UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark one)
[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended OCTOBER 31, 2004 or
[ ] Transition Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
Commission File No. 0-14443
WASTE TECHNOLOGY CORP.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 13-2842053
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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5400 RIO GRANDE AVENUE, JACKSONVILLE, FLORIDA 32254
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER: (904) 355-5558
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $.01
PAR VALUE PER SHARE
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 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 [ ]
CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM 405 OF REGULATION S-B IS NOT CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL 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-KSB OR ANY AMENDMENT TO THIS FORM 10-KSB.
STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR: $6,581,460
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
(BASED ON THE CLOSING PRICE ON JANUARY 17, 2005 OF $.33): $1,040,230
STATE THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S .01 PAR VALUE COMMON STOCK AS OF THE CLOSE OF BUSINESS ON THE LATEST PRACTICABLE DATE (JANUARY 15, 2005): 5,516,349
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Waste Technology Corp. ("Waste Tech") was incorporated on September 10, 1975, in the State of Delaware under the name B.W. Energy Systems, Inc. Its name was changed to Waste Technology Corp. in August 1983. Waste Tech is a holding company which operates through its wholly owned subsidiary International Baler Corp. ("IBC"), also a Delaware corporation. On July 30, 2004, Waste Tech's other two operating wholly owned subsidiaries, Consolidated Baling Machine Company, Inc. ("CBMC") and Florida Waste Systems, Inc. ("FWS") were merged into and became part of IBC. CBMC previously sold balers manufactured for it by IBC under the "Consolidated Baler" name and FWS had sold replacement parts to users of waste hauling equipment. The operations of CBMC and FWS have been taken over and continued by IBC.
Waste Tech and IBC maintain their executive offices and manufacturing facilities at 5400 Rio Grande Avenue, Jacksonville, Florida 32254. Waste Tech's telephone number is (904) 355-5558. Unless the context otherwise requires, the term "Company" as used herein, refers to Waste Tech and its subsidiaries on a consolidated basis. The Company's fiscal year end is October 31.
General
Since 1986 the Company's principal business has been the manufacture and sale of balers, which are machines used to compress and compact various waste materials. The Company manufactures approximately fifty (50) different types of balers for use with corrugated, paper, municipal waste, textiles, scrap metal, and other products. It is one of the leading manufacturers of balers designed to compact rubber, plastic, cotton mote and textile waste products.
Since charges for transportation of waste material are generally based upon the volume of waste, balers reduce volume substantially and therefore, reduce transportation costs. Increases in the quantity of waste produced, government restrictions on waste disposal, and mandated recycling of waste products have greatly increased the need for transportation of waste and hence, the need for balers.
Products
Balers utilize mechanical, hydraulic, and electrical mechanisms to compress a variety of materials into bales for easier and low cost handling, shipping, disposal, storage, and/or bulk sales for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile waste and rubber.
The Company offers a wide variety of balers, certain ones that are
standardized and others that are designed to specific customer requirements. The
Company's products include (i) general purpose horizontal and vertical balers,
(ii) specialty balers, such as those used for low level radioactive waste,
fifty-five gallon drums, aluminum cans, and rubber and textile waste, and (iii)
accessory equipment such as conveyors, rufflers, bale tying machines, and
plastic bottle piercers (machines which puncture plastic bottles before
compaction for greater density).
General Purpose Balers
These balers are designed for general purpose compaction of waste materials. They are manufactured in either vertical or horizontal loading models, depending on available floor space and desired capacity. Typical materials that are handled by this equipment include paper, corrugated boxes, and miscellaneous solid waste materials. These balers range in bale weight capacity from approximately 300 to 2,000 pounds and range in price from approximately $5,000 to $250,000. General purpose baler sales constituted approximately 55% of sales on a consolidated basis for each of the fiscal years ended October 31, 2003 and 2004.
Specialty Balers
Specialty balers are designed for specific applications which require modifications of the general baler configuration. The Company is attempting to shift the emphasis in its product composition from general purpose to specialty balers due to product profitability and broader geographic markets.
The scrap metal baler is designed to form a bale, referred to as a scrap metal "briquette" of specified size and weight. The rubber baler is designed to apply pressure in such a way as to compress the synthetic rubber into a self-contained bale that does not require tying. The drum crusher baler is capable of collapsing a standard fifty-five gallon drum into a "pancake" approximately four (4) to eight (8) inches high, which also serves to contain any remaining contents. The radioactive waste baler has a self-contained ventilation system designed to filter and contain toxic dust and particles released during compaction and baling. The textile baler is capable of compressing and baling loose fibers, which do not ordinarily adhere to each other under pressure. In addition, a double chamber baler has been designed for use by the clothing and textile industries.
Specialty balers range in price from approximately $3,000 to $275,000, and are less exposed to competitive pressures than are general purpose balers. Specialty baler sales constituted approximately 30% of sales on a consolidated basis for each of the fiscal years ended October 31, 2003 and 2004.
Accessory Equipment
The Company manufactures and markets a number of accessory equipment items in order to market a complete waste handling system. These include conveyors, which carry waste from floor level to the top of large horizontal balers; extended hoppers on such balers; rufflers, which break up material to improve bale compaction; electronic start/stop controls and hydraulic oil coolers and cleaners. At the present time accessory equipment does not represent a significant percentage of consolidated revenues.
Manufacturing
IBC manufactures its products, in its facility in Jacksonville, Florida, where it maintains a fully equipped and staffed manufacturing plant. IBC purchases raw materials, such as steel sheets and beams and components such as hydraulic pumps, valves and cylinders, and certain controls and other electric equipment which are used in the fabrication of the balers. The Company has no long-term supply agreements, and has not experienced unusual delay in obtaining raw materials or components.
The raw materials required by IBC to manufacture the balers, principally steel, motors, and hydraulic systems, are readily available from a number of sources and IBC is not dependent on any particular source. IBC is not dependent on any significant patents, trademarks, licenses, or franchises in connection with its manufacture of balers.
While IBC maintains an inventory of raw materials, most of it is intended for specific orders and inventory turnover is relatively rapid. Approximately 60% of its inventory turns over in 45 to 90 days and the balance, consisting of customized equipment, turns over in 3 to 6 months. IBC's, business is not seasonal.
Sales and Marketing
IBC sells its products throughout the United States and to some extent in Europe, the Far East, and South America to manufacturers of synthetic rubber and polymers, plastic recycling facilities, power generating facilities, textile mills, paper mills, cotton gins, supermarkets and other retail outlets, paper recycling facilities, and municipalities.
Most of the sales of IBC are made by its sales force of four (4) employees who rely upon responses to advertising, personal visits, attendance at trade shows, referrals from existing customers and telephone calls to dealers and/or end users. Approximately twenty-five (25%) percent of sales are made through manufacturer's representatives and dealers. The Company's general purpose balers are sold primarily in the eastern United States to such end users as waste producing retailers (supermarkets and liquor stores, for example), restaurants, manufacturing and fabricating plants, bulk material producers, nuclear plants, and solid waste recycling facilities. Specialty balers are sold throughout
the United States and to some extent in Europe, the Far East, and South America to manufacturers of rubber and polymers, plastic recycling facilities, paper recycling facilities, textile mills and power generating facilities. Both types of balers are sold abroad. During fiscal 2004, foreign sales amounted to $644,000 or approximately 10% of consolidated sales. In fiscal 2003, foreign sales amounted to $1,239,000, approximately 23% of the Company's net sales.
During fiscal 2004, IBC had baler sales to more than 600 customers, none of which accounted for over ten percent (10%) of its sales for the year. The Company anticipates that no one customer will account for more than 10% of net sales in fiscal year ending October 31, 2005.
The Company builds only a small quantity of balers for its inventory and generally builds based on firm sales orders. The Company's backlog of firm sales orders at December 31, 2004, was $1,700,000 as compared with $1,584,000 at December 31, 2003. The Company generally delivers its orders within four (4) months of the date booked.
Warranties and Service
IBC typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers a service plan for other required repairs and maintenance. Service is rendered by repairing or replacing parts at IBC's Jacksonville, Florida, facility, and by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. Repair services and spare parts sales represented approximately 15% of the Company's consolidated sales for fiscal 2004 and 2003.
