficially owned by Mr. Ferrill, 18,080 shares of which he has sole voting and investment power and 8,000 shares of which he shares voting and investment power. Also includes 1,070,776 shares of Common Stock owned by Advance Ross (where Mr. Ferrill serves as Chief Executive Officer), of which Mr. Ferrill disclaims any beneficial interest. Also includes Management options to acquire 100,000 shares of Common Stock for $.50 per share which are immediately exercisable. (6) Represents the shares owned by Savannah Holdings, which is wholly owned by Mr. Iseman. (7) Includes options issued to Ms. Burbott and Messrs. Ferrill, Kohn, and Chase to purchase an aggregate of 687,500 shares of Common Stock at $.50 per share and 13,200 shares of common stock at $1.19 per share. Also includes 1,070,776 shares issued to Advance Ross, of which Mr. Ferrill is Chairman and Chief Executive Officer but over which Mr. Ferrill disclaims any beneficial interest and the Convertible Subordinated Debentures purchased by three clients of Pecks Management Ltd. which are currently convertible into 2,774,475 shares as to which Pecks Management Ltd. has sole voting power but disclaims any beneficial interest. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On August 2, 1991, the Company issued to Allen & Company Incorporated warrants to acquire 2,000,000 shares of the Company's Common Stock at a price of $.55 per share, which warrants must be exercised on or prior to July 31, 1996. The warrants were issued as partial consideration to Allen & Company Incorporated for certain investment banking and financial advisory services and capital raising services provided to the Company in connection with the Merger and the simultaneous private placement of 11,000,000 shares of the Company's Common Stock. The warrants were also issued pursuant to a letter agreement dated August 2, 1991 by which Allen & Company Incorporated was retained by the Company to provide investment banking and financial advisory services for a three-year period following the date of the letter agreement. Allen & Company Incorporated will receive separate transaction fees for future services rendered pursuant to the letter agreement. 21 22 PART IV ITEM 14. FINANCIAL STATEMENT, EXHIBITS AND REPORTS ON FORM 8K (a) Financial Statements (i) Report of Independent Accountants. (ii) Consolidated Balance Sheets as of December 31, 1995 and 1994. (iii) Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993. (iv) Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, 1994 and 1993. (v) Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993. (vi) Notes to Consolidated Financial Statements. (b) Reports on Form 8-K None. (c) Exhibits. Each Exhibit is listed according to the number assigned to it in the Exhibit Table of Item 601 of Regulation S-K. 22 23 EXHIBIT NUMBER DESCRIPTION ------ ----------- 2.1 Agreement and Plan of Reorganization, dated August 2, 1991, by and between GeoWaste Incorporated, Utah Acquisition Subsidiary, Inc., Equivest Waste Solutions, Inc., Frederick J. Iseman and James Swistock (Incorporated by reference from Exhibit 2(A) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and restated (Incorporated by reference from Exhibit A to the Proxy filed November 25, 1991) (File No. 0-9278)). 3.2 Certificate of Designation of Preferred Stock of GeoWaste Incorporated, filed November 25, 1991. (File No. 0-9278). 3.3 Bylaws of GeoWaste Incorporated, as amended (Incorporated by reference from Exhibit 3(b) to the Annual Report on Form 10-K for the year ended December 31, 1987 (File No. 0-9278)). 3.4 Amendment to Amended and Restated Certificate of Incorporation of GeoWaste Incorporated (Incorporated by reference from Exhibit 3.4 to the Annual Report on Form 10-K for the year ended December 31, 1992 (File No. 0-9278)). 4.1 Purchase Agreement, dated March 5, 1992, between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc. (Incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). 4.2 Form of Debenture (Incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). 4.3 Registration Rights Agreement, dated March 5, 1992, by and between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc. (Incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). 4.4 Registration Rights Agreement, dated August 2, 1991, by and between GeoWaste Incorporated and each of the entities listed on Exhibit A thereto (Incorporated by reference from Exhibit 4(D) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 4.5 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton, Brian Russell, James R. Jones, Paul Thomas Cohen, William vanden Heuvel, Balis & Zohn, Inc. and IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit 4(B) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 23 24 EXHIBIT NUMBER DESCRIPTION ------ ----------- 4.6 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening and IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit 4(C) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 4.7 Equivest First Convertible Debt Exchange Agreement, dated August 2, 1991, by and between GeoWaste Incorporated the parties listed on Schedule A thereto (Incorporated by reference from Exhibit 2(B) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 4.8 Equivest Second Convertible Debt Exchange Agreement, dated August 2, 1991, by and between GeoWaste Incorporated the parties listed on Schedule A thereto (Incorporated by reference from Exhibit 2(C) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 4.9 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, Advance Ross Corporation, Allen & Company Incorporated, Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening, their persons or entities listed on Schedule A thereto and the persons or entities listed on Schedule B thereto (Incorporated by reference from Exhibit 4(A) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). 4.10 Voting Agreement, dated March 5 ,1992, by and between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc., Frederick J. Iseman, Gian Caterine, Amy C. MacF. Burbott, Harve Ferrill, James Swistock, Advance Ross Corporation and Allen & Company Incorporated (Incorporated by reference from Exhibit 4.4 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). 10.1 Warrant Purchase Agreement by and between GeoWaste Incorporated and Allen & Company Incorporated and Amy C. MacF. Burbott (Incorporated by reference from Exhibit 10.1 to the Annual Report on Form 10-K for the year ended December 31, 1991 (File No. 0-9278)). 10.2 Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and Amy C. MacF. Burbott (Incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q for the period ended September 30, 1992 (File No. 0-9278)). 10.3 Form of Employment Agreement dated as of June 1, 1992, by and between GeoWaste Incorporated and Richard J. Sherman (Incorporated by reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended September 20, 1992 (File No. 0-9278)). 10.4 Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and James W. Swistock (Incorporated by reference from Exhibit 10.4 to the Annual Report on Form 10-K for the year ended December 31, 1992 (File No. 0-9278)). 24 25 EXHIBIT NUMBER DESCRIPTION ------ ----------- 10.5 Form of Severance Agreement, dated as of December 21, 1995, by and between GeoWaste Incorporated and Kevin R. Kohn. 10.6 Form of Severance Agreement, dated as of December 21, 1995, by and between GeoWaste Incorporated and Raymond F. Chase. 10.7 Form of Consulting Agreement dated, August 31, 1995, by and between GeoWaste Incorporated and Amy C. MacF. Burbott. 10.8 Form of Amendment, dated as of January 9, 1995, to Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and Amy C. MacF. Burbott. 11.1 Computation of Net Earnings Per Share for the year ended December 31, 1995 11.2 Computation of Net Earnings Per Share for the year ended December 31, 1994 11.3 Computation of Net Loss Per Share for the year ended December 31, 1993 21 Subsidiaries of the Registrant. 27 Financial Data Schedule (for SEC use only) (d) Financial Statement Schedule
Description Page ----------- ---- II. Valuation and Qualifying Accounts 41
All other schedules have been omitted since the information is not applicable, is not required or is included in the Consolidated Financial Statements listed under section (a) of this Item 14. 25 26 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of GeoWaste Incorporated: We have audited the consolidated financial statements and the financial statement schedule of GeoWaste Incorporated and Subsidiaries listed in Items 14(a) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of GeoWaste Incorporated and Subsidiaries as of December 31, 1995 and 1994 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Jacksonville, Florida March 29, 1996 26 27 GEOWASTE INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, 1995 and 1994