Competition
The potential market for the Company's balers is nationwide and overseas, but the majority of the Company's general purpose baler sales are in the eastern United States, primarily because of freight and service costs. The Company competes in these markets with approximately ten (10) companies, none of which are believed to be dominant, but some of which may have significantly greater sales and financial resources than the Company. The Company is able to compete with these companies due to its reputation in the market place, its ability to service the balers it manufactures and sells, as well as its ability to custom design balers to a customer's particular needs. The Company experiences intense competition with respect to its lower priced or general purpose balers, based upon price, including freight, and based on performance. The Company experiences less competition with respect to its specialized baler equipment such as synthetic rubber, scrap metal, and textile balers.
Regulation
Machinery such as the Company's balers is subject to both federal and state regulation relating to safe design and operation. The Company complies with design requirements and its balers include interlocks to prevent operation while the loading door is open, and also include required printed safety warnings.
Research and Development
The Company has the broadest line of products in the baler industry and continues to provide its customers with new products and product improvements. The Company has invested approximately $30,000 in each of the fiscal years ending October 31, 2004 and October 31, 2003 on research and development of new products.
Compliance With Environmental Laws
The Company believes that it has complied with and is in compliance, with all Federal, State, and Local environmental laws. The Company's expenditures to remain in compliance are considered to be minimal.
Employees
As of December 31, 2004, the Company employed 55 persons as follows: 6 in management and supervision; 7 in sales and service; 36 in manufacturing; and, 6 in administration.
Available Information
The Company is a reporting company, as that term is defined under the Securities Acts, and therefore, files reports, including, Quarterly Reports on Form 10-QSB and Annual Reports on Form 10-KSB and other information with the Securities and Exchange Commission (the "Commission"). In addition, the Company will provide, without charge to its stockholders, upon written or oral request by such stockholder, a copy of any information referred to herein that is incorporated by reference except exhibits to such information that are incorporated by reference unless the exhibits are themselves specifically incorporated by reference. All such requests should be directed to William E. Nielsen, at Waste Technology Corp., 5400 Rio Grande Avenue, Jacksonville, Florida 32254, telephone number (904) 358-3812.
The Company is an electronic filer. The Commission maintains a web site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission, including all of the Company's filings with the Commission. The address of such site is (http://www.sec.gov).
ITEM 2. DESCRIPTION OF PROPERTY
IBC is the owner of the building located at 5400 Rio Grande Avenue, Jacksonville, Florida. The building contains approximately 62,000 square feet and is situated on eight (8) acres. IBC manufactures all of the Company's products at this location. The property has no mortgage, however, the Company's primary lender, Presidential Financial Corporation, has a security interest in the property as part of the collateral for the line of credit which it provides to the Company. See Item 6, Management's Discussion and Analysis of Financial Condition and Results of Operations.
The Company has no plans for any material renovations or additions to its current facilities. The Company's buildings and property are well maintained and are adequately covered by insurance.
ITEM 3. LEGAL PROCEEDINGS
Except as described hereafter, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company which would have a result materially adverse to the Company. To the knowledge of management, no director, executive officer or affiliate of the Company or owner of record or beneficially owned interest of more than 5% of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
On June 5, 1998, a judgment (the "Judgment") was rendered against the Company's former wholly owned subsidiary, Ram Coating Technology Corporation ("Ram"), and Transamerica Premier Insurance Corporation ("Transamerica") in the amount of $360,194 in favor of L & A Contracting Company in the 19th Judicial District Court of the State of Louisiana in the case of L & A Contracting Company v. Ram Industrial Coatings, Inc., et al., Case No. 382,924, Division F. Transamerica had issued a performance and payment bond (the "Bond") for Ram in connection with the contract which was the subject of the action and which was the basis of the Judgment against Ram. The Company had agreed to indemnify Transamerica for any payments it was required to make pursuant to the Bond. Transamerica paid the Judgment as a result of the indemnification agreement and the Company was liable to Transamerica for the amount of the Judgment.
In July 2000, the Judgment was affirmed by the First Circuit Court of Appeal of the State of Louisiana. In December 2000, the Judgment was reaffirmed by the Supreme Court of the State of Louisiana. In February 2002, the Company reached an agreement with Transamerica to settle the amount due on the Judgment for $280,500 payable in installments beginning in August 2002. The agreement was finalized in August, 2002 and the Company reversed the excess accrued expense of $321,500 in the fourth quarter of 2002. As of October 31, 2003 the balance due on the settlement was $57,000 and this balance was paid in full in fiscal 2004.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter ending October 31, 2004.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's stock is presently traded on the OTC Electronic Bulletin Board of NASDAQ under the symbol WTEK.OB. As of December 31, 2004, the number of shareholders of record of the Company's Common Stock was approximately 500, and management believes that there are approximately 1,000 beneficial owners of Waste Tech's common stock.
The range of high and low bid quotations for the Company's common stock during the fiscal years ended October 31, 2004 and 2003, are set forth below.
Fiscal Year Ended October 31, 2004 High Low First Quarter $ 0.30 $ 0.19 Second Quarter 0.27 0.18 Third Quarter 0.27 0.20 Fourth Quarter 0.33 0.22 Fiscal Year Ended October 31, 2003 High Low First Quarter $ 0.30 $ 0.16 Second Quarter 0.25 0.17 Third Quarter 0.30 0.19 Fourth Quarter 0.31 0.22 |
The Company has paid no dividends since its inception. Other than the requirement of the Delaware Corporation law that dividends be paid out of capital surplus only, and that the declaration and payment of a dividend not render the Company insolvent, there are no restrictions on the Company's present or future ability to pay dividends.
The payment by the Company of dividends, if any, in the future, rests within the discretion of its Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements, its financial condition and other relevant factors. By reason of the Company's present financial status and its contemplated financial requirements, the Company does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future expansion of its business.
Recent Sales of Unregistered Securities
During the past three years ended October 31, 2004 the Company has not sold any unregistered securities.
Purchases of Equity Securities
During the fiscal year ended October 31, 2004, the Company, nor anyone on its behalf, repurchased any of the Company securities.
Securities authorized for issuance under equity compensation plans.
None
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
For the fiscal year ending October 31, 2004, consolidated sales were $6,581,460 compared to $5,460,147 in fiscal 2003, an increase of 20.5%. The higher sales were the result of more aggressive sales efforts and improved economic conditions.
The Company had net income of $186,370 in fiscal 2004 as compared to a net loss of $397,540 in fiscal 2003. Earnings per share were $.03 in fiscal 2004 versus a loss per share of $(.07) in 2003. The higher net income in fiscal 2004 was the result of higher unit sales of balers and conveyors, 13.8% above 2003, partially offset by lower gross profit on certain baler sales due to market pricing conditions. In fiscal 2003 the Company wrote down obsolete and slow moving inventory of over $250,000. After adjusting 2003 gross profit (adding back the inventory write-down) gross profit margins increased from 19.0% in 2003 to 21.1% in 2004. Selling and administrative expenses were higher by $21,504 in 2004 due to numerous items including an adjustment to profit sharing expense in 2003.
Financial Condition
The Company's net working capital at October 31, 2004, was $947,165 as compared to $767,504 at October 31, 2003.
On August 7, 2000, the Company entered into a line of credit agreement with Presidential Financial Corporation which allows the Company to borrow up to $500,000. The line of credit bears interest at the prime rate plus one percent (1%) plus certain service charges. This agreement has a one year term with an automatic renewal unless either of the parties to the agreement gives written notice to terminate the agreement at least sixty (60) days prior to the annual renewal date. The amount outstanding under the line of credit at October 31, 2004 was $9,246 and the additional available was $275,000.
The Company has no commitments for any material capital expenditures. Other than as set forth above, there are no unusual or infrequent events or transactions or significant economic changes which materially affect the amount of reported income from continuing operations. The Company believes that its cash, line of credit, and results of operations are sufficient to fund future operation.
The Company is unaware of any events or uncertainties which are reasonably likely to have a material impact on the Company's short-term or long-term liquidity or the net sales, revenues, or income from continuing operations.
The Company has no known or anticipated significant elements of income or loss that do not arise from the Company's continuing operations.
Off Balance Sheet Arrangements
The Company has no off balance sheet arrangements.
Inflation
The costs of the Company and its subsidiaries are subject to the general inflationary trends existing in the general economy. The Company believes that expected pricing by its subsidiaries for balers will be able to include sufficient increases to offset any increase in costs due to inflation.
This "Management's Discussion and Analysis" contains forward-looking statements within the meaning of Section 21B of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company's present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties, including, but not limited to, changes in general economic conditions and changing competition which could cause actual results to differ materially from those indicated.
ITEM 7. FINANCIAL STATEMENTS
The financial statements and supplementary data commence on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
Item 8A. CONTROLS AND PROCEDURES
Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As of the end of the period covered by this report, and under the supervision and with the participation of management, including its Chief Executive Officer/Chief Financial Officer, management evaluated the effectiveness of the design and operation of these disclosure controls and procedures. Based on this evaluation and subject to the foregoing, the Company's Chief Executive Officer/Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective in reaching a reasonable level of assurance of achieving management's desired controls and procedures objectives.
There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's fiscal quarter ended October 31, 2004 that have materially affected, or are reasonably likely to affect, the Company's internal control over financial reporting.
As part of a continuing effort to improve the Company's business processes management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.
Changes in Internal Controls
During the quarter ended October 31, 2004, there have not been any changes in the Company's internal controls that have materially affected or are reasonably likely to materially affect, the Company's internal controls over financial reporting.
ITEM 8B. OTHER INFORMATION
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Identification of Directors and Officers
The current executive officers and directors of the Company are as follows:
NAME POSITION
William E. Nielsen President, Chief Executive
Officer and Director
Morton S. Robson Executive Vice President,
Secretary, and Director
Ted C. Flood Director
Robert Roth Director
David B. Wilhelmy Vice President Sales & Marketing
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The Board of Directors is divided into three (3) classes of directors ("Class I", "Class II", and "Class III"), with each class having as nearly the same number of directors as practicable. Stockholders elect such class of directors, Class I, Class II, or Class III, as the case may be, to succeed such class directors whose terms are expiring, for a three (3) year term, and such class of directors shall serve until the successors are elected and qualify.
Officers of the Company serve at the pleasure of the Board of Directors.
Messrs, Nielsen, Robson and Roth are members of the Company's audit committee. Messrs, Robson and Roth are members of the compensation committee. The Company does not, at the present time, have an independent "financial expert", as that term is defined in the Sarbanes-Oxley Act of 2002, on the Board of Directors and the Audit Committee of the Company. As of the present time, Mr. Nielsen serves as the Company's financial expert. The Company has sought and continues to seek appropriate individuals to serve on the Board of Directors and the Audit Committee who will meet the requirements necessary to be an independent financial expert as well as to find other independent directors to serve on the Company's Board of Directors. The Company has been unable to find an independent financial expert and other independent directors because it does not have sufficient funds to obtain directors and officers insurance or compensate directors for their service.
During fiscal 2004 the Board of Directors met two times.
There are no family relationships between executive officers or directors of the Company. However, Robert Roth is the husband of Patricia B. Roth, and father of Steven F. Roth, major shareholders of the Company. SEE Item 12, "Certain Relationships and Related Transactions".
For so long as Patricia Roth and Steven Roth are the owners of more than one percent (1%) of the number of outstanding shares of Common Stock, the Company has agreed to use its best efforts to cause the election of Robert Roth as a member of the Board of Directors.
Except as noted above, there is no understanding or arrangement between any director or any other persons pursuant to which such individual was or is to be selected as a director or nominee of the Company.
Background of Executive Officers and Directors
The following is a brief account of the experience, during the past five years, of each director and executive officer of the Company:
William E. Nielsen, age 57, joined the Company in June 1994 as its Chief Financial Officer and was elected a Director on November 20, 1997. He was elected President and Chief Executive Officer on May 8, 2001. Prior to joining the Company, Mr. Nielsen acted as a financial consultant to Fletcher Barnum Inc., a privately held manufacturing concern, from October 1993 through June 1994. From 1980 through July 1993, he was the Vice President, Administration and Finance at Unison Industries, Inc. Mr. Nielsen received a BBA in Finance and an M.B.A. at Western Illinois University in 1969 and 1970, respectively.
Ted C. Flood, age 74, was elected as a Director of the Company in May, 1989. From February 27, 1993, until May 8, 2001, he served as President and Chief Executive Officer of the Company and President and Chief Executive Officer of IBC and CBM, the Company's wholly owned subsidiaries. From 1960 to 1972, he was President of Peabody Solid Waste Management Company (EZ Pack). From 1972 to 1975, Mr. Flood was a corporate Vice-President of marketing for Browning Ferris Industries. During the period from 1977 to 1988, he was the principal shareholder and President of Solid Waste Recovery Systems.
Morton S. Robson, age 81, was elected a Director and the Secretary of the Company in 1989. On February 23, 1993, he was elected Executive Vice President of the Company. Mr. Robson is the senior partner of the law firm of Robson & Miller, LLP, which acts as general counsel to the Company. Mr. Robson obtained an LLB degree from St. John's University School of Law.
Robert Roth, age 79, was elected as a Director of the Company on October 12, 1993. He is the Chairman of the Board and Treasurer of Georgetowne Electric, Ltd., and a Director of Keystone Insurance Company, both publicly held companies. For more than the past five (5) years, in addition to being the Chairman of the Board and Treasurer of Georgetowne
Electric, Ltd., he has been the President and Chief Executive Officer of Browning Weldon Corporation, a privately held financial company.
David B. Wilhelmy, age 50, joined the Company in September 2002 as Vice President of Sales and Marketing. Prior to joining the Company, Mr. Wilhelmy was Vice President/Sales and Acquisitions for Consolidated Packaging Systems. CPS was a joint venture with Gryphon Investors to consolidate the packaging systems distribution industry, from January 2000 through August 2002. Mr. Wilhelmy was the Southeast Regional Vice President of Sales and Marketing for Packaging for Unisource Distribution Company from 1993 to 2000. Mr. Wilhelmy received a Bachelor Degree in Business Administration from Madison University.
Involvement in Certain Legal Proceedings
To the knowledge of the Company's management, during the past five years, no present or former director, executive officer, affiliate or person nominated to become a director or an executive officer of the Company:
(1) Filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Was the subject of any order, judgment, or decree not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his or her involvement in any type of business, securities, or banking activities;
(4) Was found by a court of competent jurisdiction in a civil action by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any Federal or State Securities laws, and the judgment in such civil action of finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated.
Section 16 (a) Beneficial Ownership Reporting Compliance
In fiscal 2004, the Company, its officers, directors, and beneficial owners of more than ten percent of the company's common stock were not delinquent in filing of any of its Form 3, 4, and 5 reports.
Code of Ethics
The Company has adopted a code of business conduct and ethics for directors, officers (including the Company's principal executive officer, principal financial officer and controller) and employees, known as the Standards of Business Conduct. The Standards of Business Conduct are available on the Company's website at http://www.intl-baler.com. Stockholders may request a free copy of the Standards of Business Conduct from:
Waste Technology Corporation Attention: William E. Nielsen 5400 Rio Grande Avenue Jacksonville, Florida 32254 (904)358-3812
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation awarded to, earned by or paid to, the Company's Chief Executive Officer and each of the Company's executive officers whose compensation exceeded $100,000 per annum for services rendered in all capacities to the Company and its subsidiaries during fiscal years ended October 31, 2004, October 31, 2003, and October 31, 2002(1):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM AWARDS
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NAME AND YEAR SALARY BONUS OTHER ANNUAL NUMBER OF ALL OTHER
PRINCIPAL POSITION ($) ($) COMPENSATION OPTIONS COMPENSATION
($)
------------------ ---- ------ ----- ------------ --------- ------------
William E. Nielsen 2004 96,800 -0- -0- -0- -0-
President & CEO 2003 92,854 -0- -0- -0- -0-
2002 80,021 -0- -0- 250,000 -0-
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None of the company's other Executive Officers earned compensation in fiscal 2002, 2003 and 2004 in excess of $100,000 for services rendered to the Company in any capacity. No Director of the Company received remuneration for services as a Director during fiscal 2004.
Option Grants and Exercises in Last Fiscal Year
No options were granted or exercised during fiscal 2004 by the Company's Chief Executive Officer or any of the Company's most highly compensated executive officers whose compensation exceeded $100,000 for Fiscal 2004.
Compensation Committee Interlocking and Insider Participation
There are no interlocking relationships between any member of the Company's Compensation Committee and any member of the compensation committee of any other company, nor has any such interlocking relationship existed in the past. No member of the Compensation Committee is or was formerly an officer or an employee of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth certain information with respect to the ownership of the Company's Common Stock as of December 31, 2004 by (i) those persons known by the Company to be the beneficial owners of more than 5% of the total number of outstanding shares of Common Stock, (ii) each director and executive officer, and (iii) all officers and directors as a group as of December 31, 2004 with these computations based on 5,516,349 shares of common stock being outstanding at that time.