1995 1994 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 3,985,459 $ 1,633,398 Accounts receivable, net of allowance of $17,897 in 1995 and $16,356 in 1994 871,968 1,013,228 Prepaid expenses 182,132 119,894 Deferred tax asset 134,000 525,000 ----------- ----------- Total current assets 5,173,559 3,291,520 ----------- ----------- Property and equipment: Land, primarily disposal site 11,337,667 10,663,213 Building and improvements 150,793 149,372 Vehicles and equipment 3,105,178 2,551,785 ----------- ----------- 14,593,638 13,364,370 Less - accumulated depreciation 6,224,889 3,914,197 ----------- ----------- Net property and equipment 8,368,749 9,450,173 ----------- ----------- Other assets: Cost in excess of net assets of acquired businesses, net of accumulated amortization of $177,545 in 1995 and $106,365 in 1994 1,067,701 1,138,881 Investments held in escrow 985,535 588,971 Other 41,772 58,412 ----------- ----------- Total other assets 2,095,008 1,786,264 ----------- ----------- Total assets $15,637,316 $14,527,957 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 27 28 GEOWASTE INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, 1995 and 1994
1995 1994 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 151,019 $ 167,971 Accounts payable 137,308 849,104 Accrued payroll 79,235 80,700 Accrued fees 143,582 154,459 Accrued income taxes 149,318 90,000 Accrued other 113,045 49,772 Deferred revenue 441,200 564,212 ---------- ----------- Total current liabilities 1,214,707 1,956,218 Long-term debt, less current maturities 4,094,450 4,080,117 Accrued Royalties 1,207,591 1,459,078 Closure and post closure obligations 1,511,647 891,175 Deferred tax liability 161,000 229,000 Minority Interest 61,564 63,547 ----------- ----------- Total liabilities 8,250,959 8,679,135 ----------- ----------- Commitments and contingencies (Notes 2, 9 and 13) Stockholders' Equity: Preferred stock, authorized 5,000,000 shares, $.01 par value; none issued or outstanding - - Common stock, authorized 50,000,000 shares, $.10 par value; issued and outstanding 18,662,605 shares in 1995 and 1994 1,866,260 1,866,260 Additional paid-in capital 6,191,110 6,191,110 Net unrealized gains (losses) on investments 67,046 (8,179 Deficit (738,059) (2,200,369) ----------- ----------- Total stockholders' equity 7,386,357 5,848,822 ----------- ----------- Total liabilities and stockholders' equity $15,637,316 $14,527,957 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 28 29 GEOWASTE INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993 ---- ---- ---- Net revenues $ 8,932,528 $ 6,966,990 $ 4,805,905 Costs and expenses: Operating 5,207,250 4,176,351 2,829,602 Selling, general and administrative 1,530,377 1,538,485 1,571,739 Write off of acquisition costs - - 300,543 ----------- ----------- ------------- 2,194,901 1,252,154 104,021 Income from operations Other income (expense): Other income, primarily interest 182,747 112,720 19,723 Interest expense (368,338) (381,051) (341,474) ----------- ---------- ------------- Income (loss) from operations before income taxes 2,009,310 983,823 (217,730) Income tax (provision) benefit (547,000) 206,000 -0- ----------- ----------- ------------- Net income (loss) $ 1,462,310 $ 1,189,823 $ (217,730) =========== =========== ============= Earnings (loss) per common and common equivalent share $ .07 $ .06 $ (.01) =========== =========== ============= Average number of common and common equivalent shares outstanding 19,526,415 18,851,170 18,637,626 =========== =========== =============
The accompanying notes are an integral part of these consolidated financial statements. 29 30 GEOWASTE INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the years ended December 31, 1995, 1994 and 1993
ADDITIONAL NET UNREALIZED TOTAL NUMBER OF $.01 PAR PAID IN GAINS (LOSSES) STOCKHOLDERS' SHARES VALUE CAPITAL ON INVESTMENTS DEFICIT EQUITY ------ ----- ------- -------------- ------- ------ Balance at January 1, 1993 22,529,641 $2,252,964 $5,631,606 $ - $(3,172,462) $ 4,712,108 Shares issued in canceled acquisition 120,000 12,000 160,800 - - 172,800 Net loss - - - - (217,730) (217,730) ---------- ---------- ---------- -------------- ----------- ----------- Balance at December 31, 1993 22,649,641 2,264,964 5,792,406 - (3,390,192) 4,667,178 Shares returned from escrow (3,987,036) (398,704) 398,704 - - - Change in net unrealized losses - - - (8,179) - (8,179) Net income - - - - 1,189,823 1,189,823 ---------- ---------- ---------- -------------- ----------- ----------- Balance at December 31, 1994 18,662,605 1,866,260 6,191,110 (8,179) (2,200,369) 5,848,822 Change in net unrealized gains - - - 75,225 - 75,225 Net income - - - - 1,462,310 1,462,310 ---------- ---------- ---------- -------------- ----------- ----------- Balance at December 31, 1995 18,662,605 $1,866,260 $6,191,110 $ 67,046 $ (738,059) $ 7,386,357 ========== ========== ========== ============== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 30 31 GEOWASTE INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ 1,462,310 $ 1,189,823 $ (217,730) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 2,505,103 1,893,602 1,315,907 Deferred income taxes 323,000 (296,000) - Non cash interest expense 80,823 306,821 282,070 Provision for closure and post closure costs 620,472 476,593 303,398 Gain on sale of equipment (7,092) (2,246) - Write off of acquisition costs - - 48,184 Changes in assets and liabilities Accounts receivable 141,261 (346,932) (263,455) Prepaid expenses (62,238) (43,323) 1,181 Accounts payable and accrued liabilities (35,711) 357,388 11,556 Deferred revenue (123,012) 357,752 108,889 ----------- ----------- ----------- Net cash provided by operating activities 4,904,916 3,893,478 1,790,000 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1,820,033) (2,953,404) (1,223,786) Proceeds from the sale of equipment 19,670 90,484 - Purchase of investments placed in escrow and other (313,445) (208,180) (77,592) ----------- ----------- ----------- Net cash used in investing activities (2,113,808) (3,071,100) (1,301,378) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt - - 125,000 Payment of debt, capital lease obligations, and accrued royalties (439,047) (398,239) (302,777) ----------- ----------- ----------- Net cash used in financing activities (439,047) (398,239) (177,777) ----------- ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS 2,352,061 424,139 310,845 Cash and cash equivalents, beginning of year 1,633,398 1,209,259 898,414 ----------- ----------- ----------- Cash and cash equivalents, end of year $ 3,985,459 $ 1,633,398 $ 1,209,259 =========== =========== ===========
See note 3 for supplemental cash flow information. The accompanying notes are an integral part of these consolidated financial statements. 31 32 GEOWASTE INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company GeoWaste Incorporated (the "Company") is in the business of owning, operating and acquiring non-hazardous, solid waste disposal facilities and solid waste collection operations. The Company currently operates a landfill in southern Georgia and its customers are primarily commercial and are based in southern Georgia and northern Florida. The Company also operates a collection company in southern Georgia whose customers include commercial and residential accounts. In addition, the Company operates a transfer station in northern Florida for a municipality. Revenue Recognition Collection revenues are recognized as services are performed. Certain commercial and residential customers are billed in advance, and these revenues are deferred and recorded as income in the period in which the related service is rendered. Disposal and transfer revenues are recognized with the performance of the service. One customer accounted for approximately 21% and 20% of the Company's revenue in 1995 and 1994. Two customers accounted for approximately 23% of the Company's revenue in 1993. Principles of Consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and Uintah Basin Limited Partnership, its majority-owned subsidiary. All significant intercompany transactions and balances have been eliminated. Cash and Cash Equivalents Cash equivalents consist of money market funds primarily invested in short-term debt securities and other highly liquid investments with original maturities of three months or less. These securities are stated at cost which approximates market value. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives, ranging from 5 to 10 years for buildings and improvements and 2 to 8 years for vehicles and equipment using the straight-line method. Disposal sites are carried at cost. To the extent cost exceeds estimated net realizable value upon closure of the disposal site such excess is amortized over the estimated life of the disposal site based on the ratio of tons of solid waste placed in the landfill over the estimated total capacity of the disposal site. Disposal site improvements are capitalized and charged to operations based on the estimated remaining capacity of the site; operating costs are expensed as incurred. Property and equipment includes vehicles and equipment acquired under capital leases of $288,358 and $183,108 at December 31, 1995 and 1994. Depreciation and amortization expense includes $32,473, $34,019 and $56,536 in 1995, 1994 and 1993 respectively for amortization of 32 33 such assets. Cost in Excess of Net Assets of Acquired Businesses The cost in excess of net assets of acquired businesses is being amortized on a straight-line basis over twenty years. Investments Held in Escrow Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115 ("SFAS No. 115"), "Accounting for Certain Investments in Debt and Equity Securities" to account for its investments held in escrow. These investments have been deposited as specified under regulatory requirements based on estimated costs related to landfill closure and post closure care. The cumulative effect as of January 1, 1994 of adopting SFAS No. 115 was immaterial. At December 31, 1995 and December 31, 1994, these investments were categorized as available for sale and are stated at fair value. Unrealized gains and losses are included as a direct component of stockholders' equity until realized. Income Taxes Deferred income tax liabilities and assets are determined using currently enacted tax rates applicable to the period in which deferred tax liability or assets are expected to be settled or realized. The deferred tax liability or asset is determined based on the difference between the financial statement and tax bases of assets and liabilities. The tax benefits recognized must be reduced by a valuation allowance to the extent it is more likely than not the benefits may not be realized. Earnings (Loss) Per Common Share Earnings (loss) per common share is computed using the weighted average number of common and common equivalent shares (stock options and warrants) outstanding during the year. For the fiscal year 1993, common equivalent shares are not included in the Company's computation of net loss per share as the inclusion of these shares would be anti-dilutive. Reclassification Certain items in prior years' financial statements have been reclassified to conform with the current year presentation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (such as closure and post closure reserves and certain other accounts) and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. 33 34 2. CLOSURE AND POST-CLOSURE RESERVES The company will have material financial obligations with respect to the closure and post closure of its landfill. Disposal site closure and post-closure costs, which includes final capping of the site, site inspections, ground-water monitoring, leachate management, methane gas control and recovery, and operation and maintenance costs to be incurred during the thirty year post-closure period, are accrued and charged to expense over the estimated useful life of the landfill. Requirements for closure and post-closure are established by Subtitle D of the EPA. While the precise amount of these future obligations cannot be determined, it is estimated that the total cost for final closure and post-closure will approximate $4,200,000 when the landfill reaches its capacity. These amounts are based on estimates obtained from an independent engineering firm. Amounts accrued for closure and post-closure costs are $1,511,647and $891,175 as of December 31, 1995 and 1994, respectively and are accrued based on capacity used. Actual, ultimate costs could differ from these estimates. 3. SUPPLEMENTAL CASH FLOW INFORMATION:
1995 1994 1993 ---- ---- ---- Cash paid for interest $201,822 $ 48,470 $ 51,500 Cash paid for taxes $ 62,000 - - Significant non-cash transactions - Purchase of equipment financed by capital lease $104,118 - - - Purchase of vehicles and equipment financed by notes payable - $140,010 - - Purchased land in exchange for a note payable - $ 24,000 - - Capital expenditures included in year end accounts payable but not yet paid - $565,836 - - Retirement of common stock held in escrow - $398,704 -
4. ACQUISITION COSTS The Company expensed $301,000 of acquisition related expenses during 1993 related to a proposed business acquisition that was not consummated. 34 35 5. STOCKHOLDERS' EQUITY The Company is prohibited, under the terms of subordinated debentures (see note 6), until March 1997 (with certain limited exceptions), from paying dividends on its common stock if the aggregate amount of all such payments from and after March 5, 1992 exceeds (i) 50% of the net after tax income of the Company, plus (ii) 100% of any amounts received by the Company from the issuance of its equity securities or certain subordinated debt securities, less (iii) 100% of all losses. 6. LONG-TERM DEBT Long-term debt at December 31, 1995 and 1994 consists of the following:
1995 1994 ---- ---- 8.5% convertible subordinated debentures, due 1997. . . . . . . $3,884,265 $3,803,442 Notes payable to Bank at interest rates from 8.5% to 9.5%, due 1996, through 1999, collateralized by vehicles and equipment . . . . . . . . . . . . . . . . . . . . 249,470 365,996 14% note payable to original seller of landfill site, due 1995, collateralized by mortgage on land . . . . . . - 15,291 Note payable to an individual due 2000, collaterized by mortgage on land . . . . . . . . . . . . . . . 20,059 24,000 Capitalized lease obligations . . . . . . . . . . . . . . . . . 91,675 39,359 ---------- ---------- 4,245,469 4,248,088 Less current portion . . . . . . . . . . . . . . . . . . . . . (151,019) (167,971) ---------- ---------- $4,094,450 $4,080,117 ========== ==========
Aggregate maturities of long-term debt including capital leases at December 31, 1995 were as follows:
DECEMBER 31, - ------------ 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 151,019 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,975,831 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,163 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,485 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,971 ---------- $4,245,469 ==========
The carrying amount for assets pledged as collateral for all debt was $527,725 and $739,408 at December 31, 1995 and 1994, respectively. On March 5, 1992, the Company completed a private placement of $3,000,000 in Convertible Subordinated Debentures. The Debentures have a term of five years and bear interest at the rate of 8.5% per annum. The interest is payable in either cash or may be added to the principal amount of the debentures at the Company's option. In the first quarter of 1995 the Company added accrued 35 36 interest to the principal of $80,823. During the subsequent quarters of 1995 the Company elected to pay interest currently. In 1994 and 1993 accrued interest of $306,821 and $282,070, respectively, was added to the principal. The Debentures are convertible into the Company's common stock at $1.40 per share. In connection with the issuance of the Notes, the Company is obligated to subordinate certain subsequent issuances of debt to the rights of the holders of the Notes, is prohibited from increasing the size of its Board of Directors, is subject to certain prepayment and conversion obligations under the terms of the Notes, and is subject to certain restrictions with respect to the declaration and payment of dividends. 7. ACCRUED ROYALTIES Royalty obligations, payable to the former stockholder of an acquired company, amounting to $1,207,591 and $1,459,078 at December 31, 1995 and 1994, respectively, are included as long-term liabilities. The current portion of such obligations is not currently estimable. 8. MANAGEMENT OPTIONS AND COMMON STOCK WARRANTS In 1991, the Company granted to certain key management personnel options to acquire an aggregate of 1,854,945 shares of common stock at a purchase prices ranging from $.50 to $1.37 per share. The Company has also adopted a Stock Option Plan (the Plan), which provided for the granting of 803,000 shares to key employees. The options must be exercised on or prior to the tenth anniversary of the grant. The options vest to employees over a three year period based upon length of service with the Company. Transactions involving the stock options for 1995, 1994 and 1993 are summarized as follows:
OPTION PRICE NUMBER OF STOCK OPTIONS PER SHARE OPTIONS - ------------- --------- ------- Balance at January 31, 1993 $.50 - $1.37 2,331,945 Granted $1.16 5,000 Canceled $1.00 (2,000) ------------ ---------- Balance at December 31, 1993 $.50 - $1.37 2,334,945 Granted $.50 210,000 Canceled $.50 - $1.37 (1,009,945) ------------ ---------- Balance at December 31, 1994 $.50 1,535,000 Granted $1.19 61,500 ------------ ---------- Balance at December 31, 1995 $.50 - $1.19 1,596,500 ============ ==========