Amount of Approximate
Name and Address of Beneficial Percent
Beneficial Owner Ownership of Class
Ted C. Flood 711,732(2) 12.9%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
William E. Nielsen 592,641(3) 10.7%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
Morton S. Robson 586,854(4) 10.6%
530 Fifth Avenue
New York, New York 10036
Robert Roth 318,638(5) 5.8%
Georgetown Electric, Ltd
Unit 17, 2501 W. Third Street
Wilmington, Delware 19805
Cosimo Tacopino 805,240(6) 14.6%
145 Connecticut Street
Staten Island, New York 10207
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2 Consists of 711,732 shares held directly.
3 Consists of 342,641 shares held directly and options to purchase 250,000 shares.
4 Consists of 78,454 shares held directly; 2400 shares held as custodian for his minor son; 505,000 shares held by Robson & Miller, of which Mr. Robson is the senior partner; and 1,000 shares held by the Robson & Miller pension plan. Excludes 89,728 shares held by Kenneth N. Miller, a partner of Mr. Robson who is the beneficial and record owner of such shares.
5 Includes shares owned by family members of Robert Roth as follows: his wife, Patricia B. Roth (114,182), his son, Steven F. Roth (83,968), his daughter, Kathie Cecile Roth (10,000O, and his son Charles B. Roth and his wife Marta Roth (107,188).
6 Consists of 211,880 shares held directly; 475,660 shares owned jointly with his wife, Erma Tacopino, 11,000 shares held directly by Erma Tacopino and 106,700 shares held by son Michael Tacopino.
DIRECTORS AND OFFICERS
AMOUNT OF APPROXIMATE
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
William E. Nielsen 92,6417 10.7%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
Ted C. Flood 711,7328 12.9%
5400 Rio Grande Avenue
Jacksonville, Florida 32254
Morton S. Robson 586,8549 10.6%
530 Fifth Avenue
New York, New York 10036
Robert Roth 318,63810 5.8%
Georgetown Electric, Ltd.
Unit 17, 2501 W. Third Street
Wilmington, Delaware 19805
David B. Wilhelmy 166,900 3.0%
5400 Rio Grande Ave.
Jacksonville, FL 32254
Waste Technology Corporation 256,33811 4.6%
Profit Sharing Trust
All Officers and Directors 2,633,103 47.7%
as a Group (5 persons)
|
7 Consists of 342,641 shares held directly and options to purchase 250,000 shares.
8 Consists of 711,732 shares held directly.
9 Consists of 78,454 shares held directly; 2,400 shares held as custodian for his minor son; 505,000 shares held by Robson & Miller, LLP of which Mr. Robson is the senior partner; and 1,000 shares held by the Robson & Miller pension plan. Excludes 89,728 shares held by Kenneth N. Miller, a partner of Mr. Robson who is the beneficial and record owner of such shares.
10 Includes shares owned by family members of Robert Roth as follows: his wife, Patricia B. Roth (114,182), his son, Steven F. Roth (83,968), his daughter, Kathie Cecile Roth (10,000), and his son Charles B. Roth and his wife Marta Roth (107,188).
11 Employees' Profit Sharing Trust of which Messrs. Robson and Nielsen are Trustees.
Changes In Control
To the knowledge of the Company's management, there are no present arrangements or pledges of the Company's securities which may result in a change in control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
Loans to Officers and Directors
On December 29, 1995, the Company transferred a life insurance policy, covering the life of its then President, Ted C. Flood, to Mr. Flood in exchange for a note receivable. The amount of the note receivable from Mr. Flood was equal to the amount of the cash surrender value of the policy at the time of the transfer. Mr. Flood also executed promissory notes to the Company for the subsequent premium payments on the policy which were made by the Company. Interest on these notes accrued at 6% per annum. No principal or interest was due until proceeds from the policy were realized.
In March 2003, the Company reached an agreement with Mr. Flood for deferred compensation payments. The Company will make deferred compensation payments with an initial present value of $463,000 payable over a ten year period. In addition, Mr. Flood agreed to exchange the life insurance policy for the notes he owed to the Company. In June 2003, the life insurance policy was transferred to the Company and the Company surrendered the policy for the cash value of $306,000. This amount was applied to satisfy the notes receivable from Mr. Flood.
As of the date of this report, Morton S. Robson, the Company's Executive Vice President and Secretary and a Director and Corporate Counsel, was indebted to the Company. The transaction giving rise to the obligations owed to the Company by Mr. Robson is described below.
On April 12, 1990, four individuals, including Leslie N. Erber, then Chairman of the Board and President of the Company, and Morton S. Robson entered into an agreement with a group of dissident shareholders to purchase an aggregate of 294,182 shares at a purchase price of $4.00 per share. Mr. Erber and Mr. Robson each purchased 134,951 shares of stock. The dissidents had previously filed Forms 14B with the Commission indicating their intention of seeking control of the Company through the solicitation of consents from shareholders to a reduction in the number of directors and the replacement of the present directors with directors nominated by the dissident group. As part of the agreement to purchase the shares, the dissident shareholders who were selling their shares agreed that, for a period of ten years, they would not seek to obtain control of the Company or solicit proxies in opposition to the Board of Directors on any matter.
Messrs. Erber and Robson and the two other persons borrowed the aggregate amount of $1,244,328 from the Company in 1990 and 1991 to
purchase these shares. Most of the loan (91.5%) was made in equal amounts to Messrs. Erber and Robson. Those advances were secured by a lien on the 294,182 shares of Common Stock. In addition, Mr. Erber agreed to transfer to the Company as additional collateral, 156,000 shares of stock of the Company. Approximately one-half of this sum was advanced on April 12, 1990 and the balance during 1991. In April 1990, promissory notes evidencing the first half of the funds were executed by these persons bearing interest at the rate of 9% per annum and payable in three annual installments commencing on April 12, 1991. Thereafter, the other members of Waste Tech's Board of Directors unanimously extended the payment due date of each payment for one (1) year. New promissory notes to Waste Tech were thereafter executed for the full amount of the advance, payable in three annual installments commencing April 12, 1992. The notes were secured by a lien on all of these shares which were acquired. In June 1992, $200,000 of the principal amount of these loans was repaid to the Company through a sale of 100,000 of the acquired shares at $2.00 per share. Payment of the remainder of the principal due in 1993 and 1994, together with the accrued interest, was subsequently deferred for two years by the Company's Board of Directors, and deferred again until 2001.
Thereafter, Mr. Erber, in connection with his termination as President of the Company, turned in all of his stock in to the Company and IBC in full satisfaction of his obligation of $698,527.
As of the end of fiscal 2004, the Company owed Mr. Robson's law firm the sum of $594,210 for legal fees and accrued interest. The Company was granted a security interest in the shares of the Company's stock acquired by Robson & Miller by its exercise of an option as collateral security for repayment of Mr. Robson's outstanding loan. As of October 31, 2004, Mr. Robson still owed the Company $427,364 together with accrued interest. The largest aggregate outstanding loan balance of Mr. Robson's during the past two (2) fiscal years was $982,550.
Legal Services
The law firm in which Morton S. Robson, the Secretary and a Director of the Company, is a partner have provided services to the Company in fiscal 2004. During fiscal 2004, Mr. Robson's law firm received $19,822 from Waste Tech as payment for legal services rendered. As of the end of fiscal 2004, accrued but unpaid legal fees and accrued interest due to Mr. Robson's law firm from the Company amounted to $594,210.
Robert Roth
Members of the immediate family of Robert Roth, one of the Directors of the Company, own an aggregate of 6.2% of the Company's outstanding and issued stock. The shares of stock are owned by his wife, Patricia B. Roth (114,182), his son, Steven F. Roth (83,968), his daughter, Kathie Cecile Roth (10,000) and his son Charles B. Roth and his wife, Marta Roth (107,188). Pursuant to the terms of an agreement dated May 11, 1993 between Patricia Roth, Steven Roth and Robert Roth, so long as Patricia
Roth and Steven Roth are the owners of more than one percent (1%) of the number of outstanding shares of Common Stock, the Company has agreed to use its best efforts to cause the election of Robert Roth as a member of the Board of Directors.
Parent Of Issuer
The Company has no parent.
ITEM 13. EXHIBITS
The Following Documents are Filed As Part of this Report
1. Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
2. Exhibits
The following exhibits are filed with, or incorporated by reference into this report.
Exhibit
Number Description
2.1 Agreement of Merger between International Baler Corporation and
IBC Merger Corporation dated June 24, 1997 (Incorporated by
reference to Exhibit 10.39 to Company's Current Report on Form
8-K, Date of Report June 27, 1997[Report on Form 8-K June 27,
1997']).
2.2 Certificate of Merger of International Baler Corporation into IBC
Merger Corporation (Incorporated by reference to Exhibit 10.39.1
to Report on Form 8-K June 27, 1997).
2.3* Certificate of Merger merging Consolidated Baling Machine
Company, Inc. and Florida Waste Systems, Inc. Into International
Baler Corporation filed July 30, 2004.
3.1 Articles of Incorporation and by-laws of Waste Technology Corp.
and amendments (Incorporated by reference to the Company's
Registration Statement on Form S-18 filed in April, 1985,
Registration No. 2-97045[the"Statement on Form S-18"])
3.2 Certificate of Incorporation of International Baler Corporation
f/k/a National Compactor & Technology Systems, Inc. And all
amendments thereto (Incorporated by reference to Exhibit 3.3 to
Form 8 Amendment No.1 to the Company's Annual Report on Form 10-K
for the year ended October 31, 1989["Amendment No. 1 to 1989 Form
10-K"]).
3.3 By-laws of International Baler Corporation (Incorporated by
reference to Exhibit 3.4 to Amendment No. 1 to 1989 Form 10-K).
3.4 Certificate of Incorporation of Consolidated Baling Machine Co.,
Inc. f/k/a Solid Waste Recovery Test Center, Inc. And all
amendments thereto (Incorporated by reference to Exhibit 3.5 to
Amendment No. 1 to 1989 Form 10-K).
23
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3.5 By-laws of Consolidated Baling Machine Co., Inc. (Incorporated by
reference to Exhibit 3.6 to Amendment No. 1 to 1989 Form 10-K).
3.7 Certificate of Amendment to Certificate of Incorporation of Waste
Technology Corp. Filed on November 4, 1991(Incorporated by
reference to Exhibit 3.1.1 to Company's Annual Report on Form 10-K
for the year ended October 31, 1991[the "1991 Form 10-K"]
3.8 Certificate of Amendment to Certificate of Incorporation of Waste
Technology Corp. Filed on November 21, 1991(Incorporated by
reference to Exhibit 3.1.2 to Company's 1991 Form 10-K).
3.9 Revised and restated by-laws of Waste Technology Corp.
(Incorporated by reference to Exhibit 3.2 to Company's 1991 Form
10-K).
3.10 Amendment to revised and restated by-laws of Waste Technology
Corp. (Incorporated by reference to Exhibit 3.2.1 to Company's
1991 Form 10-K).
3.11 Certificate of Incorporation of Waste Tech Real estate Corp.
(Incorporated by reference to Exhibit 3.7 to Company's Annual
Report on Form 10-K for year ended October 31, 1990).
4.1 1995 Stock Option Plan (Incorporated by reference to Exhibit 4.1
to Annual Report on Form 10-K for the year ended October 31,
1995).
10.1 Agreement between the Company and International Baler Corp. dated
September 8, 1986, relating to acquisition of assets and stock
(Incorporated by reference to Exhibit 10.1to Statement on Form
S-18).
10.2 Agreement dated February 3, 1987, between the Company and N. J.
Cavagnaro & Sons and Machine Corp., Nicholas J. Cavagnaro Jr.,
George L. Cavagnaro, and Pauline L. Cavagnaro together with the
exhibits annexed thereto for the acquisition of N. J. Cavagnaro &
Sons Machine Corp. (Incorporated by reference to Exhibit 10.2 to
Company's Annual Report on Form 10-K for the year ended October
31, 1987 [the "1987 Form 10-K"]).
10.3 Non-Competition Agreement dated February 3, 1987 between the
Company and N. J. Cavagnaro & Sons Machine Corp., George L.
Cavagnaro, Nicholas J. Cavagnaro, Jr. and Pauline L.
Cavagnaro.(Incorporated by reference to Exhibit 10.3 to 1987 Form
10-K).
10.4 Severance Agreement between International Baler Corporation and
Ted C. Flood dated May 17, 1989, and agreed to June 3, 1989
(Incorporated by reference to Exhibit 10.6 to Current Report on
Form 8-K, Date of Report, June 1, 1989 ["Report on Form 8-K June
1, 1989']).
10.5 Waste Technology Corp. Profit Sharing Plan including Agreement of
Trust (Incorporated by reference to Exhibit 10.7 to Report on Form
8-K June 1, 1989).
24
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10.6 Stock Purchase Agreement dated April 12, 1990 (Incorporated by
reference to Exhibit 10.11 to Current Report on Form 8-K, Date of
report, April 12, 1990 ["Report on Form 8-K April 12, 1990']).
10.7 Standstill Agreement dated April 12, 1990 Incorporated by
reference to Exhibit 10.12 to Report on Form 8-K April 12, 1990).
10.8 Form of Deferred Compensation Agreement for Ted C. Flood
(Incorporated by reference to Exhibit 10.25 to the Company's
Annual Report on Form 10K for the year ended October 31, 1991).
10.9 Agreement between Waste Technology Corp. and Charles B. Roth,
dated June 25, 1992 (Incorporated by reference to Exhibit 10.30 to
Company's Current Report on Form 8-K, Date of Report June 25,
1992).
10.10 Agreement between Waste Technology Corp., International Baler
Corp. and Leslie N. Erber dated February 23, 1993( Incorporated by
reference to Exhibit 10.31 to Company's Current Report on Form
8-K, Date of Report May 7, 1993 ["Report on Form 8-K May 7,
1993"]).
10.11 Agreement between Waste Technology Corp. and Charles Roth dated
May 7, 1993 (Incorporated by reference to Exhibit 10.32 to Report
on Form 8-K May 7, 1993).
10.12 Agreement between Waste Technology Corp., Patricia Roth, Steven
Roth and Robert Roth dated May 10, 1993 (Incorporated by reference
to Exhibit 10.33 to Report on Form 8-K May 7, 1993).
10.13 Agreement between International Baler Corporation and Ted C. Flood
dated as December 29, 1995 (Incorporated by reference to Exhibit
10.38 to the Company's Annual report on Form 10-KSB for the year
ended October 31, 1996 [the "1996 Form 10-KSB"]).
10.14 Promissory Note made by Ted C. Flood to the order of International
Baler Corporation dated December 29, 1995 (Incorporated by
reference to Exhibit 10.38.1 to the 1996 Form 10-KSB).
10.15 Promissory Note made by Ted C. Flood to the order of Waste
Technology Corp. dated April 5, 1996 (Incorporated by reference to
Exhibit 10.38.2 to the 1996 Form 10-KSB).
10.16 Promissory Note made by Ted C. Flood to the order of Waste
Technology Corp. dated October 5, 1996(Incorporated by reference
to Exhibit 10.38.3 to the 1996 Form 10-KSB).
10.17 Asset Purchase Agreement between International Press and Shear
Corporation and IPS Balers Inc. together with exhibits
(Incorporated by reference to Exhibit 10.41 to Company's Current
Report on Form 8-K, Date of Report December 10, 1999).
25
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14 Code of Ethics (Incorporated by reference to Exhibit 14 to the
Company's Annual Report on Form 10-KSB for the year ended October
31, 2003).
21* List of the Company's subsidiaries.
31* Certification of Chief Executive Officer/Chief Financial Officer
pursuant to Rule 13a-14(a)/15d-14(a)
32* Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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* Exhibit filed with this Report.
ITEM 14 PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The following table presents the fees for professional audit services rendered by KPMG LLP for the audit of the Company's annual consolidated financial statements for the fiscal years ended October 31, 2004 and October 31, 2003, and fees for other services rendered by KPMG LLP during those periods:
Fee Category Fiscal 2004 Fiscal 2003 Audit Fees $ 67,500 $ 58,000 Audit-Related Fees 0 0 Tax Fees 12,000 11,000 All Other Fees 0 0 Total Fees $ 79,500 $ 69,000 |
Audit fees include fees related to the services rendered in connection with the annual audit of the Company's consolidated financial statements, the quarterly reviews of the Company's quarterly reports on Form 10-QSB and the reviews of and other services related to registration statements and other offering memoranda.