All of the options issued in 1995, 1994 or 1993 were non compensatory. No options were exercised in 1995, 1994 or 1993. 752,795 options are exercisable at December 31, 1995. There are options granted to a former executive pursuant to which the Company will make an interest free loan of $200,000 to the executive in the event options are exercised. In addition, warrants to acquire up to 2,000,000 shares of the Company's common stock at $.55 a share at any time or from time to time on or prior to the fifth anniversary of the merger were granted to an 36 37 investment advisory firm for services rendered to the Company in connection with the merger and the private placement. The warrants, which must be exercised on or before July 31, 1996, are subject to anti-dilution rights and are adjustable for stock splits, stock dividends and similar events. 9. LEASES The Company leases its office facilities and certain equipment under various operating lease agreements some of which contain renewal options. Certain equipment and vehicles are leased under various capital lease agreements containing various purchase options. Future minimum commitments at December 31, 1995 under various noncancelable operating and capital leases are as follows:
YEAR ENDING DECEMBER 31, OPERATING CAPITAL ------------ --------- ------- 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,075 $ 34,319 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,107 31,989 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,950 31,989 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 7,997 -------- -------- Total Minimum lease payments . . . . . . . . . . . . . . . . . . . $352,673 106,294 ======== Interest portion on capital lease obligations . . . . . . . . . . . 14,619 -------- Present value of future minimum lease payments . . . . . . . . . . $ 91,675 ========
Rental expense for all operating leases amounted to $243,359, $459,594, and $165,622 for the years ended December 31, 1995, 1994, and 1993, respectively. 10. INVESTMENTS HELD IN ESCROW Investments held in escrow at December 31, 1995 and 1994 consists of the following:
1995 1994 ---- ---- Fair value Cost Fair value Cost ---------- ---- ---------- ---- U.S. Government Securities $ 40,688 $ 40,038 $ 38,744 $ 40,075 Corporate Bonds 124,800 123,170 111,863 123,170 Equity Funds 204,533 138,396 163,218 146,575 Cash equivalents 615,514 616,885 275,146 287,330 --------- --------- --------- -------- $ 985,535 $ 918,489 $ 588,971 $597,150 ========= ========= ========= ========
The contractual maturities of debt securities available for sale included in escrow at December 31, 1995, is as follows:
Fair value Cost ---------- ---- Due within one year $ 0 $ 0 Due after one year through five years 115,913 113,808 Due after five years through ten years 49,575 49,400 Due after ten years 0 0 ---------- -------- $ 165,488 $163,208 ========== ========
Gross unrealized holding gains and losses at December 31, 1995, were $70,642 and $3,596, respectively. Gross unrealized holding gains and losses at December 31, 1994 were $4,459 and $12,638, respectively. Gross 37 38 realized gains from the sale of securities classified as available for sale for the years ended December 31, 1995 and 1994, were $12,149 and $9,802 respectively. For the purpose of determining gross realized gains and losses, the cost of securities sold is based upon specific identification. The Company was able to obtain a surety bond for the closure/post closure care costs associated with its landfill. This bond required a collateral escrow of $300,000 which was made in December 1995. This will allow the Company to terminate the trust fund which was established in 1991 for closure/post closure care costs. It is expected that these funds will be returned to the Company in the second quarter of 1996. At December 31, 1995 the fair value of these funds were $685,535. 11. INCOME TAXES There was no provision for income taxes in 1993. The provision for income taxes for 1995 and 1994 consists of the following:
1995 1994 ---- ---- Current: Federal $ 130,000 $ 0 State 94,000 90,000 ----------- --------- 224,000 90,000 ----------- --------- Deferred: Federal 293,000 (266,000) State 30,000 (30,000) ----------- --------- 323,000 (296,000) ----------- --------- Income tax provision (benefit) $ 547,000 $(206,000) =========== =========
The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate to income before taxes is attributable to the following:
1995 1994 AMOUNT PERCENTAGE AMOUNT PERCENTAGE ------ ---------- ------ ---------- Tax computed using federal statutory rate $ 703,000 35 $ 344,000 35 Utilization of operating loss carryforward (195,000) (10) (640,000) (65) State income taxes, net of federal income tax effect 80,000 4 90,000 9 Other (41,000) (2) - --------- --- --------- --- $ 547,000 27 $ 206,000 (21) ========= === ========= ===
The provision for income taxes differed from the amount obtained by applying the federal statutory income tax rate to income (loss) before taxes due to carryforward of net operating losses from prior years and an adjustment of the valuation reserve for expected future tax benefits. 38 39 The components of deferred tax assets and liabilities, as of December 31, 1995 and 1994, were as follows:
1995 1994 ---- ---- Deferred tax assets: Alternative minimum tax credit $ 128,000 $ - Net operating loss carryforwards - 525,000 Closure reserves and reserve for bad debts 6,000 318,000 Valuation allowance - (318,000) ---------- ----------- Total deferred tax assets 134,000 525,000 ---------- ----------- Deferred tax liability: Depreciation (161,000) (229,000) ---------- ----------- Net deferred tax asset (liability) $ (27,000) $ 296,000 ========== ===========
The Company has recorded a current deferred tax asset of $134,000 for which realization is dependent on generating sufficient taxable income. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. During the third quarter of 1995 the Company elected to adopt Section 468 of the Internal Revenue Code which allows current deductions for future closure costs with respect to the Company's landfill (subject to limitations). These deductions were previously deferred for income tax purposes while being expensed currently for financial statement purposes. 12. FINANCIAL INSTRUMENTS Financial instruments which potentially subject the Company to concentrations of credit risk are cash investments and accounts receivable. The Company places its cash investments with what management believes to be high-credit-quality financial institutions and currently invests primarily in commercial paper of industrial companies with a rating of A-1/P-1 or better. Accounts receivable represents amounts from commercial and residential customers in southern Georgia and northern Florida. At December 31, 1995, in management's opinion, the Company had no significant concentration of credit risk. At December 31, 1995, the market value of the Company's long term debit was estimated to be $3,671,688. 13. COMMITMENTS The Chairman of the Board has an Employment Agreement (Agreement) containing certain non-competition and non-solicitation agreements upon the termination of their employment with the Company. The non-competition covenant requires the Company to pay the chairman $10,833 monthly until canceled by either party. The Agreement also provides an amount to be paid to the chairman equal to the product of (i) $.50 and (ii) the number of shares purchased by the Chairman pursuant to options granted to the Chairman. The Company is also required to reimburse the Chairman for any federal excise taxes incurred in connection with such payments. The Company entered into severance agreements (Severance Agreements) which includes certain non-competition and non-solicitation covenants in December 1995 with the President and Vice President which provides for payment of one-half their annual base salary at the time of termination if termination is without cause. In addition, for a period of six months after termination without cause the Company agrees to pay the premium, capped at the present cost, for any continuation of health insurance coverage required to be offered to the President and Vice President. 39 40 14. SUBSEQUENT EVENTS In March 1996, the Company acquired all the common stock of a street sweeping and roll-off solid waste collection company located in Jacksonville, Florida. The purchase price of $1,255,000 consisted of 233,947 shares of the Company's common stock, valued in the purchase agreement at $1.197 per share, $355,000 cash, $620,000 assumption of debt and 75,000 of common stock warrants that are exercisable at $1.25 per share. For the year ended December 31, 1995, the unaudited revenues and net income of the street sweeping and roll-off solid waste collection company were $1,771,000 and $80,000, respectively. In February 1996 the Company was granted a modification to its permit for the Company's landfill by the Georgia Environmental Protection Division which increases the total capacity of the landfill by 1,467,800 tons of solid waste. As a result of the increase in capacity of the landfill the amortization of the disposal site and the accrual of closure and post closure reserves will be adjusted in 1996 as a change in estimate. Had these adjustments been made in 1995, net income, net of taxes would have increased approximately $500,000. 40 41 GEOWASTE INCORPORATED AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Additions Balance at Charged To Balance At Beginning Of Costs And End Of Description Year Expenses Deductions(1) Year ----------- ---- -------- ------------- ---- Year ended December 31, 1995: Allowance for doubtful accounts deducted from asset account . . . . . . . . . . . . $16,356 $28,400 $(26,859) $17,897 ======= ======= ======== ======= Year ended December 31, 1994: Allowance for doubtful accounts deducted from asset account . . . . . . . . . . . . $17,064 $ 5,500 $ (6,208) $16,356 ======= ======= ======== ======= Year ended December 31, 1993: Allowance for doubtful accounts deducted from asset account . . . . . . . . . . . . $18,652 $23,000 $(24,588) $17,064 ======= ======= ======== =======