Audit-related fees are for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of the Company's financial statements.
Tax Fees include (i) tax compliance, (ii) tax advice, (iii) tax planning and (iv) tax reporting.
All Other Fees includes fees for all other services provided by the principal accountants not covered in the other categories such as litigation support, etc.
All of the services for 2004 and 2003 were performed by the full-time, permanent employees of KPMG LLP
All of the 2004 services described above were approved by the Audit Committee pursuant to the SEC rule that requires audit committee pre-approval of audit and non-audit services provided by the Company's independent auditors to the extent that rule was applicable during fiscal year 2004. The Audit Committee has considered whether the provisions of such services, including non-audit services, by KPMG LLP is compatible with maintaining KPMG LLP's independence and has concluded that it is.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
WASTE TECHNOLOGY CORP.
(Registrant)
By: /s/ William E. Nielsen
-------------------------------
William E. Nielsen, President
Dated: January 27, 2005
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In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in their capacities and on the dates indicated.
Signature Title Date
/s/ William E. Nielsen Chief Executive Officer January 27, 2005
---------------------- Principal Financial and
William E. Nielsen Accounting Officer and
Director
/s/ Ted C. Flood Director January 27, 2005
----------------------
Ted C. Flood
/s/ Morton S. Robson Director January 27, 2005
----------------------
Morton S. Robson
/s/ Robert Roth Director January 27, 2005
----------------------
Robert Roth
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WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Consolidated Financial Statements
October 31, 2004 and 2003
(With Independent Auditors' Report Thereon)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Waste Technology Corp.:
We have audited the accompanying consolidated balance sheets of Waste Technology Corp. and Subsidiaries as of October 31, 2004 and 2003 and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Waste Technology Corp. and Subsidiaries as of October 31, 2004 and 2003 and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
Jacksonville, FL
December 30, 2004
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
October 31, 2004 and 2003
ASSETS 2004 2003
------------ ------------
Current assets:
Cash and cash equivalents $ 245,553 99,495
Accounts receivable, net of allowance for doubtful accounts
of $50,000 and $40,000 for 2004 and 2003, respectively 984,128 654,624
Inventories (note 4) 1,104,936 1,287,647
Prepaid expenses and other current assets 63,831 58,519
------------ ------------
Total current assets 2,398,448 2,100,285
------------ ------------
Property, plant, and equipment, at cost, net (note 5) 488,630 517,836
Other assets:
Due from officer (note 3) 81,528 90,768
Other assets 3,246 3,246
------------ ------------
Total other assets 84,774 94,014
------------ ------------
Total assets $ 2,971,852 2,712,135
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving promissory note (note 6) $ 9,246 89,430
Accounts payable 515,485 265,652
Accrued liabilities 428,787 384,502
Current portion of deferred compensation (note 3) 67,000 66,831
Accrued legal judgment (note 7) -- 57,000
Customer deposits 430,765 469,366
------------ ------------
Total current liabilities 1,451,283 1,332,781
------------ ------------
Deferred compensation, net of current portion (note 3) 353,321 389,928
Stockholders' equity (notes 3 and 9):
Common stock, $0.01 par value. Authorized 25,000,000 shares;
issued 6,179,875 shares in 2004 and 2003 61,799 61,799
Preferred stock, $0.0001 par value. Authorized 10,000,000
shares; none issued -- --
Additional paid-in capital 6,347,187 6,347,187
Accumulated deficit (4,434,092) (4,620,462)
------------ ------------
1,974,894 1,788,524
Less treasury stock, 663,526 shares in 2004 and 2003, at cost 419,306 419,306
Less notes receivable from stockholders, net (note 3) 388,340 379,792
------------ ------------
Total stockholders' equity 1,167,248 989,426
Commitments and contingencies (note 7)
------------ ------------
Total liabilities and stockholders' equity $ 2,971,852 2,712,135
============ ============
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See accompanying notes to consolidated financial statements
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended October 31, 2004 and 2003
2004 2003
------------ ------------
Net sales (note 11) $ 6,581,460 5,460,147
Cost of sales 5,207,035 4,670,290
------------ ------------
Gross profit 1,374,425 789,857
------------ ------------
Operating expenses:
Selling 543,315 535,710
General and administrative 610,544 596,645
------------ ------------
1,153,859 1,132,355
------------ ------------
Income (loss) from operations 220,566 (342,498)
------------ ------------
Other income (expense):
Interest income (note 3) 17,108 18,459
Interest expense (56,691) (66,319)
Other 5,387 (7,182)
------------ ------------
(34,196) (55,042)
------------ ------------
Income (loss) before income taxes 186,370 (397,540)
Income taxes (note 8) -- --
------------ ------------
Net income (loss) $ 186,370 (397,540)
============ ============
Basic and diluted earnings (loss) per share $ 0.03 (0.07)
Weighted average number of shares outstanding 5,516,349 5,516,349
|
See accompanying notes to consolidated financial statements.
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity Years ended October 31, 2004 and 2003
COMMON STOCK
PAR VALUE $0.01 AUTHORIZED
25,000,000 SHARES TREASURY STOCK
----------------------- ----------------------- NOTES
NUMBER ADDITIONAL RECEIVABLE
OF SHARES PAID-IN ACCUMULATED NUMBER FROM
ISSUED PAR ISSUED CAPITAL DEFICIT OF SHARES COST STOCKHOLDERS TOTAL
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, October 31, 2002 6,179,875 $ 61,799 6,347,187 (4,222,922) 663,526 $ (419,306) (367,241) 1,399,517
Net increase of note
receivable from
stockholders (note 3) -- -- -- -- -- -- (12,551) (12,551)
Net loss -- -- -- (397,540) -- -- -- (397,540)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, October 31, 2003 6,179,875 61,799 6,347,187 (4,620,462) 663,526 (419,306) (379,792) 989,426
Net increase of note
receivable from
stockholders (note 3) -- -- -- -- -- -- (8,548) (8,548)
Net income -- -- -- 186,370 -- -- -- 186,370
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, October 31, 2004 6,179,875 $ 61,799 6,347,187 (4,434,092) 663,526 $ (419,306) (388,340) 1,167,248
========== ========== ========== ========== ========== ========== ========== ==========
|
See accompanying notes to consolidated financial statements
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended October 31, 2004 and 2003
2004 2003
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 186,370 (397,540)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 29,206 40,424
Changes in assets and liabilities:
Accounts receivable (329,504) (104,840)
Inventories 182,711 250,001
Prepaid expenses and other current assets (5,312) (43,915)
Accounts payable 249,833 (22,515)
Accrued liabilities, deferred compensation,
and accrued legal judgment (49,153) (169,273)
Customer deposits (38,601) 61,740
------------ ------------
Net cash provided by (used in) operating activities 225,550 (385,918)
------------ ------------
Cash flows from investing activities:
Net investment in notes receivable from stockholders 692 308,490
Purchases of property and equipment -- (24,978)
------------ ------------
Net cash provided by investing activities 692 283,512
------------ ------------
Cash flows from financing activities:
Net (payments) drawings from revolving promissory note (80,184) 41,271
------------ ------------
Net cash (used in) provided by financing activities (80,184) 41,271
------------ ------------
Net increase (decrease) in cash and cash equivalents 146,058 (61,135)
Cash and cash equivalents at beginning of year 99,495 160,630
------------ ------------
Cash and cash equivalents at end of year $ 245,553 99,495
============ ============
Supplemental cash flow information:
Cash paid for interest $ 23,367 38,208
============ ============
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See accompanying notes to consolidated financial statements.
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(1) NATURE OF BUSINESS
Waste Technology Corp. and its wholly owned subsidiaries (the Company) manufacture baling equipment which utilize mechanical, hydraulic, and electrical mechanisms to compress a variety of materials into bales. The Company's customers include plastic recycling facilities, paper mills, textile mills, and paper recycling facilities throughout the United States, Asia, and South America.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of Waste Technology Corp. and all of its wholly owned subsidiaries. Intercompany balances and significant intercompany transactions have been eliminated in consolidation.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
(C) CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, bank demand accounts and money market accounts having original maturities of less than three months.
(D) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method.
(E) PROPERTY, PLANT, AND EQUIPMENT
The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed on the double-declining balance and straight-line methods over the estimated lives of 5-7 years for machinery and equipment and 31 years for buildings.
On November 1, 2002, the Company adopted SFAS No 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No 144 requires that long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.
F-6 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(F) INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
(G) REVENUE RECOGNITION
The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss.
(H) EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings (loss) per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be antidilutive.
(I) STOCK-BASED COMPENSATION
The Company accounted for its stock option plans in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. The Company issued no stock options during the periods ending October 31, 2004 and 2003.
The Company has adopted the disclosure only provisions of SFAS No.
123. Since the Company has not issued any stock options and has not
had any stock options vesting during fiscal 2004 or 2003, reported net
income (loss) is equal to proforma net income (loss) as determined
under the provisions of SFAS No. 123.
(J) BUSINESS REPORTING SEGMENTS
Based on the information monitored by the Company's operating decision makers to manage the business, the Company has identified that its operations are within one reportable segment. Accordingly, financial information on industry segments is omitted because, apart from the principal business of manufacturing baling machines, the Company has no other reportable segments.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term mature of these assets and liabilities. The carrying amounts of deferred compensation and the revolving promissory note approximate fair value. Management estimates fair value based on current rates available to the Company for loans with similar maturities.
F-7 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(3) RELATED PARTY LOAN AND NOTES RECEIVABLE
On April 12, 1990, four individuals, including the former chairman of the board and executive vice president, general counsel, secretary and director of the Company, entered into an agreement with a group of dissident shareholders to purchase an aggregate of 294,182 shares of the Company's common stock at a purchase price of $4 per share. The former chairman and the general counsel each purchased 134,591 shares of common stock and the other two individuals purchased an aggregate of 25,000 shares.
On July 15, 1991, the purchase of shares was finalized by the payment to the selling shareholders of the balance of the purchase price plus accrued interest. The financing of the transactions was paid with funds borrowed from the Company with the unanimous approval of the Company's board of directors. The four individuals executed promissory notes in favor of the Company, originally payable in three annual installments due July 15, 1992-1994 plus accrued interest from July 15, 1991 at the rate of 9% per annum. The former chairman's promissory note was satisfied in 1993. The Company extended the initial installment date for the general counsel to begin on July 15, 1997. No payments were made during the years ended October 31, 2004 and 2003. The debt is collateralized by a lien on the 134,591 shares of the Company's common stock and a personal guarantee and the guarantee of general counsel's law firm to the extent of his loan. On June 13, 1995, the general counsel and his law firm exercised their option to purchase 250,000 shares of Waste Technology Corp. common stock at $1.00 per share, whereby, the Company reduced the legal fees payable to the law firm in lieu of cash. These shares are also being held as collateral for the note receivable from the general counsel.
During 1997, the general counsel and his law firm authorized the Company to offset accrued legal fees against the note receivable from the general counsel at such time as the board of directors shall determine. Accordingly, notes receivable from the general counsel, net of accrued legal fees of $388,340 and $379,792, are presented as a reduction of stockholders' equity at October 31, 2004 and 2003, respectively.
On December 29, 1995, the Company transferred a life insurance policy, covering the life of its former president, in exchange for a note receivable. The amount of the note receivable from the former president is equal to the amount of the cash surrender value of the policy at the time of the transfer. Interest accrued at the rate of 6% per annum. For 2002, no principal or interest was due until proceeds from the policy were realized. During 2003, the former president signed over the life insurance policy to the Company, which then cashed in the policy and used the proceeds to reduce the note receivable from the former president. The note receivable from the former president was $96,366 and $105,134 at October 31, 2004 and 2003, respectively.
The Company has a deferred compensation agreement with the former president of the Company for deferred compensation payments. The Company will make deferred compensation payments with a present value of $420,321, payable over the next nine years, a portion of the deferred compensation payments will be used to repay the outstanding note receivable discussed above.
The consolidated statements of operations includes interest income on officer and director notes receivable of $38,122 and $43,351 for fiscal 2004 and 2003, respectively. Legal expenses to the general counsel and his law firm were $19,822 and $20,395 for fiscal 2004 and 2003, respectively.
F-8 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(4) INVENTORIES
Inventories consisted of the following:
2004 2003
------------ ------------
Finished products $ 166,137 219,627
Work in process 510,540 569,474
Raw materials 428,259 498,546
------------ ------------
$ 1,104,936 1,287,647
============ ============
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During the years ended October 31, 2004 and 2003, the Company identified and wrote-off approximately $37,000 and $250,000 of slow moving and obsolete inventory. This inventory is no longer used in the Company's current manufactured models.
(5) PROPERTY, PLANT, AND EQUIPMENT
The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization:
2004 2003
------------ ------------
Land $ 77,304 77,304
Buildings and improvements 911,158 911,158
Machinery and equipment 793,421 793,421
Vehicles 95,327 95,327
------------ ------------
1,877,210 1,877,210
Less accumulated depreciation 1,388,580 1,359,374
------------ ------------
$ 488,630 517,836
============ ============
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Depreciation and amortization expense was $29,206 and $40,424 in fiscal 2004 and 2003, respectively.
(6) REVOLVING PROMISSORY NOTE
In August 2000, the Company entered into a line of credit agreement which allows the Company to borrow up to the lesser of 80% of eligible receivables or $500,000. The line of credit bears interest at prime plus 1% (5.75% at October 31, 2004) plus certain service charges and expires in August 2005. The line of credit had an outstanding balance of $9,246 and $89,430 at October 31, 2004 and 2003, respectively. The unused line of credit at October 31, 2004 was approximately $275,000.
F-9 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(7) COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in the ordinary course of business, some of which are substantial. While any litigation contains an element of uncertainty, management, based upon discussion with the Company's general counsel and other attorneys acting on behalf of the Company, presently believes, except for the legal judgment discussed below, that the outcome or cost of defending such proceedings or claims individually and in the aggregate, which are pending or threatened, will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows.
In August 2002, the Company reached an agreement with an insurance carrier to settle an amount due on a previously settled legal judgment in the sum of $280,000. The agreed upon settlement was payable in monthly installments and was fully paid during April 2004.
(8) INCOME TAXES
The differences between income taxes as provided at the federal statutory tax rate of 34% and the Company's effective rate are as follows:
2004 2003
------------ ------------
Expected federal income tax expense
(benefit) at statutory rate $ 63,000 (135,000)
State income tax expense (benefit),
net federal income tax effect 7,000 (22,000)
Change in valuation allowance (70,000) 157,000
------------ ------------
Income taxes $ -- --
============ ============
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The Company files consolidated federal and state income tax returns with its subsidiaries. The net change in the total valuation allowance for the years ended October 31, 2004 and 2003 was $(70,000) and $157,000, respectively. Realization of net deferred tax assets is dependent on generating sufficient taxable income in the future. Based on current and anticipated future economic conditions, management cannot ascertain when it will become more likely than not that any portion of the net deferred tax asset will be realized.
F-10 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
The significant components of the net deferred income tax assets at October 31, 2004 and 2003 are as follows:
2004 2003
------------ ------------
Reserves and allowances $ 180,000 170,000
Property, plant, and equipment 75,000 85,000
General business credit carryforwards 15,000 15,000
Net operating loss carryforwards 1,226,000 1,296,000
Other 60,000 60,000
------------ ------------
1,556,000 1,626,000
Less valuation allowance 1,556,000 1,626,000
------------ ------------
Net deferred income taxes $ -- --
============ ============
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Net federal operating loss carryforwards for income tax purposes are approximately $3,200,000 and expire in years 2007 through 2024. The Company has an alternative minimum tax credit carryforward of approximately $30,000.
(9) STOCK OPTIONS
In March 1994 and February 1993, the board of directors issued 550,000 and 700,000 nonqualified stock options, respectively, to purchase 550,000 and 700,000 shares, respectively, of the Company's common stock at $0.50 per share. As of October 31, 2004 all shares under those plans have been cancelled. In June 2002, the Company grants 250,000 nonqualified stock options to purchase shares of the Company's common stock. These options, which vested immediately, have an exercise price of $0.30 and a term of 10 years. The options or shares purchased thereunder may be registered pursuant to the Securities Act of 1933. The Company has no remaining authorized shares available for grant under existing stock option plans.