(1) Uncollectible accounts written off, net of recoveries. 41 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized in St. Augustine, Florida on the 29th day of March, 1996. GEOWASTE INCORPORATED By: /s/ KEVIN R. KOHN ----------------------------------------- Kevin R. Kohn President, Chief Executive Officer & Director Principal Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature Title Date - --------- ----- ---- /s/ AMY C. MACF. BURBOTT Chairman of the Board March 14, 1996 - ---------------------------------------------------- & Director Amy C. MacF. Burbott /s/ RAYMOND F. CHASE Vice President, March 29, 1996 - --------------------------------------------------- Chief Financial Officer, Raymond F. Chase Treasurer, & Secretary /s/ ROBERT J. CRESCI Director March 28, 1996 - ---------------------------------------------------- Robert J. Cresci /s/ STEVEN M. ENGEL Director March 28, 1996 - ---------------------------------------------------- Steven M. Engel /s/ HARVE A. FERRILL Director March 26, 1996 - ----------------------------------------------------- Harve A. Ferrill /s/ FREDERICK J. ISEMAN Director March 27, 1996 - ---------------------------------------------------- Frederick J. Iseman
42 43
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER ------ ----------- ------ 2.1 Agreement and Plan of Reorganization, dated August 2, 1991, by and between GeoWaste Incorporated, Utah Acquisition Subsidiary, Inc., Equivest Waste Solutions, Inc., Frederick J. Iseman and James Swistock (Incorporated by reference from Exhibit 2(A) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). * 3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and restated (Incorporated by reference from Exhibit A to the Proxy filed November 25, 1991) (File No. 0-9278)). * 3.2 Certificate of Designation of Preferred Stock of GeoWaste Incorporated, filed November 25, 1991. (File No. 0-9278). * 3.3 Bylaws of GeoWaste Incorporated, as amended (Incorporated by reference from Exhibit 3(b) to the Annual Report on Form 10-K for the year ended December 31, 1987 (File No. 0-9278)). * 3.4 Amendment to Amended and Restated Certificate of Incorporation of GeoWaste Incorporated (Incorporated by reference from Exhibit 3.4 to the Annual Report on Form 10-K for the year ended December 31, 1992 (File No. 0-9278)). * 4.1 Purchase Agreement, dated March 5, 1992, between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc. (Incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0- 9278)). * 4.2 Form of Debenture (Incorporated by reference from Exhibit 4.2 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). * 4.3 Registration Rights Agreement, dated March 5, 1992, by and between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc. (Incorporated by reference from Exhibit 4.3 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). * 4.4 Registration Rights Agreement, dated August 2, 1991, by and between GeoWaste Incorporated and each of the entities listed on Exhibit A thereto (Incorporated by reference from Exhibit 4(D) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). *
- ------------ * Incorporated by reference 43 44
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER ------ ----------- ------ 4.5 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton, Brian Russell, James R. Jones, Paul Thomas Cohen, William vanden Heuvel, Balis & Zohn, Inc. and IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit 4(B) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). * 4.6 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening and IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit 4(C) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0- 9278)). * 4.7 Equivest First Convertible Debt Exchange Agreement, dated August 2, 1991, by and between GeoWaste Incorporated the parties listed on Schedule A thereto (Incorporated by reference from Exhibit 2(B) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). * 4.8 Equivest Second Convertible Debt Exchange Agreement, dated August 2, 1991, by and between GeoWaste Incorporated the parties listed on Schedule A thereto (Incorporated by reference from Exhibit 2(C) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). * 4.9 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste Incorporated, Advance Ross Corporation, Allen & Company Incorporated, Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening, their persons or entities listed on Schedule A thereto and the persons or entities listed on Schedule B thereto (Incorporated by reference from Exhibit 4(A) to the Current Report on Form 8-K filed August 19, 1991 (File No. 0-9278)). * 4.10 Voting Agreement, dated March 5 ,1992, by and between GeoWaste Incorporated, the Delaware State Employees' Retirement Fund and the Trust for Defined Benefit Plan of ICI American Holdings Inc., Frederick J. Iseman, Gian Caterine, Amy C. MacF. Burbott, Harve Ferrill, James Swistock, Advance Ross Corporation and Allen & Company Incorporated (Incorporated by reference from Exhibit 4.4 to the Current Report on Form 8-K filed March 13, 1992 (File No. 0-9278)). *
- ----------- * Incorporated by reference 44 45
EXHIBIT PAGE NUMBER DESCRIPTION NUMBER ------ ----------- ------ 10.1 Warrant Purchase Agreement by and between GeoWaste Incorporated and Allen & Company Incorporated and Amy C. MacF. Burbott (Incorporated by reference from Exhibit 10.1 to the Annual Report on Form 10-K for the year ended December 31, 1991 (File No. 0-9278)). * 10.2 Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and Amy C. MacF. Burbott (Incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q for the period ended September 30, 1992 (File No. 0-9278)). * 10.3 Form of Employment Agreement dated as of June 1, 1992, by and between GeoWaste Incorporated and Richard J. Sherman (Incorporated by reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended September 20, 1992 (File No. 0-9278)). * 10.4 Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and James W. Swistock (Incorporated by reference from Exhibit 10.4 to the Annual Report on Form 10-K for the year ended December 31, 1992 (File No. 0-9278)). * 10.5 Form of Severance Agreement, dated as of December 21, 1995, by and between GeoWaste Incorporated and Kevin R. Kohn. 46 10.6 Form of Severance Agreement, dated as of December 21, 1995, by and between GeoWaste Incorporated and Raymond F. Chase. 49 10.7 Form of Consulting Agreement dated, August 31, 1995, by and between GeoWaste Incorporated and Amy C. MacF. Burbott. 52 10.8 Form of Amendment, dated as of January 9, 1995, to Form of Employment Agreement, dated as of August 1, 1991, by and between GeoWaste Incorporated and Amy C. MacF. Burbott. 53 11.1 Computation of Net Income Per Share for the year ended December 31, 1995 55 11.2 Computation of Net Income Per Share for the year ended December 31, 1994 56 11.3 Computation of Net Loss Per Share for the year ended December 31, 1993. 57 21 Subsidiaries of the Registrant. 58 27 Financial Data Schedule (for SEC use only)
- --------------- *Incorporated by reference 45 EX-10.5 2 FORM OF SEVERANCE AGREEMENT 1 EXHIBIT 10.5 December 21, 1995 Kevin R. Kohn 217 Marshside Drive St. Augustine, FL 32084 Re: Severance Agreement Kevin: This letter is to confirm our understanding and agreement regarding severance terms. In consideration of your increase in salary, as well as the 9 other mutual promises and covenants contained herein, you and GeoWaste agree as follows: 1. Effective Date. The Effective Date of this Agreement is January 1, 1996. 2. Severance Pay. In the event that the Company terminates your employment without Cause within two (2) years of the Effective Date. (a) the Company will pay you in a lump sum or in installments over six (6) months, as selected by the Company, one-half of the greater of $94,500 or your annual base salary rate in effect at the date of your termination. (b) for a period of six (6) months following your termination date, the Company will pay the premium for any continuation health insurance coverage required to be offered to you by the Company under federal law; and (c) the Company will continue to reimburse you for the premium you pay to continue life insurance on your life during the six (6) month period following your termination date, to the extent reimbursement for such premium was not made prior to your termination and the amount of the reimbursement for such six (6) month period does not exceed $750.00. The term "Cause" means that: (i) you use for personal gain or disclose to an unauthorized person any confidential or proprietary information or trade secrets of the Company or its subsidiaries; (ii) you act in a manner which materially and detrimentally affects the Company or its subsidiaries; or (iii) your conduct violates any applicable civil or criminal law or violates any written rules of ethical corporate conduct of or fiduciary obligation to the Company or its subsidiaries. 3. Non-Competition and Non-Solicitation Covenants. You hereby agree that: (a) for the period of one (1) year following the date your employment with the Company is terminated at the request of the Company, you will not, without the prior written consent of the Company's Board of Directors, own, manage, operate, join, be employed in an executive or managerial capacity by, control or otherwise render, directly or indirectly, any executive or managerial Services to any person or organization which is engaged in the solid waste management business in competition with the Company within a 50-mile territorial radius from any facility owned or operated by the Company. For purposes of this Paragraph 3(a), the term "Services" shall mean any services of a business, commercial or professional nature and shall include, without limitation, the following: engaging in, working with, having an interest in, acting as an officer or director or consultant to, advising, lending money to, guaranteeing the debts or obligations of, or permitting one's name or any part thereof to be used in connection with an enterprise or endeavor that conducts a business of the type and in the area referred to above, either individually, in partnership, or in conjunction with any person or persons, firm, association, company or corporation, whether as principal, agent, five percent or more shareholder, executive, or in any other similar manner whatsoever, provided, however, that you may 46 2 own less than five percent (5%) of the outstanding capital stock of any publicly-held corporation; and (b) in the event your employment with the Company is terminated for any reason, then for period of one (1) year after the date of your termination, you will not, without the prior written consent of the Company's Board of Directors, render any services or advice to, solicit, service the account of, or otherwise engage in any business relationship (as an employee or otherwise) with any Customer (as defined below) of the Company in connection with the solid waste management business, or solicit or hire any person in connection with the solid waste management business, or solicit or hire any person in connection with the solid waste management business who was an employee of the Company at any time within the six (6) month period ending the date your employment terminates. For purposes of this Paragraph 3(b), a "Customer" means any corporation, association, partnership, organization, business, individual or governmental agency (a "Person") within a 50-mile territorial radius from any facility owned or operated by the Company that is subject to a contract with the Company whereby the Company provides solid waste management services to such Customer, or is otherwise actively involved in a business relationship with the Company in connection with such solid waste management services, including, without limitation, any person that the Company is actively soliciting at any time within the six (6) month period ending on the date your employment terminates. (c) you acknowledge that the Company will suffer substantial damages not readily ascertainable or compensable in terms of money in the event of the breach of any of your obligations under this Paragraph 3. You therefore agree that the Company will be entitled (without limitation or any other rights or remedies otherwise available to the Company) to obtain an injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any such breach of this Paragraph 3 the stated period, scope or area is held to be unreasonable, the parties agree that the maximum period, scope or area reasonable under the circumstances will be substituted for the state period, scope or area. (d) the running of each of the covenants in this Paragraph 3 will be tolled and suspended for such period of time as you are in violation of the particular covenant, but none of the covenants will be so tolled and suspended for longer than one hundred eighty (180) days in the aggregate as to that covenant. 4. Confidential Information. You understand and acknowledge that: (a) in order to enable you to properly perform your duties, the Company has entrusted and will continue to entrust you with trade secrets and confidential information, including, without limitation, trade secrets and confidential information relating to merchandising methods, engineering and production methods, accounting or financial methods, processes, strategies and technique, know-how, pricing policies, inventory, market studies and strategy, customer lists, special needs and characteristics of the Company's customers, debt and equity financing sources, scientific, technical and management information and other aspects of the Company's business ("Confidential Information"); and (b) the development or acquisition of this Confidential Information is critical to the success and survival of the Company and the disclosure or use of this Confidential Information would cause the Company irreparable harm and that you are fully aware of the Company's need to protect this Confidential Information. Accordingly, you hereby agree that, from the Effective Date and thereafter as to trade secrets, and from the Effective Date and thereafter until the end of one (1) year period following your termination of employment, as to other Confidential Information, you will not disclose to third persons any Confidential Information of the Company, its officers, directors, agents or representatives, except to the extent that such Confidential Information: (i) is authorized in writing by the Company to be disclosed; was in or has become part of the public domain (otherwise than through your breach hereof); 47 3 (ii) was known to the recipient prior to the disclosure; (iii) was known to you prior to performing services for the Company or any predecessor company; or (iv) is required to be disclosed by a court or governmental agency and, in this regard, you will execute such additional documents as the Company may reasonably require to protect the confidentiality of the Confidential Information required to be disclosed. 5. Stock Options. This Agreement in no way affects your rights under the NonQualified Stock Option Agreement granted to you effective as of July 3, 1991, or stock options granted to you pursuant to the 1992 Stock Option Plan. 6. Severability. In the event any provision of this Agreement should be held to be unenforceable, each and all of the other provisions of this Agreement shall remain in full force and effect. 7. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of Delaware. 8. Waiver. The waiver by any party to this Agreement of a breach of any of the provisions of this Agreement shall not operate or be construed as a waiver of any subsequent or simultaneous breach. 9. Modification. This Agreement may be modified or amended only in writing signed by the parties. 10. Entire Agreement. This Agreement constitutes a single integrated contract expressing the entire agreement of the parties hereto. There are no agreements, written or oral, express or implied, between the parties hereto, concerning the subject matter hereof, except the agreements set forth in this Agreement. All other agreements, whether written or oral, between the parties, other than the stock options granted to you effective as of July 3, 1991 as well as those granted to you under the 1992 Stock Option Plan, are superseded by this Letter. 11. Binding Effect. This Agreement shall be binding on the parties and their respective directors, officers, employees, heirs, executors, administrators and successors. 12. Understanding. You hereby covenant and agree that you have read and fully understand the contents and the effect of this Agreement. You warrant and agree that you have had a reasonable opportunity and been advised to seek the advice of an attorney as to such content and effect. You accept each and all of the terms, provisions, and conditions of this Agreement, and do so voluntarily and with full knowledge and understanding of the contents, nature, and effect of this Agreement. Assuming the foregoing accurately reflects our understanding and agreement, please evidence the same by affixing your signature on the line provided below. Sincerely, GEOWASTE INCORPORATED /s/ AMY C. MACF. BURBOTT - ------------------------ Amy C. MacF. Burbott Chairman of the Board Accepted and agreed to this 21st day of December, 1995 /s/ KEVIN R. KOHN - ------------------------ Kevin R. Kohn 48 EX-10.6 3 FORM OF SEVERANCE AREEMENT 1 EXHIBIT 10.6 December 21, 1995 Raymond F. Chase 1250 Hollywood Avenue Jacksonville, FL 32205 Re: Severance Agreement Ray: This letter is to confirm our understanding and agreement regarding severance terms. In consideration of your increase in salary, as well as the 9 other mutual promises and covenants contained herein, you and GeoWaste agree as follows: 1. Effective Date. The Effective Date of this Agreement is January 1, 1996. 