A summary of the status of the Company's stock options is presented below:
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
------------ ------------
Outstanding, October 31, 2002 500,000 $ 0.40
Canceled (200,000) 0.50
Issued -- --
------------
Outstanding and exercisable, October 31, 2003 300,000 0.33
Canceled (50,000) 0.50
Issued -- --
------------
Outstanding and exercisable, October 31, 2004 250,000 $ 0.30
============
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The outstanding stock options at October 31, 2004, have a remaining contractual term of 8 years.
F-11 (Continued)
WASTE TECHNOLOGY CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements October 31, 2004 and 2003
(10) EMPLOYEES' BENEFIT PLAN
The Company has a defined contribution plan and profit sharing program for its employees. The Company made no contributions to the plan in 2004 or 2003.
(11) EXPORT SALES
Export sales were approximately 10% and 23% for the years ended October 31, 2004 and 2003, respectively. The principal international markets served by the Company, include Canada, China, United Kingdom, India, Korea, Japan, Russia, and Brazil. In 2003, the Company had a percentage of total net sales of over 11% to Brazil.
DELAWARE
The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES: "CONSOLIDATED BALING MACHINE COMPANY, INC.", A FLORIDA LIMITED LIABILITY PARTNERSHIP,
"FLORIDA WASTE SYSTEMS, INC.", A FLORIDA CORPORATION,
WITH AND INTO "INTERNATIONAL BALER CORPORATION" UNDER THE NAME OF "INTERNATIONAL BALER CORPORATION", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE THIRTIETH DAY OF JULY, A.D. 2004, AT 11:48 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL] /S/ HARRIET SMITH WINDSOR
--------------------------------
HARRIET SMITH WINDSOR,
SECRETARY OF STATE
2640223 8100M AUTHENTICATION: 3269135
040559457 DATE: 08-02-04
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CERTIFICATE OF MERGER
OF
CONSOLIDATED BALING MACHINE COMPANY, INC. ,and
FLORIDA WASTE SYSTEMS, INC.,
INTO
INTERNATIONAL BALER CORPORATION
INTERNATIONAL BALER CORPORATION, a Delaware Corporation hereby certifies as follows:
FIRST: The names of the constituent corporations arc International Baler Corporation, a corporation incorporated under the laws of the State of Delaware and Consolidated Baling Machine Company, Inc. and Florida Systems, Inc. each of which is incorporated under the laws of the State of Florida. Each of the constituent corporations is a wholly owned subsidiary of Waste Technology Corp., a corporation incorporated under the laws of the State of Delaware and which as the sole stockholder of each of the constituent corporations has consented to the Merger.
SECOND: An Agreement and Plan of Merger dated July 22, 2004 has been approved, adopted, certified, executed and acknowledged by Waste Technology Corp., in accordance with Section 252(c)of the General Corporation Law of the State of Delaware..
THIRD: The name of the surviving corporation is International Baler Corporation (the
"Surviving Corporation").
FOURTH: Article Fourth of the Certificate of Incorporation of the Surviving Corporation is hereby amended to read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall have the authority to issue is thirty-five million (35,000,000) shares consisting of twenty-five million (25,000,000) shares, designated as Common Stock, at par value of $.01 per share, and ten million (10,000,000) shares, designated as Preferred Stock, at a par value of $.0001 per share.
(1) Common Stock
(a) Dividends. The holders of shares of Common Stock shall be entitled to receive, when and as declared by the Board of Directors, out of assets of the Corporation legally available therefor, such dividends may be declared from time to time by the Board of Directors.
(b) Liquidation. Subject to the rights of any other class or of stock, the holders of shares of Common Stock shall be entitled to receive all the assets of the Corporation available for distribution to stockholders in the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, ratably, in proportion to the number of shares of Common Stock held by them. Neither the merger or consolidation of the Corporation into or with any other corporation, nor the merger or consolidation of any other corporation into or with the Corporation, nor the sale, lease or exchange or other disposition (for cash, shares of stock, securities or other consideration) of all or substantially all the assets of the Corporation shall he deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, of the Corporation.
(c) Redemption. Common stock shall not be subject to redemption.
(d) Voting. Subject to the rights of any other class or series of stock and the provisions of the law of the State of Delaware governing business corporations, voting rights shall be deemed exclusively in the holders of Common Stock. Each holder of Common Stock shall have one vote in respect of each shares of such stock held.
(2) Preferred Stock
The Preferred Stock may be issued, from time to time, in one or more series, with such designations, preferences and relative, participating optional or other rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the issue of such series which shall be adopted by the Board of Directors from time to time, pursuant to the authority herein given, a copy of which resolution or resolutions, shall have been set forth, in a Certificate made, executed, acknowledged, filed and recorded in the manner required by the laws of the State of Delaware in order to make the same effective. Each series shall
consist of such number of shares as shall be stated and expressed in such resolution or resolutions providing for the issuance of the stock of such series. All shares of any one series of Preferred Stock shall be alike in every particular. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following:
(a) the, number of shares constituting that series and the distinctive designation of that series;
(b) whether the holders of shares of that series shall be entitled to receive dividends and, if so, the rates of such dividends, conditions under which and times such dividends may be declared or paid, any preference of any such dividends to, and the relation to, the dividends payable on any other class or classes of stock or any other series of the same class and whether dividends shall be cumulative or noncumulative and, if cumulative, from which date or dates;
(c) whether the holders of shares of that series shall have voting rights in addition to the voting rights provided by law and, if so, the terms of such voting rights;
(d) whether shares of that series shall have conversion or exchange privileges into or for, at the option of either the holder of the Corporation or upon the happening of a specified event, shares of any other class or classes of stock of the Corporation and, if so, the terms or conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board of Directors shall determine;
(e) whether shares of that series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon, or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;
(f) whether shares of that series shall be subject to the operation of a retirement or sinking fund and, if so subject, the extent to and the manner in which it shall be applied to the purchase or redemption of the shares of that series, and the terms and provisions relative to the operation thereof;
(g) the rights of shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation and any preference of any such rights to, and the relation to, the rights in respect thereto of any class or classes of stock of any other series of the same class, and
(h) whether shares of that series shall be subject or entitled to any other preferences, and the other relative, participating, or other special rights and qualifications, litigations or restrictions of shares of that series and, if so, the terms thereof.
FIFTH: An executed copy of the Agreement and Plan of Merger is or file at the
principal place of business of the Surviving Corporation, International Baler Corporation, 5400 Rio Grande Avenue, Jacksonville, Florida 32205, and a copy of the Agreement of Merger will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of any constituent corporation,
SIXTH: The authorized capital stock of each of the constituent corporations is as follows:
(a) International Baler Corporation
Class Number ----- ------ Common 25,000,000 Preferred 10,000,000 |
(b) Consolidated Bailing Machine Co., Inc.
Class Number ----- ------ Common 750 |
(c) Florida Waste Systems, Inc.
Class Number ----- ------ Common 100 |
SEVENTH: The Surviving Corporation agrees that it may be served with process in the State of Florida in any action or special proceeding for the enforcement of any liability or obligation of any domestic or foreign corporation, previously amenable to suit in Florida, which is a constituent corporation to this merger.
EIGHTH: The Surviving Corporation hereby designates the Department of State of Florida as its agent upon whom process against it may be served. The post office address to which
the Department of State of Florida shall mail a copy of any process against the corporation served upon it is: 5400 Rio Grande Avenue, Jacksonville, Florida 32205.
IN WITNESS WHEREOF, International Baler Corporation has caused this Certificate of Merger to he executed in its name this 22nd day of July, 2004.
International Baler Corporation
List of Subsidiaries
NAME STATE OF INCORPORATION
International Baler Corporation Delaware
I, William E. Nielsen, that:
1. I have reviewed this annual report on Form 10-KSB of Waste Technology Corp. for the year ended December 31, 2004.
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in the annual report;
4. As the Registrant's sole certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for Registrant and I have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. As the Registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent function);
(a) All significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
Dated: January 27, 2005
/s/ William E. Nielsen
------------------------------
William E. Nielsen
Chief Executive Officer
Chief Financial Officer
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Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
I hereby certify that:
(A) I have reviewed the Annual Report on Form 10-KSB for the year ended October 31, 2004.
(B) To the best of my knowledge this annual report on Form 10-KSB (i) fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m (a) or 78o (d); and, (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Waste Technology Corporation and Subsidiaries during the period covered by this Report.
Dated: January 27, 2005
/s/ William E. Nielsen
---------------------------
William E. Nielsen
President, CEO and
Chief Financial Officer
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