2. Severance Pay. In the event that the Company terminates your employment without Cause within two (2) years of the Effective Date. (a) the Company will pay you in a lump sum or in installments over six (6) months, as selected by the Company, one-half of the greater of $76,000 or your annual base salary rate in effect at the date of your termination. (b) for a period of six (6) months following your termination date, the Company will pay the premium for any continuation health insurance coverage required to be offered to you by the Company under federal law; and (c) the Company will continue to reimburse you for the premium you pay to continue life insurance on your life during the six (6) month period following your termination date, to the extent reimbursement for such premium was not made prior to your termination and the amount of the reimbursement for such six (6) month period does not exceed $750.00. The term "Cause" means that: (i) you use for personal gain or disclose to an unauthorized person any confidential or proprietary information or trade secrets of the Company or its subsidiaries; (ii) you act in a manner which materially and detrimentally affects the Company or its subsidiaries; or (iii) your conduct violates any applicable civil or criminal law or violates any written rules of ethical corporate conduct of or fiduciary obligation to the Company or its subsidiaries. 3. Non-Competition and Non-Solicitation Covenants. You hereby agree that: (a) for the period of one (1) year following the date your employment with the Company is terminated at the request of the Company, you will not, without the prior written consent of the Company's Board of Directors, own, manage, operate, join, be employed in an executive or managerial capacity by, control or otherwise render, directly or indirectly, any executive or managerial Services to any person or organization which is engaged in the solid waste management business in competition with the Company within a 50-mile territorial radius from any facility owned or operated by the Company. For purposes of this Paragraph 3(a), the term "Services" shall mean any services of a business, commercial or professional nature and shall include, without limitation, the following: engaging in, working with, having an interest in, acting as an officer or director or consultant to, advising, lending money to, guaranteeing the debts or obligations of, or permitting one's name or any part thereof to be used in connection with an enterprise or endeavor that conducts a business of the type and in the area referred to above, either individually, in partnership, or in conjunction with any person or persons, firm, association, company or corporation, whether as principal, agent, five percent or more 49 2 shareholder, executive, or in any other similar manner whatsoever, provided, however, that you may own less than five percent (5%) of the outstanding capital stock of any publicly-held corporation; and (b) in the event your employment with the Company is terminated for any reason, then for a period of one (1) year after the date of your termination, you will not, without the prior written consent of the Company's Board of Directors, render any services or advice to, solicit, service the account of, or otherwise engage in any business relationship (as an employee or otherwise) with any Customer (as defined below) of the Company in connection with the solid waste management business, or solicit or hire any person in connection with the solid waste management business, or solicit or hire any person in connection with the solid waste management business who was an employee of the Company at any time within the six (6) month period ending the date your employment terminates. For purposes of this Paragraph 3(b), a "Customer" means any corporation, association, partnership, organization, business, individual or governmental agency (a "Person") within a 50-mile territorial radius from any facility owned or operated by the Company that is subject to a contract with the Company whereby the Company provides solid waste management services to such Customer, or is otherwise actively involved in a business relationship with the Company in connection with such solid waste management services, including, without limitation, any person that the Company is actively soliciting at any time within the six (6) month period ending on the date your employment terminates. (c) you acknowledge that the Company will suffer substantial damages not readily ascertainable or compensable in terms of money in the event of the breach of any of your obligations under this Paragraph 3. You therefore agree that the Company will be entitled (without limitation or any other rights or remedies otherwise available to the Company) to obtain an injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any such breach of this Paragraph 3 the stated period, scope or area is held to be unreasonable, the parties agree that the maximum period, scope or area reasonable under the circumstances will be substituted for the state period, scope or area. (d) the running of each of the covenants in this Paragraph 3 will be tolled and suspended for such period of time as you are in violation of the particular covenant, but none of the covenants will be so tolled and suspended for longer than one hundred eighty (180) days in the aggregate as to that covenant. 4. Confidential Information. You understand and acknowledge that: (a) in order to enable you to properly perform your duties, the Company has entrusted and will continue to entrust you with trade secrets and confidential information, including, without limitation, trade secrets and confidential information relating to merchandising methods, engineering and production methods, accounting or financial methods, processes, strategies and technique, know-how, pricing policies, inventory, market studies and strategy, customer lists, special needs and characteristics of the Company's customers, debt and equity financing sources, scientific, technical and management information and other aspects of the Company's business ("Confidential Information"); and (b) the development or acquisition of this Confidential Information is critical to the success and survival of the Company and the disclosure or use of this Confidential Information would cause the Company irreparable harm and that you are fully aware of the Company's need to protect this Confidential Information. Accordingly, you hereby agree that, from the Effective Date and thereafter as to trade secrets, and from the Effective Date and thereafter until the end of one (1) year period following your termination of employment, as to other Confidential Information, you will not disclose to third persons any Confidential Information of the Company, its officers, directors, agents or representatives, except to the extent that such Confidential Information: (i) is authorized in writing by the Company to be disclosed; was in or has become part of the public domain (otherwise than through your breach 50 3 hereof); (ii) was known to the recipient prior to the disclosure; (iii) was known to you prior to performing services for the Company or any predecessor company; or (iv) is required to be disclosed by a court or governmental agency and, in this regard, you will execute such additional documents as the Company may reasonably require to protect the confidentiality of the Confidential Information required to be disclosed. 5. Stock Options. This Agreement in no way affects your rights under the NonQualified Stock Option Agreement granted to you effective as of July 3, 1991, or stock options granted to you pursuant to the 1992 Stock Option Plan. 6. Severability. In the event any provision of this Agreement should be held to be unenforceable, each and all of the other provisions of this Agreement shall remain in full force and effect. 7. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of Delaware. 8. Waiver. The waiver by any party to this Agreement of a breach of any of the provisions of this Agreement shall not operate or be construed as a waiver of any subsequent or simultaneous breach. 9. Modification. This Agreement may be modified or amended only in writing signed by the parties. 10. Entire Agreement. This Agreement constitutes a single integrated contract expressing the entire agreement of the parties hereto. There are no agreements, written or oral, express or implied, between the parties hereto, concerning the subject matter hereof, except the agreements set forth in this Agreement. All other agreements, whether written or oral, between the parties, other than the stock options granted to you effective as of July 3, 1991 as well as those granted to you under the 1992 Stock Option Plan, are superseded by this Letter. 11. Binding Effect. This Agreement shall be binding on the parties and their respective directors, officers, employees, heirs, executors, administrators and successors. 12. Understanding. You hereby covenant and agree that you have read and fully understand the contents and the effect of this Agreement. You warrant and agree that you have had a reasonable opportunity and been advised to seek the advice of an attorney as to such content and effect. You accept each and all of the terms, provisions, and conditions of this Agreement, and do so voluntarily and with full knowledge and understanding of the contents, nature, and effect of this Agreement. Assuming the foregoing accurately reflects our understanding and agreement, please evidence the same by affixing your signature on the line provided below. Sincerely, GEOWASTE INCORPORATED /s/ AMY C. MACF. BURBOTT - ------------------------ Amy C. MacF. Burbott Chairman of the Board Accepted and agreed to this 21st day of December, 1995 /s/ RAYMOND F. CHASE - ------------------------ Raymond F. Chase 51 EX-10.7 4 FORM OF CONSULTING AGREEMENT 1 EXHIBIT 10.7 August 31, 1995 Amy C. MacF. Burbott 5 Woodholm Road Manchester-by-the-Sea, MA 01944-1041 Ms. Burbott: This letter is to confirm the understanding and agreement reached between you and GeoWaste Incorporated concerning your position as Chairman of the Board and work for the Company. Effective September 1, 1995, you have agreed to remain as Chairman of the Board until such time as either: (a) you furnish the Company with 30 days notice of your resignation as Chairman; or (b) the Company furnishes you with 30 days notice that it seeks your resignation (which you hereby agree to provide) as Chairman of the Company. During your tenure as Chairman, and for the six calendar months following your resignation or termination thereof, GeoWaste will pay you the sum of $10,833.33 per month as well as reimburse your medical coverage premium costs and reasonable expenses incurred in connection with work for the Company. Please evidence your agreement with the foregoing by affixing your signature on the line provided below. Sincerely, /s/ KEVIN R. KOHN /s/ HARVE A. FERRILL - --------------------------------------------- ------------------------- Kevin R. Kohn Harve A. Ferrill President, Chief Executive Officer & Director Director /s/ FREDERICK J. ISEMAN ------------------------- Frederick J. Iseman Director
Acknowledged, Accepted & Agreed As Of The Date First Written Above: /s/ AMY C. MACF. BURBOTT - -------------------------------- Amy C. MacF. Burbott 52 EX-10.8 5 FORM OF AGREEMENT 1 EXHIBIT 10.8 January 9, 1995 Amy C. MacF. Burbott President and Chief Executive Officer GeoWaste Incorporated 5 Woodholm Road Manchester-by-the-Sea, MA 01944 Re: Employment Agreement Amy: Pursuant to Section IX.A. of your employment agreement dated August 1, 1991 ("Agreement"), this letter will confirm our agreement to amend Section II.B of that Agreement to provide for payment of the severance payment described in that section within sixty (60) days of the date you exercise your stock options without regard to when you terminate your employment with GeoWaste. Accordingly, Section II.B is hereby amended to read as follows: "B. Severance Payment. In the event that the Executive's employment hereunder terminates, with or without Cause (as hereafter defined), the Company shall be obligated to make a severance payment to the executive, in cash, equal to the product of (A) $.50 and (B) the number of shares of common stock of the Company purchased by the Executive pursuant to options during the Employment Term or after the end of the Employment Term if the option so permits. Such payment shall be made by the Company within sixty (60) days after the date of such exercise. The Company's obligation to make such payment shall be absolute and unconditional and shall not be affected by any other provision of this Agreement. In the event the Executive determines that she is liable for any excise tax pursuant to Section 4999 of the Internal revenue Code of 1986, as amended, in connection with any payments made by the Company to the Executive herunder, she shall notify the Company and shall be entitled to a payment pursuant to this Section II.B. the payment pursuant to this Section shall be equal to the amount necessary to compensate Executive for the excise tax payable by Executive with respect to any payments made to her by the Company including any payments under this Section II.B." Except as expressly amended herein, all other terms and conditions of the Agreement shall remain in full force and effect. 2 Furthermore, this letter will confirm our understanding that if your employment is terminated as a result of the expiration of the Agreement on January 31, 1995, the stock option granted to you under the Non-Qualified Stock Option Agreement dated August 1, 1991 will expire on June 28, 2001, unless exercised earlier. However, nothing in this letter is intended to modify the Non-Qualified Stock Option Agreement. Assuming the foregoing accurately reflects our understanding and agreement, please evidence the same by affixing your signature on the line provided below. Sincerely, GEOWASTE INCORPORATED /s/ Harve A. Ferrill - --------------------- Harve A. Ferrill Chairman of the Board I hereby covenant and agree that I have read and fully understand the contents and the effect of this letter. I warrant and agree that I have had a reasonable opportunity and been advised to seek the advise of an attorney as to such content and effect. I accept each and all of the terms, provisions and conditions of this letter, and do so voluntarily and with full knowledge and understanding of the contents, nature and effect of this letter. /s/ Amy C. MacF. Burbott - ----------------------------- Amy C. MacF. Burbott Date: January 13, 1995 EX-11.1 6 COMPUTATION OF NET INCOME 12/31/95 1 EXHIBIT 11.1 GEOWASTE INCORPORATED AND SUBSIDIARIES COMPUTATION OF NET INCOME PER SHARE FOR THE YEAR ENDED DECEMBER 31, 1995
Primary Fully Diluted ------- ------------- Weighted average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605 Stock options and warrants outstanding . . . . . . . . . . 63,810 1,042,119 ----------- ----------- Weighted average shares of common stock outstanding . . . . . . . . . . . . . . . . . . . . . . . 19,526,415 19,704,724 =========== =========== Net Income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,462,310 $ 1,462,310 =========== =========== Income per share . . . . . . . . . . . . . . . . . . . . . $ .07 $ .07 =========== ===========
EX-11.2 7 COMPUTATION OF NET LOSS 1 EXHIBIT 11.2 GEOWASTE INCORPORATED AND SUBSIDIARIES COMPUTATION OF NET INCOME PER SHARE FOR THE YEAR ENDED DECEMBER 31, 1994
Primary Fully Diluted ------- ------------- Weighted average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . 18,662,605 18,662,605 Stock options and warrants outstanding . . . . . . . . . . 188,565 222,613 ----------- ------------ Weighted average shares of common stock outstanding . . . . . . . . . . . . . . . . . . . . . . . 18,851,170 18,885,218 =========== ============ Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 1,189,823 $ 1,189,823 =========== ============ Income per share . . . . . . . . . . . . . . . . . . . . . $ .06 $ .06 =========== ============
EX-11.3 8 COMPUTATION OF NET LOSS 1 EXHIBIT 11.3 GEOWASTE INCORPORATED AND SUBSIDIARIES COMPUTATION OF NET LOSS PER SHARE FOR THE YEAR ENDED DECEMBER 31, 1993
Primary Fully Diluted ------- ------------- Weighted average common shares outstanding (1) . . . . . . . . . . . . . . . . . . . . . 18,637,626 18,637,626 Escrow shares . . . . . . . . . . . . . . . . . . . . . . . - 3,987,036 Stock options and warrants outstanding . . . . . . . . . . 1,269,790 529,144 ------------- -------------- Weighted average shares of common stock outstanding . . . . . . . . . . . . . . . . . . . . . . . 19,907,416 23,153,806 ============= ============== Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (217,730) $ 64,340 ============= ============== Loss per share . . . . . . . . . . . . . . . . . . . . . . $ (.01) $ - ============= ==============
(1) Includes weighted average shares available for release from Escrow (254,087 shares). EX-21 9 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT GeoWaste Acquisition Corp. (Delaware) GeoWaste of FL, Inc. (Delaware) GeoWaste of GA, Inc. (Georgia) Low Brook Development, Inc. (Delaware) EX-27 10 FINANCIAL DATA SCHEDULE
5 1 DOLLARS YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 1 3,485,459 0 889,865 17,897 0 5,173,559 14,593,638 6,224,889 15,637,316 1,214,707 0 0 0 1,866,260 5,520,097 15,637,316 8,932,528 8,932,528 5,207,250 5,207,250 0 0 368,338 2,009,310 547,000 1,462,310 0 0 0 1,462,310 .07 .07
-----END PRIVACY-ENHANCED MESSAGE-----